As a financial planner, I’ve lost count of the times clients have said “but it’s a tax deduction” to justify all sorts of insane costs.let me be clear: the only reason to take a cash flow hit on an investment now is if you’re expecting amazing capital (or income) growth in the future that will more than cancel out those losses. Property? Borrowing for property investment worked great for Baby Boomers because during their watch households transferred from single income to double income earners. As more women entered the workforce, households had more money to spend, hence pushing up property prices. Great capital growth! but now double income is the norm and already factored into prices, so property isn’t such a sure bet.

Shares? Sure! Careful buying of some good-quality shares could be a great investment choice (note the words careful and good-quality – and I should add “professional advice needed” for good measure). but do your sums first. if your intended investment is negatively geared, try the mortgage calculator on ASIC’s moneysmart.gov.au website to compare how much you’d save by putting that money on your mortgage instead.

Justine Davies is a finance author with a decade of financial planning experience. Her latest book is Money for nothing. — Gen X: Bruce Brammall THERE’S a fringe element out there – certifiably crazy, in my opinion, like Charlie Sheen’s spectacular brain implosion last year – that believes debt is the devil. These, um, fools, claim embracing debt is essentially Russian roulette, using a revolver with ammo in every cylinder. Forfeit enjoyment until all debt is repaid. If debt is evil, how would you buy your first home? by saving? are they sane? or do they claim a “home” is different, but you should never borrow to invest? Bollocks. Forget the hysteria. Debt is a tool. Used by the wrong people, it can be dangerous. Used to buy the wrong assets, it can be fatal. but used correctly, debt can be powerful for wealth creation.

The right people, predominantly, are Gen Xers, who have rising incomes and enough time until retirement to make debt-based investment strategies work. the right assets are quality property and shares. I half-agree with Justine’s warning about debt-based investment strategies when you have a sizeable mortgage. but I also have my own saying: “Manage your mortgage, then manage your wealth”. That is, when your mortgage is under control (usually after three-to-five years), that’s the time to start investing. And debt-based investments might be part of that. If you like residential property as an investment, accept that option doesn’t realistically come with a choice. You must borrow. Shares come with more choice but your strategy could be enhanced with moderate gearing. And gearing gives tax benefits, which should be considered as part of the whole. Bruce Brammall is the author of Debt Man Walking (debtman.com.au) and principal adviser with Castellan Financial Consulting. — Boomers: mark Bouris MOST Baby Boomers have borrowed to invest in the past, as the majority of us have taken out a loan to buy our family home.

Many people take a disciplined approach to paying off the loan by way of monthly contributions and we go into the investment knowing that its potential depends on our prudence to get rid of the debt. It’s a conservative strategy, but for the most part we benefit from increases in the value of our property over time. Borrowing to invest is the same principle. many Australians borrow to invest in property, while others invest in things such as shares and managed funds. Ideally, investments are selected that have returns greater than the borrowing costs (on an after-tax basis). however, borrowing or leverage adds another layer of risk. With most investments, there is the risk that the value of the investment itself will decrease over time. Borrowing increases the impact of that risk as losses and gains are magnified. In the current environment where investment returns are uncertain, people are concerned about protecting their capital and are being cautious about where to invest. So if they have a nest egg sufficient to meet their needs, they are choosing not to take a gamble. Others who still need to create wealth may adopt a more aggressive strategy to help them build for their future retirement. All up, the answer depends on your personal preference and whether you’re willing to take the risk to get the return. Getting the right professional tax and investment advice up front will be the best money you can spend to help you avoid potential traps and pitfalls. Mark Bouris is executive chairman of wealth management and advice firm Yellow Brick Road. — Retirees: Kerrin Falconer ARE lurex bikinis, gold hot pants or budgie smugglers a good look for retirees? what about discos, big day outs or all night parties? Some things are better left to younger generations – and for very good reasons. Borrowing to invest, also known as gearing, is probably in that category for most retirees. Don’t get me wrong. Borrowing to invest can be a very valuable wealth creation strategy for those who stick to the rules. However, gearing is not a game. just as a game has rules, so does a successful gearing strategy. Those who stick to the rules can win. Those who circumvent the rules may lose.

The rules are very specific – unlike who can or can’t wear lurex bikinis. For most retirees the rules will, by their very nature, rule them out of contention. Here are the rules, the five P’s: * Profile. You need to have a high-risk profile. That is, you need to be able to shut out the noise when the markets go haywire. most retirees want to sleep well at night. * Patience. You need to have a seven to 10-year investment time frame. For many retirees, Christmas is about as far as they want to look, especially given the markets as they have been. * Pecuniary. You need sufficient income to cover the interest costs of the borrowings. many retirees are focussed on everyday living costs, let alone extra payments for borrowings. * Product. You need to be investing in shares and/or property as they will have the greatest opportunity for growth. Forget term deposits. * Persistence. You need to hang in there. despite the ups and downs of markets, successful gearing strategies only work over the longer term. You need to stay invested. Do the 5 P’s apply to you or are they in the category of the budgie smugglers? Kerrin Falconer is a financial planner.

It’s not a bad article and well worth a look for some strategies to engender a bit more financial acumen amongst the smaller folk One of the suggested strategies – having your child sell off all their unwanted toys to may space and money for new ones is something my young son has been persuing over the last 2 months leading up to Christmas. Trademe has helped him sell off numerous ‘last-year’s-fad’ type toys that he swore black and blue at the time he’d ‘never ever not want to play with ever’! There has been an adequate amount of opportunity here to illustrate how a modern economy works, what with seller’s fees, handling postage and answering a multitude of potential buyers questions via the site.

Diana also links off to some nice resources so have a look at the original article.

Parents who have no idea where to start in teaching their children about money can get some good starting points from these publications about how to begin financial literacy conversations with their children. These excellent publications can be downloaded by parents as PDFs at nzmaths.co.nz/figure-it-out. Be warned, however, they’re not easy to find even when you land on the right page.

UK’s Personal Finance Education Group website Pfeg.org, was a school where children made items in the design and technology department and sold them at a Christmas market.

http://www.nzherald.co.nz/opinion/news/article.cfm?c_id=466&objectid=10772139

Getting a Loan with a Bad Credit History 

Standard procedures apply to calculate interest rates. The lender will keep a track of the risk involved by looking to your past credit record and then subsequently approves or denies your loan.

All the loans for people with bad credit have some common features. Initially, at the time of buying, the loans are based on slightly higher interest rates, compared to existing market rates. You can ensure a lower interest rate by paying all your installments on time for the first 24 months of the loan term.

In Conclusion 

Loans for people with bad credit do exist and are there to help you out in times of need.

Christmas Loans

Need a Christmas loans for that expensive time of year? Looking for Christmas loans to fill the gap throughout the holidays? A Christmas loan is perfect for getting you through the holidays. Need Christmas loans for that extra nice present? Perhaps you need a Christmas loans for that Christmas travel we all look forward to?

How easy is it to get a Christmas loans?

Receiving a Christmas loans is about as easy as it gets. The application process for a Christmas loans really is only minutes. You really get pre-approved in just minutes. Because our Christmas loans application is completely online, you are done with the application in minutes.

How do I apply for Christmas loans?

There are a variety of Christmas loan suppliers in New Zealand to help you get a loan for Christmas. A simple web search will reveal numerous options.

Credit union systems vary significantly in terms of total system assets and average institution asset size, ranging from volunteer operations with a handful of members to institutions with several billion dollars in assets and hundreds of thousands of members.

Before getting into a debt situation for an emergency cash loan it is wise to consider talking with your friends and family network to see if you can potentially source the money this way and avoid hefty interest rates. If you find that you are suffering a genuine hardship these people may be more than willing to help out. Don’t be overly offended if it turns out that they are unable to help out – providing a loan might be more risk than they can shoulder at the time.

Depending on the urgency for access to cash, it might be possible to get emergency cash from your bank. With a pre-existing banking relationship this is most likely to be your best option if you have no other resources. Emergency cash loans from the bank can be sourced in a variety of ways:

• A charge on your credit card
• A home equity loan
• A home equity line of credit
• An unsecured loan (or “signature” loan)

A bad credit loan is basically finance that might be extended to customers that don’t currently have a great credit history.

They are provided by a large range of finance companies. Most finance companies will provide a diverse range of finance for people with negative credit. If you have a less than shining credit history a simple internet search will reveal a wide variety of bad credit loan suppliers in New Zealand.

Remember that it is highly recommended when applying for this kind of finance that you use the services of a registered and reputable loans broker. This simple step can ensure that you are more likely to service the loan and negotiate the cheapest rates available.

Guarantee is a word that should be seldom, if ever used by Financial Consultants. If it were possible to gain high levels of interest well above that available from major banks deposit accounts whilst guaranteeing the capital, the world would beat a path to the door of that Consultant.

In many cases the main aim is to secure a reasonable income from a secure investment. So how can this be achieved?

A straight Eurobond is a loan note issued by a company or Government for a specific time at a fixed percentage, the dividend is normally paid annually.

The Eurobonds market for medium and long term capital investment, exceeds 500 billion pounds Sterling in total value. As an income producing investment, they are very similar to a United Kingdom Government Gilt Stock. The security of the capital will depend on the rating of the Bond.

All issues except those companies or corporations with high name recognition (household names) require a credit rating from one of the agencies. The three main agencies offering credit ratings at present are Moody’s, Standard & Poor’s and IBCA. The credit rating itself gives an indication to potential investors of the level of security that they can find in a particular issue:

It is generally accepted that for the offshore investor, any Eurobond carrying a rate below BBB should not be considered.

Investment grades – Standard & Poor’s

AAA – Debt rated AAA has the highest rating assigned by Standard & Poor’s and has the capacity to pay interest and repay the principle which is extremely strong.

AA – Debt rated AA has a very strong capacity to pay interest and repay principal and differs from highest rated issues only in a small degree.

A – Debt rated A has a strong capacity to pay interest and repay principal although it is somewhat more susceptible to the adverse effect of changes in circumstances or the economic conditions facing the company than debt in higher rated categories.

BBB – Debt BBB is regarded as having an adequate capacity to pay interest and repay principal. Whereas it normally exhibits adequate protection, adverse economic conditions or changes in circumstances are more likely to lead to a weakened capacity to pay interest and repay principal for debt in this category than in higher rated categories.

Non- investment Grades. Standard & Poor’s.

Non-Investment Grade Securities are sometimes referred to as speculative securities. Prior to the event of “junk bonds” companies could not issue into these captions, and any company categorised with ratings below BBB who had been downgraded from higher ratings were referred to as “fallen angels”. However the bond market, which started in the 1980s, now enables corporates with speculative credit ratings to issue debt.

BB – Debt rated BB has less near term vulnerability to default than other speculative issues. However it faces major ongoing uncertainties, exposure to adverse business, financial or economic conditions which could lead to inadequate capacity to meet timely interest and principal payments. The BB rating category is also used for debts that are subordinated to senior debt that is assigned an actual or implied BBB rating.

B – Debt rated B has a greater vulnerability to default but currently has the capacity to meet interest payments and principal repayments. Adverse business, financial or economic conditions will be likely to impair capacity or willingness to pay interest and repay principal.

Eurobonds are available in all currencies. However, it must be realised that the dividend percentage varies with the strength of the currency and the rating, United States Dollar bonds return 5.25%, Sterling up to 6.0% and _uros up to 5.25%. These figures may be exceeded by moving to BBB rated issues.

A further advantage of Eurobonds as opposed to Bond Funds is that the initial fee is normally 2.0% or 1.5% for investment of £150,000 and over, there is no bid-to-offer-spread. In addition there is no annual fee, the payment of dividends is paid gros, by cheque from the broker direct to the client’s bank account. It is the client’s responsibility to ensure that the correct taxes are paid in the country of which they are tax resident.

Currency Issuer Rating % Coupon
(Dividend)
Sterling Marks & Spencers A3 5.98%
British gas A2 5.29%
ICI BBB 5.88%

US Dollars Rabo Bank AAA 4.45%
GMAC AAA 4.69%
General Motors BBB+ 6.09%

Euros British Gas A2 5.10%
Rolls Royce A- 5.22%
Ford Motor BBB+ 5.75%
It must be appreciated that the figures above may vary as the markets move.

We are confident that Eurobonds form an excellent investment medium for clients who wish:-

* To secure a better return than is available from deposit accounts.
* Invest in a secure and safe bond that will return their capital at any time.
* Ensure that the income will be paid annually without deductions for management.
· Ensure that the capital value of their fund will not fall apart from minor movements and that their capital will be returned in full either on maturity or when they elect to sell their bonds.