Monday, July 21, 2014

A Silver Lining in Silver Prices

Silver is frequently one of the most favored precious metals investors invest in, but silver is only presently trading slightly below the $19.50 per ounce level at the end of 2013. Unlike gold, the price of silver is highly volatile because it is not as liquid as gold, and because of the fluctuation of the demand between store of value and industrial uses. 

Silver Prices

But what seems to be a price fiasco can actually be an awesome buying advantage. Silver, specifically, silver coins are great hedge investments. Buying silver bullion or coins as part of an investment mix, an investor can survive any economic or financial crash. Silver continues to be cheap, and the market is extremely small and unobtrusive.

The price of silver vs. the price of gold

The price of silver frequently takes off after the price of gold, but there are times when the ratio varies widely. As far back as in Roman times, the ratio of the price of gold to silver was set at 12:1. In the US the ratio was fixed by law at 15:1 in 1792, while in France a law was enacted to fix the ratio at 15.5:1. These were times when the prices of gold and silver were fixed by governments. However, in the 20th century the average ratio in the price of gold to silver was 47:1, ranging from a high of 100:1 to a low of 16:1 or 17:1. The current ratio of the price of gold to silver is 65:1.( $1,260.80/$19.19)

Many experts in the gold/silver community believe that the price ratio between gold and silver should revert to the historical ratio close to 16:1. If this happens, at today’s price of $1,260.80 per ounce silver would have to be around $78.81. The arguments supporting said belief are:
  • There are studies that showed that silver is 19 times more plentiful than gold
  • There are also studies that showed that silver in the ground is approximated at 9 ounces to 1 ounce of gold
  • Investment grade silver is more precious than gold
  • Silver has more industrial uses than gold
  • Big players in the silver futures or silver paper contracts have been manipulating the market for the longest time, and this has kept the prices artificially low in a practice called naked shorting.

What’s the prognosis?

All the above are indications that buying silver now should be very advantageous assuming that the ratio will revert to its historical level. Citibank predicted that the price of gold will hit $3,500 in the next years to come. Their theory is that the price of gold will be boosted by the continuing laxity in the monetary policies of Japan, the US and the Eurozone and these countries’ piling debts plus the strong demand for both silver and gold from China and other Asian countries. Given this environment a return to the historical ratio of 16:1 will mean a price of gold at $3,500 means silver could rise to $220.

This phenomenon could bring a dramatic change to the silver market, and silver investors will benefit tremendously.

Thursday, July 17, 2014

Young Couples Don’t Understand the Meaning of Debt: Lessons Learned

Financial hardship rarely just results in credit ruin and property loss. Overwhelmingly, tough financial times leave individuals with so much stress that they often end up with conditions such as depression and anxiety. However, such situations can quickly become far worse when these individuals rely on bad financial decisions, such as payday loans and other scammy financial practices.

Debt for Young Couples

Fortunately for many people in these situations, the family serves as a safety net and support structure for financial assistance and emotional support. In fact, most of us feel obliged when we learn that a relative has fallen on hard times. Whether we provide a loan or simply offer a place to crash for a few nights, many of us feel that charity is our responsibility when loved ones are at risk financially. 

However, it can be difficult and strain our relationships to continue supporting relatives who seem to “take advantage” of us, or those who always seem to need more no matter how deep out-of-pocket we are. To avoid getting into this kind of relationships, here are three types of financial support that should only be offered to the most trustworthy of friends and relatives in need.

Recurring or large loans

While a small amount here and there may not amount to much, relatives who are dealing with collections agencies and angry debtors might need more to support themselves on a month-by-month basis than your average financially challenged individual. This is also true for relatives who are struggling to keep a business afloat. To these people, an interest-free family loan can be too tempting.
However, these kinds of arrangements leave a great deal to chance – which is never okay when your money is on the line. If your family members seem to always need more money than they or you can manage, it’s important to look past just this month’s bills and figure out what solutions might exist for them to end the vicious cycle. For example, many businesses offer debt consolidation services which can drastically reduce the interest being paid over time.

Cosigning for rent or a loan

For individuals with poor or no credit, it can sometimes be necessary to find someone to cosign their lease or agreement. This provides a “vote of confidence” from someone with better credit and provides you with financial liability. What makes this extremely dangerous to your personal finances is that negligence on their part can cost you severely through your credit. Worst of all, this leaves the individual needing the loan able to get off scot-free if they default and leave you footing the bill.
Nobody wants to assume the worst about someone in need, but this can leave your finances at grave risk. Since you’d be liable for this debt and are agreeing to whatever terms are being laid out, always read them and know what’s between the lines. If you can’t afford to cover the costs if your relative defaults on their loan, don’t think twice about offering this kind of assistance. While nobody wants to say “no” to a relative in need, both of these practices can drag down your finances as well while potentially damaging your relationship with your loved ones. 

Author Bio: Frank McCourt is a student of McCarthy, but applies his hard lessons of the south to the world of finance. It's a wild world out there.

Saturday, July 12, 2014

Financial Coaching Can Help You Get Out From Under Crushing Debt

If you have mounting bills and are getting calls from creditors at all hours you know how stressful debt can be. Many people find themselves under crushing debt through no fault of their own; others may find bad spending and saving habits have caught up with them. No matter how you got there debt is stressful and can make you feel hopeless. But there is a way you can get out from under your debt. Financial coaching by a Certified Public Accountant (CPA) can help identify where you can start to reduce your debt and even start to save money. 

Savings Budget

What is Financial Coaching?

Financial coaching is not a magic wand that can be waved and all of your financial problems will disappear. It is not a bunch of products you buy to cure your debt. Rather it is a way for you to identify your debt, formulate a budget, and learn how to live within your means. Your coach will sit down with you and take an honest and impartial look at your financial situation and help you identify problems and come up with solutions to solve these problems. 

The main goal of a financial coach is to change the way you think about money. They will do this by first identifying the problem, and then formulate a plan to help you improve your financial situation. Once formulated the coach will work with you to set it in motion and keep you on track. Working with you they will help you replace old bad habits with good ones. As you work with your coach you will learn new ways to avoid debt and pay down the debt you have. This will help avoid financial problems in the future.

What Can Financial Coaching Do For Me?

As stated earlier financial coaching will help you learn new ways to handle your money and your current debt as well as formulate a plan to pay off your debts. Some of the areas coaching can help include the following:
  • Household Income Management
  • Budgeting
  • Debt Management
  • Financial Goal Setting
  • Savings Plans andTips
  • Spending Habits
  • Planning for Taxes
  • Emergency Funds
Financial coaching isn’t just for folks in trouble, if you recognize you have mounting debt you should take advantage of this service before you get buried. When you are faced with seemingly impossible debt it is easy to feel hopeless and feel like giving up, but there is an answer and a way out. Consider financial coaching to help you escape mounting debt and get back on your feet again. 

Author Bio: Kathryn McDowell is a freelance writer and uses her knowledge of finance to educate her readers on smart ways to manage their money. She recommends the services of a CPA to help you get and stay out of debt through financial coaching.

Sunday, July 6, 2014

Research and Right Renovation Sells Well

Selling or buying property is a tricky affair. Especially when you are selling your house for making money you need to be extra prudent. One indiscreet step and you will have to regret it for the rest of your life. Having decided to sell property one has to look for the right price for it. In fact finding the appropriate price is the only effort that you have to apply and wait for the right buyer, without getting impatient. If you are the type that succumbs to bargaining then you need to over-price it suitably and on the other hand if you are the fixed price tough seller then you may quote the right price and sell it. One has to acknowledge that it takes a lot of smart research and despite all the effort that you may put it is very hard to do a property price prediction over short time periods. Interest rates pay a key role in determining the price and if they remain low, then house prices will be down in nominal terms.

Buy Sell Property

Enhance the property

Even for the select few that understand market trends and bank policies very well, the market can be intriguing sometimes, with the challenge lying in predicting short term trends. For the majority of us we may choose what lies within our control and proceed to carry out the tasks such as enhancing the value of the property that we plan to sell.This is one area that most of us either overdo, spending money unnecessarily or makes improvements to parts of the house that doesn’t really matter to the buyer and can therefore not be of any consequence. So how do you know where to put your money so that it fetches the maximum returns? So this is the right time and you have a valid reason to consult with an experienced realtor even before you start investing in adding value to your house by improving it. Any worthy consultant can save you from investing your hard earned money in unnecessary upgrades.

Some common mistakes

  • Spending money on high-end electrical and kitchen fixtures: Though the buyer would appreciate such improvements, it is better to settle for an affordable lower-price brand and be assured that it would not break a deal.
  • Leaving the old carpet untouched: People willing to buy your house should be able to envision their stay in it, while the dirty grout, torn and worn carpet, and miscellaneous clutter will put off a buyer as it gives the impression of an ill-maintained house that also lacks sufficient storage.
  • Painting the whole house: If your home can do with a few touches here and there, then do not go about purchasing paint cans for the whole house.
One simple philosophy is to replace or fix only that part which needs fixing. This way you would save your money from spending on upgrades that doesn’t fetch returns on your investment.

Research is paramount

Before you start posting ads, research is paramount and it not just earns that extra bucks but also save you from spending unnecessary money in the name of renovation. Your background work should include:
  • Finding out the type of property that sells in your area. Is it the two or three or four bedroom houses, with or without garages?
  • Visiting a few well developed houses and compare them with your property.
  • Finding out the people’s needs and the investment capabilities in and around your area.
  • Talking to the real estate agents and consulting with them to ascertain your property value.
Armed with this knowledge set aside a realistic budget to develop your property and start looking for prospective buyers. Do worry too much about pricing and be reasonably flexible as it all depends on the market needs and ultimately based on supply and demand. You just need to make that decent sum without under-pricing your property. For more information please click here