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The Similarity Between The 1031 And 1035 Exchange

November 13, 2009 By FPT Guy Leave a Comment

The 1035 exchange is one of those rare times in which officials with the Internal Revenue Service actually put in place a plan to help individual investors.  The 1035 comes from the 1030 group of exchanges because it belongs to a section of the tax code on tax-free situations.

Investors who often deal in real estate may be familiar with the 1031 and the 1031 exchange rules.   The IRS naturally wants a cut of any proceeds an investor makes when they buy a property and sell it at a profit.  However, investors can sometimes avoid taxation through a 1031 exchange.  Under this scenario, the investor would simply rollover the profit from the sold property into a new property of equal or greater value, thereby avoiding taxation on gains from the old property.

In a similar way the 1035 also follows an exchange rolled over rule.  But instead of pieces of property, the investors hold assets such as annuities, life insurance, or endowments, which are then rolled over into new plans with different holding companies, without facing taxes on any gains.

The reasons the holders of such policies might want to switch and take advantage of the 1035 exchange, will vary from person to person.  In general assets such as life insurance policies start small and grow over the years.  This build up of assets is often called the reserve.  The provider of the policy keeps the reserve in stocks, bonds and other areas where the funds can build up and earn a profit.  When the policies are left intact, these earnings are not taxable.  But the moment a holder tries to touch them, i.e. taking them out of the policy, such as a loan or withdrawal, the IRS will tax it.  Of course not all the money withdrawn is taxable, just the profit faces these regulations.  This is calculated by subtracting the base investment from the gross.

However, if an investor’s policy is not performing as well as they would like, perhaps it was purchased years ago and is no longer competitive with newer policies, they can have the option to rollover their plan to a new company without facing any taxation.  In other words, the IRS will treat the funds as if they haven’t been withdrawn, when they are transferred to the new policy, thereby avoiding unwanted taxes for the investor. However, the investor should understand that a few other taxes could apply with a 1035 exchange, so it’s important to check with the IRS before committing to any exchange.  By the way, you can check out a great type of insurance policy known as return of premium term life insurance to give yourself more life insurance options to choose from.

Filed Under: Insurance, Real Estate Tagged With: , , , , ,

What Is A Self Employed Remortgage?

November 10, 2009 By FPT Guy Leave a Comment

When you get a mortgage, much of the data that the financial institution needs will come from your current financial information.  However, if you are self employed, this can be more difficult.  A self employed remortgage means proving your current income.  Of course,  when you need a remortgage and self employed is your status, you can run into difficulties.  But don’t worry, this does not make you ineligible, and you can always contact different companies to get a different remortgage quote from each one.  It just means that you will need to do more hard work to show your financial situation.  After all, remortgage loans are a good way to consolidate all of your debt and pay it off at once.  It is worth the difficulty to go through with this situation.

Getting a remortgage, like a buy to let remortgage, may be harder if you are self employed. It also means having your assets evaluated for their value.  Remortgages and self employed status means producing documents, receipts, and all of your business accounts for at least the past three years.  It means being honest about bad credit. After all, a person who owns a company is self employed.  That company is one of many points of value.  You may not have a friendly guide for remortgages for the self employed.  However, don’t think that lots of people in your situation aren’t getting remortgages.  They are.  Although having a paycheck and working for someone else means you have easy evidence to provide to show your financial situation, it’s not the be all and end all.

A positive way to deal with this is to consult with an accountant who works with self employed people.  Simply call and ask if they have ever worked with self employed remortgages.  They will help you to compile the information that you need to make a strong case.  They are also familiar with working with financial institutions and know what they’re looking for.  They may ask you to have special documents made a notarized.  They may also have you take information from your business partner in addition to your own.  They will help to make any property that you use with your self employment to show all of your assets.  They may also help you to find a financial institution that accepts your situation.

Bad credit is not always a problem for every financial institution.  In fact, they may have a special package with a special rate of interest especially for you, though the remortgage rates for a bad credit situation will most certainly be higher.  Being self employed will also not be a problem for them.  Many people falsely assume that they will have a problem because of their past.  However, a remortgage is always about your current assets.  As long as you’re honest about your situation and provide all of the information needed, you will find someone that is willing to lend to you.  After all, it is a step in the right direction and there are companies willing to help you to do that.

Filed Under: Loans and Mortgages Tagged With: , , , , ,

Getting A Reverse Annuity Mortgage

November 10, 2009 By FPT Guy Leave a Comment

Older Americans can have just as many problems as other people with monthly income.  Unlike younger people, older Americans usually have most of their home paid for.  When financial crises come their way, an older person may find reverse annuity mortgages to be a real possibility.  So how does a reverse mortgage work?  Basically, a mortgage is taken out on the home.  But instead of paying the financial institution, the person who owns the home receives a monthly payment.  This monthly payment is basically like somebody buys your home and slowly pays you back for it while you are still living there.  While this means that you are not going to have a home to give to someone to inherit after you have passed away, it is still a very good option.

If you are interested in finding out exactly what you could get, you can go online and use a reverse annuity mortgage calculator.  This means that you can show how much money you have paid into your home, the estimated value, and get a dollar amount of your monthly payment.  Of course, once you start to do your research, you’ll soon see that you have many options for mortgages available – so try to find the best mortgage provider that you can.  The end result, if you are approved, is that you will get a tax free payment each month.  The mortgage will be paid off once your home is sold.  However, you must evaluate if this is the best decision for you.  The reason is, you may be limited in the future for housing plans.  This means you may have more difficulty moving to another location.

If you’re worried about this option, you can ask a financial consultant instead of someone who works in the reverse mortgage jobs industry.  They are in the business of helping people make the right decisions for themselves and can easily explain the pros and cons of a reverse mortgage.  Of course, a financial institution maybe extremely eager to get your business.  However, a financial consultant will help you evaluate all of your options.  They will help you to understand any of the terms being offered to you.  For example, the RAM plan is helpful because you do not have to have a current income to get your monthly payments.  However, if you move out, then your mortgage balance is immediately due.  This could create problems for you if you are not aware of them.

Many people consider getting a home equity loan.  However, this means that you are going to need to pay taxes on it.  The difference is that you will be able to move out without having to pay the mortgage balance immediately.  Of course, the appeal of a RAM is that you will have several payout options to choose from, when considering these types of mortgages.  You may want to have monthly payments for a tenure policy.  Or, you might want to have one lump sum payment and a line of credit that you can use at a later date.  Of course, the main point is that you do your research.  After all, you do not want to be involved in a situation that you later learn is a scam.

Filed Under: Financial Planning Tagged With: , ,

Selecting The Best Legal Credit Repair

November 10, 2009 By FPT Guy Leave a Comment

If you are trying to rebuild your credit to own a home or some other financial goal, it can be difficult to find a company that you can trust.  If you are new to this, it can be shocking to learn from your research that there are credit companies that are scams.  Even some of the web sites that talk about sites that are legal are scams.  So what is a legal credit repair company?  Thankfully, there are government regulations for these kinds of services.  They are regulated by the Federal Trade Commission.  They are very good at going after illegal credit repair agencies.  They rely on regular citizens to report any credit restoration scams that they may be a victim of.

A credit legal repair service will offer its credentials easily.  If you call them, you can ask them for this verification.  Then you can call institutions like the Better Business Bureau and see if they truly are a legal credit repair company.  You may also find information on the Internet from your local or state gov’t pertaining to complaints against companies that claim they are a legal credit repair company.  Doing this research is in your best interest.  After all, you’ll need to submit your Social Security number.  You also need to ensure that a legal credit repair center is sending your payments to pay your debts.  There are plenty of credit repair businesses out there trying to scam people, so be very careful with whom you submit your sensitive information.

Of course, you may question is credit repair legal in the first place.  In short, yes it is.  They help you buy finding out who you owe money to and fielding all of your calls.  They make arrangements with the companies you owe money to.  They may also be helpful in getting them to reduce the amount of debt and fees that you owe them.  A good example of a credit repair company that many people trust is Legacy legal credit repair.  If you put your trust in this company, they will help you to come up with a dollar amount that you can pay every month that is helpful to you.  Just be careful when it comes to submitting your credit information online to credit repair companies, because most are just looking for credit repair leads to sell to companies.

Many companies that claim they are legal credit repair companies will do and say crazy things.  I was lucky that I didn’t come across some of these companies when I was investigating what it would take to repair my credit.  For example, someone ask you to create a new identity.  They will also ask you to waive your CROA rights.  This means that you are saying that they are exempt from following the credit repair organizations act.  Doing these things can cause you legal problems.  Any legitimate company in the credit repair business, for example, Onyx legal credit repair, will allow you to cancel your contract with in three days to a week if you change your mind about their services.  They will only provide you with accurate information.  They will be upfront about the fees that they will pay.  Furthermore, they will encourage you to research their company with legitimate organizations to see if they are legal.

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Why You Should Be An Annuity Buyer

November 7, 2009 By FPT Guy Leave a Comment

When it comes time to invest in your retirement, you become an annuity buyer.  An annuity, such as a structured settlement annuity, a variable annuity or fixed rate annuities, is an investment of money for a period of time.  It means that you put aside money and allow it to collect interest.  Someday, your annuity will be liquidated, which will provide you an income for a period of time or for the remainder of your life.  Depending on how much you invest, the financial institution, and the percentage rate, annuity buyers can make a lot of money tax free.  It is different than a CD or certificate of deposit.  Mainly, at this difference lies in the fact that you can get tax benefits because you are putting it away for your retirement.  It is also different because many annuities can be liquidated without penalty.  However, this depends on the financial institution and the fine print.

Overall, annuities are very lucrative for senior citizens so I would definitely recommend buying them from people who are selling annuities.  It is a very effective way to plan for retirement.  The best age to buy an annuity is 55.  Many financial institutions started expect an annuity payment buyer at this age.  In fact, many banks market to their current customers around this time.  You may have less information offered to you if you decide to start an annuity plan before that age.  If you ask the bank manager, they will offer you an annuity buyers guide.  This guide will inform you about the ratios and timelines they expect you to follow.  For example, if you are investing $10,000 for five years they may offer you 3% interest.  However, if you invest $10,000 for 10 years, they may offer you 10% interest.  All of these variables can be discussed with a bank manager, as you’ll be looking for the best annuity rates you can find.

One option that an annuities buyer might not be aware of is the option to receive monthly payments from the annuity.  Most people have it in their minds that they will put this money aside and never see any of it until the future.  However, if you receive a very large inheritance, one of the best things that you can do is to put the money into an annuity.  That way, you can keep your initial amount of money and receive payments every month from the bank based on your interest.  The bank is able to do this if they know that they can keep your money for an extended period of time.  For example, in order to get a higher rate of interest, you can sign a contract saying they you will not liquidate your annuity under any circumstances for 10 years.  If you were to liquidate this asset, then you would pay back all of the interest out of that annuity.  Make sure you have the kinds of annuities explained and annuity rules by an investment professional, so you can make the best decision.

For example, if you received a monthly check of $1000 from your annuity interest and, at the end of the year, you liquidated it, then you would have to pay $12000 out of your annuity fund.  Of course, this is not every company.  Different companies operate with different contracts.  Some will have a standard contract for the buyer of annuity and others will make the contract according to your terms.  If you are dealing with more than $50,000, you may want to talk to an investment specialist.  For example, they may tell you that you should not put all of your eggs in one basket.  If you have a large amount of money, they may suggest that you go with many different companies instead of just one.  Retiring comfortably is extremely important and so it pays to invest money into hiring a specialist to help you handle the special circumstances.

Filed Under: Financial Planning Tagged With: , , , , ,

What Is An Inverse ETF?

November 7, 2009 By FPT Guy Leave a Comment

When you first hear the term inverse ETF, you may be totally confused.  ETF stands for “exchange traded funds”.  The exchange is, of course, what we know as the stock exchange.  So any ETF is going act like a stock that is exchanged on the stock market.  The terms associated with ETF are, for example, inverse ETFs.  Other words for inverse ETF funds are short ETFs or Bear ETF’s.  These are stocks that you keep for a very short period of time.  These are not the same as a double inverse ETF.  This is not only dealing with the company.  You can also have an inverse bond ETF.  Don’t get confused with all of the ETF terms.  There are so many types like the silver ETF or the energy ETF as well!

Many people will find the available stocks from an inverse ETF list.  They will feel knowledgeable of this kind of information right away.  After all, many of these stocks will list the company, the price, and how long you need to hold them for.  This will often be in a list for regular people to interact with.  Before long, a novice in the stock exchange arena will learn of the term double inverse ETF.  No doubt, in a list of inverse ETFs you will see the option for a double or swing inverse ETF.  However, if you are a beginner, you may want to wait until you understand the stock market better before you try a swing inverse ETF.

A popular financial ETF at the moment is a gold inverse ETF.  This means taking into consideration other countries and other stock exchanges.  This is someone of our risk and involves a great deal of knowledge about the process of doing this.  You may also deal with certain tax regulations so be advised.  In other words, you may try this kind of ETF and find at the end of the tax year that you lost all of your profits.  You can also lose more money than you expected.  For some people, this means that they may want to try something like inverse bond ETFs.  This means that you put in a certain amount of money for a short period of time and make money for lending it.

If you are looking for good investments, and you are a beginner, you might want to also stay away from proshares inverse ETF.  This basically means that you are dealing with an ETF that is even shorter than a double ETF.  Triple inverse ETFs are very similar.  They are very effective for stockbrokers to manage but not for beginners.  If you consult with a stockbroker, they may suggest an inverse commodity ETF, proshares inverse ETFs. or even rydex inverse ETF.  This does not mean that you should not take the advice of a stockbroker.  This just means that you should not try to play the stock market quickly when you have varied little experience doing so.  After all, you want to make money and not lose money.

Filed Under: ETFs, Financial Planning, Investing Tagged With: , , , , , , , , ,

Using A Check Cash Advance

November 6, 2009 By FPT Guy Leave a Comment

It is not only people who have very little money that find a check cash advance to be a good solution.  It is a mistake to assume that only poor people use this kind of service.  That is simply not true.  There are plenty of situations where a check advance no credit check can be seriously vital and important.  For example, many of these kinds of services are necessary in the case of an emergency.  Think, for example, of business hours.  Many places where you can get large sums of cash in the middle of the night are simply not available.  Sometimes, emergencies arise that are out of our control.  They require that we have a large amount of cash right away and we cannot wait until the morning.

As we know, sometimes ATMs do not dispense cash over a certain dollar amount.  Most of them have a daily cash limit.  If this is the situation for you a paycheck cash advance is perfect for obtaining cash now.  If the situation warrants it, cash advance checks can also be issued, say if your heating system in your house breaks down and you need some emergency cash.  These kinds of institutions can also do cash advance check cashing on a random check that you have in your possession at the time.  If you live in an area outside of the city, your need for emergency cash can be addressed with a cash advance online no credit check service.  They provide the same amount of benefits and use the same process as a check cashing advance service.

For some of us, we need a check cash advance loan.  This means that we don’t have an actual check today or money to verify it.  If this is the case, you’ll be happy to know that you can use a check cashing service like this.  The way the operation works is that you provide a bank information that shows that you regularly get a check from a job.  Based upon how much money you make depends on how much that check cash advances will allow you to take out.  Because they’re giving you a loan, they will charge a high rate of interest.  You simply go to a place that states they are a no credit check cash advance loans business.  Just because they say that they do not do credit checks does not mean that they will not check your financial history.  However, it is not like a bank.  A bank is more thorough than just checking your bank statements and making sure you have a job.

A quick cash check advance business is going to be very similar if not exactly the same.  A cash advance no checking advertisement on the business also means the same thing.  It is easy to get confused by all of the different terminology but the principle is the same.  The basic idea is that you can walk in, show them how much money you’re expecting in the near future, and get a loan or a check cashed which they will process with their own in-house check cashing software.  Some people are having trouble with their bank accounts and they find the check cashing aspect very helpful.  This is especially true if there has been a bank error that is taking a long time to get corrected.  If you just want to get a check cashed, they usually charge a flat fee with no reason for you to show them your banking information.  Either way, you should not worry about stigma attached to these institutions.  People from all walks of life and incomes find their services to be extremely helpful.

Filed Under: Loans and Mortgages Tagged With: , , , , , , ,

Finding The Best Annuity Rates

November 6, 2009 By FPT Guy Leave a Comment

Finding the best annuity rates can be a difficult task.  Part of the challenge is due to so many companies selling the same product.  Almost all financial institutions offer an annuity package.  Particularly, they offer a rate of interest based on how much money you deposit and for how long.  Finding the best annuity rate depends on what you expect and how much you have to offer as one of many annuity buyers out in the market.  After you evaluate these two starting points, you can begin your search.  For example, if you have $1000 to invest for 10 years, you will be accepted by some companies and not by others.  Some financial institutions will want you to invest a higher dollar amount.  Some will want you to invest that dollar amount for a longer period of time.

Of course, doing your research is important as an annuity buyer.  After all, there are other issues to consider.  For example, what if you want to take the money out early.  For some companies, taking the money out early means losing some of your interest earnings.  Other companies charge a flat rate based upon percentage.  Therefore, if there are many things to consider besides the interest rate.  For instance, you may decide that you are looking for the best fixed annuity rates.  This means that once you contribute your money, you are locked in at that interest rate.

For some people, the best annuities rates are those that are connected to immediate payments, other want fixed annuity rates for to have a guaranteed percentage, though these are not backed by the SEC like variable annuities are.  In technical language, what they’re looking for are the best immediate annuity rates.  An immediate annuity means that you are given money monthly.  Basically, you will deposit a large amount of money and live off of the interest.  This means that you might need to deposit over $100,000 for 20 years.  However, at the end of the 20 years, you will still have $100,000.  In the meantime, you will get a monthly check based upon what ever percentage rate you chose.  If you have a 10% fixed annuity rate, then you will get that payment every month.

The main consideration on anyone’s mind is acquiring the best rate annuity.  Depending on the amount of money that you invest, this can be anywhere from 3 to 15%.  However, it is unrealistic to assume that you will get a high rate of interest if you are investing less than $10,000.  Again, you need to keep in mind that if you suddenly need to liquidate your assets, there can be some a legal paperwork involved that causes you to lose some of your initial investment.  Be sure to read the fine print very carefully and consider what other assets could be liquidated before you touch your annuity.

Filed Under: Financial Planning Tagged With: , , , , ,

Understanding Remortgage Loans

November 5, 2009 By FPT Guy Leave a Comment

When people buy a home, they take out what is called a home loan.  When people take out a loan on the value of what they have already paid on their home, this is called a mortgage.  Once you have a mortgage in place, you may want to change it over time.  It is normal to want to remortgage loans.  A remortgage loan is a way for you to change your interest rates to lower remortgage rates.

Typically, people will do this in order to lower their monthly rate.  However, you may want to pay it off quicker.  Both are remortgaging options.  Newer mortgage instruments like the self employed remortgage and buy to let remortgage also exist, for those who work for themselves.  There are many options available for almost any loan or mortgage situation.

Having a lower monthly payment can be extremely helpful if you are in a financial crisis.  As a matter of fact, it can be your only option.  However, once you do this, you need to pay it off.  If you do not, you can have the problem of bank of foreclosure.  So while it is tempting to go with a cheap remortgaging option you may find on an online remortgage quote, you need to pay attention to your ability to pay it back.

Many people feel that it is not an option to get a cheaper loan.  This is partially due to their bad credit.  Most people are unaware that there is such a thing as a bad credit remortgage loan.  However, they may not understand the idea of a mortgage in the first place.  After all, a mortgage can only be done if you have paid part of your original loan.  The lender is interested in the value of your home minus what you have paid.  This is how the mortgage functions in the first place.  So if you have bad credit, it doesn’t matter.  After all, you have your home as collateral – something which may not be an issue if you’re doing everything to stop foreclosure now – if you are about to lose your home.  A remortgage might be one of the last options you have.

Homeowners are also often confused by the definition of a home loan remortgage.  This is not the same thing as a mortgage.  This means that you take your original loan and change it.  For example, if you have a 10 year loan, you can change it to a 30 year loan, or you might consider a 40 year mortgage.  Many people will do this if they do not have very much equity in their home.  Equity means that you have already paid a significant amount of money into your home.  If you have equity in your home, then you can get a line of credit or even more than the value of your home.  Such as with a 125 home equity – though this type of loan is not recommended for most people.  If you have a mortgage, they give you money based on the equity you have already paid.  If you have a home loan and a mortgage, that means that you will be paying 2 payments per month unless you borrow from the same lender.

Filed Under: Financial Planning, Loans and Mortgages, Real Estate Tagged With: , , , ,

Finding Great Fixed Annuity Rates

November 5, 2009 By FPT Guy Leave a Comment

When you are compiling wealth for your retirement, a few things come to mind.  For example, a personal savings account.  You might also know about a 401K.  However, many people are unfamiliar with fixed annuity rates.  Fixed rate annuities are very much like certificate’s of deposits (CDs) that you get from your bank.  However, the main difference is that they are mainly used for retirement savings.  This means that you have a certain amount of money and you cannot touch it for a predetermined number of years.  The interest rate on that is also locked.  In this post, we’ll be looking at how to find the best annuity rates possible for your investment portfolio.

In order for a fixed rate annuity to work, you must make an initial deposit.  This is often a large amount of money starting at $5000.  As an annuity buyer you don’t have to worry about the money because there is very little risk involved.  Plus, if you need to liquidate your assets, you can do this easier than with a typical CD.  Fixed annuities rates are usually between 3 and 10%.  However, if you liquidate them early, you may lose all of this interest.  This is why it is better to not over extend the amount you want to invest.  This is not a hasty decision to make.  Once you put aside this money, it is important that you leave it there.  Although liquidating your assets may be necessary at some point, it is not advised.  In addition to losing your interest, the financial institution may also require that you pay an additional fine.  Be sure to read the fine print.

In order to get the best fixed annuity rates, you need to shop around.  Different financial institutions offered different rates.  They also have different packages.  For example, in order to get 10%, you may need to deposit $10,000 for 10 years.  Often, the best fixed annuity rate will have this kind of stipulation.  All you need to do is pick a company that you are comfortable with and agreed to their terms.

Fixed annuity interest rates are stable as long as you sign a contract.  Annuity buyers are always interested in getting the highest fixed annuity rates possible and may find that they are closed out after a certain dollar amount.  If you have a very large amount of money to invest, you will need to shop around to many different financial institutions.  This can also be a good way to protect your money.  The FDIC insures investors up to a certain amount.  For this reason, it is better not to put all of your money in one financial institution if you are investing more than $100,000.

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What Is An Energy ETF?

November 5, 2009 By FPT Guy Leave a Comment

It is common with the downturn in the economy for many people to want to invest their money an ETF (exchange traded funds) or stock that is stable.  One of the solutions to this problem is to invest in an energy ETF.  They are one of the most popular commodities in the stock market world.  In addition to traditional energy sources such as coal, natural gas, oil, and gas, there is also alternative energy ETF.  In the past, these were a gamble.  However, clean energy ETFs are no longer a gamble.  They are popular with many people’s morality and are also paying off because of the recession economy.

Of course, any of the energy ETFs are going to work to your advantage compared to all the other ETFs, like a silver ETF, a financial ETF, an inverse ETF or any type of exchange traded fund, really.  In particular, the wind energy ETF tends to be the best.  The main reason for this is that there is always wind.  There is also an abundance of areas in the country where that this is feasible.  Plus, once the wind turbine is in place, it is only a matter of time before the profits role in.  In the past, there was a problem with these types of alternative energy ETF.  This was mainly due to the fact it was a new engineering feat and difficult to maintain and repair.  These days are over.

Amongst other renewable energy ETFs, there is also a lot of money to be made by solar energy.  Solar energy ETFs are also a very stable stock to invest in.  Thankfully, vanguard energy ETF portfolios can now be created by adding alternative energy stocks.  A vanguard ETF of course, can only be purchased through a broker.  In the past, these green energy etf options were only available from the company itself.  Opening up to the general energy ETF list means that their stock is more widely available to everyone.  It also means that it can easily be traded from one portfolio to another.

As always, nuclear energy ETF is available and plentiful.  However, many people find that alternate energy ETF is more close to their hearts.  People everywhere are trying to make this planet a better place.  For this reason, nuclear energy is falling out of favor.  Consumers and citizens feel that if they ignore nuclear energy, it will just go away.  However, nuclear energy is a very stable stock to buy.  If you are thinking of options for stabilizing your energy based stock portfolio, you may find that nuclear energy is perfect.  Don’t be surprised if your green stock broker objects.  Some consumers feel that nuclear energy is better than oil, coal, or the like.  In the end, the choice is yours.  Choose wisely!

Filed Under: ETFs, Financial Planning, Investing Tagged With: , , , , , , ,

What Are Commercial Insurance Brokers?

November 4, 2009 By FPT Guy Leave a Comment

Many people are confused when they hear of commercial insurance brokers.  They’re often mistake in that this means the same thing as an insurance agent.  Nothing could be further from the truth.  Most people will be approached by an insurance agent in a sales capacity.  However, a commercial insurance broker is different.  An insurance agent will work for one company.  They will try to sell you everything from that one company.  However, a commercial insurance broker will sell you policies from many different companies for you business.

The main goal of the broker is to work for you the client or business owner.  For example, if you go to commercial property insurance brokers, they will not have restrictions over what they can offer you, just like a home insurance broker.  Because they deal with larger amounts of money, they often have many insurance companies that are willing to bend the rules in order to get your business.  Therefore, the broker creates a policy with you in mind and sends it to various insurance companies to be approved.

If this sounds confusing, imagine that you own a taxi company.  You would not have individual insurance on each vehicle in your fleet.  You would go to commercial auto insurance brokers.  You would tell them everything about your company and how many vehicles you want insured.  You would tell them about any specifications that are required by local governments.  You would also tell them the nature of your drivers.  The broker would then devise a policy that works for you and covers all of your needs.

Another example would be for large corporations.  If you on a business that has many employees and customers, you will need insurance.  Let’s say that you have 20 different companies and 20 different states.  Some are retail stores and others are factories.  It can be very difficult to manage this many stores and factories if each one has a multitude of insurance policies.  It is much easier to make one payment to one company.  This is what commercial General Insurance brokers are for.  This way, you streamline everything into one payment.  No need to hire a staff just for dealing with this one area of your business.

The largest commercial insurance brokers in America are well known to everyone.  They may not know that this is what they do, but everyone has heard of insurance companies like AIG.  In fact, they’re often incorrectly called insurance companies.  They are more appropriately called commercial insurance brokers.  If you are thinking about starting a business – which you obviously need before buying commercial insurance – you should consider setting up an LLC as a possible business entity.

You can check out our other insurance articles and guides here:

Finding A Car Insurance Broker

Car Insurance Brokers And Agents

Filed Under: Business Finance, Insurance Tagged With: , , , , ,

What Is A Financial ETF?

November 4, 2009 By FPT Guy Leave a Comment

Financial ETF is an abbreviation for exchange-traded funds.  You may know this system of business as the stock exchange.  There are many ETFs or stock exchanges throughout the world.  In the middle of our global financial crisis, it is financial ETFs that were hit the hardest.  This meant that many companies throughout the world had to cut back their labor forces.  It also meant that many banks lost money.  In order to correct these errors, short financial ETF programs were designed to cover the entire financial sections.

The hopes of these designs were that profits could be made even though the global market was in trouble.  The overall point of this program is that there is a downward trend in prices of stock.  It means that a stock that is worth $1000 is sold to the same fund manager if the price declines to $800.  The same fund manager will therefore make a $200 profit.  This process is repeated over and over again to compound the profits.

There are many problems affecting banks involved in the global financial ETF list over the past year.  The $700 billion bailout that was applied by the United States government has done little to relieve the problem.  This has led to many loans that are of poor quality.  This means that financial services ETF are suffering.  The main problem is that good creditors are losing their good standing and there are very few borrowers paying down the loans they have taken out.

In the meantime, investors are looking for a solution for their investments.  This means that they will have an investment that will hold even if the Dow Jones industrial average tanks.  For example, purchasing gold.  Other investors may choose to invest in other stock markets.  For example, Canadian financial ETF.  After all, if the American ETF is not doing well, then maybe another country will be.  Of course, everyone’s ultimate goal is to reach the the most solid double long financial ETF.

In pursuit of the best financial ETF, many people will consult a stockbroker.  However, they can quickly become overwhelmed by the new methods that are being implemented.  While a novice may be familiar with many techniques used by stockbrokers, they may not be familiar with new terminology such as a double short financial ETF.  The most helpful thing to do is to show them charts based upon results of the recent past with each ETF proposed.

For more on ETFs check out our posts on:  Inverse ETF - Silver ETF - Energy ETF – enjoy!

Filed Under: ETFs, Financial Planning, Investing Tagged With: , , ,

The Many Types of Mortgages

November 3, 2009 By FPT Guy Leave a Comment

If it has been a long time since you looked at mortgages, you may be surprised that there are many more than three types available.  The amount of information for the various types of mortgages can be overwhelming.  In order to understand them little bit better, it is important to understand who is sponsoring the money.  For example, some types of mortgages are sponsored by the government.  Two common mortgages sponsored by the government are for veterans or first time home owners.

Most of the other types of mortgages are based on someone having other mortgages already.  Primarily, this is called a combo or piggyback mortgage.  This means that you take out two different mortgages at the same time that follow each other.  These are not done by the government.  They are typically different types of mortgages done by the same financial institution.  Most likely, a bank or credit union.  Another type of mortgage is a 40 year mortgage which can help lower your payments, but it can be more expensive in the long run.  40 year mortgages need to be carefully assessed before choosing one.

In order to help younger mortgage payers, some mortgage companies offer interest only mortgages.  This means that you can pay the interest at a time in the future.  In the beginning, you do not pay the interest.  You only pay for the monthly mortgage amount.  Not all types of mortgages require you to pay interest, but most of them do unless they come from the government.  Interest only mortgages are put in place to compete with government mortgages by offering the option to pay the interest at a later date.

There are also various types of adjustable rate mortgages.  These types of home mortgages can often be seen as confusing to many consumers.  The reason for this is because there is no standard.  The interest rate can fluctuate over any designated period of time.  For example, monthly, annually, or quarterly.  There are also other variations to this kind of mortgage.  There is also the option to have a mortgage buy-down.  This means that there is an initial period at first where the interest is low.  Then, at a later date, this increases.

Of course, there are also many other types of mortgages – like no doc mortgage loans for those who want quick approval and less hassle.  There are a specialty mortgages for people who are buying a home that needs many repairs.  This kind of loan is partially funded by the government.  There are also mortgages or someone who has been trying to sell a home for an extended period of time.  And of course reverse mortgages for elderly people who need to sell off their house for money to live on – for which the reverse mortgage jobs industry has become popular.  Read our post “How Does A Reverse Mortgage Work” to find out more info on the reverse mortgage.

Many people are familiar with an equity mortgage that is placed on a home that has already been mostly paid off.  However, many people are not familiar with a reverse mortgage that is a type of home mortgage or someone over the age of 62 who already owns their home.  The lender pays a monthly sum to the home owner as long as they live in the home.  At the end of this period, the lender takes ownership of the home.

Filed Under: Financial Planning Tagged With: , , , , ,

The 1031 Exchange Rules

November 3, 2009 By FPT Guy Leave a Comment

There is a very easy way to sell property under the 1031 exchange rules. Simply put, this involves selling property with a strategy.  You must have two qualified pieces of property in order for the 1031 exchange rule to work.  This is also known as a tax deferred exchange.  Many people get this rule confused with 1035 exchange rules.  The 1035 is concerning annuities.  The 1031 is concerning property.  Both involve exchanging one for another.  Both allow you to defer taxes.  Both need to be handled within a designated period of time.

The IRS 1031 exchange rules, if followed carefully, will mean that you do not pay the 20 – 30% for a capital gain.  In other words, if you sell your property, the IRS will expect you to give them a percentage of your profits.  However, if you sell the property and turnaround to buy another, you will not need to pay the IRS.  As long as you follow the rules for the time period involved, you will technically the following 1031 tax exchange rules.

Some property owners lose their property due to it being condemned, a fire, or other damage.  If this is the case, there is a tax code called the 1033 exchange rules.  This rule helps you to avoid paying the IRS a large sum of money on a property that you are no longer making a profit from.  This is extremely helpful if you were expecting to follow rules for 1031 exchange.  This is also helpful if a government entity seizes a property.  For example, they seize property in exchange for money in order to build a public road.  This way, you may not follow your plan for the 1031 property exchange rules and save a significant amount of money, but you can’t still follow through with your plan to defer 20% – 30% of your property tax.

The rules of 1031 exchange must be followed very carefully in order to protect your tax status.  The sale of the property must be handled through an agent that is determined to be a qualified intermediary.  All of the money you make from the first sale must be applied toward the second sale.  If any cash is left over, it will be taxed.  In other words, the second property must be more expensive than the first property.  So you may want to take a look at the different types of mortgages available if you need some extra money for a more expensive property.  The main points that you must know in order to follow the 1031 exchanges rules is to understand the identification period and the exchange period.  As long as you follow the rules, you are on your way to saving a significant amount of money with the IRS.

Filed Under: Real Estate Tagged With: , , , , , , ,
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