Category: Finances

Jan 31 2012

The Pros and Cons of Internet Banking

Online banking has become very popular in the past couple of years  for simple banking transactions. Online banking can make actively managing your financial life much more simple and less time-consuming. With an internet bank, you’ll be able to monitor your accounts, pay bills, and transfer money, all with the click of a button.

But if you are considering online banking, and in particular, Internet only banking, remember that internet (or “direct”) banks are not always a viable substitute for brick-and-mortar banks in all cases. To help you decide whether to switch to online, stay with traditional banking, or do a combination of both, let’s examine the advantages and disadvantages of Internet banks.

The Advantages of Internet Banks

1. Banking convenience.

Direct banking institutions are open for business anywhere and any time you have a web connection. They will sometimes perform maintenance on their site, but otherwise, they will be open 24/7 to help you manage your finances.  Your account balance and information are can be accessed with a just few keystrokes and you can also send yourself alerts to help you manage your money better.

2. Better interest rates, lower fees.

Infrastructure and overhead costs are minimal and allow Internet banks to pay higher interest rates on savings accounts while charging lower loan and mortgage rates. There are even accounts with no minimum balance or service fees that can be opened without a minimum initial deposit. Just put in your personal details, and get started.

3. Extensive financial information.

Internet banks normally have better-quality websites than traditional banks, with more comprehensive content. Such features can include functional budgeting and forecasting tools, online financial planners, investment analysis tools, loan calculators, retirement calculators, and more. They can help you with budgeting and financial planning long before you have to speak to a specialist.

4. Banking wherever you are.

Internet banking now almost always includes mobile capabilities that will send you text messages, email messages, let you bank through an app, and more. New applications are continuously being created to further expand and improve this capability on smart phones and other mobile devices, so if you love to keep up to date on the latest technology and stay on top of your money, you will enjoy all the features an Internet bank has to offer.

5. Easy electronic transfers.

While traditional banks do allow funds to be moved via electronic transfer, often there is a fee. Most internet banks offer unlimited transfers at zero cost. This even includes transfers to outside financial institutions. They also accept authorized direct deposits and withdrawals, such as payroll deposits and automatic bill payment.

6. Simple to get started, simple to use.

Online accounts are quite easy to set up, and don’t require any more information than a traditional bank account. If you don’t want to complete the application online, the forms can be downloaded and mailed. Online checks are actually easier to use, since the payee information is automatically saved for future use. You can also often connect with your top financial software, such as Excel and Quicken.

The Disadvantages of Internet Banking

1. Lacks the personal touch.

A regular bank does offer a better opportunity to develop a personal relationship. These connections can help when you need a loan or other special service. Your local bank manager also has some discretion when you’d like an overdraft fee removed. You can talk to a human being more easily if they are just down the block than online miles away.

2. Transaction fees.

Complicated transactions and large cash transactions can be challenging with an online bank. Most Internet banks don’t have their own ATMs, though some have begun to form network alliances with traditional banks. But in most cases, ATM use will cost you unless you can find a nearby machine.

3. Available services.

Some Internet banks may not have the full range of financial services that a traditional bank has, such as insurance offerings and notarization. They might not have physical branches at all. It might also be hard to find an ATM linked to their system without having to pay high fees. (See above.)

4. Security concerns/online identity theft.

Internet banks are required to obey the same laws and regulations as a traditional bank, and the FDIC insures the bank accounts. However, having electronic access to your accounts always carries some additional risk to your data, regardless of whether you’re using a traditional bank or an Internet bank. With many people worried about identity theft, you might want to consider the decision to bank online or via your phone carefully before proceeding.

There are advantages and disadvantages to both online and traditional banking. Your ultimate solution might be to utilize both types of banks. Use the pros and cons highlighted above in relation to your own decision, and see if online banking is right for you.

FURTHER READING

Eternal Spiral Books: Money Matters Series

Dec 01 2011

Investment Opportunities: Making the Gold Market Work For You

Thanks to the a volatile stock market and certificates of deposits (CDs) and money market accounts paying their lowest interest in 5 or more years, good investors are eagerly looking for other opportunities to make their money work for them and keep on earning. Many are turning to other markets, and one of the most attractive for those who can afford it can be the gold market.

Although investing in gold might not be your first idea when thinking about starting a new investment, in these precarious financial times it is actually rather steady compared with other investments. Of course its value fluctuates, but it behaves more like a currency, in smaller increments up and down, rather than going into free fall like certain stocks.

Gold is a commodity, and you can usually spot trends and jump in and out of the market more readily than you can with certain stocks. Gold has reached all-time highs consistently in the past three years, so if you can afford to enter the market, investment experts suggest holding 5 to 25% percent of your portfolio in gold.

Methods to invest in gold include actually physically purchasing gold bullion in the form of coins or bars, buying gold bullion as a member of a group of individuals who invest together in a special fund, and investing in gold equities, such as gold stocks and gold mining companies.

Let’s look at each of these in turn to see if they are a good choice for your portfolio,

GOLD BULLION
Gold bullion can actually protect you in a volatile market. If the currency of your country loses value, inflation occurs, or the country’s economy can go into decline. When you invest in gold bullion that you store yourself, you keep the gold in your own home or perhaps in your safety deposit box at your bank. You are responsible for keeping your gold secure from theft. But you will pay no monthly or yearly fees to anyone for storing your gold investment. The not so good news is you might want to obtain insurance on the gold so, in the event of theft, you won’t lose your investment. Keeping the gold secure is important to eventually profiting from your investment.
Another factor to consider when storing the gold bullion at home is liquidity issues. In the event you need cash quickly, you would have to sell your gold bullion yourself. Doing so means you have to find a buyer and make the exchange to get the cash. This process could take a few days or even longer, so it is not a practical way to tie up all of your wealth.

Another method of investing in gold bullion is purchasing gold coins. They’re easier to store and can also become worth more than their face value and gold value to coin collectors. However, selling your coins, if you need to liquidated your assests, can also take a few days and not always be that easy in terms of finding a buyer.

For those who fear the U.S. financial market is going to implode, buying gold bullion and coins might be a wise way to go. If, however, you want quick, convenient investments which do not carry such a high insurance risk and risk of being stolen, purchasing gold bullion in this way might not be the best way to invest in the gold market. However, traditional investors and those saving for a long-term financial goal at least 5 years in the future find gold a good option.

INVESTING IN GOLD AS PART OF A GROUP

This method of gold-investing is different from buying gold bullion because you don’t have to take physical possession of the gold you’ve purchased. Instead, your gold is kept in a warehouse of sorts called a “gold bank,” along with the gold purchased by the other members of your fund group. Instead of storing it in your home or a safe deposit box, you will mke your purchase and then get a receipt that states that you own “X” bullions of gold and tells you where it is being stored.

In the event you wish to sell your gold, you would let the gold bank know. They would sell your gold and send you the value of the gold at current levels, minus a small fee. If seeing is believing and you prefer to have it in your possession, you can ask the gold bank to ship your gold to you. The responsibility for storing the gold will then be yours and you will have to find a buyer and sell it on yourself just as you would with gold bullion.

INVESTING IN GOLD MINING AND GOLD EXCHANGE TRADED FUNDS (ETFs)

Investing in mining and stocks which are related to the gold mining industry can be quite convenient for those who do not want to have gold bullion or gold coins sitting in their home or safe deposit box. Rather than receiving the gold physically, you will receive stock certificates.
These are easy investments you can make online or through your stock broker. Do your research on the top companies in the world and which ones are showing steady performance and a good return on investment.

Whether you put your money in gold mining or gold stocks, you will be charged a fee, but the opportunity for making more money can more than offset the cost. As with all stocks, there is a risk that the stock may lose value. However, they are also an easy investment to sell compared with coins or bullion.

Gold ETFs can be purchased through major stock exchanges in the U.S. and around the world, so if you are interested in the steadiness of gold as an investment, stocks related to the gold mining industry can be an easy way to grow your money without huge volatile swings.

Investing in gold might seem beyond your means, but with the stock exchange having lost 40% of its value in 2008 and about 25% of its value in August 2011, gold may start looking like more and more of a reasonable investment choice for you to make in these times of economic uncertainty.

Whether you opt for buying gold bullion and storing it, purchasing gold through a fund group or obtaining gold mining stocks and gold ETFs through your broker, take the time to study the market and see if any of the various choices available are right for you.

Jim Franklin is the co-author of several guides to smart investing, including Name Your Link, The Essential Guide to College Saving Plans, and A Beginner’s Guide to Buying Life Insurance.

Jul 09 2010

How to fund a new business

Here is a useful article on how to find the funding for your new start up business.

Dec 06 2009

How Does Your Company’s 401K stack up?

A new tool may help you discover if your corporate 401k is going to be a boom or a bust. 401k comparisons

Dec 02 2009

The Dangers of Debit Cards

With the holiday season upon us, we need to not only be mindful of our spending,   but the hidden dangers that lurk in even the seemingly safe debit card: Dangers of Debit Cards

Nov 15 2009

Why Gifts Cards are not such a great gift

Gift cards may seem like a terrific idea, but there can be a lot of hidden fees and restrictions. Here is a handy article on what to watch out for this holiday season. Gift Cards not a great gift

Apr 10 2009

The Young Investor: Projects and Activities for Making Your Money Grow

The Young Investor: Projects and Activities for Making Your Money Grow

Looking for some spring break or summer projects for your tweens and teens? Why not look at the economy, and start planning ahead?

Kids can never start too young thinking about their financial future. The book The Young Investor is a great way to get them started on the path to financial success and independence.

It was written by a grandmother, Katherine Bateman, who wanted to teach her own grandchildren the importance of money and how to invest it sensibly.

She has a vast knowledge of the investment banking sector, having been the CEO of a major investment bank.

It is never too early to start thinking about your financial future, and how you are going to meet many of life’s goals.

This book is geared toward teens and young adults. The author talks about a variety of topics including basic economics, budgeting, investments, banking, saving, stocks, bonds, mutual funds, risk tolerance, and much more.

The author uses everyday experiences and current examples to get these basic but essential ideas across. She uses a story of the Young Investor at the end of each chapter throughout the book to demonstrate and review in an understandable way the points made earlier on.

The book also features a bibliography, websites, phone numbers and a glossary.

This is a fantastic book for every budding investor who wants to learn the language of business and investing. It would make a great gift for any young teenager, or teen getting ready to face the world and their own financial responsibility.

The Young Investor: Projects and Activities for Making Your Money Grow

Apr 07 2009

Start Late, Finish Rich

Start Late, Finish Rich was written by David Bach, money guru and well-known author of several #1 New York Times bestselling books on achieving financial success.

Some of his books include The Automatic Millionaire, Smart Women Finish Rich, Smart Couples Finish Rich, and Fight for your Money.

His books have been translated into 15 languages and are being sold worldwide. He also lectures throughout North America on finishing rich.

Start Late, Finish Rich inspires reader to understand that it is never too late to take financial action. Whether you are in your thirties, forties, fifties or older you can still change your financial situation.

He talks about real life Americans who have made the commitment, and with David’s help ended up being financially free.

He coaches you step-by-step through a financial plan to improve your finances and start saving money. His plan relies on proven and tried financial principles: spend less, save more, make more, and live more.

Your road to success won’t be an easy one and it won’t come overnight, but once you have made the decision and stick to it, it is doable.

David Bach has helped millions of people achieve financial security with his financial plan. It gives hope to everybody, whether you have credit card debt, are living from paycheck to paycheck or are just starting late financially for whatever reason.

This book could be the start to your financial freedom. All it takes is a bit of effort and planning on your part. So why not head over to Amazon to get a copy (even a second hand one!) now:

Start Late, Finish Rich: A No-Fail Plan for Achieving Financial Freedom at Any Age (Finish Rich Book Series)