5 Ways to Know You’re Making a Bad Investment

Bad investments can have negative effects on your finances for years. How can you tell solid stocks from illegitimate investment opportunities? The following warning signs can help you determine whether investing is a good idea.

Your Adviser Works on Commission

Image via Flickr by kenteegardin

Not all financial advisers have your best interests in mind. Those who work on commission may recommend investments solely based on which ones will help them profit. This point is especially true for high-cost investments since these types of investments will maximize their commissions.

To make sure you’re not getting swindled, switch to a financial adviser who is not paid on commission. Your financial adviser should be qualified as a Certified Financial Planner (CFP) and make money only from financial counseling fees or annual fees that account for a small percentage (think 1 percent) of your assets.

You’re Jumping on the Band Wagon

Just because everyone else is jumping on a “hot” investment opportunity doesn’t mean you should follow suit. This decision can be a recipe for disaster if many people start to cash out at once, an activity which can cause the bubble to pop and your investment value to tumble rapidly.

Do your own research and take advice only from trusted experts rather than following the herd. Learn more about how to make money in stocks so that you can make smart, strategic decisions about your investments that aren’t swayed by peer pressure.

You’re Borrowing to Invest

Some investors are able to use a margin to increase their investment returns. However, this risky method is usually recommended only for investment experts. This approach makes it even harder to turn a profit since you’re also paying interest on your margin loan.

Unless you’re willing to take on big risks in the stock market, you should avoid borrowing money to invest. Any investment that you do take on should be one that you can buy outright. If you don’t have much cash available, consider more affordable options such as penny stocks or micro-investing apps.

An Investment Sounds Too Good to Be True

If you find yourself believing that a particular investment could be life changing for you, it’s time to step back and think. Are you being sucked in by unrealistic promises? Is the sales pitch you’re hearing filled with phrases such as “huge upside and zero risk” or “unbelievable gains?” If so, you may be on the verge of falling for an investment scam.

Don’t expect more than average stock market returns when you’re investing. If you’re being promised significantly more, it’s a sign that the investment is shady.

You Discover a Limited-Time Offer

One clever sales tactic is requiring investors to come up with the capital to invest in a short amount of time. However, reliable, trustworthy investments aren’t going to disappear in a matter of days. In this case, the pressure to invest quickly is simply a trick to get you to fork out the cash before you have time to reconsider.

Make sure you take time to research each investment. You should never rush to invest based on the idea that you’ll “miss out” if you don’t buy in immediately.

You want to be a careful, informed investor. Use the tips above to make sure that you don’t fall into a bad investment decision.

Our Tips For Financing And Budgeting For An Unexpected Furnace Repair

You come home after a long day at work, and the house is freezing cold. You can hear the furnace blower running, but you’re just getting cold air. Something’s wrong with your furnace – and you need to fix it, ASAP.

If you’re a homeowner, this is going to happen to you eventually. So, how can you deal with the financial implications of an unexpected furnace repair? Here are a few tips!

  1. Build A “Home Emergency Fund”

When you own a home, you should expect the unexpected. There’s a financial planning adage that states that, when you rent, the money you pay each month is the most you’ll ever pay. But when you own a home, the money you pay for a mortgage is the least you’ll ever pay.

And that makes sense. When you rent, your landlord is responsible for upkeep and repairing major systems like furnaces. You’ll never have to pay more than your monthly rent bill. But when you own a home, you’ll regularly have to pay for maintenance and repairs – on top of your mortgage.

Most financial experts recommend saving 1% of your home’s value for repairs in a special “home emergency fund” every year, as this is about the amount you’ll pay for repairs. So, if you have a $150,000 home, try to build up a stash of $1,500, which can be used for these kinds of emergency repairs.

  1. Keep Energy Costs Down (And Save That Money For Furnace Repairs)

Try to keep things a bit cooler in the winter and warmer in the summer. You may also want to investigate ways to insulate your home more effectively. If you can take some money off of your monthly energy bills, you can dump it directly into your home emergency fund!

  1. Ask If The Company Offers Any Financing Options

Don’t have cash on-hand for Winnipeg furnace repairs? It happens. In fact, it happens so often that some furnace and HVAC companies offer in-house financing for large repairs, or for furnace replacements. See if there’s any way to spread the cost over 6-12 months, to make sure you can get the furnace service you need now – but give yourself extra time to pay it off.

  1. Consider Paying With A Credit Card

Credit cards are a reasonable way to pay for a minor furnace repair, which usually costs about $300, or even a complete furnace replacement, which can cost up to $3,000. However, you should not use your credit card unless you’ll be able to pay it off, in full, within a month or two.

Credit cards have very high interest rates compared to other loans. The longer you wait to pay off your furnace repair, the more money it will cost you in the long run. That’s why it may be a better idea to…

  1. Tap Into Your Home’s Equity Or Get A Personal Loan

A Home Equity Line of Credit (HELOC) uses your home’s equity as collateral, to secure a loan with a great interest rate. This is often the best option for financing a furnace repair or replacement, if you don’t have an emergency fund. Depending on your credit, the APR (interest rate) could be as low as 4%!

Personal loans are also a reasonable option. But because you do not put up any collateral for a personal loan, they have higher interest rates than HELOCs, usually between 7-12% if you have good credit. However, this interest rate is much lower than most credit cards – so a personal loan is usually a better alternative, if you can’t pay off the cost of your furnace repair within a month or two.

Use These Tips – And Prepare For The Unexpected!
Ideally, you can save enough money to cover the cost of a furnace repair or replacement outright.

But, if not, a credit card, HELOC or personal loan – or in-house financing with an HVAC company – gives you the financial flexibility you need. You’ll pay a bit more in interest, but you’ll be able to keep your home in tip-top shape, and ensure that your furnace remains functional and safe for years to come!

Beginner’s Guide in Refinancing Mortgage

Becoming a homeowner is a special milestone that you can be proud of. Finding the home and going through the closing process can be exciting. There’s nothing like signing the closing documents at the bank or title office.

As we all know, things can change over time. For instance, there’s a possibility that you may want to refinance your home loan. You may end up being in perfect position to refinance, but it’s important for you to know that you may be facing a lengthy process.

Why Should You Consider Refinancing?

You may like the current terms of your loan, but you may be able to get a better deal if you refinance. Refinancing may help you lower your monthly mortgage payment. However, you should know that refinancing could put you in a position where it will take you a longer period of time to pay off your home. You could also be looking at a higher interest rate.

You should look at how much interest you have paid on your current loan and how much you will have to pay when you refinance. Please keep in mind that home loans are front-loaded with an interest rate. Your payments are directed at reducing your principal balance. You must key in on what you have paid in interest at this point and what you pay on your current loan. When you compare this to what you will get with a refinance, you will be able to see the total loan costs for each option.

It’s not unusual for homeowners to refinance their home loan. This gives them the golden opportunity to get a lower interest rate. It can do the same for you. Can you imagine what it would be like if you could save thousands of dollars?

Using a Mortgage Refinance Calculator

Are you serious about moving forward with refinancing? It’s now time for you to work the numbers. A mortgage refinance calculator can help you find the best deal. However, it’s critical to mention that you need to know your new loan amount and interest rate. If you don’t, you can simply make an educated guess.

Put your data or information into the calculator. It will calculate new monthly payment, your monthly savings, and your lifetime savings. The mortgage refinance calculator will give you an idea of what you can expect if you decide to proceed. It’s the best instrument to use when you want to get the best deal. You can go to https://figure.com/refinance-mortgage to learn more.

Here are the steps you need to take for the refinancing process:

1. Be Clear About Your Goal

As we stated earlier, you should only refinance for the right reason. You should focus on lowering your interest rate while shortening your home loan term.

2. Check Your Credit Score

Take out the time to get your credit score. The lender will take your beacon score into consideration. If you have a high credit score, you will get a better deal on the interest rate.

3. Research on the Market Value of Homes in Your Area

Check out the recent sales of homes in your neighborhood. This will give you an estimate of how much your home is worth on the market.

4. Look for the Best Rate

You should get several offers. It’s now time for you to compare the refinance rates. Who’s offering the best deal?

5. Know the Costs of Refinancing

Please be ready to deal with the fees associated with refinancing. You will be responsible for covering the following: an underwriting fee, the cost of appraisal, application fee, document processing fee, credit report charge, tax transfer fee, and etc.

The law requires lenders to disclose these fees to you. Their transparency will help you get prepared.

6. Collect Your Paperwork

The lender will require paperwork from you. You may have to download certain statements, submit your pay stubs, and other documents. You must make an earnest effort to stay organized while collecting your paperwork.

7. Accept the Offer

Accepting the offer means you will be locking in your rate with the prospective lender.

8. Have the Capital at Your Disposal

You will more than likely be facing closing costs, property taxes, and other expenses. It will be wise for you to have enough capital on hand to take care of these costs.

Would you like to lower your monthly mortgage payment and interest rate? Refinancing can help you do this. However, you must follow the points in this article carefully if you want everything to go well. At the end of the day, refinancing can help you save thousands of dollars.