Trade Commodities and Forgo Low Money Market Rates

Investors who are turned off by low money market rates are increasingly turning to commodities and precious metals as alternative sources of investment. When money market rates and interest rates at banks fall, investors like to turn to tangible assets. Here are some benefits of investing in commodities and precious metals.

Commodities Basics
Commodities attract investors because they are always in demand. This allows investors the ability to avoid large price fluctuations. It makes it easier to manage your investment, because you know someone will always want or need your commodity. However, commodities’ trading does require a lot of action. You need to constantly trade up and customize your portfolio so that you are taking advantage of minute differences in prices.

High Demand for Rare Materials
Gold, silver, tin, bronze, and many other precious metals have become increasingly popular recently. The rarity of these precious metals ensures their value. Also, many of these metals are needed for crucial parts in manufacturing or electronics. Investors should be very careful where and how they purchase precious metals. You want to make sure that you are purchasing a diversified source of metals, in other words, a fund that combines metals. This way, you will not be at risk for heavy losses if one metal loses value.

Consult With a Commodities Expert
It’s possible to invest in commodities and precious metals by yourself, but its advisable to consult with a financial consultant or investment expert. Often, precious metals or commodities are mixed in a basket of securities that functions like a mutual fund.

Choose commodities or precious metals if you’d like to invest in something with good price fixity and if you have the time to consistently trade and make adjustments to your portfolio.

How Does a Home Equity Loan Work?

Though it’s been a much discussed practice in the media lately, many are still relatively in the dark as far as home equity loans are concerned. As with anything related to mortgages and financing, there are a lot of subtle nuances and rules you need to be aware of and understand before you do anything. But in general the basic principles behind home equity loans are pretty simple and universally applicable throughout the housing market. In essence, a home equity loan entails a homeowner borrowing money from the mortgage firm or bank against the equity they have built up in their house.

In order to determine how much equity you have in your house to borrow against, the following basic formula lets you know how much you can take out. First, take the current value of your home and subtract the amount you still owe, which gives you the equity amount. When borrowing against this built up equity, you generally don’t want to borrow more than 75% to 80% of that total. There are a number of reasons that one might want to take out a home equity loan. Anyone with positive equity is eligible to apply for one.

Some times emergencies crop up and homeowners need some extra cash to deal with unexpected expenses. Or they may want to make capital improvements to their home in the hopes of selling it for a greater amount, so they can come out even or even make a profit. For whatever reason, there are a few things that need to be kept in mind when taking out a loan. The terms of your deal will depend greatly on your credit history and ability to pay back the loan in a timely manner. Obviously, your home equity depends entirely on the current assessed value of your home, which can go down in the future, despite what some experts claim.

When you do take out a loan against the equity, you’ll be refinancing your original mortgage or taking out a second one. The interest rates will of course be somewhat higher in either event. As with any contract, the important thing to remember is to carefully read the fine print and review your options before you make any decisions. Home equity loans can be both a blessing and a curse, so it is vital that you take the time to weigh all eventualities before you undertake any new financial obligations.

The Vocabulary of Auto Insurance Rates

Auto insurance rates are contingent upon a variety of factors.  You can take steps to lower you auto insurance rates if you maintain a clean driving record, choose the right vehicle, and take other precautionary steps. In this article, we’ll go over some common terms used in auto insurance parlance.

Bodily Injury Liability – This type of insurance will cover the costs incurred if you caused an accident in which someone else was injured or killed.

Collision Insurance – This will pay for damages to your vehicle if the vehicle is involved in a collision. It doesn’t matter who is at fault, collision insurance will cover your vehicle regardless.

Medical Payments – You will purchase limits on medical payments. Medical payments pay for medical and funeral expenses for the driver and any passengers in the car at the time of an accident. The insurance company will provide coverage regardless of who caused the accident.

Property Damage Liability – This insurance covers damages you might cause to the property of someone else as a result of a car accident.

Comprehensive – You can purchase comprehensive insurance, which pays for damages to your car that are unrelated to accidents. Examples are fire, vandalism, flood, glass, debris, graffiti, etc. Most of the time, you need to pay a deductible with comprehensive insurance.

Uninsured Motorist Bodily Injury – The insurance company will pay for the bodily injury or death of you and your passengers if you get into an accident with an uninsured motorist. However, this insurance doesn’t apply to any damages sustained by your vehicle.

These are a few frequently used terms in auto insurance. Familiarize yourself with them, because you’ll need to know them.

Stay Ahead of Inflation with Series I Savings Bonds and Savings Rates

The majority of savings rates are not adjusted for inflation. This means that when inflation rates rise, your interest basically gets eaten by the market. One exception to this rule is Series I Bonds, a government bond that is actually indexed by inflation. Here’s an overview of these bonds.

The Basics of Series I Bonds
Series I bonds were created in the late 90s with the express purpose of protecting the owner from inflation. You can purchase a variety of denominations of Series I bonds, notably: $50, $75, $100, $200, $500, $1,000, and $5,000. Investors can purchase Series I bonds at face value.

There are minimums and maximums, however. Investors can purchase a minimum of $50 Series I bonds, and a maximum of $5,000 in Series I bonds annually.  However, you can purchase $5,000 in paper bonds and $5,000 in electronic bonds in one calendar year.

Restrictions and Limitations
You must wait at least one year before you cash in Series I bonds. It’s best to wait at least five years before cashing in your bond, because if you cash in a bond before five years, you have to pay a three month penalty.

You must purchase electronic Series I bonds through TreasuryDirect.  I Bonds offer great interest rates that steadily stay above the inflation rate. This means you are guaranteed to make a good return on your Series I bonds.

Series I Bonds: Slow and Steady Returns
Series I bonds will have fixed rates set by the Fed. Individuals and corporations can purchase Series I bonds, as long as the purchaser is a U.S. resident with a Social Security number.

Series I bonds make a great conservative investment for people who want to ensure that they gain steady returns on their money.

Take Advantage of Sallie Mae’s High-Yield Savings Accounts

Federal loan giant Sallie Mae has recently entered the retail banking sector, and they’re offering competitive rates on high-yield savings accounts. Here, we’ll do a brief rundown of Sallie Mae’s high-yield savings accounts.

Powerful Interest Rates
Sallie Mae’s current High Yield Savings Account is offering an interest rate of 1.34%, though this figure might fluctuate. Here are some details regarding the account.

Important Details
*If you wish to link other bank accounts to your Sallie Mae account, it’s quite easy to initiate this process.
*Don’t ask for paperwork, as you’ll have to pay $5 for a hard copy of your bank statement.
*You receive free monthly electronic statements.
*Your account is insured for up to $250,000 by the Federal Deposit Insurance Corporation.
*You can easily establish Direct Deposit.
*Sallie Mae will compound your interest daily but credit to you monthly.
*In compliance with federal law, Sallie Mae permits only a maximum of 6 withdrawals per your statement cycle before you have to pay a penalty.
*If you make any withdrawals beyond the original six, you are required to pay a $10 penalty for each withdrawal.
*Don’t allow deposits to get returned, because you’ll have to pay a $5 fee.

Make an Educated Decision
Despite all of these details, the powerful 1.34% interest rate is attracting many investors. This is a very motivating factor for people who are looking to put their money in an account that actually has growth potential. Sallie Mae’s reputation as a federal loan giant is also attracting many investors to these bank accounts.
If you’re looking for a high-yield savings account, then Sallie Mae might work very well for you.

Begin Saving For Your Child’s College Fund

College is an important investment for people. This is a chance to really broaden one’s horizons. If you have children, then you need to start saving money for your child’s college fund as early on as possible. College can cost thousands upon thousands of dollars. Settling should not be synonymous with college applications and acceptance letters. If you plan ahead for your child’s future, he or she will surely have what they need to truly succeed. The following are some tips for how to begin saving for your child’s college fund so that you have the money to help them attend the college of their dreams.

One of the first things you should do is set up a separate bank account for your child’s college fund. This will help you keep track of what funds you have specifically for this goal. A general savings account isn’t going to cut it. When times are lean, you may need to use this fund. Additionally, having an account earmarked for this purpose will really help you stay focused so that you can truly save enough for your child’s education.

Once you have a good sized amount of money saved, think about opening a CD. Just by agreeing not to spend your money for a certain amount of time, you can make money with high interest rates. CDs can last anywhere from a few years to a few months. Having such an account really takes saving for your child’s college fund to a new level. Instead of just saving up your pennies each month, you will be able to make money. This takes saving for college to a whole new level.

Take a small portion of your child’s college fund and use it in the stock market. This is a nice way to turn a small amount of money into something more. Don’t be too aggressive when it comes to your child’s college fund. You don’t want it to disappear because you make a bad decision. Explore your options so that you can take the small amount of money you have saved and can increase it!

Lastly, try to keep penny or dime jars around the house. Once these jars are full, take them to your bank so that they are immediately deposited into your child’s college fund. This is a solid way to keep saving even when times are tough or lean. Every cent counts when it comes to saving for your child’s college fund. Consider increasing the amount you save by 10% every year. This will give you goals that will help you save as much as possible.

You really need to dig in and be serious about saving if you want to save enough money for your child’s college education. This is an important investment. After all, a college education goes a long way. A degree will really open doors for your child so that it is that much easier to obtain a solid job with a high salary. While at college, your child may very well meet people who can help him or her land jobs in the future. If you truly want your child to be a success, then you can not afford to be lazy about saving for their education. Soon, with a little hard work and organization, you will have the money you need to send your children to the college of their dreams. After all, who wants less than the best for their family?

When can I take money out of my 401(k)?

A 401k is a tax deferred retirement savings account which allows an individual to save for retirement on a pre-tax basis.  Not only are the contributions tax free, but as the account balance grows, the interest income is also tax free.  The 401k balance is not taxed until the owner of the account begins to withdraw funds, which in theory will be in retirement when the owner’s tax level is much less.  Most 401k plans are employer sponsored and to further encourage their employees to save for retirement, many employers offer their employees a 401k match.  This match is normally between 2% and 5% of the employee’s income.

Technically, someone can begin withdrawing from their 401k at any age.  However, since 401k plans come with significant tax benefits and are designed to help save for retirement, early withdrawal, which is any withdrawal prior to being 59 and a half years old, often comes with a severe penalty.

One significant penalty is imposed by the employer who provides the 401k benefit to their employees.  To discourage their employees from withdrawing funds early many employers charge a 10% fee for all premature withdrawals.  However, many employers allow hardship withdrawals that are penalty free.  Examples of hardship withdrawals include death of the employee, excessive medical expenses, or temporary or permanent disability.

While they do not want their employees withdrawing from their 401k, many employers do provide their employees with the option to take out a loan against their 401k without penalty.  The loan can be used for just about anything, but is often capped at a certain dollar amount or 50% of someone’s vested balance.  This loan normally comes with a low interest rate and requires repayment over a few years.  If the loan is not repaid, then the employer will charge the 10% fee.

Another penalty of withdrawing from a 401k prior to turning 59 and a half years old are income taxes.  When someone withdraws funds from their 401k, they will have to pay taxes on the amount they withdraw.  The withdrawal will be taxed at the same levels as someone’s highest marginal tax bracket.  For most people, withdrawing funds earlier than 59 and a half is disadvantageous because their tax bracket is bound to decrease after entering retirement.  In most situations, when a 401k withdrawal takes place, the 401k servicer will hold back a certain portion of the funds which will be paid to the IRS when the account owner files their taxes.

Once a person reaches 59 and a half years of age, they can begin to withdraw from their 401k penalty free.  However, it is highly advised that 401k distributions not be taken until the account owner has stopped working and their tax level decreases.

Once an individual reaches 70 and a half years of age, they are required to start making minimal distributions from their 401k.  The minimum distribution is different for every individual and is based on current life expectancy tables that are held by the IRS.  If the 401k account owner fails to withdraw the required amount, the IRS will charge a very high fee of 50% of the required distribution.  However, the required distribution law does not apply to individuals who are still working.