Surety Bond

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WHAT IS A SURETY BOND?
A surety bond is a written agreement that guarantees the performance of an obligation. Another name for it is suretyship agreement. Surety bonds usually provide for monetary compensation to be paid in the event that a principle fails to perform as specified in a bond. A surety bond is not insurance, but it is a risk transfer mechanisms. It shifts the risk of doing business with the principle from the obligee to the surety.

WHO ARE THE PARTIES TO A SURETY BOND?
There are always at least three parties to a surety bond:
1. The Principal
This is you, your company or institution – the party that gets bonded. You undertake to perform an obligation that is specified in your bond. The principal in a contract bond is the contractor. It is the public official in a public official bond, the one who gets licensed in a license bond, the guardian in a guardianship bond, and so on. Obligor is another word for principal.
2. The Obligee
This is the beneficiary, the party that requires you to get bonded. It might be a person, or an entity such as a company, municipality, or government agency. The obligee receives the bond and its benefit, protection against loss. The surety company compensates it if you fail to fulfill your obligation.
3. The Surety
This is the party that issues the bond, usually a surety bond company. It guarantees that a specific obligation will be met. The surety is financially obligated to the obligee in the event that you do not meet your obligation.
What is a surety bond company?
This is a corporation, usually an insurance company. It can legally underwrite surety bonds.

IS A SURETY BOND LIKE INSURANCE?
No. They are both risk transfer mechanisms that provide for financial loss, and both regulated by state insurance commissions, but there are major differences between surety bonds and insurance.
- An insurance policy is a two-party agreement (insured and insurer), while most surety bonds are three-party agreements (principal, surety, and obligee).
- An insurance policy transfers risk from an insured policyholder to an insurer (an insurance company). A surety bond protects an obligee against losses, not a principal.
- You can buy an insurance policy, but you must qualify for a surety bond. It is a form of credit. A surety bond company will only take acceptable risks, so it will only bond qualified businesses and individuals.
- Insurance companies expect losses, and adjust their insurance rates to cover them. Surety bond companies extend credit, expecting principals to meet the legal obligations of their bonds. They do not expect losses, which severely impact their bottom line when they do occur.
- Insurance companies calculate assumed losses into policy premiums. Bond premiums include underwriting expenses such as the qualification of applicants, but do not provide for losses. A bond premium is a service charge. It pays for the financial backing and credit guarantee of a surety bond company, which allows a company or individual to conduct business.

Written by SuzanneKhalil

WHAT IS A SURETY BOND?
A surety bond is a written agreement that guarantees the performance of an obligation. Another name for it is suretyship agreement. Surety bonds usually provide for monetary compensation to be paid in the event that a principle fails to perform as specified in a bond. A surety bond is not insurance, but it is a risk transfer mechanisms. It shifts the risk of doing business with the principle from the obligee to the surety.

WHO ARE THE PARTIES TO A SURETY BOND?
There are always at least three parties to a surety bond:
1. The Principal
This is you, your company or institution – the party that gets bonded. You undertake to perform an obligation that is specified in your bond. The principal in a contract bond is the contractor. It is the public official in a public official bond, the one who gets licensed in a license bond, the guardian in a guardianship bond, and so on. Obligor is another word for principal.
2. The Obligee
This is the beneficiary, the party that requires you to get bonded. It might be a person, or an entity such as a company, municipality, or government agency. The obligee receives the bond and its benefit, protection against loss. The surety company compensates it if you fail to fulfill your obligation.
3. The Surety
This is the party that issues the bond, usually a surety bond company. It guarantees that a specific obligation will be met. The surety is financially obligated to the obligee in the event that you do not meet your obligation.
What is a surety bond company?
This is a corporation, usually an insurance company. It can legally underwrite surety bonds.

IS A SURETY BOND LIKE INSURANCE?
No. They are both risk transfer mechanisms that provide for financial loss, and both regulated by state insurance commissions, but there are major differences between surety bonds and insurance.
- An insurance policy is a two-party agreement (insured and insurer), while most surety bonds are three-party agreements (principal, surety, and obligee).
- An insurance policy transfers risk from an insured policyholder to an insurer (an insurance company). A surety bond protects an obligee against losses, not a principal.
- You can buy an insurance policy, but you must qualify for a surety bond. It is a form of credit. A surety bond company will only take acceptable risks, so it will only bond qualified businesses and individuals.
- Insurance companies expect losses, and adjust their insurance rates to cover them. Surety bond companies extend credit, expecting principals to meet the legal obligations of their bonds. They do not expect losses, which severely impact their bottom line when they do occur.
- Insurance companies calculate assumed losses into policy premiums. Bond premiums include underwriting expenses such as the qualification of applicants, but do not provide for losses. A bond premium is a service charge. It pays for the financial backing and credit guarantee of a surety bond company, which allows a company or individual to conduct business.

Commercial surety bonds guarantee performance for a wide variety of business obligations and undertakings. They are required in order to conduct many different types of business.Each specific obligation is described in the bond. There are many different types of commercial bonds.

License and Permit Bonds (L&P Bonds)
These are the most popular type of commercial surety bonds. Contractors, car dealers, Private Investigators and mortgage brokers are among those who must get bonded in most states. L&P Bonds are widely required by municipalities, states, and the federal government, who are held harmless by them. These bonds protect the general public by assuring that businesses comply with local, state or federal codes and laws, and meet their obligations under their licenses or permits. Permit bonds are widely required in order to exercise certain privileges, such as blasting, demolition, fumigation, highway access, and right of way. License bonds are needed in order to engage in certain professions. L&P bonds are also required to operate some businesses, such as car dealerships, employment agencies, health spas, and liquor stores.

License and Permit Bonds (L&P Bonds)
There are thousands of different L&P bonds. This is a partial list of them, those that are most frequently requested. We also provide many other license and permit bonds, so please apply even if you do not see your bond here. We will help you through the commercial bonding process.

Collection Agency Bond
A collection agency bond protects the public by assuring that a collection agency complies with laws, and properly remits the funds that it collects. Apply Now

Contractor’s License Bond / CSLB (Contractor’s State License Bond)
This bond is routinely required before a contractor’s license can be issues, reactivated, or renewed. It assures that a contractor complies with state laws and regulations. Apply Now

Insurance Broker Bond / Insurance Broker License Bond
This bond is required by the Department of Insurance in many states. It protects the public by assuring that an insurance broker complies with laws, and properly accounts for insurance premiums. Apply Now

Lottery Bond
Some states require a lottery bond for an establishment that operates a state-owned lottery machine. The bond protects the integrity of the state lottery system by assuring that the machine will be used properly. Apply Now

Mortgage Broker Bond
This bond is required for mortgage brokers in most states. It assures the faithful performance of a mortgage broker, including proper accounting for the funds that it receives. Apply Now

Motor Vehicle Dealer Bond (MVD Bond) / Auto Dealer Bond / DMV Bond / Used Car Dealer Bond
Most states require dealer bonds in order to license dealerships for new and used cars. This bond protects the public against fraud, misrepresentations, or violations by an auto dealer or its sales force. Apply Now

P. I. Bond / Private Investigator Bond

Most states and municipalities require private eyes and private detective agencies to be bonded, in order to assure compliance with local and/or state laws. The bond amounts vary from state to state, and each has its own bond form. Apply Now

Sales Tax Bonds
These bonds are commonly required for merchants who sell certain products, such as alcohol, cigarettes, and gas. A sales tax bond assures that a merchant will properly collect state sales taxes from customers, remit them to the state, and properly file state sales tax returns. Different sales tax bonds include: Alcohol Tax Bond (for merchants such as liquor store owners) Cigar/Cigarette Tax Bond (for merchants such as convenience stores that sell tobacco products), Fuel Tax Bond/Fuel Distribution Bond/Fuel Use Bond (for fuel fuel suppliers, such as gas station owners). Apply Now

Written by SuzanneKhalil

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You Can Earn Great Returns Through Your Employer Matched 401k

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You can earn a fantastic rate of return on your money, simply by contributing to your employer sponsored and matched 401k retirement plan.

Do a household budget, and determine how much you can afford to contribute.

Understand that 401k contributions come off of the “top” of your earnings, and your Federal (and in many cases) State income taxes are calculated AFTER your contributions.

Talk to your plan administrator to see what is required of you to sign up.

This really is a no brainer, so we’re going to walk through an example of the power of matched money, along with income tax savings, plus a nominal rate of return of 1% of earnings through investments in your plan.

Let’s assume:

* Your gross pay is ,000 per year, pre tax.

* You are going to contribute 4%, or ,400 to the plan.

* Your employer matches 3% of your earnings to the plan.

* That you are in the 20% combined Federal and State tax bracket.

* That the money is invested in something through the plan that earns a nominal 1%.

Here’s the rate of return that you can expect on the ,400 that you contributed, excluding any gains or losses on your plan’s investments:

1. Your employer is going to match 3% or ,050 of your salary. ,050 divided by your ,400 contribution is a 75% return on your contribution.

2. You are in the 20% bracket. The ,400 contribution comes “off of the top” of your taxable income — it is not taxed until you begin withdrawing from the plan.

Hence, 00 tax savings in the 20% bracket is 0 tax savings for that year, or another 20% rate of return (,400 time 20%).

Overall rate of return:

* Employer match ,050, plus the 0 tax savings equals a ,330 return by contributing.

* You have contributed ,400, plus your employer has matched ,050 for a total of ,450, which earns 1%, or another .

* Your total “matched in”, plus tax savings, plus return through the fund is:

Employer match ,050
Tax savings 280
Plan income 25
——
Total Return ,355

divided by:

You contributed ,400

Rate of return 96%

You’re earning a 96% yield on your contribution, and you have the peace of mind of knowing that you are contributing to your retirement.

Written by EDWARDVANCE

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Despite The Negative Reports, The 401K Plan Has a Lot of Life in it Yet!

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Although often touted as a retirement firewall, the 401K plan has come under recent attack by many financial pundits as a pie-in-the-sky dream, founded on a dodge, finally exposed by our financial crisis for the miserable fraud that it always was. This is alarming for the millions of baby-boomers who have been trusting in deriving at least 4 percent of their yearly retirement income from their 401Ks. Is this just more fear-mongering, or is there really something to it?

The reason for this hostility is obvious enough, according to a recent Time magazine article. Whatever money you put into your 401K ten years ago, take about 25 percent from that and that’s what your 401K is worth today. You would have done better to put your savings into a savings account (at least they’re insured), or stuff your mattress with the cash. If the 401K plan is such a disaster, why do financial planners, whose job it is to devise a portfolio of holdings that they claim will keep a retiree in the black for 30 years, still advise their clients to count on this leaking bag?

It seemed smart enough when it first came out in the early 80s. It was named after the section of the tax code that permitted it. You pay into it by automatic deductions from your pay. You never get your hands on the money, so you can’t spend it. It wasn’t as though you couldn’t drop it if you wanted. If your financial condition required it, you could suspend it any time you wanted – it was your call.

I can save my own money, you might say, but there’s more to the 401K plan than forcing discipline on you. It’s better than a savings account because your company matches what you contribute. Most employers liked it better than their pension plans, which always reduced their bottom line. Most dropped those plans and took up with the 401K system instead. Unlike company pension plans, if you left the company, the money in it was all yours. Best of all, it couldn’t be taxed. The IRS does get some in the end, a levy they call it, a tolerable percentage. Your net income doesn’t include your contributions, so you’re being taxed for less than what you actually make. It was conceived as a well paid executive’s benefit, but it quickly became available to anyone who could stand to have a meaningful amount withheld from each paycheck.

That’s not as bad as you might have first thought. Yes, the National Bureau of Economic Research predicted that an average 401K plan, over the life of a career,  would provide about 50 percent of retirement income, but the truth is that today’s retirees can expect their plan to render a mere 8 percent. The reasons for this poor return mainly falls on the participant. Most didn’t contribute enough to hold the amount needed to cover 50 percent of their retirement. Poor investments in other financial vehicles required the participants to cash in early. Other investments are critical to cover the other percentage of retirement income the plan doesn’t cover. The recent crash has wiped out many of these investments, causing the retiree to draw more from their 401K than they expected. The problem, then, is not that the 401K with employer contributions won’t result in the expected savings. The problem is that other investments may well cause you to use more of your 401K savings earlier than expected in your retirement.

Yes, the 401K plan still has the potential to support a retiree in the future, that is, if enough is contributed. Raising your contribution will at least assure you that there is more to draw on when all else fails. Other schemes are being proposed, but the 401K still has a life and can still provide the income to future retirees when they’re in their golden years.

Written by andrebni

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Convert a 401k to an IRA

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5286313430 8f7d5a64ee m Convert a 401k to an IRA
by avrene

Establish an IRA at discount brokerage house, such as Scottrade or Fidelity. There is no need to put any money in it at this time. You will soon put your 401k money into it.

Contact the plan administrator at your former employer and explain to him/her that you need to convert your account to an IRA and that you need the administrator to send you the conversion paperwork. The administrator’s phone number should be listed on the front page of your quarterly 401k statement.

When you receive your paperwork, fill it out diligently. You don’t want to get hung up on some pedestrian protocol issue. Send the paperwork back to the administrator. It should take between a week and 3 weeks for the money to be sent to your new brokerage account. Stay on top of it.

Once the money is in your account you need to allocate it correctly, that is to say, invest it. The closer you are to retirement, the more conservative you should be as a general rule. 

Written by Nicksuno

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Top Ten Management on Foreign Bonds: An Overview of a Major Mechanism Through Which The World is Financed

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215456425 c733ed5306 m Top Ten Management on Foreign Bonds: An Overview of a Major Mechanism Through Which The World is Financed
by dbking

Introduction

A Foreign Bond is a debt security issued by a borrower from a foreign country in which the bond is exchanged into the foreign countries currency. Foreign bonds must be traded in a financial market, issued within a foreign country, and be denominated. The bonds are normally issued by a foreign body, for example a government, corporation, or a municipality.

The Idea in a Nutshell

Foreign bonds represent a financial obligation of a government or corporation. They have a higher risk because of currency fluctuations. Some counties give nicknames to the foreign bonds to make it easier to distinguish the bonds. Investors purchase foreign bonds and collect at the end of its maturity in hopes of a positive return. There are many risks involved when dealing with foreign bonds. Some examples include fluctuation exchange rates or losing initial investment due to seizure of foreign assets. To minimize the risk, buy high quality funds and hold onto them for an extended period of time.

The Top Ten Things You Need to Know About Foreign Bonds

1.            Many foreign bonds have nicknames given to them by the country they originate from. For example foreign bonds sold in the United Sates are called Yankee bonds, and bonds sold in Great Britain are called bulldogs. This helps distinguish one countries foreign bonds from another.

2.            Foreign bonds have 3 main characteristics. They must be issued by a foegin country or body, it must be traded in a financial market, and it must be denominated in a foreign country.

3.            When a company or government needs to raise money they can issue out foreign bonds for a certain price. The investors get regular interest rate payments for their investment. When the bond reaches the end of the term or matures the investor gets their money back.

4.            A country can either seize or deny all foreign assets. This can lead to military conflict and prohibit its currency from leaving that country. If a country does deny all foreign assets the investor can only spend that currency in the country it was purchased in. in other words the investor cannot convert the assets back to its original currency.

5.            When investing in foreign bonds the investor has a potential risk of losing their initial investment due to the fluctuation of the exchange rates. Currency exchange rates fluctuate because of macroeconomic factors including interest rates. Unfortunately none of these factors can be predicted, which imposes an even greater risk for the investor. Smart investors believe that foreign bonds can be a protection against the falling U S dollar.

6.            In order for an investor to invest in a foreign bond they usually have to know someone at a bank or a brokerage firm such as Fidelity or Charles Schwab. For this reason most people who invest in foreign bonds do so through secondary markets.

7.            There are two main types of currencies, pegged and free floating. Pegged currencies are those that fluctuate with the U S dollar. This protects it from currency risk. Free floating currency fluctuates independently form the US dollar. This makes the bond more risky.

8.            There are two main types of foreign bonds, bonds issued from developed nations and bonds form emerging markets. Bonds from developed nations are efficient and have a lower risk. Bonds from emerging markets are less efficient and have more of a risk because the currency may collapse to a government overthrow.

9.            An investor had two options when investing in foreign bonds they can either purchase individual issues or shares of mutual funds. Investors tend to lean more towards mutual funds because it’s more affordable than the individual bonds. The individual bonds are more expensive because it is mostly for retail investors.

10.            Investors like foreign bonds because it can balance out returns and reduce losses in the United States market. The bonds acts like a hedge or wall against inflation making it cheaper to sustain a successful business.

The Video Lounge

This clip explains what the biggest risk if of foreign bonds today, which is currency fluctuations:

http://www.clipsyndicate.com/video/play/598510/understanding_u_s_and_foreign_bonds_6_what_is_the_biggest_risk_of_investing_in_foreign_bonds

My Take

Almost every developed country participates in foreign bonds. Without them our economy would suffer. Foreign bonds make our economy more diversified. Sometimes foreign bonds can be risky because of currency fluctuations, but with every investment you have the potential of a risk. In my opinion, foreign bonds may be a little too risky to invest in. in order for managers to make educated decisions on purchasing of bonds they need to stay up-to-date on the constant changes in the market.

References

Wacovia(2010). Investing in Foerign Bonds. https://www.wachovia.com/foundation/v/indext.jsp?vgnextoid=3ee475c8011aa110VgnVCM1000004b0d1872RCRD

Business Knowledge Source(2003). Investing in Foreign Bonds. http://www.businessknowledgesource.com/investing/investing_in_foreign_bonds_023623.html

Financial Web. Investing in Foreign Bonds. http://www.finweb.com/investing/investing-in-foreign-bonds.html

Joshua Kennon. The Danger of Investing in Foreign Bonds. http://beginnersinvest.about.com/od/bondsandfixincome/a/aa071104.html

Stan Luxenburg(06/25/10). Foreign Bond Mutual Funds Miount a Comback. http://www.thestreet.com/story/10788924/foreign-bond-mutual-funds-amount-a-comback.html

Admin(10/20/10). The Pros and Cons of the Foreign Bonds. http://www.morgit.com/All/The_Pros_And_Cons__Of _The_Foerign_Bond

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Contact Info: To contact the author of “Top Ten Management on Foreign Bonds,” please email Heather Cosentino at heather.cosentino@selu.edu.

Biography

David C. Wyld (dwyld.kwu@gmail.com) is the Robert Maurin Professor of Management at Southeastern Louisiana University in Hammond, Louisiana. He is a management consultant, researcher/writer, and executive educator. His blog, Wyld About Business, can be viewed at http://wyld-business.blogspot.com/. He also serves as the Director of the Reverse Auction Research Center (http://reverseauctionresearch.blogspot.com/), a hub of research and news in the expanding world of competitive bidding. Dr. Wyld also maintains compilations of works he has helped his students to turn into editorially-reviewed publications at the following sites:

Management Concepts (http://toptenmanagement.blogspot.com/)

Book Reviews (http://wyld-about-books.blogspot.com/) and

Travel and International Foods (http://wyld-about-food.blogspot.com/).                

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Written by David Wyld
Professor of Management, Southeastern Louisiana University

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How to Borrow From Your 401K

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Many people in the USA have a retirement plan at work. 401(k), 403(b), and 457 plans allow employees to save part of their salary toward retirement and sometimes receive a tax benefit, as well. Many plans allow you to borrow money from a 401k with a 401k loan. You must be careful so that the IRS doesn’t consider it a withdrawal. Each plan has slightly different 401k loan rules, but here is the basic process.

Instructions

Talk to your 401k plan administrator. Your first contact should be your Human Resources or Payroll department. They either handle the 401k program or can refer you to an external person who handles 401k loans, 401k withdrawals, and other 401k questions. Ask about the rules for borrowing from your 401k. Most plans will allow you to borrow up to a certain percentage (usually 50% or less) of your 401k account value. Make sure to ask about the loan repayment rules. You will usually be required to make minimum monthly payments, plus interest. The interest usually goes into your account. But keep in mind that while you are “making” loan interest, you are missing out on the opportunity for that portion of your money to grow in mutual funds. Also, you are footing the bill for that investment “growth”. Make sure to ask about the rules when you leave the company. With most plans, you will be required to pay back the entire balance of the loan when you leave the company (usually within 90 days of termination). If you don’t, the IRS may require stiff penalties when you file your taxes at the end of the year.

Written by bubbabendog
Marketing entrepreneur

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Bond Funds or Bond Exchange Traded Funds (Etf)?

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Management fees

The iShares Barclays Aggregate Bond(AGG) is one of the most traded ETF in the United States. Its asset under management was 12, 6 $ billions on July 31, 2010. It reproduces the Lehman Aggregate Bond Index considered to be the best total market bond index. Its management expense ratio (MER) is 0, 24%. In comparison, the average funds tracking this index has a whopping 0, 94% MER.  Such a difference in management fees (0, 70%) is enormous especially when historic low rates make the evening news. It’s a fact; the low level of interest rates on government and municipal bonds don’t leave much to the investor. Since bonds are mostly bought by investors for income, they might live poorer than anticipated if they invest in a fund. Therefore, bond investors should double check the fees of their funds before they invest in them. Since most ETF’s offer a broad diversification with MER’s as low as 0, 20%, the advantage clearly goes to ETF’s in this regard.

Choice of sector

The bond market is more than twice as big as the stock market. Such a vast market leaves choosing the right bond with the right maturity and credit quality a difficult task. However, ETF’s and funds offer a large repertoire of diversified portfolios. Here are the major types of bonds mostly covered by ETF’s and funds.

·         Government bonds

·         Municipal bonds

·         Corporate bonds

·         Short, intermediate and long maturity bonds

·         Real return bonds

·         International bonds

While most funds cover these sectors, ETF’s offer an even more complete set. For instance, iShares have 35 ETF covering the entire bond market from general indexes to more specialize markets. Mutual funds don’t offer as much depth while their products generally try to follow major bond indexes.

Active or passive management?

Research has shown poor added value for active management of bonds. While few managers might be able to generate few basis points more than their index counterparts, the management fees of funds will quickly annihilate this advantage. Result? Most ETF’s are ranking in the 1st and second quartile and almost none of them are present in the 3rd and 4th quartile. Consequently, investing in passive management trough bonds ETF’s appears to be the best bet for a decent performance of the bond allocation of the portfolio.

Income

Monthly distributions characterized most funds and ETF’s. However, automatic reinvestment of distribution is a convenient feature offered by funds. While reinvestment of ETF distributions is possible, it is to your brokerage firm to set it up. However, some brokerage firms do not offer ETF distribution reinvestment and it’s not all ETF’s that qualify for it either. Clearly this time, the advantage goes to funds.

Conclusion

And the winner is? ETF’s. Globally, ETF’s are cheaper, more efficient, offers better returns, are more transparent, offer a broader choice for diversification purposes and generate monthly income (as well as bond funds). The only downside is the automatic reinvestment of distribution. While it’s a feature offered systematically by funds, ETF’s have certain limits in this regard.

Written by foufagetradetogain
Options Guru, TradetoGain has been trading options for more than10 years.

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How To Get Cash From Your 401K

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Anyone who has a 401k can cash it out at any time.  Just know that you face a 10% penalty if you are cashing it out for a non-qualified reason.  You face this penalty along with the taxes you will owe on the amount of your 401K.  For most taxpayers this combination totals a loss of about 30 to 40% of the account’s value.

There are ways to access 401K funds without paying the full penalty of cashing out.  One way is to obtain a loan from your 401K.  There is no 10% penalty associated with the loan, although there is a preset interest rate you must pay.  Also, the money you do pay back against the loan is taxed.

The 401K administrator must approve a loan against a 401K.  Loans are usually granted for secondary education expenses, the purchase of a home, or to pay medical expenses.  The loan must be paid off in full in five years and the payments must be made at least quarterly.

One of the drawbacks of a 401K loan is that the money is no longer accruing interest.  As the money is paid back in, the interest will begin to gather, but not until payments are received. Interest will only accrue on the payment portion.

For some people, the 30 to 40% loss is worth the cash out, but for most it is not.  Think things through before you take the money and run.  After all, this money represents savings for your retirement years, to supplement pensions and Social Security.  You might think you need it now, but it is certain that you will need it then.

Before taking any action with your 401K it is a good recommendation to consult with your financial planner or your attorney.  You need to calculate how the actions you take now might affect you later in life.

Written by Chintamani

Anyone who has a 401k can cash it out at any time.  Just know that you face a 10% penalty if you are cashing it out for a non-qualified reason.  You face this penalty along with the taxes you will owe on the amount of your 401K.  For most taxpayers this combination totals a loss of about 30 to 40% of the account’s value.

There are ways to access 401K funds without paying the full penalty of cashing out.  One way is to obtain a loan from your 401K.  There is no 10% penalty associated with the loan, although there is a preset interest rate you must pay.  Also, the money you do pay back against the loan is taxed.

The 401K administrator must approve a loan against a 401K.  Loans are usually granted for secondary education expenses, the purchase of a home, or to pay medical expenses.  The loan must be paid off in full in five years and the payments must be made at least quarterly.

One of the drawbacks of a 401K loan is that the money is no longer accruing interest.  As the money is paid back in, the interest will begin to gather, but not until payments are received. Interest will only accrue on the payment portion.

For some people, the 30 to 40% loss is worth the cash out, but for most it is not.  Think things through before you take the money and run.  After all, this money represents savings for your retirement years, to supplement pensions and Social Security.  You might think you need it now, but it is certain that you will need it then.

Before taking any action with your 401K it is a good recommendation to consult with your financial planner or your attorney.  You need to calculate how the actions you take now might affect you later in life.

The 401k retirement plan is a special type of account that invests in different asset classes such as stocks, mutual funds, and bonds, which are not taxed on any interests, dividends or capital gains when withdrawn on maturity. Although the main purpose of 401k account is to secure financial solvency for the retirement years, for people who face short-term liquidity problems and may not have alternative options, the government has allowed the offer of 401k hardship loans.

To be eligible for a 401k hardship loan, a 401k participant should be able to prove a financial need that is ‘immediate and heavy’ and may include the need of the employee, his/her spouse or dependent(s). By the clause ‘immediate and heavy’ financial need, the employee has to prove to the employer not only the severity of the situation, but also the lack of alternative options to meet the need in order to be allowed to borrow against the 401k account.

Likewise, the amount requested must be proper to meet the financial need. This means that the employee must request an amount of 401k hardship loan that matches the total of the financial need that cannot be met with any other source of funds.  Typically, employers request employees to certify that they can meet the 401k plan’s requirements for a 401k hardship loan. This means that employees are rightfully justified to request a 401k hardship loan for the following reasons:

(1)    to purchase their first property (first-time home buyers),

(2)    to cover the costs of higher education for a family member (college tuition),

(3)    to prevent eviction due to foreclosure on their property (home mortgage or bankruptcy), and

(4)    to pay un-reimbursed medical expenses that cannot be covered by another source

Typically, a 401k hardship loan is minimum ,000 and maximum the 50 percent of the account balance up to ,000, while the repayment occurs evenly over a period of 60 months (5 years) or in the case of a home loan, up to 15 years.

401k hardship loans have numerous advantages. First of all, they are not subject to governmental restrictions or any taxation. Any interest paid on the loan, it actually goes back to the loan, while interest rates are extremely competitive even for people with poor credit history. In case of default, the employee will forfeit the interest and dividends on the borrowed amount as well as the lifetime tax value and would pay the 10 percent penalty on the withdrawal amount. This means that borrowing from 401k account has no impact on the employee’s credit history. If the employee pays back the borrowed amount on a short-term horizon as scheduled, it will have a minor impact on the retirement savings progress, while it will definitely have a positive impact on the savings account.

On the other hand though, one of the major disadvantages of a 401k loan is the fact that some of these loans inhibit contribution to 401k retirement plan until full repayment. This means that if the employer matches the 401k contributions, the employee definitely loses money until the loan is repaid. Besides, the interest rates on 401k hardship loans are not tax deductible. And, finally, from a financial point of view, financial planners consider that 60 months is a short term period for repayment if one compares 401k loans to personal or equity loans.

In any case, when borrowing the proper amounts of money for a short-term period, 401k hardship loans may be the lowest-cost source of funds available. On the other hand, a 401k hardship loan is like borrowing against own financially-secure retirement. In any case, if one is going to get a 401k hardship loan, it should really be used as last resort option. If there is really no other alternative, then it makes sense to request a 401k hardship loan, but while keeping in mind that it might being hardships along the way.

Written by Christina Pomoni
Investment Advisor – Freelancer Writer

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Real Estate Investing For Beginners

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As a result I’m sure that you feel ready to throw your hat into the ring and begin your own real estate portfolio. There is certainly nothing wrong with this as an investment strategy though there are many wrong ways in which an investor can go about the process.

 

Flipping properties is my field of experience and a good deal of what will be discussed here will relate to flipping properties though some of the information can be crossed over into rental properties and other types of real estate investment. Even personal property can be a real estate investment. 

 

Real estate is one of the few forms of investment in today’s society in which you can actually see the changes as they are occurring. 

 

It is truly amazing to watch a property that was once neglected and in a state of disrepair suddenly spark back to life right before your very eyes. There is a lot of work involved in this process though and this is often overlooked. Much like labor in light of birth. The pains are quickly forgotten when looking into the face of the outcome. 

 

Keep these things in mind for your first time and you should be well on your way to future success. You should also realize that the first few investments are learning experiences more than anything else. If you do not achieve the success you were hoping for (or success to a lesser degree than hoped) you should not give up on the dream all together simply learn from the mistakes you will make along the way as well as the mistakes that others have made.

 

Real estate investing is not an exact science. There is no formula in this business that guarantees success. Even seasoned professionals will find the occasional bump in the road even on a property for which they had high expectations. Stuff happens along the way that cost money, delay the project, or set the project back. 

 

These things are stumbling blocks no doubt but should not be allowed to derail the entire project. When these things happens go back to your original plan, reassess the situation and create a new plan with the necessary adjustments in mind. The key is in sticking to a plan the entire time and never throwing the plan out the window and flying by the seat of your pants.

 

Your plan will be your lifeline throughout the project. You need to have a plan and a budget in writing. One great rule of thumb is that you set aside double the amount of money you plan for in your budget. This gives you a bit of a safety net for the inevitable things that will go wrong. Things will go wrong on almost every flip you encounter. Even the seasoned professionals that have television shows about their flipping efforts encounter problems in almost every single flip, rehab, or renovation.

 

For your first few investment purchases it is recommended that you purchase properties that need little more than minor cosmetic repair rather than complete rehabs or renovations. This allows you to get your feet wet without the incredible risk of going off the deep end mentally, emotionally, and financially. 

 

These properties represent lower profits but also lower risk. They also allow you to gain valuable experience and raise a little capital in which to invest in properties requiring more extensive work in the future.

 

Keep your eye on the carrot at the end of the project. Far too many would be property investors give up just before they reach the point of true profitability. The goal is the profit at the end of the project.

Written by victornzekwu
victor brown is an expert in business management and investment ideas, and also a consultants in financial investment and money matters. and a writer

As a result I’m sure that you feel ready to throw your hat into the ring and begin your own real estate portfolio. There is certainly nothing wrong with this as an investment strategy though there are many wrong ways in which an investor can go about the process.

 

Flipping properties is my field of experience and a good deal of what will be discussed here will relate to flipping properties though some of the information can be crossed over into rental properties and other types of real estate investment. Even personal property can be a real estate investment. 

 

Real estate is one of the few forms of investment in today’s society in which you can actually see the changes as they are occurring. 

 

It is truly amazing to watch a property that was once neglected and in a state of disrepair suddenly spark back to life right before your very eyes. There is a lot of work involved in this process though and this is often overlooked. Much like labor in light of birth. The pains are quickly forgotten when looking into the face of the outcome. 

 

Keep these things in mind for your first time and you should be well on your way to future success. You should also realize that the first few investments are learning experiences more than anything else. If you do not achieve the success you were hoping for (or success to a lesser degree than hoped) you should not give up on the dream all together simply learn from the mistakes you will make along the way as well as the mistakes that others have made.

 

Real estate investing is not an exact science. There is no formula in this business that guarantees success. Even seasoned professionals will find the occasional bump in the road even on a property for which they had high expectations. Stuff happens along the way that cost money, delay the project, or set the project back. 

 

These things are stumbling blocks no doubt but should not be allowed to derail the entire project. When these things happens go back to your original plan, reassess the situation and create a new plan with the necessary adjustments in mind. The key is in sticking to a plan the entire time and never throwing the plan out the window and flying by the seat of your pants.

 

Your plan will be your lifeline throughout the project. You need to have a plan and a budget in writing. One great rule of thumb is that you set aside double the amount of money you plan for in your budget. This gives you a bit of a safety net for the inevitable things that will go wrong. Things will go wrong on almost every flip you encounter. Even the seasoned professionals that have television shows about their flipping efforts encounter problems in almost every single flip, rehab, or renovation.

 

For your first few investment purchases it is recommended that you purchase properties that need little more than minor cosmetic repair rather than complete rehabs or renovations. This allows you to get your feet wet without the incredible risk of going off the deep end mentally, emotionally, and financially. 

 

These properties represent lower profits but also lower risk. They also allow you to gain valuable experience and raise a little capital in which to invest in properties requiring more extensive work in the future.

 

Keep your eye on the carrot at the end of the project. Far too many would be property investors give up just before they reach the point of true profitability. The goal is the profit at the end of the project.

The biggest challenge that real estate investors face is to make offers that get accepted.   Buying properties is the basic foundation of real estate investing.

Unless you buy properties, you cannot make any money.

 Here is how to make offers that get accepted.

The offer you make depends on the type of property you are buying.
1)    Buying from motivated sellers
 It is important to have the following pieces of information if you buy houses from motivated sellers:

a)    Market Value
Do your due diligence to find out conservatively how much the house would be worth in a perfect condition.   You must have this information before you can make any offer.

b)    Mortgage balance
You must get this information before you can make an offer.   A seller who is not willing to disclose this information is not motivated enough. Move on to a motivated seller.

The mortgage balance must allow you to buy the house and still leave you with a profit.  Thus means that the offer you give must allow you to own the property free and clear and still make money.

c)    Repairs needed
 It is possible to estimate repair costs with the information provided by the seller.

 You must know how much you need to fix up the house before you can make an offer.  Of course I like to see the house and do my own repair estimates.

d)    Asking price
 Given the above 3 pieces of information, if the seller is asking for too much, the deal might not be worth it.

A  good asking price must take into account the market value, mortgage balance and repairs.   You can then make your offer lower than the asking price.  If at all the mortgage balance and repairs allow you to make an offer that can leave you with a profit, by all means do it.

No offer can be too low, but you also have to take into consideration the seller’s needs.   If they are facing foreclosure, then they probably need some money to move, or their asking price might be just enough to get away from the property.

 It makes no sense making an offer when mortgage balance is so high you cannot make a profit. Move on to the next deal.

When all is said and done, the only bad offer is the one you have not made.  Make as many offers as you can.   You’ll be surprised how many get accepted.

2)    Buying foreclosed properties
 The asking price and repairs are the only important considerations to make in this case.  Banks selling these properties are willing to negotiate.

 Most REOs are listed below market value.   If your numbers look acceptable, by all means make an offer.

Remember the banks are willing to negotiate, so always make an offer lower than the asking price.

In order to be successful in real estate investing, it is necessary to close as many deals as possible while spending as little time, money and effort as possible. Learn how you can achieve this by automating your real estate investing business with an automated real estate investor website.

Written by simon87

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Stock Invest- Helpful Information For Cdnn Investments

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So here is chance to get your free tips on stock invest and in addition to that get basic information on saving money visit owner says sell

What does the flow of cash and a changing tide have to do with where to take a position in 2011 or 2012? Where money flows in – prices rise. Where it exits from costs fall. In recent years gold has exploded to all time highs. In the stock funds vs. Bond funds arena speculators have flooded bond funds with cash inflows of hundreds of uncountable billions of dollars as bond prices climbed. Stock funds watched money run for the exits.

 

It’s tough to provide accurate stock invest info, but we have gone thru the demand of putting together as much stock invest related information as practicable. Even  If you’re trying to find other info somehow related to invest in stocks,gold investment online, teens saving money or smart money investments this document should help a good deal.

 

A backer is someone that trusts some automobile of the market, be it in the shape of stocks, bonds, non-public investments, or something else to grow his or her cash thru real worth growth, business planning, or sound money management.No matter what you choose to make an investment in whether it’s Property, Boats, Precious Stones, Wholesale items, etc, you should already have an idea of who your customers are and where they are. If you can receive a firm commitment from a purchaser for your investment object, many times your cash never leaves your account. 

 

The Platform Traders at the top of their peers are rewarded with staggering wealth. Platform Traders utilise many methods to help identify rewarding trades ,eg macro research, price idea, fundamental analysis.price analysis and lots more investment strategies. What superior and major Platform Traders can do is make enough winning trades over the course of time irrespective of what technique they may use to accrue trading profits.When you acknowledge the incontrovertible fact that the incidence of a tragedy be it natural or alternatively is a probability in an organization, then it is an admission a risk exists in the business. The method and steps that you take to pinpoint the extent of the risk, and the action brought to curb same to a level that can be described as manageable is what we call risk administration.

 

RECESS — As is clear from the half this article, even if your direct quest is stock invest, reading to the end will prove useful, as this article in addition has helped those trying to find information regarding vanguard investments, online investor, making money with Investing, best investment.

 

Aside from that, though  the trend of savings in bonds continued last year too, however it is currently the opinion of the experts that bonds will most likely not be a safe investment in future times. The explanation for this is that the market has been crowded too much and it is widely anticipated that governments will increase the interest rates sooner or later.One of the very basic risk management methods exploited by Non-public Placement Program Traders is only risking a miniscule percentage of the investment capital on every trade. It is usually between a half and 2 % on a specific trade. If a trade loss hits an outlined % grant, the trade is closed out.

 

Funds exist for investing cash in all the above asset sectors and they are made for average folks. Fund management selects the stocks, bonds and other investments and they manage them as a diversified portfolio for their backers as a group.

 

For your info, we found that a lot of folks that were looking for stock invest also searched online for alternative investment, online trading, and even options investing education,investment property texas.

 

With greenbelt land frequently being rezoned for development so as to manage the demands of housing, land values are seen as a consistent and safe tangible asset to invest in, which can see enormous returns. Speak to a UK land investment firm to discover how you can use this investment option.

Written by sumitbisht

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