This is a guest article submitted by Patricia. She is an expert at reclaiming unfair bank charges.

Stand up to the banks and reclaim unfair charges

Millions of people across the world have been victims of unfair bank charges. But not all of them decide to fight back. Customers who were pressed upon with high charges (wrongly) by the banks have taken action and retaliated.

We often do not want to reciprocate simply because the procedures are long and time consuming. Yet, when the charges inflicted are high, it is more likely that one would want to reclaim them. If you have a similar problem, follow these simple steps and fight for your right. After all it is your money that is being ripped off.

Get your bank statements

Most of us are not updated with our bank statement figures. But the Data Protection Act entitles everyone with the right to get this information from your bank. Visit your local branch and ask for your statements.

Open a new bank account

It is wise to open a new bank account once to decide to reclaim unfair charges from your bank. This is because some banks close customer accounts after paying out compensation. If you have an existing overdraft facility, it should not be too much of a problem to get a new agreement with another bank.

Calculate the total charge

After you have collected your entire bank statements from your bank go through them and calculate the total charge. Note down the charged amount, date and time as it may be useful for future correspondence with the bank. Remember that precision is very important when it comes to dealing with the law.

Write to the Bank

Now when you have the figures (of the amount charged) with you, it is time to write to the bank mentioning about the unfair charges.Ask for compensation on the basis of your letter.

Give a reminder

If the bank does not respond within 14 days of your writing to them, write to them once again, reminding them about your concerns. This time warn the bank that you would take court action they do not respond. You can even write about this hassle in different magazines and people forums so that other customers are made aware of such situations.

Take help of court

If your bank does not respond even after your second letter, file for a court judgement. Go to the court and find out the procedure in order to reclaim your money.

The procedure of the bank acknowledging your request takes around 14 days after you register your concern. It might happen that the bank does not even acknowledge your request, implying that you have to directly claim through court asking for compensation for the entire amount.

The best way to stop banks swindling with your money is to avoid penalty charges. Do not miss payments, live debt free ; do not go to banks which are known for harassing customers. A conscious effort can drive you to fight for your rights.

About the Author

Patricia is a finance blogger and debt management expert. Visit her site for debt management help. Article Source: http://www.articlesbase.com/finance-articles/victim-of-unfair-bank-charges-fight-for-your-right-1796648.html.

Photo Credit: BankPromotions.com

Though we have a favorable opinion of promotional offers, reward checking, and shopping around for the best rates, one common misconception among investors and savers alike is that no-fee and interest paying checking accounts provide extra income.  In many cases, non-promotional no-fee and interest yielding checking accounts may do more harm than good.

Interest Bearing Checking

With banking fast becoming a highly-competitive industry for your saved dollars, many banks are now promoting checking accounts that pay small amounts of interest on relatively small deposits.  For example, your local bank may offer to pay as little as .10% interest on checking accounts with an average daily balance of more than $5000.  The idea of earning even some interest on your checking account is promising, but you’re best to overlook what are really just gimmicks.

Figure Your Costs

In today’s world of high-tech, electronic banking, savers have more options than ever before.  They can check their balance whenever they want, move money from savings to checking with the click of a mouse, and manage all their accounts without making a trip to the bank.  These money and time saving options are great, and they are exactly the reason it makes little sense to stuff your checking account for a minimal return.

Many interest bearing checking accounts, which require up to $5000 before they yield any return, pay less than even smaller amounts of money stored in a savings account.  In addition, since most companies now accept payment by electronic funds transfer through a savings account, having a checking account stuffed with cash makes even less sense.

Simply Put

Unless you write piles of checks each month or don’t have an easy way to transfer funds from savings to checking, it makes little sense to take advantage of these offers.  99% of people will be better served – and earn better returns – if they instead keep nearly everything in savings, choosing only to transfer money to checking when it is needed.  Sure, you’re unlikely to earn 2% per year with a savings account, but rates are soon to rise, and this money-making tactic will help you reap more out of the cash you have lying dormant in the bank.

Banks are trying everything they can to bring new clientele to their business.  In fact, they’re going as far as offering 4% interest on checking accounts, a banking product that generally yields less than a tenth of a percent, if anything at all.

How Reward Checking Accounts Work

Like reward credit cards, reward checking accounts offer benefits to those who make frequent use of their checking accounts.  To get started with reward checking, most banks require a minimum deposit of $25,000 and offer to pay 4% on the first $25,000, plus 1% on any amount over $25,000.  For fixed income investors looking for liquidity, this is an excellent deal.  Money market accounts are paying just a fraction of what rewards checking accounts offer.

There Are Some Catches

Alas, you will not earn 4% as easily as just depositing $25,000 into a checking account and letting it sit.  Most banks require that you make at least 10-12 purchases per month with a paper check or a debit card attached to the account.  This may seem like a large number of transactions, but for most people, it can be covered just by swiping your debit card for common purchases like gasoline, dinner, utilities and cable bills, and groceries once a week.  Most people will find they’ll hardly go out of their way to make 12 purchases with a debit card each month; you probably make that many without even trying!

Earn 3% More with Rewards

The average money market account with a $25,000 minimum currently yields just .99% per year, while rewards checking accounts are quickly topping 4% per year.  With such a differential, those who can slightly alter their spending habits, or can find the time to open a new account, should most certainly do so.  With such small requirements, as well as the chance to earn 4 times what you would be receiving with a similar money market account, it makes perfect sense to try out rewards checking.

Beware, though, that the rules are stringent, and you must meet the monthly requirements, or your benefits will be forfeited.  However, most should find the rules to be straightforward, easy to meet, and most importantly, rewarding!

Photo Credit: Business Week

What has always been a staple of financial planning is now supercharged in today’s economy of low rates and incredibly low mortgages prices.  Paying off the mortgage is one item investors should place on the back burner.

Managing Your Finances

Couple historically low rates with tax advantages for middle-class investors, including the ability itemize and write off interest expenses on mortgage payments, investors are better off investing the excess rather than paying down debt.  Young Americans are in an even better position; as the majority of a mortgage payment is interest and can be written off, they have to time accept more risk, allow their wealth to grow in the market place, and let their real estate holdings appreciate from their timely bottomed out prices.

Calculating the Bottom Line

Luckily for investors, interest on a mortgage is entirely deductible and generates a beautiful tax savings.  An investor in the 28% income bracket and a home loan at 5% would effectively pay just 3.6% in interest with the additional savings coming from an itemized deduction.

Home owners looking to refinance have an additional reason to do so.  Points, which are the charges mortgage brokers add to a mortgage, are also deductible over the life of the loan.  Therefore, a 15-year refinance that costs $1500 would allow a borrower to write off $100 a year for 15 years, which generates $28 of tax savings plus a lower interest rate on the amount borrowed.

Beating 3.6

Anyone with even the most rudimentary of investing knowledge should be poised to beat, and exceed, an annual return of 3.6%.  Those who lock into low rates today may even be able to beat the 3.6% interest rate with corporate bonds, as historically inexpensive rates give way to more a more reasonable level.  Considering that stock funds have generated greater than 10% per year and bond funds roughly 5% per year, there isn’t a single borrower (with a good interest rate) that should be paying down debt early.

Of course, if you haven’t already, lock in today’s rates.  If history is any indication, they won’t be around for much longer.

Photo Credit: Land Think

Just as the sub-prime rate resets rattled the economy in 2007 and 2008, a new groundswell of adjustable and Alt-A mortgages could send the US real estate economy for a second twist.

Weighing the Problem

While investors focus on the commercial real estate bubble that is still unwinding throughout the United States, a silent storm of resets in the residential markets could send home prices back into a second freefall.  More than $350 billion in residential loans are due for a rate reset as option adjustable rate mortgages.  Trailing close behind that figure at nearly $250 billion are Alt-A mortgages, a type of exotic mortgages that were the main product during the real estate boom of the early 2000s.

Alt-A Mortgages

Although less risky than their sub-prime counterparts previously removed from the system, Alt-A mortgages are still riskier than traditional A paper.  Alt-A mortgage holders typically have high debt-to-income ratios, poor credit history (though better than sub-prime borrowers), and poor loan to value ratios.  Therefore, those with Alt-A mortgages are either biting off more debt than they can chew, have a poor history of making good on their debts, or live in a home in which they’ve borrowed a greater percentage of its market value and are likely “upside down” on their holdings.

The Fed

As these loans will be up for rate resets in 2011, the Federal Reserve will play a key role in how many Alt-A borrowers go underwater.  Should the Fed raise rates aggressively, Alt-A borrowers will inherit an incredibly high monthly payment.  However, if the Fed keeps rates extremely low as they have for the better part of two years, borrowers will pay roughly the same amount each month in interest and principal and suffer few consequences.

2011 Will Make or Break the Market

The eventual outcome from 2011 resets is either the same market we’ve seen for a number of years or a significantly worse housing market.  To put it simply, there is no room for growth – only the possibility that a whole slew of homeowners will again face foreclosure, and the real estate market will have to absorb thousands of homes on the market.  If the Fed gets aggressive come 4Q 2010, look out: the real estate market will face another plunge.

As the best and the brightest round out their last semester of college and prepare to enter the workforce, an entirely new breed of future scholars are being born.  Unfortunately for those coming of college age, student loan reform could leave them severely under-funded.

Good Intentions

The newest look at reforming the student loan market is well-intentioned, but may leave some families wondering how they’ll pay for the high costs of college tuition.  In bills presented in front of the House and soon to make it out of local committees, the student loan market as a whole would be nationalized and directed through the “Direct Loans” program of the Department of Education, rather than operated by independent and for-profit banking institutions.  The goal is to create a system that minimizes the cost to taxpayers and returns student loan profits to the Treasury, rather than private coffers.

The Catch

Student loans through the Department of Education and FASFA generally begin funding only after a certain amount of the cost is paid either by the parents or the student himself.  Under this new program, there is certain to be a shortage of institutions financing such small and generally unprofitable loans, which are usually worth just a few thousand dollars for the average middle class American.  In addition, no one knows definitively whether the new reforms will automatically opt-out parents who make too much money.

The Solution

With stocks trading well off their highs and the student loan business fighting against more government bureaucracy, there has been no better time to start a 529 plan for your prospective student.

Another inherent benefit for future scholars is that the growth in pre-paid plans is allowing students to lock in savings against future tuition hikes today, regardless of the performance of the stock market.  This benefit, although once looked over during the roaring bull market of the 1990s, is one of the most advantageous offerings, as it provides a return on investment with essentially zero risk.

Tax advantages are also plenty.  Deposits into a 529 plan are considered gifts, thus allowing the student to solicit help from grandparents and other extended family at any time that can be used for education without penalty, taxes and other charges.

Though down and out following the collapse of the bubble in 2007, real estate could be back in vogue as an investment.  Lower prices, lower interest rates and an improving economic climate could set the stage for another great boom in real estate investing.

Real Estate as an Investment in 2010

Anyone who has watched the evening news in the past six months knows there’s no shortage of “fixer-uppers” and under-priced repossessed homes on the market.  As the recession wears on, more and more homeowners are underwater, and many are walking away from the homes into which they’ve invested so much.  For investors, there has never been a better time to buy.

Low Rates

The cost of borrowing is one of many great reasons to be a landlord.  With rates under 5% for prime borrowers, monthly payments on investment grade houses are well below monthly rent prices.  In addition, a new slew of previous homeowners who are now renters need a place to live, and with banks unwilling to make another risky loan, they’ll turn to the rental market for inexpensive housing.

Follow the Jobs

Should the employment situation improve in the coming months, the rental market will be quick to follow.  As more people find full-time and even part time employment, demand for the basics of life, which is primarily shelter, will grow faster than the general economy.  In many places, especially on the west coast of the United States, single family homes now shelter multiple families as unemployment swells well into the double digits.

If You Don’t Want to Be a Landlord

You don’t have to be a landlord to take advantage of rising real estate prices.  Real estate investment trusts, homebuilder stocks, and a variety of exchange-traded funds are sure to increase in price as the real estate economy rebounds.  One popular choice, the SPDR S&P Homebuilders ETF (XHB) has nearly doubled in the past 12 months, and it pays a healthy 1% annual dividend to investors.  Other opportunities in individual companies, such as Equity One (EQY), which rents office space and retail fronts to small businesses, provide another outlet into an already improving industry.  In the end, the opportunities are many, and the chance for profit is huge should the economy recover.

Credit card companies relish in a dirty business, giving millions of people very small credit lines with incredibly high interest.  To further the spending addiction, credit card companies make it extremely easy – and often rewarding – to use the card at as many places as possible.  In addition to the revenues they earn on both merchant charges and interest, credit card companies hold a dirty little profit secret: extra fees.  In fact, these fees often reward companies with more money than a full year of interest payments.

However, the profit party may be over for credit card companies.  American legislators are now proposing changes that will alter the playing field that credit card companies have dominated for decades.

A Dramatic Business Change

Besides interest rate caps and changes in the maximum interest rate, credit card issuers face a huge change to their current business model.  At present, most credit card companies apply monthly payments to the lowest interest balance first – which ensures that the balances take longer for the consumer to pay off, while the companies get to pocket higher profits from larger interest rate charges. While consumers hope that consolidating their credit cards will help them lower their interest costs, this is not always the case in reality. Democrats are hanging out this dirty credit card laundry to dry and hoping to make legislative changes to alleviate the issue – but this is a bridge credit card issuers are willing to die on, and these changes may not be included in the final bill.  However, gauging the response from the House and its vote, this bill will likely make it through the democratically controlled Senate.

Who’s Affected the Most?

The most affected companies are those that issue “sub-prime” credit cards that flood consumers’ mailboxes.  These companies often charge high interest rates and even higher default interest rates and extra fees for each missed or late payment.  The result is that these companies can charge fees as high as $39 for a late payment, even if the balance was just $10.  That’s an effective interest rate of 400% in one month, which terrible for anyone trying to get out of their small debt.

Capital One vs. American Express

Capital One does excellent business in serving credit cards to borrowers with poor credit.  In contrast, American Express is good at giving cards to people who can pay them back.  Their business models reflect the spectrum of business philosophies, with American Express’ cards carrying lower APR and higher limits that allow more business and luxury use.  By doing so, American Express can also target its market, offering retail establishments access to its users by paying a premium price for credit card use.  In contrast, Capital One gives very small credit lines to many people and at higher interest rates.  With this strategy, Capital One can produce higher profits, albeit with more customers.

Premium Issuers to be Least Affected

Premium issuers will be least affected because they draw more profits from less customers and also rely less on late fees and other fee schedules to draw profits.  Looking forward, American Express makes a lot more sense as an investment than Capital One or other low end lenders.

What the Legislation Means for Their Stocks

The new legislation is sure to put a dent in the bottom line of many credit card companies.  Unable to draw additional profits from consumers, they’ll either have to raise their interest rates across the board, or live with reduced profits.  The changes may be minute or dramatic; however, if any industry can easily defray a new cost, it will be credit card companies.  After all, they’re very good at what they do.

My wife and I attended the Donald Trump Wealth Building Seminar a couple of weeks ago.  Actually it wasn’t a seminar, but a 2 1/2 hour promotion for his upcoming weekend seminar.  I have attended sales pitches for seminars before, but I must admit that this was one of the better ones.  I did walk away with a few tidbits that I will be able to use on my Financial Freedom journey.

To the dismay of a few attendees the Donald wasn’t there.   What do you expect for free?  He did have a 10-15 minute video introduction to the seminar – where he changed his name into a verb.  He must have mentioned the Trump Way a hundred times.  “I will teach you how to create wealth in the Trump Way.  You will learn how to evaluate projects in the Trump Way.  By the time you will finish my seminar – you will be combing your hair in the Trump Way.”  I added the last one.

The presenter was excellent.  Trump found a person who he believed represented the average American.  He owned a moderately successful real estate agency and was making a living, but wasn’t really getting ahead.  Trump’s people mentored him obviously in the Trump Way. Now he has multiple streams of income and appeared to be in a much better financial position.  Trump is definitely a smart man.  He created a success story to help sell his seminar.  I am not sure exactly how long Trump work with this person, but I imagine a few years.

During the presentation, it was stated a roadmap is essential to wealth building.  You must have:

• A dream
• Must have a goal and be passionate about it
• Must obtain specific knowledge
• Create a Timeline

In addition to those you must learn:

• how to use OPM (other people’s money)
• OPT (other people’s time)
• and OPE (other people’s experience).

Trump’s time is too valuable to be running over the country pushing this seminar, thus he uses OPT and OPE

There were many other interesting points.  If you have a chance to attend the “freebie” seminar, I would recommend it.  I chose not to sign up for the actual seminar, it appears to have a strong slant towards real estate although it was stated that would cover business development as well.   I may reconsider it down the road, but my focus currently is on the stock market. These seminars are being conducted all over the US.  If anyone has attended the seminar or know of anyone that has attended – I would be interested in your feedback.

Michael Dawson recently said goodbye to a 20 year career in Engineering, Marketing and Sales to focus on living his dream of financial independence. He has since founded The Time and Money Group as vehicle to encourage others to do the same. The company’s mantra is “Why trade time for money … when you can have both.” Sign up for their free weekly newsletter, where he and others discuss the different paths to financial freedom and offer insights for your successful navigation.

Photo Credit: www.SquawkFox.com

The explosion of growth in the ETF industry has been both a boom and a bust for investors looking to make top dollar in the stock markets. Although the vast selection of ETFs gives investors more consumer choice, some ETFs are simply not worth trading. More and more traditional ETFs that help investors buy or sell a vast variety of investments and entire sectors at a time are convenient, but the new inverse and leveraged ETFs are leaving most with a headache.

The Derivative Effect

Post-credit crunch CD rates are contradictorily excellent for investors. Even after infusing the market with billions of dollars worth of capital, personal CD rates are at their best – mostly because the LIBOR rates (the rate at which banks lend to banks) has yet to fall. The only source of capital for banks is other banks in this environment, as only a few have access to government funds. Other smaller and well capitalized banks are finding a tough time finding capital. The general idea that banks are in distress has scared investors away from any significant investments in banks.

Making the Hedge

High CD rates allow for the perfectly hedged investment. First, all money invested in a CD will be fully insured and protected by the FDIC. The only downside to this hedging strategy is that the bank could fail, in which case you’d get your money back, but you would not receive future interest payments. At the same time, rates might even be lower at that point.

Shopping Around for the Best CD Rates

Finding the best CD rates often employs plenty of shopping around and due diligence. Many local banks offer high returns for long term deposits and only advertise their rates to people in the local area. Likewise, credit unions and membership driven banks will only offer the best rates to members as a way to draw new people to the bank. For global types, BankRate.com offers an effective solution for finding the best CD rates.

Make sure to evaluate the bank’s credit rating as a general indicator of its solvency. Some banks like GE money bank or GMAC (the financing arm of General Motors) may not be good institutions to entrust with your money. Even though the banks are FDIC insured, the chance of default (and liquidation of your CD to cash) is greater than others.

How it Works

The hedge is driven almost entirely by the CD. The goal is to find a CD for the timeframe that you would like to hedge against. For example, using a 5 year timeframe, the rates will be better, but you’ll be locked in for 5 years. The general goal is to invest as much as necessary to cover your more speculative investments that are a part of the hedge. With $10,000 and an example APR of 10% for one year, you’d want to invest $9100 into the CD (which will grow to $1010.) The remaining $900 can be invested in whatever you like; think speculative for as long as the CD lasts, as your investment is 100% protected. And in the case of the example above, you would actually make 1% on your investment regardless. Obviously, finding 10% rates in this environment is not easy, but 4% and higher rates on 5 year CDs are entirely possible with many local promotional rates.

Why Use a CD?

In any investing climate, and especially today, protecting your investment capital is the most important strategy. Though you may limit your upside, the downside is negated and the chance of loss virtually eliminated. Furthermore, you’ll also be able to take extremely speculative investments due to the hedge in your CD.

What to Buy

In today’s market, there are hundreds of investments that could pay off tremendously should the economy turn around. Think Ford, GM, the banking sector – any number of stocks that have fallen some 90% from their tops. You also have currency trade options or emerging markets. The possibilities are endless.

A Variant of the Hedge

Since picking the market bottom is impossible when the market is bottoming, this hedge can be used to profit tremendously on the upturn. By operating this hedge every month, or every few months, you could effectively lock in a new CD and take a high risk option play on the turnaround. Look far out into the upper strike prices on an index ETF and aim for the sky. If you miss, you haven’t lost a dime. and if the market continues finding new bottoms, your money was better off in a CD anyway you cut it.

]]> http://www.investortrip.com/how-a-cd-hedges-perfectly-against-risky-investments/feed/ 56 http://www.investortrip.com/top-7-income-tax-preparation-tips/ http://www.investortrip.com/top-7-income-tax-preparation-tips/#comments Sun, 01 Mar 2009 11:35:00 +0000 InvestorTrip.com Staff http://www.investortrip.com/top-7-income-tax-preparation-tips/

Income Tax Tips

It’s that time of year again when the taxman wants to know how much you have earned and how much tax you owe him. Don’t forget that your individual tax return has to be returned to the Internal Revenue Service (IRS) by April 15th 2009, unless you have applied for, and received an extension.

We all want to pay less tax, but instead of looking for loopholes and gray areas, rather focus on managing your tax affairs as efficiently as possible. The following business and personal tips should make the current tax year a little easier on your pocket when completing your return:

1. Record Travel Expenses for Tax Purposes

It is good practice to keep a mileage logbook of distance travelled, in order to accurately determine your travel deduction. If you have two jobs, you can deduct the cost of traveling from the first to the second, but if you have a single job, you cannot deduct commuting costs because it is considered a personal expense, not a business expense. Travel for business, including costs to go to seminars and conferences are 100% deductible. Deductible travel costs include hotels, airfare, taxis, car rentals, parking fees, tolls and tips.

2. Record Medical Expenses for Tax Purposes

Keep records (including invoices and statements) of medical expenses which are not covered by your medical aid, in order to get a deduction for those expenses on assessment. Depending on your income, certain medical expenses including health insurance and dental insurance premiums may be deductible. This deduction is limited to costs over 7.5% of your income. Pursue turning your non-deductible personal medical expenses into a legitimate business expense.

3. Record Entertainment Expenses for Tax Purposes

Be careful of entertainment allowances. Since March 1, 2002, no deductions can be claimed against entertainment allowances for personal reasons. Make sure your employer is aware of this and that the allowances are taxed in full, otherwise you might end up with a tax liability on assessment. You may however deduct “ordinary and necessary” business meal and entertainment expenses up to 50%.

4. Keep Good Tax Records

Why not make your life easier and ensure that you don’t miss any deductions by organizing your record keeping system early and keeping it updated. Not only does having organized records make it easier and less frustrating for you to file your tax return, it also enables you to explain an item on your return that the IRS might question, and could prevent you from having to pay additional taxes and penalties for unsubstantiated items. Although legally you need only keep tax records for three years , you should keep a copy of the returns in case you need information from these returns at some point.

5. Consider Filing Your Taxes Electronically

If you want your return processed in approximately half the time of a paper return, you should consider filing the forms electronically. IRS E-file makes you life a lot easier as it picks up problems with your returns instantly and provides immediate feedback and confirmation regarding your return.

6. Avoid Refund Anticipation Loans

While it would be nice to get your money back in your pocket as soon as possible, it is much better to wait for your refund. The downside of these loans is that the annual interest rates on them are very high, usually between 50% and 500%. So between the loan fee, tax preparation fees and other administrative fees imposed on the loan, you end up losing a big portion of your refund.

7. Be Aware of Income Tax Deadlines

Be aware of deadlines in order to avoid penalties. Tax returns must be submitted before the due date given by the IRS. If your previous years’ tax affairs are up-to-date, an extension for submission of the return can be requested. However, extensions are granted less frequently, depending on your particular circumstances.

Conclusion

Tax season makes everyone a little nervous. Rather start early to allow yourself time to prepare and to ensure that you are taking full advantage of every eligible tax break.

If you’re looking to save time searching for penny stocks, I highly recommend you subscribe to the Timothy Sykes PennyStocking Silver Membership. Click here to learn more…

One of the easiest way to find undervalued penny stocks is to use a free penny stock screener. A good screener lets you search a variety of filters to create a powerful, personalized list of bargain penny stock buys.

Best of all, they are free to use and you can access them at anytime by logging onto the internet.  Every screener isn’t created equal, so I listed my Top 5 favorite online stock screen tools.

Which is the Best Penny Stock Screener?

1. Yahoo! Finance Penny Stock Screener

Yahoo Stock Screener

Yahoo! offers a powerful stock tool that lets you short your results by:

• Category
• Share Data
• Sales and Profitability
• Valuation Ratios
• Analyst Estimates

Remember to set the “Share Price” to $10 max to only retrieve penny stocks.

2. MarketWatch Penny Stock Screener

MarketWatch Stock Screener

MarketWatch’s screener is the most web 2.0 like of the bunch. You can sort the results based on:

• Price
• Volume
• Fundamentals
• Technicals
• Exchange & Industry

MarketWatch gives you the most control over your results better than any other stock tool. Remember to activate stocks “trading from $1 to $10″ to only show penny stocks.

3. MorningStar Penny Stock Screener

MorningStar Stock Screener

MorningStar’s tool is more suited for mutual fund investors, but you can ignore the MorningStar ratings to return some incredibly accurate penny stock recommendations. You can sort the results by:

• Stock Basics
• MorningStar Stock Grades (Optional)
• Company Performance
• Stock Performance
• Valuation

Morningstar lacks a trading price function, so limit the market capitalization to $1 billion.

4. AOL Penny Stock Screener

AOL Finance Stock Screener

AOL offers a very useful screener that lets you sort penny stocks by:

• Company Basics
• Profile
• Fundamentals
• Performance
• Results

Select the $0 to $10 Price range in the beginning, continue screening your results, and you’ll create a powerful list of targeted penny stocks in no time.

5. MSN Penny Stock Screener

MSN Stock Screener

MSN offers a simple yet powerful stock tool as well. You can sort the results by company basics and key financial indicators. MSN lacks many screening features, so make sure to select only small cap stocks to improve your search results.

Very few people equate frivolous expenses as lost income.  Knocking off a $500 a month payment is more than just getting out of debt; it’s saving your money and boosting your cash flow. In these woeful economic periods, sometimes there is no such thing as a great investment – except for one in your own personal finances. As the global markets are tanking, it seems as though the best investment is in your own debt, whether that be credit cards, car loans, or maybe even the home. Eliminating debt will not only save you thousands in interest charges, but it will free up more monthly cash flow and put you in a better retirement position.

Consider this: you have $20,000 you would like to invest, but currently hold $15,000 in credit card debt. While you’re interested in setting a path for retirement, you also have to consider how much debt you’re holding. Paying off the credit card debt will save you a $300 a month payment, as well as knock off an interest rate anywhere from 10-20%. On $15,000, credit card rates really start adding up; even a modest 10% rate sets up $1500 a year, or $125 per month in interest charges.

Paying off debts now while the market is in decline will give you more cash flow to invest when the market starts turning around. Below is a list of debt types and how paying them off will be advantageous to your financial future.

Credit cards

Credit cards should be the easiest of debt to eliminate. Too many people are sucked into the idea that they’ll pay off their balances when they have more money. Chances are that you’re unlikely to have any more money until you start paying off the balance. Adding an extra $50 per month to a credit card bill in a crunch, or even a one time payment of $1000, will reduce your monthly payments and allow you to dedicate more resources to the principle. If you currently have a credit card with a 2% minimum monthly payment and a 18% interest rate, only a quarter of your monthly payment goes to eliminate principle.

If you can, dedicate as much as you need to pay off the credit card bills. The chances that you’ll earn a guaranteed 20% rate anywhere else is slim to none. Even as your monthly payments drop, continue to make the same payment. More of each payment will be dedicated to principle, further dropping your monthly payments. Compound interest works in two ways only: for you and against you. Paying off credit card bills will save you money and eventually free cash flow. Think of how much you could do with an extra $300 per month.

Car loans

There are plenty of reasons to pay off the car loan. Their interest rates usually run higher than your mortgage, but generally lower than credit card rates. Second, the amount of insurance you carry can be lowered after the car is paid off. Generally, creditors ask that the car is covered for obscene amounts of money and against virtually any problem or natural disaster you can imagine. Paying off the car loan helps in two ways: you save money on interest and on the cost of carrying a car.

Home mortgages

Your mortgages will likely be the last loan you ever have, generally spanning thirty years. The interest rates on home loans are generally lower than other lines of credit and often have generous repayment terms. There is no reason to payoff a home loan before starting your retirement planning; the interest on these loans can be easily beaten over the long term. If you are interested in paying off a loan as quickly as possible, consider a 15 year loan instead of a 30 year. The interest rate will be lower, but you’ll have higher mortgage payments, and the home will be paid off 15 years faster than you had planned.

Student loan debt

This should either be at the top of the list or at the bottom of the list, depending on what kind of student loan debt you are holding. Like home mortgages, student loan debt may seem like it will plague you for your whole life. Retirement planning can be done around home loans and student loan debt, but consider what kind of interest rate you’re paying on your student loans. Federally backed student loans are cheap, currently as low as 6.2% per year, while private student loans can run as high as some credit cards. Paying off your debt to Uncle Sam should come long after paying off the bankers; however, corporate student loan issuers like Sally Mae charge rates that are significantly higher than government programs.

The kicker: Student loan debt is hardly a talking point when you apply for a line of credit, either for a home loan or any type of large installment debt. In a sense, student loan debt is kept off the books when you apply for a loan.  Student loans are unlikely to affect your credit (unless you’ve missed payments), and it shouldn’t hurt you when looking for other credit lines.

Eliminating debt is never a bad investment

Eliminating debt in any form is a strong long-term financial strategy. It will cut down on your monthly expenses, allow you to save money by cutting in other places (such as insurance), and give you a stronger bottom line in your savings account in the long-run.  Starting with the high interest items and working down the list of highest interest, it would be wise to pay down any interest-bearing loan that is greater than 8% per year. For rates lower than 8%, you are likely  to get a higher return in the market than in your own debt. However, anything above 8% per year is a free guaranteed return; take it now and put the proceeds in the market when it starts turning around.

A reader has left the following question at our Investment Knowledge Base about her situation with a pushy collection agency.

You can read the entire collection agency question at our forums.

If you’re not a forum member, then read the question here and leave your comments below.

Years ago my banking account was overdrawn while I was in the hospital for heart surgery. As soon as I was feeling better, I went to the bank and paid the cost and closed my account. Weeks later I received a letter from a collection agency. I wasn’t feeling well at the time and was very much afraid so I sent the collection agency $50.00 just to get them off of my back until I was feeling better. This happened in the year 2000. I have the bank statement that shows that I have a zero balance. I was told that I must show them my receipt. I have written many letters and I have received many letters from many different collection agencies. Believe it or not, a collection agency is still writing me here it is 2008. I have explained to them many times what happened and that they owe me my $50.00 back. What they have done is subtracted the $50.00 from the amount that they say I owe. As I said before I still have my bank statement which I gave them a copy of. They don’t seem to care. The collection agent just continues to write me. What can I do to resolve this matter? I get so up-set everytime I get a letter from them. This is really worrying me. I am stressed out.

Once I collect everyone’s opinion on how to handle the situation, I will list each response along with the author’s name and link in a follow-up article.

The best response will be chosen as the final answer, and earn a free article listing in the Investor Trip FAQ.

Much of the recent buzz has been surrounding the housing cycle and its recent localized re-trace pattern from its highs. Many people are worrying that their home values may fall considerably, ruining their chances of retiring as interest rates reset, and the amount of borrowers in over their heads is in the millions.

For the future retiree with plenty of time, there isn’t much reason to worry about the current state of the housing market. While the short term drop in home prices is worrisome, the future looks bright. It is important for the saver and spender alike to realize that the drop in property values is nothing. You need a home to live and survive, and while you might have not needed the spare home on the beachfront, things are still all and well.

Paradigm shift

The last decade brought a new sentiment to the happy homeowner. Consumers across the United States considered their homes as an investment, rather than something they must own to live. We all like to have a home, regardless of the current financial situation, and in many cases, renting is even more expensive than buying. Homes were redefined in the late 90s and early 2000s as an investment, where money could be drawn at any time. For the unseasoned homeowner, you might find yourself between a rock and a hard place. Consumers must not worry as the price of homes stays about the same over time – all people need a place to live.

Look at your home as a necessity of life, rather than a 24-7 cash machine. Home equity loans, second mortgages and even HELOC based credit cards shifted the fundamental use of a house from a home to a cash machine. Now we’re worried that we’re in over our heads. The only way the current housing bust can hurt is if you sell. Sitting on top of a large paper loss is nothing compared to renting. When you own your own home, you’re slowly buying it back from the bank. Rather than toss money down the toilet to rent a home, you’re slowly building equity.

Compare to other homes

If your home has lost 20-30% of its value, it is likely that the rest of the homes in the same neighborhood or area have depreciated by similar amounts. Thus, an investment in your home still has the same value compared to other homes in your area. In theory, you could swap your home for any house in the same area, as they have all depreciated equally. It is very rare, nearly impossible, that the value of your home lost 20% and the house down the street gained value. The long term still looks good, unless you sell now, when the only thing you’re holding is a paper loss.

Don’t depend on your home

No matter where you live or how you plan to live, you need to have a place to go to bed each night. From this point forward, it is important not to consider your home as an appreciating asset, as its gains will likely follow the rest of the housing market. An investment in a home is to save yourself from paying rent for the rest of your life while building future equity. Even gains of 50%+ are nothing to get excited about. If you plan to move, you’ll just buy a home that has appreciated a similar amount.

No reason to sell

At this point in time, there is virtually no reason to sell. Home prices across the country have cooled enough to spur plenty of investment and affords new buyers the ability to buy back into the market. In addition, if you look at America’s real estate history in 10 year increments, the price always rebounds and appreciates to higher values within a decade.

Fed plans have worked well

The economic stimulus package offered to US taxpayers and the Federal Reserve’s rate cuts have done much to boost housing prices. The $150 Billion stimulus package will have to find a home somewhere, and it is without a doubt that many will use it as a down payment to finance a home. Lower rates have also spurred home purchases, and with rates going as low as 5-6% on a modest home, people can yet again afford to make the leap into homeownership.

The most important thing to remember is that a home is shelter – not an investment. Buying and selling homes should be left to the speculator rather than the blue collar professional. Consider your home to be a place to live, not a long term investment. Regardless of where you live, you’ll be paying something to live there, and you might as well build equity than pay hundreds and thousands in monthly rent fees.

With a tumultuous week behind us in the stock market, both in America and overseas, many investors are wondering how to preserve and create  wealth. Despite the recessionary fears and uncertainty that are plaguing the rollercoaster performance of the market, the nine underlying principles to long-term wealth creation remain the same:

1. Create Clear, Defined Objectives: Before you begin on any investment plan, you must be clear on your goals and objectives. Are you looking for long-term, moderate growth at 6% that will fund your retirement? Do you seek high, short-term gains to jump start your vacation fund? You must be clear about your goals and objectives. If not , your investments will lack direction and commitment.
2. Consistently Review Your Goals: You should always review your goals periodically, modify and rejuvenate them. With the changing economic and market dynamics, allowing your portfolio to stay on the backburner could prove disastrous to the number of zeros in your account. Continuously reviewing your goals, and the reality of those goals, are important to keeping your portfolio on the right track.
3. Consider Self-Directed Investment: Most of the billionaires today have made their riches through self-directed investment. Essentially, this means taking the reins over your finances. Of course, this involves work, dedication, and consistent learning. You may not be successful initially, but taking your money into your own hands ensures that your self-interest is best preserved.
4. Shun Bad Debt: Not all debt is created equal. There is good debt, which is quite different than bad debt. While the former will make you richer, the latter is a road to poverty. Simply put, whichever debt is generating income for you after meeting all the expenses is good debt, and whatever takes more money out of your pocket is a bad debt.
5. Become Your Own Boss: When you can keep 100% of the revenues, instead of receiving a 10% cut of the true value you bring to a company, you build your path to wealth. Like any investment, creating your own enterprise has a high risk-to-reward ratio. But the payoffs can be tremendous, both monetarily and personally.
6. Exercise Caution with Investment Advisors: Although some investment advisors will have your best interest at heart (or at calculation), not all advisors you meet will be this altruistic. Indeed, generating an income via commissions does not translate into savvy investments for you every time. Before you embark on a relationship with any advisor, conduct research. You can ask to review the past performance of their instrument selection, as well as call several references.
7. Allow Yourself to Make Mistakes: There is no fool proof system of investment. Indeed, most wealthy people have made a plethora of mistakes – but learned the main lesson to become savvier investors. If you allow fear of making mistakes to cripple your actions, then you will only remain at status quo. Letting go of your fear of making mistakes empowers you to scale large challenges, allowing you to achieve your full investment potential.
8. Treat Hot News with a Cold Shoulder: One of the largest mistakes investors make – especially new investors – is pursuing hot news with their portfolio dollars. Once the “trendy” news has already hit the media circuits, the run is most likely already over, and you do not want to be caught buying high and selling low.
9. Be the Tortoise: The adage, “slow and steady wins the race” still persists in our modern era of speed. “Get quick rich” schemes are exactly that – pure schemes. When you take time to carefully map out and walk through your investment plan, the end trophy of financial stability is much more valuable.

After a long day of running errands, I more often than not have nothing to show but a little pocket change. It’s never much after taking into account all the bills I’ve spent. Maybe it might total to 76 cents or even less. No matter the amount, I drop these coins in my coin bank to make sure I save something that day. This is a powerful thing.

$1 in Change Can Turn Into Thousands of Dollars in 1 Year

If you only save $1 in change every day, that’s $365 a year. Get your spouse and kids in on the fun, and your family can save enough for a vacation.

$1 per person x 4 = $4 a day X 365 days = $1460.

That’s nearly $1500 in cash savings by collecting all your coins and saving them.

Calculating Compound Interest Basics

Compound interest is, “interest which is calculated not only on the initial principal but also the accumulated interest of prior periods.” Albert Einstein referred to compound interest as the “8th wonder of the world.” It’s the same powerful concept that keeps millions of people in debt to their creditors, yet also produces millions of dollars when practiced over a long period of time.

The biggest misconception about money is that people believe $25 spent today is worth $25. This is not true! You are forgoing opportunity cost as well, which is the decision to go in one direction or the other. While some may spend that $1 today, you may choose to save and invest the money instead.

You can calculate compound interest using a formula to determine the future value of $25 saved today:

Compound Interest Formula

FV = PV (1+i)^n

FV= future value
PV= present value
i= interest rate
n= # of years

For this example, we’ll assume that $25 earned a 9% annual return (the average between historical small cap stock returns and long term bond yields) over the course of 25 years. Now, we plug and chug the numbers into the compound interest equation:

FV = $25 (1.09)^25

The result of future value is $215. $25 grows to nearly 9x its value as an investment, rather than an expense. If you account for inflation, then the return is reduced to $107, over 4x as much as you started with.

Start Investing Early and Compound Interest Will Work Hard for You

Start investing early and often. Time is a dimension that we have zero control over. You can start off by investing $20 a month when you’re 20, and will end up with more money than someone who started investing $100 a month when they’re 30. Money can be replicated, but time is irreplaceable.

Small amounts count. When I learned this equation in school, I believed the magic of compound interest only applied to large sums of money. I was wrong. $1 will compound as much as $100, provided that annual returns are equivalent. If you have $20 left over from your monthly budget, then re-invest the money so you can earn more money later. Don’t view it as frugal; view it as a smart investment.

During my freshman year of college, I spent over $1000 per term on food, clothing, and weekend party materials My Bank of America debit card was my worst enemy, for it gave me the power to spend, not invest. Except for my Fidelity Roth IRA, I completely neglected most of my investments because all my excess cash went towards my consumption-driven lifestyle. Things have changed now. I now rethink the way I spend money, which improves the way I invest.

So how do you go about saving more money for investing? Easy! You should spend less.

101 Ways to Save Money

Credit Cave has a great post on 101 ways to save money, which provides you with cost cutting practices on everything from credit cards to travel. Once I reconfigured my consumption habits, all of a sudden I had tons of money to invest! And I thought I would have to get another job.

101 Ways to Invest Money

Great! You found 101 ways to save money, which means you should have hundreds (maybe thousands) of dollars left over for investing. I wrote early about 101 ways to invest money in equities, collectibles, real estate, and alternative ideas. There are tons of lucrative investments all around us, yet it’s really easy to become obsessed with stocks, mutual funds, etc. Investing takes many forms; explore as many investment ideas as possible.

Maintain Your Investment Strategy

Like a world class distance runner, you must maintain your stride throughout the whole contest. Saving and investing wisely for a couple months will not write your ticket towards financial independence. Wealth takes time to build. So start out small by cutting your expenses on a few discretionary items (Starbucks latte, that gym membership you never use), then continue the cycle. In a few months, you will eliminate a ton of unnecessary habits without noticing a difference in your attitude or mood. It won’t be easy, but heck, what have you ever gained without working hard for it?