Personal finance expert on September 21st, 2009

Much has been touched on the issue of good debts and bad debts. In terms of personal debts, most personal financial advisers would generally advocate that consumption debts like credit cards and hire purchases are bad debts.

Banks do tend to charge a lot for unsecured personal loans.

Debts incurred for loans like education loans however are considered good debt since there’s a good chance that the expected increase in income in future can cover the interest charged.

Singapore small business loans, if used prudently can also be a good debt for a company. Let’s take a very simple illustration on how a small business can take advantage of a business loan to generate higher growth.

Small companies don’t want to miss opportunities to scale up
Company A imports product X for $1 and sells it off for $2. Business is growing and it receives 10 orders for product X. However, it has only sufficient capital to fulfill 5 orders. Company A would then take a $5 loan from the Bank, which charges 10% interest for every dollar lend. Company A would still pocket a 90 cents profit per product after accounting for the interest charged by the bank.

This is just a simplified example on how companies leverage on financing loans to meet growth and demand, a popular concept also known as using OPM (other people’s money). The bottom line is: As long as the business can generate higher revenue/mark up than the interest charged by the bank, then a business loan would be considered a good debt.

Apart from fuelling revenue, business loans could also be used as a vehicle for tax reduction. The current corporate tax rate in Singapore is at 18% on chargeable income. The market rate for unsecured business loans is around 5%-10%.

If a company uses debt wisely and do not over gear, debt is not costly. Best of all it can be offset against taxable income.

If you are a SME boss and perhaps there are a few shareholders in your company, it may not make sense to get Singapore housing loans in order to obtain capital if the other shareholders are not chipping in.

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Personal finance expert on September 21st, 2009

Savage Times in Markets

But the profit over that period , which began when stocks reached their nadir in March, was not enough to offset the losses recorded in the recent six months. Not since 1932 had the market suffered a half-year period as bad as that one.

Sponsors clearly found it hard to decide whether the Great Recession would turn into Great Depression II.

Amazingly, but , the American stock market was one of the least inconstant markets in the world in the last year. It was among the best markets when it was plunging, and among the worst when it was soaring . Over all, it ranked near the bottom among international markets.

Whatever else you might want to say about the virtues of international diversification, in this cycle it has done little to balance the risks of investing in any one market. When the markets broke , they nearly all went down. When the markets rose , they soared together.

If history is a leader , the strong upturn may be an indication that better prices are still ahead. Since World War II, there have been eight times before the current market when the S.& P. 500 managed to soar at least 30 percent over a half-year period — in 1963, 1971, 1975, 1980, 1982-83, 1991, 1997 and 1999. A year later, the index had made further gains in seven of them.

The exclusion was 1980, when the economy went into a double-dip decline and dashed the hopes of investors who had bet on a continued rise in stock prices .

Before that, the record was less impressive. Rising costs in 1929 presaged the Great Depression, and a keen rebound in 1930 proved to be a suckers’ rally. But big gains in 1932-33 and 1935 were followed by additional profits . Costs were little changed a year after large gains in 1938 and 1943.

The accompanying graphic demonstrates the truth of an old proverb : If you lose 50 percent of your money, and then profit 50 percent, you have not come close to going down even.

Italy provides one of the best examples of that. Over the six-month time ending on Wednesday, the FTSE/MIB index of Italian stocks rose 81 percent in euros. With the euro also strong against the dollar during that period , the Italian index more than doubled, rising 109 percent from the perspective of a dollar-based sponsor .

But an sponsor who put money in the Italian stock market exactly one year before, on Sept. 9, 2008, suffered a decrease of 55 percent in euros, or 60 percent in dollars, during the next six months. The Italian market, like the American market, hit break on March 9 of this year.

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Personal finance expert on September 19th, 2009

The talking heads keep pushing that the economy is improving ,but, I think the millions upon million who are out of a job, are probably going to not agree. The talking heads are focused on profit. So if a company can make enough income while being lean and mean, well great. The problem is we will see profits long before any serious recovery starts. Don’t take this the wrong way, a company needs profits before it can start hiring, but this is going to be a turtle race recovery.

1-year and less certificates of deposit rates have continued to drop. Our high 1-year at 2.50% went down to a 2.00%. The next highest rate, 2.35% APY, held for about a week, but has since dropped. Some of the big boys have continued to adjust rates down. Some long-term rates have inched up a bit. At the beginning of the month we had a 5-year CD at 3.70% APY. It increased to a 3.80% APY, but has fallen back down to 3.70%. Of course, 5-year CDs may not be the best idea right now unless you have a great ladder or the penalty is low for closing the CD early. The other side of the coin, we just don’t know when the rates will be increasing. The Fed is talking like it could be a while.

Residential property continues to be a drag. Many states had issued moratoriums on foreclosures and those are beginning to expire. There are still lots of variable loans that are re-setting. With the way home prices are, there is no way to refinance. Banks have been trying to hold off showing losses, but they can only do that for so long. The June data for many banks looks worse than March’s.

Commercial real estate appears to be the next big problem. Many developers built small business complexes expecting them to be filled with entrepreneurs looking to serve all of the new homeowners. As the complexes remain empty, the commercial property owners can’t afford to continue to take the losses each month. Many are letting them go into foreclosure or selling for steep discounts.

So do I have any good news. The workweek as reported for average hours worked increased a little. Income overall snuck up 0.1%. And my kids’ soccer team, the Big Dogs started in Division B; their highest start, yet. Yes, I am a very proud coach and father. So how about you guys?

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Personal finance expert on September 19th, 2009

We can achieve a lot of credit card holders who are intelligent to retain their good even admirable credit ratings by using their card wisely as well as warily and pay the amount of charged purchase immediately. Unhappily, limitless numbers of them are lessening into a bad credit score due to their irresponsible spending habits. Mostly, credit card issuers will prefer people with good and excellent credit score as their customers. What about those who have bad credit? Fortunately, there are still many card issuers that allow people with bad credit to have their opportunity to get a credit card again. The question is how to get a credit card with bad credit?

The most and first thing to do for those who have bad credit score or rating on how to get a credit card with bad credit is by applying for a secured credit card. This special card simply means a card especially intended for people with bad credit score to help them recover and re-establish their bad score by challenging for certain amount of money as their deposit in a bank account. Actually, the credit limit on such situation depends on the amount of the security deposit which usually comes as 10% of the deposited money. This exacting card is able to help you manage your financial so as to you can evenly as well as pay off your debts on time. Make sure that your card issuer also fond of the payment reports as well as reporting your good, punctual payments to the three major credit reporting companies.

Such good data will definitely increase your credibility and if you keep doing such thing, it is only a matter of time when you will regain your good credit score as well as open your prospect to get a conventional credit card again. This will not be easy to do markedly if you have a reckless spending habit. One thing to remember is that your greatest goal id to build, re-build as well as re-establish your bad credit so as to you qualify a straight credit card. Such good and excellent credit score will certainly benefits you not only financially, but also in getting a mortgage or loan. That is why you have to firmly force yourself to stick to your ultimate purpose so as to the question such how to get a credit card with bad credit will never be your question since you are able to keep up a good credit and even an excellent credit score. It will absolutely take your energy, time as well as struggle. But once you have achieved what your have been strive for, you will not easily fall into the same hole due to the hard, difficult process in keeping it to be right.

It is awfully crucial for every credit card holders to carefully and wisely use their cards. Due to the cards’ fantastic functions, benefits, features as well as rewards, lots of people spend it more than what they could afford. The result is they are categorized as people with bad credit due to the lack of payment and many other things. With such bad credit he will absolutely wonder how to get a credit card with bad credit.

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