Structured Settlements

Structured Settlements

Structured Settlements is an agreement through which an insurance company agrees to pay an individual a predetermined amount of cash for a fixed length of time if the individual meets an accident. Structured Settlements is designed to help the people to get the most money for their structured settlements and annuity payments by matching with the best possible choices of financial institutions.

Structured Settlements Documents

The documents for Structured Settlement include an agreement, a qualified assignment, an annuity application, a court order if a claim is made by a minor and an annuity policy. Structured Settlements is useful for the individuals who need money quickly for a financial emergency or lifestyle change. These reasons may include paying bills, the purchase of a home, children going to college or starting a new business.

With Structured Settlements one can have the control to proceed as they wish with their settlements. It only works with the finest direct funding sources, weeding out expensive brokers and fly-by-night companies.

Steps to get money by Structured Settlements:

• Firstly we need to evaluate what type of structured settlement or annuity we have.
• Secondly package all the information together in a way it will be pleasing to the investor. This deals with several outstanding investors both private and institutional which pay the best prices in the country. This will give more than 3 quotes and makes us decide which terms and financial offers best suit for our needs.
• Lastly if we would decide to accept an offer, it takes from 2 to 3 months due to the paperwork and court processes involved.

Structured Settlements also includes assisting with the paperwork when we sell annuity payments. The qualified representative will review the specific needs and match us with one of our select partners who can help us in giving much cash for your structured settlement. The information which we give must be confidential as it will not be shared by anyone outsiders. The funding company commences payment after acknowledging the assignment and receiving a court order. The payments starts after we receive the receipt from court orders.

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WHAT IS SHORT SELLING?

WHAT IS SHORT SELLING?

Short selling is the selling of a stock that the seller doesn't own. More specifically, a short sale is the sale of a security that isn't owned by the seller, but that is promised to be delivered. That may sound confusing, but it's actually a simple concept.


When you short sell a stock, your broker will lend it to you. The stock will come from the brokerage's own inventory, from another one of the firm's customers, or from another brokerage firm. The shares are sold and the proceeds are credited to your account. Sooner or later you must "close" the short by buying back the same number of shares (called covering) and returning them to your broker. If the price drops, you can buy back the stock at the lower price and make a profit on the difference. If the price of the stock rises, you have to buy it back at the higher price, and you lose money.

Most of the time, you can hold a short for as long as you want. However, you can be forced to cover if the lender wants back the stock you borrowed. Brokerages can't sell what they don't have, and so yours will either have to come up with new shares to borrow, or you'll have to cover. This is known as being called away. It doesn't happen often, but is possible if many investors are selling a particular security short.

Since you don't own the stock (you borrowed and then sold it), you must pay the lender of the stock any dividends or rights declared during the course of the loan. If the stock splits during the course of your short, you'll owe twice the number of shares at half the price.

Also, because you are being loaned the stock, you are buying on margin. In fact, you have to open a margin account to short stocks.

EXAMPLE:

BORROWED 100 SHARES AT $10 EACH = $1000(SHORT SELL)
BOUGHT BACK 100 SHARES AT $7 EACH = $700(BUY TO COVER)
PROFIT = $300

BORROWED 100 SHARES AT $10 EACH = $1000(SHORT SELL)
BOUGHT BACK 100 SHARES AT $15 EACH = 1500(BUY TO COVER)
LOSS = $500

The credit for this article goes to www.investopedia.com

MOST READ ARTICLES ON THIS BLOG

WHAT IS THE BEST TIME FOR TAX PLANNING?

WHY ARE OIL PRICES SURGING

HOW TO INVEST IN SHARES

ALL ABOUT FOREX TRADING

MASTERING THE STOCK MARKET VIDEO

Please comment on this article

WHAT IS THE BEST TIME FOR TAX PLANNING TO SAVE MONEY?

The best time for tax planning

Following some of these tax-savvy strategies can help you save money:

Tax planning involves far more than scrambling in April to defer income and boost deductions.

If you want to minimize what you pay in capital gains tax, reduce your year-end tax bill, and give less of your estate to Uncle Sam, you should be aware of the short- and long-term tax consequences of all your financial moves.

One tax-savvy strategy is to contribute regularly to tax-deferred savings plans, which let you defer your tax payments until you make withdrawals.

The benefits are two-fold: The more you contribute to a 401(k) or deductible IRA, for instance, the more you reduce your taxable income for that year. Plus, the money you invest grows at a much faster rate since it's not dragged down by taxes.

If you're looking to reduce your taxable estate, a quick way to do that is to make tax-free gifts up to $12,000 a year per person. (For more on estate planning strategies, including trusts that serve as tax shelters, visit the Money 101 lesson on estate planning.)

When you're investing outside of retirement plans, you have a number of tax-smart options. There are tax-managed mutual funds, which seek to minimize the turnover in holdings and hence limit the number of taxable gains distributions to shareholders.

There are also tax-free CDs, bonds and money market funds.

But a tax-free CD or money market fund may not always save you more than their taxable cousins. Here's how to tell which is best for you:

Compare your after-tax return on the taxable investment with the return on the tax-free investment. To figure out your after-tax return, you need to know your combined income tax bracket (federal plus state), since that determines how much of your investment income you can keep.

If you pay 28 percent in federal taxes and 6 percent in state taxes, your combined bracket is 34 percent, which means you keep 66 percent of the income the investment generates.

So if a taxable investment guarantees a 7 percent return, you'll only pocket 66 percent of that, or will net a return of 4.6 percent. If a tax-exempt instrument offers less than that, you'll pocket more with the taxable option.

Generally speaking, if you're in a top tax bracket, you will benefit more from tax-free investments since the yield on a taxable investment would have to be very high to match your return in a tax-exempt instrument.

Another tax-friendly savings strategy: If you have a taxable account of stocks and funds, take advantage of your capital losses to reduce your tax bill.

"Capital losses are allowed to the extent that you have capital gains plus an additional $3,000," said enrolled agent Cindy Hockenberry of the National Association of Tax Practitioners.

In other words, if you have $10,000 in capital losses and no capital gains this year, then you can claim only $3,000 in losses. But if you have $5,000 in gains, then you can claim $8,000 ($5,000 plus $3,000) in losses. Any unused losses may be carried over to future tax years.

The credit for this article goes to www.cnn.com

WHAT IS AMT?

Originally meant for the rich, the tax is increasingly afflicting the middle class.

Maybe you've managed to ignore the recent spate of tax-reform stories, but that doesn't mean you'll dodge the Alternative Minimum Tax or its higher tax bite.

The AMT system comes with a completely different set of rates and deduction rules. People pay it only if their AMT tax amount is higher than their traditional taxes. Translation: If you're paying the AMT, you are by definition paying higher taxes.

The system created to make sure the uber-rich didn't dodge the tax bullet is under fire because it's now affecting middle-class Americans. And reforming it could mean increased tax payments for everyone.

The problem? What defined uber-rich in 1969, when the AMT was first enacted, has never been adjusted for inflation. That means what made you affluent back then doesn't now - but you're still taxed like it does.

The Urban-Brookings Tax Policy Center says the AMT will hit 23.4 million taxpayers in 2007 and some 39 million could be affected by the end of 2010 if nothing is done.

To give you a sense of just who might get caught, almost half of the households with incomes between $75,000 and $100,000 will pay AMT by 2010 versus 0.7 percent in 2006.

A tale of two systems

Under the regular IRS rules, you start with your gross income and subtract deductions like state taxes you paid, and exemptions like child credits. Eventually, you arrive at your taxable income.

Under AMT rules, you still start with your gross income, but many of the usual deductions and exemptions are disallowed. Suddenly, your taxable income is a lot higher.

Even though some deductions still stand, including those for mortgage-interest and charitable donations, some key breaks are lost. They include: state and local income taxes and property taxes; child-tax credits; and home-equity loan interest.

Even though the highest tax rate under the AMT - 28 percent - is lower than that in the regular tax system - 35 percent - AMT victims are paying more because they're paying on a greater amount of taxable income.

Short of moving to a low-tax state like, say, Texas, said Len Burman, co-director of the Tax Policy Center, there's not a lot you can do to avoid AMT's clutches.

Exemptions and phase-outs

In trying to determine tax liability under AMT, you do get to exempt a certain amount of income from your calculations.

The problem is that the exemptions granted under the AMT have not kept pace with inflation - while the average paycheck has. For instance, in 1982, the exemption for married couples filing jointly was $40,000. Adjusted for inflation, that would be $82,000 today.

Currently, the exemptions are only $62,550 for married couples filing jointly and $42,500 for singles. And they would be even lower if Congress didn't vote through a "patch" every year.

Really high earners may not even get the full exemption since it is phased out above certain income levels.

The phase-out for married couples filing jointly begins at $150,000 (after the deductions that are allowable). The deduction shrinks by 25 cents for every dollar earned above that amount until finally, at $382,000, there is no exemption at all.

Who gets burned?

By law, everyone who files taxes is obligated to figure out whether they have to pay AMT, and they are prompted to do so on line 45 of Form 1040.

There, taxpayers are referred to the AMT worksheet. If the taxable income on the worksheet is higher than the taxable income on the 1040, you are subject to AMT and must fill out the special AMT Form 6251.

But the worksheet and Form 6251 can be daunting, and 75 percent of AMT payers hire a professional to do their returns, according to the President's Advisory Panel on Federal Tax Reform.

"The first time most people hear about the Alternative Minimum Tax is when they get a letter from the IRS saying that they still owe money," said the Tax Policy Center's Burman.

So how do you know if you'll be one of the unlucky?

If your total deductions and exemptions under the normal tax code come close to the AMT exemption, you want to be on the lookout for the AMT, said Tom Ochsenschlager, vice president of taxation with the American Institute of Certified Public Accountants.

The IRS also offers "AMT Assistant," an online tool that helps you determine whether you need to pay the AMT.

Also be on the lookout if your adjusted gross income changes dramatically because of: a lot of itemized deductions; high local and state tax deductions; child exemptions; or a mortgage deduction.

Then it may be time to get some professional help or some good tax software.

The credit for this article goes to www.cnn.com

WHAT IS FICA?

What's FICA ?

If you're a wage or salaried employee, your employer picks up half of this tax burden.

Under the Federal Insurance Contributions Act (FICA), 12.4 percent of your earned income up to an annual limit must be paid into Social Security, and an additional 2.9 percent must be paid into Medicare.

That limit is $94,200 for the 2006 tax year and rises to $97,500 for the 2007 tax year.

There are no earned income limits on Medicare taxes - so even if your salary is well above the cap for Social Security tax, you will still owe Medicare tax on your total earned income.

If you're a wage or salaried employee, you pay only half the FICA bill (6.2 percent for Social Security plus 1.45 percent for Medicare), and the tax is automatically withheld.

Your employer contributes the other half.

For most people that means 7.65 percent of their paycheck is withheld and their company pays another 7.65 percent on their behalf.

If you're self-employed, however, you're expected to cough up both the employee and the employer share of FICA. You are, however, permitted to deduct half of this self-employment tax as a business expense.

WHAT IS YOUR TAX BRACKET

Not every dollar of your income is taxed at the same rate.

That's because portions of your income fall into different brackets, which are assigned tax rates that increase on a graduated scale. Generally speaking, the first dollar you make will be taxed at a lower rate than the last dollar you make.

Your taxable income is not the salary your boss told you you'd make when you got your job, but the amount of income left over after you've made your pre-tax contributions to your 401(k) and after you've subtracted the tax breaks to which you're entitled.

The income ranges that define tax brackets are adjusted for inflation, change yearly and differ depending on your filing status (e.g., single or married filing jointly).

Tax rates can change as well.

Here's an example of how income is taxed: Say you are single and report $80,000 in taxable income for the 2006 tax year (filing in 2007). In accordance with the income ranges defining federal tax brackets for single filers in 2006, the first $7,550 of your income is taxed at 10 percent; dollars $7,551 through $30,650 are taxed at 15 percent; dollars $30,651 through $74,200 are taxed at 25 percent; and dollars $74,201 through $80,000 are taxed at 28 percent.

When people ask you what your tax bracket is, they're really asking for your marginal tax rate. That is, the percent at which the highest portion of your income is taxed. In the example above, if you report $80,000 of taxable income for 2006, your marginal tax rate is 28 percent - the rate at which the last dollar of that $80,000 is taxed.

Your marginal rate is the rate you use to calculate the value of a deduction. For example, if your marginal rate is 28 percent, a $100 deduction reduces your taxable income by $28 (100 x 0.28).

Your effective rate, meanwhile, is the overall percentage of your taxable income that was actually paid in income taxes at the end of the day. And that rate will be lower than your marginal rate because much of your income will taxed at rates lower than your top rate.

You should also be aware of what's known as your combined tax bracket. That's the sum of your federal tax bracket and your state tax bracket, minus the amount of state taxes you can deduct from your federal return.

For example, if your top federal rate is 28 percent and your state tax rate is 5 percent, your combined rate is 33 percent if you take the standard deduction on your federal return.

But if you itemize deductions on your return, your combined rate is likely to be less since you may deduct the state income tax you pay on your federal return, unless you're subject to the alternative minimum tax.

Your combined tax rate determines how much tax you'll owe on income from your investments. If your combined bracket is 33 percent, then 33 percent of your investment income will go to the federal and state governments. Put another way, you'll be able to keep 67 percent of your investment income.

Tax basics

Understanding tax fundamentals can save you money.

Doing your tax return isn't always as daunting as it seems. In fact, it actually can be a great opportunity to get your financial house in order.

If that opportunity lacks appeal or your finances are just too complicated to handle on your own, there are plenty of tax professionals who can do the dirty work for you.

No matter which route you choose, however, you should understand tax basics for two reasons: You are legally responsible for your tax return; and being tax-savvy throughout the year can save you a great deal of money over time.

In this lesson we'll go over some tax essentials, including:

- How much you should withhold;

- What those oft-heard but rarely defined phrases on your 1040 mean;

- What tax records you should keep;

- How you can avoid an audit; and

- Some good tax-planning strategies.

Unless we note otherwise, we're talking primarily about federal taxes.

State and local governments impose a variety of income, sales, and property taxes that are too complex and varied to address here.

Check out next article on this blog "What is your Tax Bracket"

The mystery behind surging oil prices

Oil tops $80 a barrel, an all-time high

Experts explain the increase in prices by pointing to industry fundamentals.

Take inventories, for example.

In its weekly inventory report Wednesday, the Energy Information Administration said crude stocks plunged by 7.1 million barrels last week.

There have been concerns that OPEC production cuts from earlier this year and rising demand for oil have diminished crude supplies worldwide.

Still, EIA said crude inventories in the United States remain above average for this time of year.

But traders are focusing on the fact that crude inventories are below last year. Plus they say that while summer driving season sparks big demand for gasoline, it's actually winter that sees the largest demand for crude as people worldwide use heating oil and power plants burn oil to provide electric heat.

"Crude stocks are not crazy high anymore," said Antoine Halff, head of energy research at Fimat in New York. "Plus, heating season is ahead of us."

3 court cases for climate change.

Another factor pushing up crude prices was renewed confidence in the economy as markets have stabilized after August's subprime-induced roller coaster.

How confident should people be that economic growth will remain strong?

A report released Monday by the National Association for Business Economics puts the growth of gross domestic product at 2 percent for this year, the weakest since 2002.

"Based on the economy, I think demand growth will be slower than people think," said Halff, who still has a target price of $73 for crude in the fourth quarter and said he may even raise that to $75.

But it's not just the U.S. economy that influences the price of oil.

"Crude oil is a global market, and we still have strong growth abroad," said Brian Hicks, co-manager of the Global Resources Fund at U.S. Global Investors.

Indeed, while countries like India, China and Brazil still use much less oil than the developed nations, especially on a per capita basis, they are responsible for much of the growth in global demand for crude.

This has led to projected strong demand for crude over the next few years, and concerns that supplies will not be able to keep up.

Already that has created a tight supply and demand scenario, where the difference between what the world produces and what it consumes has narrowed.

That of course magnifies the effects of geopolitical events, as there is less extra oil to cover demand if supplies get disrupted.

Hicks also said the declining value of the U.S. dollar, which oil is priced in, has helped push prices higher. OPEC is less likely to boost production if the value of their product is falling with the dollar. And consumers overseas are less likely to conserve if the price spikes aren't as pronounced.

As for whether speculative investors are driving up the cost of oil, Hicks said that interest in commodities has certainly increased over the last several years. This year alone, an estimated $100 billion was put into commodities funds by everyone from hedge funds to state pension plans.

But he said its impact on prices has been marginal. "There are sound fundamentals behind rising oil prices," he said.

The credit for this article goes to www.cnn.com

STORM FEARS HOLD OIL PRICES HIGH

Storm fears hold oil prices high

Oil prices remain strong amid ongoing worries about the development of a tropical storm in the Gulf of Mexico.

In London, Brent Crude hit a new high of $79.35-a-barrel, before finishing the day at $79.07, while US light crude ended down 16 cents to $81.62.

About 25% of production in the Gulf of Mexico has been shutdown, and traders fear a storm will mean more closures, leaving supplies thinly stretched.

The mounting supply fears come hard on the heels of data showing US oil stocks

fell more than expected last week.

Evacuation

According to official figures US crude stocks fell for the fourth week running by a higher-than-expected 3.8 million barrels last week.

"The concern is that what is currently only a tropical disturbance in the eastern gulf could develop into a tropical storm and companies have already started evacuating workers from the area," said Barclays Capital Analyst Kevin Norrish.

"Both Shell and BP have reported that they are evacuating and shutting in all of their gulf oil production."

Oil industry workers have already left five production platforms in the Gulf, and three drilling rigs have been evacuated.

Story from BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7006010.stm

JOB FEARS AS EURO GETS STRONGER

Jobs fears as euro gets stronger

On Friday the euro hit a fresh record high against the dollar of $1.4120.
Airbus may also have to buy more goods in the dollar zone - where it currently buys about half its supplies.
Buying more goods in the dollar zone would help lower costs as it would mean cheaper prices.
"If the euro remains durably at $1.45, that would mean we had to find one billion euros in additional savings under Power 8 [restructuring plan"
Our reply to a strong euro is, first to be more competitive, second to buy more in the dollar zone," he added.
The euro later dropped down to slightly below $1.41. Meanwhile it rose to a one-and-a-half year high against British sterling, of 70.20 pence.

New projects threatened
European industrialists are concerned that the euro's rise is hurting exports and could lead to job cuts in European manufacturing.
if the euro remained high it would not allow investments in new projects.
The euro gains on Friday came a day after breaching the psychologically-important $1.40 mark.
The euro has been strong since US rates were cut to 4.75% on Tuesday.
This and a warning from Federal Reserve chief Ben Bernanke on Thursday that the US housing market crisis might deepen prompted the dollar falls.
Analysts have said the impact of the falling dollar on European consumers and businesses may be mixed.
Eurozone consumers may benefit from cheaper prices for some imported goods, while input costs for eurozone firms may fall as oil, metals and many raw material prices are quoted in dollars.
However, while the strong euro may cut some import costs, it could also have a negative effect on exports as European-made goods become more expensive in the US.
The US is Europe's largest trading partner.
The fall in the value of the dollar could also hurt growth in Asia, with the US being the largest market for China, Korea, and other Asian exporters.

The credit for this article goes to BBC NEWS:
http://news.bbc.co.uk/go/pr/fr/-/2/hi/business/7006060.stm

ALL ABOUT FOREX TRADING

Overview of Forex Trading

Foreign exchange, forex or just FX are all terms used to describe the trading of the world's many currencies.

The forex market is the largest market in the world, with trades amounting to more than USD 1.5 trillion every day. This is more than one hundred times the daily trading on the NYSE (New York Stock Exchange).

Most forex trading is speculative, with only a few percent of market activity representing governments' and companies' fundamental currency conversion needs.

Unlike trading on the stock market, the forex market is not conducted by a central exchange, but on the “interbank” market, which is thought of as an OTC (over the counter) market. Trading takes place directly between the two counterparts necessary to make a trade, whether over the telephone or on electronic networks all over the world.

The main centres for trading are Sydney, Tokyo, London, Frankfurt and New York. This worldwide distribution of trading centres means that the forex market is a 24-hour market.

Trading Forex

A currency trade is the simultaneous buying of one currency and selling of another one. The currency combination used in the trade is called a cross (for example, the Euro/US Dollar, or the GB Pound/Japanese Yen.).

The most commonly traded currencies are the so-called “majors”:

EURUSD

USDJPY

USDCHF

GBPUSD

The most important forex market is the spot market as it has the largest volume. The market is called the spot market because trades are settled immediately, or “on the spot”. In practice this means two banking days.

Margin Trading

Foreign exchange is normally traded on margin. A relatively small deposit can control much larger positions in the market. For trading the main currencies, SaxoBank requires a 1% margin deposit. This means that in order to trade one million dollars, you need to place just USD 10,000 by way of security.

In other words, you will have obtained a gearing of up to 100 times. This means that a change of, say 2%, in the underlying value of your trade will result in a 200% profit or loss on your deposit. See below for specific examples. As you can see, this calls for a very disciplined approach to trading as both profit opportunities and potential risks are very large indeed

Base Currency and Variable Currency

When you trade, you will always trade a combination of two currencies. For example, you will buy US dollars and sell Euro. Or buy Euro and sell Japanese yen, or any other combination of dozens of widely traded currencies. But there is always a long (bought) and a short (sold) side to a trade, which means that you are speculating on the prospect of one of the currencies strengthening in relation to the other.

The trade currency is normally, but not always, the currency with the highest value. When trading US dollars against German marks, the normal way to trade is buying or selling a fixed amount of US dollars, i.e. USD 1,000,000. When closing the position, the opposite trade is done, again USD 1,000,000. The profit or loss will be apparent in the change of the amount of Euro credited and debited for the two transactions. In other words, your profit or loss will be denominated in Euro, which is known as the price currency. As part of our service, Saxo Bank will automatically exchange your profits and losses into your base currency if you require this.

This way of trading is different to the futures markets, for example, where the marks, francs and yen are the fixed trade currency, resulting in a US dollar denominated profit or loss. You can, however, also choose to trade in this reciprocal manner in foreign exchange markets but it is not the norm.

Dealing Spread, but No Commissions

When trading foreign exchange, you are quoted a dealing spread offering you a buying and a selling level for your trade. Once you accept the offered price and receive confirmation from our dealers, the trade is done. There is no need to call an exchange floor. There are no other time-consuming delays. This is possible due to live streaming prices, which are also a great advantage in times of fast-moving markets: You can see where the market is trading and you know whether your orders are filled or not.

The dealing spread is typically 3-5 points in normal market conditions, e.g. USD/EUR 1.7780-85. This means that you can sell US dollars against the Euro at 1.7780 and buy at 1.7785. There are no further costs, commissions or exchange fees.

This ensures that you can get in and out of your trades at very low slippage and many traders are therefore active intra-day traders, given that a typical day in USD/EUR presents price swings of 150-200 points.

Spot and forward trading

When you trade foreign exchange you are normally quoted a spot price. This means that if you take no further steps, your trade will be settled after two business days. Due to the fact that the EU investment directive does not presently cover spot foreign exchange trading we will, however, require you to swap your trade forward at least another two business days. This ensures that your trades are undertaken subject to supervision by regulatory authorities for your own protection and security. If you are a commercial customer, you may need to convert the currencies for international payments. If you are an investor, you will normally want to swap your trade forward to a later date. This can be undertaken on a daily basis or for a longer period at a time. Often investors will swap their trades forward anywhere from a week or two up to several months depending on the time frame of the investment.

Although a forward trade is for a future date, the position can be closed out at any time - the closing part of the position is then swapped forward to the same future value date.

Interest Rate Differentials

Different currencies pay different interest rates. This is one of the main driving forces behind foreign exchange trends. It is inherently attractive to be a buyer of a currency that pays a high interest rate while being short a currency that has a low interest rate.

Although such interest rate differentials may not appear very large, they are of great significance in a highly leveraged position. For example, the interest rate differential between the US dollar and the Japanese yen has been approximately 5% for several years. In a position that can be supported by a 5% margin deposit, this results in a 100% profit on capital per annum when you buy the US dollar. Of course, an even more important factor normally is the relative value of the currencies, which changed 15% from low to high during 2005 - disregarding the interest rate differential. From a pure interest rate differential viewpoint, you have an advantage of 100% per annum in your favour by being long US dollar, and an initial disadvantage of the same size by being short.

Such a situation clearly benefits the high interest rate currency and as result, the US dollar was in a strong bull market all through 2005. But it is by no means a certainty that the currency with the higher interest rate will be strongest. If the reason for the high interest rate is runaway inflation, this may undermine confidence in the currency even more than the benefits perceived from the high interest rate.

Stop-loss discipline

As you can see from the description above, there are significant opportunities and risks in foreign exchange markets. Aggressive traders might experience profit/loss swings of 20-30% daily. This calls for strict stop-loss policies in positions that are moving against you.

Fortunately, there are no daily limits on foreign exchange trading and no restrictions on trading hours other than the weekend. This means that there will nearly always be an opportunity to react to moves in the main currency markets and a low risk of getting caught without the opportunity of getting out. Of course, the market can move very fast and a stop-loss order is by no means a guarantee of getting out at the desired level.

But the main risk is really an event over the weekend, where all markets are closed. This happens from time to time as many important political events, such as G7 meetings, are normally scheduled for weekends.

For speculative trading, we always recommend the placement of protective stop-lossorders. With Saxo Bank Internet Trading you can easily place and change such orders while watching market development graphically on your computer screen.

Forex trading examples

Example:

An investor has a margin deposit with Saxo Bank of USD 100,000.

The investor expects the US dollar to rise against the Swiss franc and therefore decides to buy USD 2,000,000 - 2% of his maximum possible exposure at a 1% margin Forex gearing.

The Saxo Bank dealer quotes him 1.5515-20. The investor buys USD at 1.5520.

Day 1: Buy USD 2,000,000 vs CHF 1.5520 = Sell CHF 3,104,000.

Four days later, the dollar has actually risen to CHF 1.5745 and the investor decides to take his profit.

Upon his request, the Saxo Bank dealer quotes him 1.5745-50. The investor sells at 1.5745.

Day 5: Sell USD 2,000,000 vs CHF 1.5745 = Buy CHF 3,149,000.

As the dollar side of the transaction involves a credit and a debit of USD 2,000,000, the investor's USD account will show no change. The CHF account will show a debit of CHF 3,104,000 and a credit of CHF 3,149,000. Due to the simplicity of the example and the short time horizon of the trade, we have disregarded the interest rate swap that would marginally alter the profit calculation.

This results in a profit of CHF 45,000 = approx. USD 28,600 = 28.6% profit on the deposit of USD 100,000.

Click for Live Forex Trading Quotes and Charts

The credit for this article goes to www.forextrading.com

MASTERING THE STOCK MARKET WITH DAVID SCHIRMER - PART 1 of 4

Following are the videos for Mastering the Stock Market with David Schirmer in 4 Parts

PART 1:


PART 2:


PART 3:


PART 4:


The credit for these videos goes to www.youtube.com
Any suggestions or comments will be greatly appreciated.

WHAT IS HOME REFINANCING?

When an owner obtains a new first mortgage on his real estate, the homeowner has undergone a home refinancing. Simply put, think of home refinancing as trading in an old first mortgage for a new first mortgage.

To refinance a home, the homeowner must apply for a new mortgage. During the application process, the subject home will undergo a new appraisal to determine its value, and the homeowner's credit file will be reviewed. The lender will also order a title report on the property to search for any other liens that may appear. Assuming all these items meet with the lender's approval, the loan will be approved.

Once approved, the homeowner will meet typically at the office of the lender or title company to sign the new mortgage. The proceeds of the new loan will be used to pay off the old first mortgage as well as any additional mortgages and liens on the property. Accordingly, the only mortgage showing on the home after the refinance will be the new loan itself.

Homeowners frequently seek to refinance their home when interest rates fall below the rate they had on their mortgage when they first bought their home. For instance, if a homeowner had a 30-year mortgage at 8% and a loan of $100,000.00, it would be wise to seek a refinance if the interest rates fell to 6%. The savings in such a situation would be $134.00 per month. Over the life of the loan, the savings could reach a total of $48,240.00. If the loan was for $200,000.00, the monthly savings would be $268.00, an almost $100,000.00 savings over the life of the loan. Accordingly, when determining if it is worthwhile to refinance a home, the homeowner should weigh the long term savings against the costs involved in the refinance and the length of time the homeowner intends to stay at the home to insure that the refinance is worthwhile.

Costs typically involved in a refinance include: points, document preparation fees, tax service fees, title expenses, appraisal fees, and other lender's costs. Of these, the "points" are typically the most expensive. Using the $100,000 loan example again, for a refinanced loan with one point (1%), the homeowner would pay a fee of $1,000.00 to secure the loan. If two points (2%) are being paid, then the homeowner would pay $2,000.

It is wise to consult an attorney or real estate agent when considering a refinance as these professionals have many good insights to offer.

Credit for this article goes to www.wisegeek.com

WHAT IS HOME EQUITY DEBT?

A home equity loan or line of credit allows you to borrow money, using your home's equity as collateral.

Collateral is property that you pledge as a guarantee that you will repay a debt. If you don't repay the debt, the lender can take your collateral and sell it to get its money back. With a home equity loan or line of credit, you pledge your home as collateral. You can lose the home and be forced to move out if you don't repay the debt.

Equity is the difference between how much the home is worth and how much you owe on the mortgage (or mortgages, if you have more than one on the property).

Example:

Let's say you buy a house for $200,000. You make a down payment of $20,000 and borrow $180,000. The day you buy the house, your equity is the same as the down payment -- $20,000: $200,000 (home's purchase price) - $180,000 (amount owed) = $20,000 (equity).

Fast-forward five years. You have been making your monthly payments faithfully, and have paid down $13,000 of the mortgage debt, so you owe $167,000. During the same time, the value of the house has increased. Now it is worth $300,000. Your equity is $133,000: $300,000 (home's current appraised value) - $167,000 (amount owed) = $133,000 (equity).

A home equity loan (or line of credit) is a second mortgage that lets you turn equity into cash, allowing you to spend it on home improvements, debt consolidation, college education or other expenses.

There are two types of home equity debt: home equity loans and home equity lines of credit, also known as HELOCs. Both are sometimes referred to as second mortgages, because they are secured by your property, just like the original, or primary, mortgage.

A home equity loan is a one-time lump sum that is paid off over a set amount of time, with a fixed interest rate and the same payments each month. Once you get the money, you cannot borrow further from the loan.

A home equity line of credit, or HELOC, works more like a credit card because it has a revolving balance. A HELOC allows you to borrow up to a certain amount for the life of the loan -- a time limit set by the lender. During that time, you can withdraw money as you need it. As you pay off the principal, you can use the credit again, like a credit card.

Home equity loans and lines of credit usually are repaid in a shorter period than first mortgages. Most commonly, mortgages are set up to be repaid over 30 years. Equity loans and lines of credit often have a repayment period of 15 years, although it might be as short as five and as long as 30 years.

Example:

Let's say you have a $10,000 line of credit. You borrow $5,000 to pay for new kitchen cabinets. At that point, you owe the $5,000 you borrowed, and you have $5,000 remaining in your credit line, meaning that you could borrow another $5,000.

Instead of borrowing more from the line of credit, you pay back $3,000. At this point, you still owe $2,000, and you have $8,000 in available credit.

A HELOC gives you more flexibility than a fixed-rate home equity loan. It also is possible to remain in debt with a home equity loan, paying only interest and not paying down principal.

A line of credit has a variable interest rate that fluctuates over the life of the loan. Payments vary depending on the interest rate, the amount owed and whether the credit line is in the draw period or the repayment period.

During the equity line's draw period, you can borrow against it and the minimum monthly payments cover only the interest, although you can elect to pay principal.

During the repayment period, you can't add new debt and must repay the balance over the remaining life of the loan.

The draw period often is five or 10 years, and the repayment period typically is 10 or 15 years. Those are generalizations, and each lender can set its own draw and repayment periods. Lenders have been known to have draw periods of nine years, six months, and repayment periods of 20 years. Bankrate surveys home equity line of credit lenders for their current rates.

A line of credit is accessed by check, credit card or electronic transfer ordered by phone. Lenders often require you to take an initial advance when you set up the loan, withdraw a minimum amount each time you dip into it and keep a minimum amount outstanding.

With either a home equity loan or a line of credit, you have to pay off the balance when you sell the house.

Credit for this article goes to www.bankrate.com

LEARN ALL ABOUT INVESTING IN SHARES

1>WHAT ARE SHARES AND WHICH SHARES SHOULD BE ACQUIRED?

Shares means Ownership.

Acquiring shares of a particular company means you have a stake in that particular company.

A company whose shares you have purchased is answerable to you. They send you an annual report regarding various information about the company such as financial accounts, profit and loss accounts etc..

The management communicates through the balance sheet and the AGM, where shareholders voice their opinion on the performance of the company.

2>WHICH COMPANY SHARES TO PURCHASE?

This involves little bit of research and a logical mind.

Try to understand what is in demand.

In newspapers you get to here about various activities such as infrastructure boom, IT boom, bank loan facilities are getting successful which means there is a boom in financial sector and so on.

1>Watch news channels such as Zee Business and try to acquire information on what sectors are flourishing or are going to be in demand.

2>Watch out for the share prices of various companies trailing at the bottom of the screen(ticker) on Zee Business or other news channels.

3>Select company which is a recognised one and which belongs to A,B1,B2 group as they are the stable and secure companies.

Group of company can be determined by typing name of company in

www.sharekhan.com and then clicking on the name of the company or you can simply post the name of the company in the comment section and I will provide you with the group information.

4>Check out the annual report of the company. The annual report will provide info on the sales turn over of the company, the profit and loss of the company in the various quarters etc. This will give you an idea whether the company is flourishing or is in dumps.

3>IS IT RISKY TO INVEST IN SHARES?

Risk is involved in everything.

"Only those who risk going too far can possibly find out how far one can go"

Risks are not involved if you don’t invest entire money on some company which is going in loss, its not going to give you any returns.

If you invest wisely in good companies which are recognised and have a reputation in the market then there are NO RISKS involved.

So stop acting dumb and invest wisely is the need of the hour.

Two types of Risks are involved:

1>Company Risk:

If the company is recognised, reputed then no need to worry. The company may suffer temporary losses but will not run with your money, you will get sufficient to magnificent gains later in the future.

2>Market Risk:

The market may be down which may lead to low share prices but that is a temporary phase when the market goes into correction and happens from period to period.

But this phase should be used to acquire shares of many good companies as the prices are low, when market rises the share prices will shoot up giving you maximum returns.

THUS, IT IS NOT RISKY TO INVEST IN SHARES.

HOW TO INVEST IN SHARES?

In order to invest in shares you must have a demat account.

You can open a Demat account in various banks and brokerage firms such as,

HDFC,

ICICI,

SHAREKHAN

ANGEL BROKING SERVICE,

RELIANCE MONEY etc.

To Learn all about shares, companies and risks involved go to post

"LEARN ALL ABOUT INVESTING IN SHARES"

WISH YOU BEST OF LUCK,
Happy Investing,

For any queries please post your comments

Thank you…..

NEED FOR INVESTING IN SHARES?

First let us understand why there is a need for investment.

Saving is different than investment.

In saving you just put money at one place thinking that it is beneficial but sadly simply saving money is not beneficial because the value of money decreases with time.

"Milk which you buy for Rs.25 per litre will cost you more than Rs25 after 10 years"

Thus, the value of money decreases with time. This is known as INFLATION.

"Inflation is the enemy of Savers"

Thus, in order to combat Inflation Investment is important.

You deposit money in the bank, the bank pays you a small interest for the money you deposited, but still the interest rate is so low that it leads to minimum gains which in a span of 5 to 10 years turns to nill thanks to inflation.

THAT IS WHY INVESTMENT IN SHARES OR EQUITIES IS NECESSARY BECAUSE IT PROVIDES YOU WITH MAXIMUM GAINS AND THAT TOO WITHOUT ACTUALLY MOVING A LEG.

Before investing in shares, you should have some basic knowledge regarding shares on the following points.

1>What are Shares?

2>Which company shares should be purchased?

3>Is it Risky?

These questions are answered in the post
"LEARN ALL ABOUT INVESTING IN SHARES"