These days, if you are holding out for cheaper fixed mortgage deals, you should have a few more years before stepping into one. Lord Turner, chairman of the Financial Services Authority, has shown us just how long a waiting game it could be, according to a comparison of a few banks.
The expectancies certainly don’t look positive for people who are looking for a mortgage loan. The rates can stay high for an other six to nine years after the onset of a banking crisis.
To keep banks as Northern Rock, Bank of Scotland,… from repeating their failures, they should hold much more capital, according to Lord Turner.
Of course, this will not solve all the current liquidity problems, because holding more capital will automatically increase the banks’ costs, which will get passed on to the clients eventually, in a form of a wider spread between the rates paid on our savings, and the rates charged on our debts.
The mortgage market has been doing so bad recently, there is a real chance that the rate of the 9% mortgage may not be far off.
With the rather poor bank rates of just 0.5%, it’s not looking good for us customers, and especially not for the banks. Just imagine if their interest rates were back at a “normal” level of about 4%, that would mean suicide for most banks.
With the country being set to fall into deflation, it’s rather out of the question to be thinking about higher interest rates, but that’s not quite the case, the rates could be closer than we think they are.
Although these are some really rough times, investors are not predicting a lower global growth over the next year, largely thanks to renewed optimism about China. A lot of people see many opportunities in the development of their economic.
Also in this part of the globe, this seem to be getting better step by step. Last week we saw a stronger growth than we’re used to nowadays. Oil soared 7% in just one day, while copper surged to a four month high.
So we’re all wondering if we should be locking into a fix now to protect ourselves from these big tracker margins. Melanie Bien, from Savills, definitely thinks so, but certainly not for 2 years. You should play it safe and have one for 5 years.
On the other hand, if you decide to play the waiting game on a tracker, and house prices fall even further, you may find you don’t have enough equity when you try to switch to a fix in a year or so.
Although we are seeing some important signs of a recovery on the markets, mortgage lending’s don’t seem to be getting any profit of it. With mortgage lending’s that are about to reach a 9% rate, you may want to play the waiting game for another period.
If there’s no other way, Melanie Bien at Savills would recommend you to step into a 5 year fix now to protect yourself from what’s coming. This may be the best advice you can take, according to me, due to the expectations of Lord Turner, who said the mortgage rates could stay high for six to nine years after the onset of this crisis.
I don’t think that banks holding more capital isn’t the best solution. It is a long term solution, but we need things to be handled right now. If they eventually hold more capital, it will cost the bank more money, which will eventually cost us more money. That way, we’re not getting any closer of putting this period behind us.
But we all seem to be keeping our heads up. While the crisis continuous here, there’s a lot going on in China, which looks like a whole new era for investors as they see a lot of opportunities there. That way they’re kept from getting depressed on thinking about how things are going to end up here.
Source: http://www.timesonline.co.uk/tol/money/investment/article5949354.ece
Written by
Tom Baeyens
Student at Artevelde College
2FI2
zondag 29 maart 2009
zondag 22 maart 2009
Ten questions to ask your financial advisor before handing over your cash
Nowadays, people who would like to invest their money in a slight safer way than investing it on the stock market, often put their savings in a fund. Funding is a way to provide capital that a rather large group of people raise, mostly to finance a business or a project, such as the health fund.
Unfortunately, the Bernard Madoff scandal has scared many investors around the globe. The people who invested in this may have gotten tricked into a scam, so the question that the people ask is: how safe is it to invest in a fund.
Fortunately, on the other hand, there are ways in which ordinary investors can help minimize their chances of buying into an unsafe fund. Along with Justin Urquhart Stewart, of Seven Investment Management, the writer has put together a list of questions that may help you decide whether you should, or shouldn’t buy into a fund.
You should always know what kind of investments the fund you buy into makes. It will give you a clear idea of what kind of fund you get involved with. Another import essence of the fund is a clear investment strategy. As an investor, you want clarity of what’s about to happen to your savings. If their strategy is not clear to you at all to you, you may reconsider about this way of investing.
Now how about the risks of a fund? How does it measure the risk, and how risky is it? You should absolutely be aware of the potential risk that may emerge. It’s important to be entitled to know how risky a fund, and to know how big the measure of the risk is for the managers, is before putting money into it.
A crucial factor to decide to step into a fund or not remains the full costs of it. Hedge fund managers in particular often charge performance fees of up to 20% of your profits, which doesn’t seem to be attractive to the most of us, but of course without the fund managers their probably wouldn’t be a lot of profit if you don’t quite understand investments.
Another downside of a fund is that is not easy at all to get your money out of it if you want to. Mostly you will have to wait for several months to get it back, of course with a rather high interest percentage you will have to pay on top.
If you ask your fund manager who he is regulated by, the answer shouldn’t be “no one” if you are looking for clear investment strategy. You should be very wary of investing your money there.
You should also look for a fund in which you are protected if it goes bust.
I think you should really consider every detail and make sure you know what you’re doing when you invest in a fund. At first sight it may seem too good to be true, and most of the times, you’ll notice that it is, once you’ve gotten into it.
By reading the hints, you should be aware of any danger that could appear before you buy into a fund. They’re not all as reliable as they seem, so it’s very important to ask a lot of questions to the fund manager.
The fact that the fund manager charges a rather high commission on his profits (which he made for the investors), might scare some people away, but if he’s charging this much, you might get a better feeling about your money, knowing that it’s in the hands of a professional.
Of course because you can not withdraw your money from the fund at any time, you may reconsider stepping in, but that’s the risk you take by taking it away from your savings account and investing into a fund. Of course the interests will be much higher than before.
I would definitely consider replacing my savings into a fund, but only if I know for sure that there is a clear strategy, and I am familiar with the investments the fund puts it’s faith in.
Source: http://timesbusiness.typepad.com/money_weblog/2009/01/ten-questions-to-ask-a-fund-manager-before-handing-over-your-cash.html
Written by
Tom Baeyens,
Student at Artevelde College
2FI2
Unfortunately, the Bernard Madoff scandal has scared many investors around the globe. The people who invested in this may have gotten tricked into a scam, so the question that the people ask is: how safe is it to invest in a fund.
Fortunately, on the other hand, there are ways in which ordinary investors can help minimize their chances of buying into an unsafe fund. Along with Justin Urquhart Stewart, of Seven Investment Management, the writer has put together a list of questions that may help you decide whether you should, or shouldn’t buy into a fund.
You should always know what kind of investments the fund you buy into makes. It will give you a clear idea of what kind of fund you get involved with. Another import essence of the fund is a clear investment strategy. As an investor, you want clarity of what’s about to happen to your savings. If their strategy is not clear to you at all to you, you may reconsider about this way of investing.
Now how about the risks of a fund? How does it measure the risk, and how risky is it? You should absolutely be aware of the potential risk that may emerge. It’s important to be entitled to know how risky a fund, and to know how big the measure of the risk is for the managers, is before putting money into it.
A crucial factor to decide to step into a fund or not remains the full costs of it. Hedge fund managers in particular often charge performance fees of up to 20% of your profits, which doesn’t seem to be attractive to the most of us, but of course without the fund managers their probably wouldn’t be a lot of profit if you don’t quite understand investments.
Another downside of a fund is that is not easy at all to get your money out of it if you want to. Mostly you will have to wait for several months to get it back, of course with a rather high interest percentage you will have to pay on top.
If you ask your fund manager who he is regulated by, the answer shouldn’t be “no one” if you are looking for clear investment strategy. You should be very wary of investing your money there.
You should also look for a fund in which you are protected if it goes bust.
I think you should really consider every detail and make sure you know what you’re doing when you invest in a fund. At first sight it may seem too good to be true, and most of the times, you’ll notice that it is, once you’ve gotten into it.
By reading the hints, you should be aware of any danger that could appear before you buy into a fund. They’re not all as reliable as they seem, so it’s very important to ask a lot of questions to the fund manager.
The fact that the fund manager charges a rather high commission on his profits (which he made for the investors), might scare some people away, but if he’s charging this much, you might get a better feeling about your money, knowing that it’s in the hands of a professional.
Of course because you can not withdraw your money from the fund at any time, you may reconsider stepping in, but that’s the risk you take by taking it away from your savings account and investing into a fund. Of course the interests will be much higher than before.
I would definitely consider replacing my savings into a fund, but only if I know for sure that there is a clear strategy, and I am familiar with the investments the fund puts it’s faith in.
Source: http://timesbusiness.typepad.com/money_weblog/2009/01/ten-questions-to-ask-a-fund-manager-before-handing-over-your-cash.html
Written by
Tom Baeyens,
Student at Artevelde College
2FI2
zondag 15 maart 2009
Investors flock back to stock market
Since the rates on the cash deposits have plumed, investors seem to be flocking back to the stock market, which looks like a great opportunity for income-seekers, but they may not take the profit they may make for granted.
Nearly half of the investors who have invested in ISAS have already shared their £7,200 allowance this tax year. More than a quarter of them plan to increase their exposure to equities due to falling cash interest rates.
The investment Isa accounts jumped to 67% this season, compared to last. 63% of the surveyed investors had been persuaded that the shares will generate the best results in 2009.
Head of investment strategy at Barclays Stockbrokers, Barbara-Ann King, claimed that people seem to be benefitting the low interest rates. Informed investors are taking advantage of the potential long-term returns from their investments.
The interest rates have been low all over the world these last few months. The Bank of England cut the official interest rates to an all-time low last week, they are now just 0.5%. This was the sixth consecutive rate cut since October 2009, when it started dropping from 5%.
Savers have been shunning cash to chase more profit on their deposit accounts. In January they managed to pull a sloppy £2.3 billion out.
With ISAs, you are able to invest your money in a riskless way, unlike the value of stocks and shares, which can rise and fall. An other way is to invest in corporate bonds or hold the funds in cash in the ISA wrapper, so you can wait until you think it’s gotten safer to invest.
However, the “safe havens” aren’t as low risk as they might seem. Investors in corporate bonds and equity income funds have proven to have underestimated the risks of these investments.
Most people don’t manage to invest their money the way they actually want it to be. Stocks and shares ISAs are proving popular as an alternative to miserly savings accounts. In these times, those who invest it in a riskless way often gain profits of les than 0.5%. I still think the best way to gain profits is to invest on the stock markets, and to take advantage of this current situation.
But of course, everyone has got savings, and not everyone wants to take risks and buy shares on the stock market. Therefore the ISA accounts are a great way of saving your money. It doesn’t make as much profit as you could make elsewhere, but you have no risks at all, which seems to be quite popular in times like these.
Source: http://www.timesonline.co.uk/tol/money/investment/article5874619.ece
Written by Tom Baeyens,
Student at Artevelde College
2FI2
Nearly half of the investors who have invested in ISAS have already shared their £7,200 allowance this tax year. More than a quarter of them plan to increase their exposure to equities due to falling cash interest rates.
The investment Isa accounts jumped to 67% this season, compared to last. 63% of the surveyed investors had been persuaded that the shares will generate the best results in 2009.
Head of investment strategy at Barclays Stockbrokers, Barbara-Ann King, claimed that people seem to be benefitting the low interest rates. Informed investors are taking advantage of the potential long-term returns from their investments.
The interest rates have been low all over the world these last few months. The Bank of England cut the official interest rates to an all-time low last week, they are now just 0.5%. This was the sixth consecutive rate cut since October 2009, when it started dropping from 5%.
Savers have been shunning cash to chase more profit on their deposit accounts. In January they managed to pull a sloppy £2.3 billion out.
With ISAs, you are able to invest your money in a riskless way, unlike the value of stocks and shares, which can rise and fall. An other way is to invest in corporate bonds or hold the funds in cash in the ISA wrapper, so you can wait until you think it’s gotten safer to invest.
However, the “safe havens” aren’t as low risk as they might seem. Investors in corporate bonds and equity income funds have proven to have underestimated the risks of these investments.
Most people don’t manage to invest their money the way they actually want it to be. Stocks and shares ISAs are proving popular as an alternative to miserly savings accounts. In these times, those who invest it in a riskless way often gain profits of les than 0.5%. I still think the best way to gain profits is to invest on the stock markets, and to take advantage of this current situation.
But of course, everyone has got savings, and not everyone wants to take risks and buy shares on the stock market. Therefore the ISA accounts are a great way of saving your money. It doesn’t make as much profit as you could make elsewhere, but you have no risks at all, which seems to be quite popular in times like these.
Source: http://www.timesonline.co.uk/tol/money/investment/article5874619.ece
Written by Tom Baeyens,
Student at Artevelde College
2FI2
zondag 8 maart 2009
Buffett puts worst year in rearview mirror
Warren Buffett, the 78 year old American businessman and philanthropist, who had received a master’s degree in economics at the Columbia University in 1951, is one of the worlds most successful investors, who became a straight up billionaire. He didn’t make his success by founding a company, making a massive invention, nor by investing a penny in technology companies, and yet, the billions of dollars that he’s made over his successful career, all were made on the stock market.
In 1962, Buffett discovered a textile manufacturing firm, Berkshire Hathaway. Buffett's partnerships began purchasing shares at $7.60 per share. In 1965, when Buffett's partnerships aggressively began purchasing Berkshire, they paid $14.86 per share while the company had working capital of $19 per share.
In 1977, Berkshire indirectly purchased the Buffalo Evening News for $32.5 million and in 1979, Berkshire began to acquire stock in ABC. With the stock trading at $290 per share, Buffett's net worth neared $140 million. However, he lived solely on his salary of $50,000 per year. Berkshire began the year trading at $775 per share, and ended at $1,310. Buffett's net worth reached $620 million, placing him on the Forbes 400 for the first time.
In 2008, Buffett became the richest man in the world, worth $62 billion according to Forbes and $58 billion according to Yahoo. Bill Gates had been number 1 on the Forbes list for 13 consecutive years.
Working at Berkshire Hathaway Inc., Warren Buffett had a rather disappointing year in 2008. The company Buffett built into a financial powerhouse since 1965, lost 9.6 percent of its book value in 2008, he reported. That's a paper loss of $11.5 billion, the most ever and only the second decline in book value in Berkshire history. The market price of Berkshire stock, partly a measure of investor confidence, is about half of what it was at its peak.
With his worst year behind him, Warren Buffett is looking unflinchingly at 2009 as another difficult year, but one offering rare opportunities to make profit. Although this crisis is definitely not over yet, their insurance and utility businesses prospered and shows "excellent prospects" for the upcoming year.
"Warren Buffett has positioned his company to take advantage," said Stephen Lococo, a principal in the Omaha investment company Footprints Asset Management. "It takes the hits like everyone else, but it also has the cash flow to reinvest. He's got the cash flow to buy these incredible bargains. I would not predict where his stock price will go."
Berkshire's recent investments totaling $14.5 billion in Goldman Sachs, General Electric and Wrigley should add about $1.5 billion, before taxes, to annual earnings and give Berkshire a chance to profit from stock in the companies, too.
Warren Buffett is such a successful billionaire, and realizes that a company can make it due to the huge amount of money that is daily exchanged on the stock markets. He knows exactly when to buy or to sell, and yet, even this stock market “guru” has suffered in 2008. It was a year with more down’s than up’s. His company, Berkshire Hathaway Inc., had failed in Buffett’s eyes last year, but he is planning on leaving that behind him.
He said that by putting his worst year in the rearview mirror, he can concentrate on the upcoming year, which he claims to be full of opportunities. Buffett often gives conferences and statements on investment and managing a company. His annual shareholders meeting is not only being attended by investors, but also by people who want to learn about investing and how they should manage their company.
He made his company so successful, it would take you a while to find out how many times he doubled the worth of his company’s share.
Sources:
· http://www.omaha.com/index.php?u_page=1208&u_sid=10575905
· http://en.wikipedia.org/wiki/Warren_Buffett
· http://www.warrenbuffett.nl/
Written by Tom Baeyens,
Student at Artevelde College
2FI2
2FI2
zondag 1 maart 2009
Dow plunges to a nearly 12-year low
These last few months, the worldwide economy has been suffering from a major crisis, better yet, the worst crisis we’ve known since 1939. All around the globe, stock markets have now reached several depth points, as also the Dow Jones Industrial Average, which has reached a 12-year low, closing at 7114.78 points. The last time the stock index closed below that level was May 7, 1997.
Despite the US government’s assurances of last Monday, which stood ready to back the financial system, the Dow Jones plunged 250 points. Of course now they want to know how the banking system would get stabilized.
CNBC has reported earlier that AIG, the tottering and mostly government-owned insurance giant, would announce losses of nearly $60 billion. That would represent the biggest loss in US corporate history. This also weighs a lot on the markets, which costs it many points.
AIG said it would release financial results “in the near future”, but that seemed to be all talks. They said they will continue to work with the US government to evaluate potential new alternatives for addressing AIG’s financial challenges.
While we keep wondering how all this has gotten this far, all of the markets worldwide seem to be going down on the same hill. A steady market as the Dow Jones Industrial Average is one that people assume to be reliable. Unfortunately they have been proven wrong: the Down Jones traders seem to be out of touch with the economy.
Even though the brand new American economic system that President Barack Obama promised to his country is full praised, numbers that the markets are showing today don’t seem to be in proportion with the Presidents promises.
Source: http://features.csmonitor.com/economyrebuild/2009/02/23/dow-plunges-to-a-nearly-12-year-low/
Written by Tom Baeyens,
Student at Artevelde College
2FI2
2FI2
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