June 2006
You are currently browsing the articles from General Finance written in the month of June 2006.
If you rent an apartment you might not know that renter’s insurance is not really an option–it should be mandatory for you. Your landlord’s insurance covers the building; not what is inside your apartment.
There are policies that:
- Protect your private property from fire, theft and vandalism
- Give you liability coverage in case someone is hurt inside your apartment
- Are flexible to your needs
The HO-4 policy is designed for renters, while the HO-6 policy is for condo owners. Both HO-4 and HO-6 cover losses to your personal property from 17 types of perils:
- Fire or lightning
- Windstorm or hail
- Explosion
- Riot or civil commotion
- Aircraft
- Vehicles
- Smoke
- Vandalism or malicious mischief
- Theft
- Damage by glass or safety-glazing material that is part of a building
- Volcanic eruption
- Falling objects
- Weight of ice, snow, or sleet
- Water-related damage from home utilities
- Electrical surge damage.
Some definitions from wikipedia on types of renter’s/homeowner’s insurance:
- HO-1
- A limited policy that offers varying degrees of coverage but only for items specifically outlined in the policy. These might be used to cover a valuable object found in the home, such as a painting.
- HO-2
- Similar to HO-1, HO-2 is a limited policy in that it covers specific portions of a house against damage. The coverage is usually a “named perils” policy, which lists the events that would be covered. As above, these factors must be spelled out in the policy.
- HO-3
- This policy is the most common written for a homeowner and is designed to cover all aspects of the home, structure and it contents as well as any liability that may arise from daily use as well as any visitors who may encounter accident or injury on the premises. Covered aspects as well as limits of liability must be clearly spelled out in the policy to insure proper coverage. The coverage is usually called “all risk”. Also called an “open perils” policy.
- HO-4
- This is commonly referred to as renters insurance or renter’s coverage. Similar to HO-6, this policy covers those aspects of the apartment and its contents not specifically covered in the blanket policy written for the complex. This policy can also cover liabilities arising from accidents and intentional injuries for guests as well as passers-by up to 150′ of the domicile.
- HO-5
- This policy, similar to HO-3, covers a home (not a condo or apartment), the homeowner and its possessions as well as any liability that might arise from visitors or passers-by. This coverage is differentiated in that it covers a wider breadth and depth of incidents and losses than an HO-3.
- HO-6
- As a form of supplemental homeowner’s insurance, HO-6, also known as a Condominium Coverage, is designed especially for the owners of condos. It includes coverage for the part of the building owned by the insured and for the property housed therein of the insured. Designed to span the gap between what the homeowner’s association might cover in a blanket policy written for an entire neighborhood and those items of importance to the insured, typically the HO-6 covers liability for residents and guests of the insured in addition to personal property. The liability coverage, depending on the underwriter, premium paid, and other factors of the policy, can cover incidents up to 150′ from the insured property, all valuables within the home from theft, fire or water damage or other forms of loss. It is important to read the Associations By-laws to determine the total amount of insurance needed on your dwelling.
- HO-7
- For mobile home owners.
- HO-8
- It is usually called “older home” insurance. It lets house owners with higher replacement cost than the market value insure them at the lower market value rate.
Keep in mind if you have car insurance and renter’s insurance with the same carrier you will get a discount.
Written by mike on June 30th, 2006 with 2 comments.
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Oil prices are over $73 a barrel, the U.S. has an enormous trade deficit; huge national debt, the Fed just raised interest rates because of fears of inflation; Iran, North Korea, Israel and Palestine; typically you would not think people would be bullish right now. After the market skyrocketed today about 2% many breathed a sigh of relief because The Herd thought if the Fed acted as they did today (raising interest rates) they thought the stock market may bottom out. But it did not bottom out today.
I am not saying that the stock market will go bear all of the sudden, but it might. Today just was not that day.
Usually when the stock market has a slow down or is in a recession there is a big jump up before the stock market becomes a bear market. I am not predicting this, but I want to alert people that there are a lot of indicators out there that historically point to the potential of the market beginning a lull. Just remember to be diversified.
Written by mike on June 30th, 2006 with 1 comment.
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Today, the Fed raised the Fed Funds interest rate another 0.25% to 5.25%. This marks the 17th straight rate hike since December 2004 and shows how seriously the Fed and Ben Bernanke are taking inflation concerns. At one time the stock market was up over 1% this morning before the news was announced so we will now wait and sit to see how the stock market reacts in the short-to-mid-term to this news. Currently the stock market has jumped another full percentage point since the announcement.
Written by mike on June 29th, 2006 with 1 comment.
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If you are like many Americans you have struggled at times to get out of credit card debt. Obviously, it is best if you never get into credit card debt. But if you do get some debt you need to take it seriously and start taking big chunks out immediately. If you pay only the minimum it will take years and years to get out of debt while paying that credit card company way too much in interest on your balance.
If you are paying 18% interest on your credit card balance of $5,000 you are essentially paying $75 a month in interest (or $900/year). Is that ok with you? Because it should not be. If you interest rate is that high you need to focus on paying that balance as soon as possible. Sacrifice what you must because if your minimum payment is $100 a month on that balance and you pay the minimum, only $10 a month is going towards the principal. Here are some ideas to help:
- Try to negotiate with your credit card company a better interest rate
- Try to transfer that balance to a lower percentage rate credit card (ask for them to waive the transfer fees)
- If you have debt with lower interest rates focus on the highest interest rate, but still make at least the minimum payments on the other
- Get a second job. It sounds tough, but a couple hundred extra dollars a month an go a long way to paying off your debt.
If you have some other good ideas on how to pay off credit card debt please share with everyone.
Written by mike on June 29th, 2006 with no comments.
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If you want to learn more about personal finance taking a personal finance course is always a good idea. Scores of websites give you good information on personal finance, but sometimes having a human in front of your giving you explanations and taking questions can really benefit your finance knowledge.
Of course, you can look at those sites and go through their tutorials on personal finance and that can be helpful. But maybe check out your local community college and see if they offer personal finance classes. It is an inexpensive option and can inspire you to improve your financial knowledge. You also can find out a lot from the web in finding those that can help you. Maybe there is a personal finance club in your area or maybe you can start one to share knowledge. Search your community and you should be able to come up with some method of increasing your personal finance knowledge in a face-to-face environment.
It is great to learn on the web, but a classroom environment with instant feedback is important to gaining good personal finance knowledge.
Written by mike on June 28th, 2006 with no comments.
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From 1970-2000 bonds gave a higher and more stable income stream than stocks did. Bond investors receive their income at fixed intervals, which can be used to offset cash obligations or increase portfolio liquidity. Bonds from 1970-2000 provided greater cash income compared to income provided by stocks. So if you are ever in the investing position that requires income generation bonds are a great way of generating investment income.
Written by mike on June 27th, 2006 with no comments.
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Investing in penny stocks is a little like playing the lottery in that it is very difficult to actually to make money investing investing in them. There are many people that say you can get rich off investing in penny stocks, and it is possible, but there is less information available out there on penny stocks. You have to access information on the pink sheets about investing in penny stocks–that information is not always reliable because penny stocks are not regulated like the normal stock market. They are listed on the pink sheets because they do not meet the listing requirements of the exchange. Not all companies listed on the pink sheets are scams, but you need to be very savvy in order to not get taken by a company listed on the pink sheets. If you receive stock-related spam in your email account often times it is for speculative penny stocks.
Be very careful investing in penny stocks.
Written by mike on June 26th, 2006 with 1 comment.
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Google Finance is still in its Beta stage, but it plans on taking on the other big financial sites like Yahoo Finance and MSN Money. Google Finance is still relatively plain, but soon it will add much more options so it can go live and take on Yahoo and Microsoft for this portion of web traffic and information.
From Google’s website here are some ways Google Finance will differentiate itself from the competition:
- Company Search — With Google Finance you can search for stocks, mutual funds, public and private companies, using both company names and (where available) ticker symbols.
- Interactive Charts — Google Finance charts correlate market data with corresponding dated news stories to help you determine if there is a relationship between them (for instance, by seeing news stories that came out about a certain company in the context of what that company’s stock did that day). You can also click and drag the charts to see different time periods and zoom in to see more detailed information.
- News and More News — Google Finance incorporates our Google News service, which gathers stories from more than 4,500 English news sources worldwide. Stories are clustered by topic so you can see different opinions on a single subject; you can also review news stories by monthly date range and by importance (which is determined by algorithms).
- Blogs — If you want the opinions of citizen journalists, you got ‘em; Google Finance includes company-related postings from Google Blog Search.
- Company Management Team — Google Finance helps you put a face to a name. Mousing over an executive name shows you their picture as well as links, where available, to their biography, compensation details and trading activity.
- Discussion Groups — Talk amongst yourselves. Google Finance offers high-quality Discussion Groups whose dedicated team of moderators work to keep conversations on and spam-free.
- Portfolios — Google Finance offers a fast, easy and powerful way to keep create and maintain your portfolio of stocks and mutual funds.
When this comes to fruition google will be a player and seriously take on Yahoo Financial and MSN Money. While in the beta stage they will continue to tweak it and get feedback from people like us.
Written by mike on June 25th, 2006 with 1 comment.
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From 1925-2000 bonds did not lead all asset classes in performance returns, but it did show stable returns over that long-term period. Over that period stocks well-outperformed any type of bonds or Treasury bills, but of course there is much more risk in stocks. In this period corporate bonds outstripped government bonds and Treasury bills, but those corporate bonds possessed much more risk (default) than the latter. Municipal bonds were outperfromed by other bonds, but they provide a tax advantage of not having to pay federal income tax on them and sometimes state and local taxes as well. Bonds do not provide the long-term growth that stocks do, though during tougher economic times they do tend to outperform stocks. Because of these characteristics bonds are a source of diversification to your overall investment portfolio.
Written by mike on June 25th, 2006 with no comments.
Read more articles on Investing.
Bonds can be an excellent way to diversify your overall portfolio. Though they typically garner lower gains, the risk involved is also low. When adding Bonds to your stock portfolio you have instantly reduced your risk and as you know diversification will help your portfolio in the long run. Here are some other good reasons to look toward bonds.
Potential Growth
Historically bonds give you growth in your portfolio while lowering your risk
Historically Low Risk
Take any long-term slice of history of the U.S. stock market and you will see bonds are lower risk than stocks.
Diversification Benefits
Stock prices and bond prices often move inverse to one another and this is why diversification through bonds is a great investment idea.
Income Generation
Because bonds oftengive you steady income at regular intervals this increases your portfolio’s liquidity.
Written by mike on June 25th, 2006 with 1 comment.
Read more articles on Investing.
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