More Than Finances

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How Do Interest Rates Affect Your Finances

Everyone seems to talk about interest rates, especially right now because they are historically very low.  However, two decades ago, they were extremely high.  But the real question is how interest rates affect your finances?  Here is the breakdown of you are affected.

When you’re Saving

If you’re saving money, the current interest rate definitely affects savings accounts.  If interest rates are low, you will get a lower interest rate on your money.  If interest rates are high, you will get paid a higher interest rate on your money.

You get better interest rates on long term savings, like CDs, but then you will be locked in when rates rise back up, making your future returns worth less.  When rates are low, it is best to keep money in the short term rates, so that you can take advantage when they rise again.

When you’re Borrowing Money

If you’re borrowing money, low interest rates are a blessing.  Having low interest rates means the amount of interest you will pay on your loan will be less.  Right now, with interest rates being historically low, you can save a lot of money by refinancing any money you’ve borrowed in the past.

However, when interest rates rise, the amount of interest you will pay on your debt will go up unless you have a fixed rate loan.  This put individuals who have variable or adjustable rate loans at a disadvantage.

When you’re Investing

When you’re investing, interest rates can play a little havoc with your portfolio.  If you’re invested in stocks, low interest rates typically boost the stock market because cheap capital allows companies to boost their bottom lines, which in turn boosts shareholder returns.

However, if you invest in bonds, low interest rates typically raise bond prices while lowering bond yields.  If you need the fixed income, this is a bad thing.  If you speculate in prices, this is a good thing.  However, as interest rates rise in the future, bond prices will fall, especially on long term bonds.  That is why it is a good idea to only hold short term debt.

Post by Robert


Consider Cash Flow When Investing in a New Company

If you are new to investing, you may wonder how to successfully analyze a company’s financials.  Many people look at the company’s net income, which is an important factor.  However, you should also consider other numbers such as the company’s statement of cash flow.  A U.S. or U.K. based company’s cash flow management can tell you a great deal about the company, and, therefore, whether or not you want to invest in the company.

What to Analyze on the Statement of Cash Flow

When analyzing the company’s statement of cash flow, there are three important parts to consider—operations, investing and financing.  Each piece gives you a separate piece of the company’s corporate finance strategy and analyzing all of them together helps you determine if the company is financially strong and a company you would like to invest in.

The operations piece of the cash flow report tells you how much money the company can generate internally.  The investing piece shows you how much the company is spending for acquisitions, investments, property and equipment.  It also shows you how much the company is bringing in through their investments.  Finally, the financing piece shows how much the company is spending to service their debts as well as the debts they have recently paid off.

Another important piece to consider is how often the company is issuing cash dividends as it takes cash to do so.

When you consider net income as well as the company’s statement of cash flow, you can get a fuller picture of a company’s stability and financial success, which in turn will help you determine if you want to invest with them.

Steps for an Investing Novice

Of course, a new investor may want to think twice about investing in individual companies without guidance.  A better strategy for a first time investor may be to invest in mutual funds so the risk is spread out over several companies.  As you invest more and become more comfortable with investing, you can begin to invest small amounts into individual companies that you research careful.  As your confidence and, hopefully, investments grow, you can begin to invest larger sums.

Likewise, you can hire a financial planner, but it is still in your best interest to do your research and feel comfortable with the company you are investing in because it is your money.  If you lose that money due to a bad investment, you will suffer the financial consequences, not your financial planner.  When investing, no one cares about your money as much as you do, so invest wisely after careful planning and research.

Post by Melissa


How to Plan Ahead for Your Retirement

2036 is the landmark year in which Social Security funds will be exhausted. So for future generations, this means there have to be other options to plan for retirement. While a lot of people don’t like the idea of increasing the amount of money that comes out of their checks for future retirement, but there are plenty of options for saving for retirement that won’t break the bank today. If you haven’t already, check out these options for saving for retirement.

1. 401(k) and Pension

Many government agencies and successful companies offer a 401(k) or Pension plan for their employees, which are generally approached in three ways. A company can provide full funding to a plan as long as the employee works for the company for a particular length of time. Another option is for you to contribute fully to your plan, and the employer actively searches for the best sources so you can get the greatest return for your contributions. The third is a matching program a lot of employers do; you simply add what you desire to your plan and the employer will match a certain percentage of your contributions. Even if your employer uses the first option, it is always a good idea to contribute money to the 401(k) plan yourself, as that will help it accrue much more interest over time.

2. Roth IRA

Because a Roth IRA relies solely on your contributions, much like a savings account, it is the best deal for you. This is because the income you place in a Roth IRA is already taxed, so when it gets distributed upon your retirement, those funds will not be taxed. On top of that, Roth IRA accounts are insured by the federal government for up to $100,000.

You can easily contribute money from your paycheck or money you make on the side to your Roth IRA account. A lot of people can find easy side work to do for small amounts of money that can be held in a Roth IRA. Consider offering your talents or hobbies as a service, or take paid online surveys at Though the money is not comparable to your income, it is nice to have that little extra to put away.

3. Stock Market

The stock market is a risky venture, but is an opportunity for everyone to get integrated into the American economy. Investing in the right stocks is a guaranteed way to get you on the fastest route to earning money, especially in a slowly recovering economy. Even if you are on a budget, you can still invest money in penny stocks or other low-priced stocks on the market.

4. Equity

Not many people are aware that they can make money simply by being consistent with their mortgage payments for an extended period of time. Paying off your mortgage on time each month will build up your home’s equity, which you can later bank on. Once you reach the age of retirement, your children will most likely have moved out, leaving you with more extra space than you need. Because your home has built up equity, you can sell your home for a better price than what you paid, and move into a smaller home with a suitable amount of space.

Planning for your retirement should not be stressful, as there are plenty of easily accessible opportunities to save and invest to ensure that you have a steady and healthy retirement income.


Wealth Building On A Budget

As I’ve learned, it’s never too early to start investing in your future but you may be, like a lot of people out there, working within the constraints of a tight budget. It’s nothing new. Most people are in the same position as you. It’s true that it takes money to make money but it’s also important to realize that you don’t have to be rich in order to invest money for your future. Here are a few, user friendly and easy tips that anyone ca use to affordably. As always, sooner is better than later.

You might be one of those few individuals that’ lucky enough to work for a company that has a 401k plan. These companies will often match your monthly contribution. How this works is the company in question will agree upon a predetermined percentage and put that towards your plan. This comes out of your paycheck and whatever agreed upon percentage will go towards a fund that is put back for your investment. This is usually a retirement fund. Your work will then match up to that percentage, which is most commonly around six percent. Now, you can put in whatever amount you want but the company won’t go past that percentage. It’s a great way to make free money and shore up your funds for later on in life.

An IRA is a long-term investment, like a 401k, that doesn’t take a ton of money to start up. IRA stands for Individual Retirement Account and it’s pretty much a savings account that provides investors with tax breaks and other incentives. It’s a savings account in which your money is invested in stocks, bonds, mutual funds, and other assets. As I’ve learned, it’s an ideal way to put away cash. Though IRA’s aren’t exactly an investment, they are a good way to put back money for your later years and shore up your holdings.

People have always found it lucrative to invest their money in the stock market. Using a broker is always advised since they’re able to mange your investments with a certain level of understand beyond that of the common investor. It depends but brokers can really cut into your profits with high commission rates. You can do it yourself but if you’re a novice it’s ill advised to venture into an arena as fickle as the stock market with out the proper knowledge or experience. If you feel that this option is right for you then I recommended you start small with investments like penny stocks. These are stocks that trade at 5 dollars or under.

Resources like are helpful to investors who don’t really know the penny stock game. Often bought cheaply and quickly, these stocks hold a certain level of risk so it’s advisable that you don’t sink a lot of money into them. They’re great short-term investments for people who want to get a feel for the stock market and don’t want to wait it out with long-term stocks. The cost is so low that many like to use these, potentially, high yield investments.

Often times there are investment opportunities that require an initial minimum investment that can cost you several thousand dollars. Don’t let this stop you because there are too many options, like the ones listed above, which make it affordable for anyone. You don’t have to spend thousands in order to start saving.


Should You Rent Or Buy Your Home?

One thing we all have in common is the need for a roof over our heads. Yet many people debate whether they should rent or buy that roof. How do you know which is right for you?

On one hand, home ownership is a big commitment that can be very expensive. On the other hand, ownership is also an investment that can be less expensive than renting over the long term. So how do you decide?
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