FYInance

Archive for July, 2008

Today we are going to discuss what bonds are. Let’s start with the basics. Some of you may know bonds as fixed income securities or debt securities because bonds have fixed interest payments.

So, what is a bond?

A bond is another type of investment that you can put your money in (just as you would with stocks). When you buy a bond, you are effectively loaning your money to the bond issuer. In return, the issuer promises to pay you back plus interest payments regularly. Basically, when an (bond) investor loans money to the bond issuer, the issuer must make regular payments of interest for the use of the funds.

Who can issue a bond?

Corporations, municipalities and the US governments are the issuers of bonds. They issue different types of bonds. When a corporation issues a bond, the bond is classified as a corporate bond, for example. Bond issuers issue bonds to raise working capital or funds.

There are many aspects of bonds and bond investing to discuss. We will discuss more about bonds later. For now, if you want to learn about bonds, you can go to http://money.cnn.com, http://www.bloomberg.com, and http://all-about-bonds.info. Next time we discuss bonds we can talk about bond interests, maturities and other important factors you should know when investing in bonds.

If you're new to FYInance, we're going to make it worth your while to subscribe to our FYInance RSS feed. It will keep you up to date, on your terms!

Gas seems to be staying expensive. Now, driving is a concern. Right now, gas and many other products are expensive and possibly could get even more expensive. The slow economy has driven prices up exponentially for both gas and other products. As a result, people have to change their lifestyles and think twice about how, when, and where to spend their money.

Gas is the worst of all

This is especially true with regard to gas, which people used to purchase without thinking too much about it. Now people have to consider how much driving they truly need to do to accomplish everyday tasks and try to economize their driving trips wherever possible.

If you watch the news or read it online, you will hear of many stories about how the high gas price is affecting people on a world wide scale. Not only in the US, but in most places in the world. On http://www.usatoday.com there was an interesting story about how the high gas price is affecting a community, hitting rural Americans particularly hard. The article is called “High gas prices threaten to shut down rural towns”.

Please leave comments if you have something to share about high gas price.

The IRS wants your money!

When investing, not only your goal would be to make as much money as possible (most people have this goal!) and achieve your financial goal, you will also have to pay attention to the taxes you will owe to the IRS. Obviously, the more money you make, the more money the IRS wants from you! There enters tax planning. Some people go overboard and day trade, but they don’t take into account what their capital gains will do to their finances tax-wise. As a result they are not making as much money as they would because they have to give a large chunk to Uncle Sam.

So, before you invest seriously, you should spend some time researching how your investment strategies will do to your tax bills. Capital gain taxes are not to be ignored. Go to the IRS website www.irs.gov and you can read about different tax treatments regarding investing. Don’t be on the IRS’ radar – it’s not worth the trouble! Taxation and tax planning is not part of this website even though we will touch on the subject of taxes on investments a little bit. But, budget in your tax bills early so that you know what you owe the IRS and with proper tax planning, you could even lower your tax bills! Good luck you all!

Recession, recession, recession… are you scared?

Today, we had a discussion about what the current economy is affection us, the banks, our finances, jobs, and everything else. The recession discussion tends to scare people and bring about many concerns and worries.

Don’t lose sight of your financial goals

But, no matter what the economy is doing, no matter how bad the economy is, we cannot let it get to us. We need to still work towards our financial goals. We need to follow our financial plan even though it may be harder than we originally anticipated.

Fortunately, at the end of the gloomy discussion, we managed to have a slightly more upbeat discussion about what if we had a lot of money on hand right now. So, again, we ask our readers what they would do if they had $50,000 in the bank account right now and one of them said:

The $50k question is back again!

So, what would you do if you had the $50,000 in the bank now?

“I would pay off my bills, this whole recession thing really scares me! Put some in savings to make sure I have emergency money. Spend some on my son who would never forgive me if I didn’t. And then I would take my best friend, who is also struggling financially, and we would go to a resort/spa for a weekend. We’ve both had some rough years lately. Both have gone through divorce, struggling somewhat financially, and we could really use the relaxation or get-away. Money is no fun if you can’t share it.”

Thank you for sharing your thought. It is nice to see that even in tough times, family and friends come first and of course you need to pamper yourself when you can. Don’t let the recession talk get the better of you. Have fun if you can while working towards your financial goals!

When the economy is slow, it is tough being a student. Not only tuition are expensive, books are expensive, lab equipments and other accessories are expensive, housing is expensive (and the list goes on) but there are other factors that makes being a student when the economy is recessionary very difficult.

A story from a student in the slow economy

Here is a story from a student whose life has changed because of the economy:

“Well, basically, I am going to school full time (online) so money was tight before, but now my family and I eat everything at home. We don’t go anywhere unless absolutely necessary and it is one big trip to many stores near each other. My husband and I are also now working online to make more money to just make ends meet. This takes away from my studies so I am having to stay up long nights just to do my courses. So basically it is school and work, no play at all.”

Thank you for sharing your story. There are so many other students in the same boat or in even worse situations. Money is hard to make when the economy is slow and anyone who is supporting themselves while going to school will have to work extra shifts to earn more money.

Financial planning helps students in slow economy

Some students are fortunate enough when their parents set up a college plan or a 529 plan for them. We will discuss collage planning and the 529 plans another day. But if you want to read about 529 plans, there are websites such as these ones http://www.sec.gov, http://www.morningstar.com, or http://529-plan.info for a more basic explanation of what a 529 plan is. A 529 plan, if a student has one, will usually help him or her throughout his or her college life so that he or she does not have to work extra hard, in the evenings and weekends to make ends meet and still have free time to study.