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Examples of Default Risk


Default risk is the probability that a company or an individual will not be able to pay their debts obligations. Thus any time that an investor or a lender gives out a loan to a person or a company who might not be able to repay it they expose themselves to default risk.

Among other default risk solutions, a creditor can set a default premium which can be used to cover the default risk. The default premium is the additional amount that any lender sets for the borrower to pay indirectly while repaying their loan. This amount is determined by subtracting the rate of return of a risk-free bond from the rate of return of the corporate bond you are purchasing. The Merton Model, Edward Altman’s Z-score and the Jarrow-Turnbull financial models are used to analyze default risk.

Sovereign Risk

Sovereign risk is the type of default risk associated with the government not being able to meet loan obligations. Before a creditor deciding to lend any foreign country, the lender must consider the risk quality of the country and the credit quality of the firm. A perfect example of this type of default risk happened in 2015 when Greece failed to make payments to an IMF loan. Another example is when Argentina defaulted on a World Bank debt which was worth one billion dollars during the country’s economic crises in 2002. Due to the 1998 Russia finance crisis, the country defaulted on internal bonds but not its Eurobonds. When sovereign countries such as the above nations default on their loans, they are not liable to court suits or bankruptcy courts.

Strategic Default

A strategic default is an intended default of a loan. This happens when a borrower can pay a loan, but they choose not to. This is mostly applied to nonrecourse loans whereby the debtor cannot get any other claims from the creditor. A good example of this is when mortgage loans have negative equity in countries where the common law is applied like America. In this case, the debtor halts making the loan payments and just sends the keys to the lender which is usually a bank.

A sovereign country can also opt for a strategic default type of loan. However, in this case, it will be called a sovereign strategic default. A good example of this happened in Ecuador in 2008. This was when the Rafael Correa who was the president of the country at that time decided not to make payment for his country’s debt. The president then stated that the cause of the default was that he thought the debt was illegitimate and immoral.

Consumer Default

A consumer default arises when an individual doesn’t make the payments required for payments such as utility payments, mortgage payments or rent, and consumer credit among others. A good example of this happens when an individual suddenly fails to make payments d due to losing a source of income, when income decreases, unemployment or even personal issues that may arise at any time. However, research shows that being young, illiteracy, or even being too old maybe also contribute to defaulting consumer loans. Regardless of this, this type default often attracts legal litigation cases or even bankruptcy procedures.

Is Investing in HYIPs Worth It?


Is Investing in HYIPs Worth It?

The newest fad in investing is the high-yield investment program, or HYIP. Some of these “investments” are no more than just Ponzi schemes, so many investors might wonder if they are worth it. The answer to that question could be a surprising yes – but only if you, the investor, know what you are doing. There are some careful tips you can follow in order to answer the question in the title with an emphatic yes.

First of all, avoid any HYIPs that offer you a high rate of return in no time flat. HYIPs that promise you a 700% return after one day, a 7000% return after two days, or a %70000 return after three days are never going to deliver. They are simply going to rip you off and leave you without any type of return whatsoever.

So what type of HYIP should you invest in instead? Believe it or not, you actually should go for a low-performing HYIP because those types are really the only legitimate ones out there. When looking for a good HYIP investment, you want one where you can expect to get your seed money back in three to six weeks. Of course, this is just the start of having a good HYIP portfolio.

Another tip to consider would be to always invest in HYIPs with daily or weekly payouts. It should raise a huge red flag to you if a HYIP has a long stretch without a pay-out even if everything else checks out well.

You should invest a small amount of seed money across a number of HYIPs instead of just settling on just one. You also should strongly consider recovering your seed money as soon as possible. Letting greed and desperation take you over is only going to cause you to lose huge in the long run.

You need to invest through a trusted HYIP monitor in order to determine just how legitimate a particular HYIP might be. A HYIP monitor that expects their downline investors to get paid consistently is usually a wise idea. You also should consider doing internet research to determine if anyone is complaining about a given HYIP not paying them. Use legitimate monitors like HYIP, to sort out the good ones from the bad ones.

Finally, you need to pick a well-established HYIP in order to make your investment. Don’t be surprised if this is difficult to accomplish because HYIP’s don’t exactly have a track record for long-term success. The best way to find a well-established one is to peruse the trusted HYIP review websites in order to find the right HYIP. You want to find a HYIP with positive reviews from sites such as earnwith.me, internationalfreeofers.com, and digitalmoneyideas.com.

Finally, the best thing to do is to avoid testing a HYIP. This strategy will not work because these types of investments have a short life span. Find a promising alternative, do your research, and invest in it accordingly. That is the best method for reaching a return on these rather risky investments. So….is this worth it? It depends. You really have to know what you’re doing in order to do it. If you are going to invest in something that promises ridiculously high returns then no, it is not worth it, and you are only going to lose money in the end.

Stick to the tested:

The Three Common Mistakes People Make When They Buy Pro Gold and How to Avoid Them


Go gold! This is what we all hear. Truth be told, there is a lot of money in gold these days. It is more fluid and can offer you more to retire on later. Buying gold does not come without its fair share of issues though. You do need to be careful. You need to be careful that you are not making some of the mistakes other have made.

There are 3 common mistakes people make when buying gold and pro gold within the Forex Markets and FX handel. Here is a rundown of what they are and what you need to do to avoid them.

1)Do not get ripped off

This may be harder to say than do, but they are ways to avoid this. he conventional wisdom is that a gold coin is about 5-10%. This goes for the metal coins too. They are usually made at a 4% markup. The retail margin for this is going to be about 1-3%.

Take the spot price and subtract it from the price you are being quoted. Now, you divide this answer by the spot price and multiply by at least ten times.

An Example

Say something is selling for $1225.00. The spot price is going to be about $1200. The markup is going to be at 2.1%. You will have to have this increase in order for you to break even on the investment.

Why do you want it? Is it for a long-term thing? Is it for a short-term thing? Those who are buying in the long-term need to it as close to the spot price as you can get it. Are you looking to use it as money? You then need to invest in something smaller and you will pay the premium.

2)Gold stocks

They are tempting, but they will only offer a 3 to 1 chance for leverage. Stick with an investment that offers more leverage. You want to have something for your money to show for it. Some people tend to buy more than they should. There are some gold stocks and pro gold stocks that are not worth buying. You need to do a cost-benefit-analysis of the situation. You need to know that your return is going to be worth the cost of buying. As I said before, some gold is not worth it.

“It looks good on paper, but that is as far as it goes”.

3)You do not own anything

This is another big mistake many investors in gold assume. You do not own anything physically. The funds will have gold and issue shares. You will own the paper copy of that representation. That is all.

What happens when a specific metal coin is in high demand? They will buy contracts from Comex, not the Bullion. When you let your contract expire you will get a certificate of the commodity, but that is all. Say you invest in ETF’s for Pro Gold. Some speculate the actual gold may not exist.

Some also assume they trade in their certificate for the actual gold. You are only allowed to do this up to 2,500 on the 15th of each month. Some terms and conditions may apply to this. See this link.

How You Can Apply For A Loan


When it comes to applying for a loan, the amount of paperwork you have to complete and hoops you have to jump through largely depend on what type of loan it is. Is it a business or a personal loan? If it’s a personal loan, is it going to be a short-term or debt consolidation loan? Is it for a larger purchase such as a new vehicle or even a home mortgage? These questions are all important when knowing what you should be prepared to do when you go to apply for loans. Home mortgages or major business real estate purchases are going to require even more legal and financial paperwork than smaller basic loans, but the following tips are you should follow to apply for all loans.

Do Your Research On Loan Providers

While brick and mortar banks and credit unions are still the most common lenders, online lenders and alternative agencies have sprung up in greater numbers recently and have sometimes proved to be better than traditional lenders. One reason online lenders have been more popular is they’ve accepted borrowers who don’t have good credit, and in some cases their interest rates are lower with online lenders. Online lenders also often approve loan applications much faster than brick and mortar banks. But be careful to do your homework on any company you plan to take a loan from and make sure to avoid lenders with very high interest rates.

Know Your Credit Report And Score

A big part of being approved for a loan is having your credit report in order and making sure your credit score is also good. You can get a copy of your credit report free every year by going to www.annualcreditreport.com. You should make sure all your credit reports are free of errors and discrepancies because these can affect your overall credit score and could make the difference in the loan amount you’re granted as well as interest rates. If you aren’t approved for a loan you should learn how to improve spending habits to get your credit back up.

Have Your Financial Statements In Order

To apply for any kind of loan, you’ll want to be able to prove you have a solid paycheck or are generating good business revenue and can make your payments. You should gather up current W2s and paystubs, current bank and credit card statements, filled out tax forms and other financial record documents. You’ll need to fill out paperwork explaining what you plan to use the loan for and what kind of returns you should expect.

Why Do You Need To Save For Later


Saving through your professional life is but a compulsion. It is an essential factor as it gives you a sense of independence and security. If you spend as much as you earn without putting any of it in your savers account then you might end up all dependent on a welfare institution after your retirement!

Saving even a small amount each month out of your income will lead you to a happy retirement, in that case, you would not have to worry about being financially crippled and in need of a welfare aid consequently enjoying a self-sufficient life even after your professional years.

Managing Your Finances the Wise Way


Managing your finances is a subject of prime importance when you are running a business. Many people encounter finance management issues and tend to struggle in the process. As it is believed that properly managed finances constitute the backbone of any business so any blunder made in this regard may cause you a great deal of loss. It may sometimes seem like a very complicated and tiring process but once you get to know the right way to go about it, it’s just a matter of hours!

Following are some of the tips which will help you keep your finances balanced and managed:

Seek Help from Your Local Credit Union

It is recommended that you find a local credit union which meets all your business the requirements and agrees on providing you loan accordingly. While choosing the credit union, you must follow a criterion for selection which should be based entirely on your own needs and what the union promises to offer. You will have to spend money to get started with this but over years it will return in amplified figures.

Use an Accounting Software

It is recommended that you use a software which is created for the purpose of accounting. You may come across many of such type on the internet so choose the one which suits your requirements. This will enable you to handle all the issues which are finance-related effectively. It easy to choose the best one by answering a questionnaire that each application offers, the purpose of which is to find out what exactly are you looking for. These suggest judge your needs and suggest all the online applications that best meet your demands.

Use of Digital Payment Systems

It is better if you keep up with the coming advancements in the field. Nowadays the mobile/digital payment systems have taken over all the other methods which were used previously. You too must employ this means of payment as it provides more acceptance towards various services.It not only makes the management process easier by many folds but also helps you handle everything right on your computer screen. You must employ the use of mobile payment systems as they allow comparatively quicker and more convenient means of payment acceptance for different services. Transactions that are made through this system can be viewed on phones and can a track of them can be kept easily.

Keep All the Required Information

You must keep yourself informed as to what do your service delivery charges stand. Are they declining or progressing? Or are have they simply come to a halt? Keep a record of all the payments and service rates.Manage your time according to the worth of each task and always try to find out the effect that time and resources have on the quality and quantity of your work. If you keep these calculations going inside your head you can always welcome new strategies and ways of business and financing.

Investing on a Business


Investing in a business is a rather easy way of making money. Firstly, it doesn’t require you to be very actively involved in the business yourself as that can fairly be handled by the company you are investing in. One thing that is very important while making an investment is that you see all the aspects, pros, and cons that may come along. It is advisable to make multiple small investments in different companies rather than investing all your capital in one stock. There are certain tactics about investing which come to you only through experience and exposure but till then all you have to do is make smart choices and never hesitate to seek professional help if and when required.

How to Select the Right Company to handle your Finances


A finance management company helps its clients to invest and grow their money in the best ways possible. They can help you tackle your financial goals and keep your finances well managed. These may cost you a little but considering its outcome, in the long run, it seems worth it.
Before choosing a company to manage your finances, you need to make sure that you end up with the right one. Firstly, have a detailed look at the pay structure of the company and make sure that it suits your budget and requirements. Moreover, run a background check on the company, check its sustainability standards and verify all its credentials. This will reduce the risk of falling for a fraudulent one.

Personal Finances


Personal finance refers to all those financial decisions and activities that are linked to one individual, a family or household. This may include Insurance policies, retirement planning, monthly saving and annual budgeting. Personal finance management is a very significant aspect of one’s life as it helps an individual to manage his finances such that he earns, spends and saves in a set proportion. This way a person has a complete knowledge of his present financial position and is able to make decisions for saving, insurance and retirement accordingly.

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Examples of Default Risk

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Go gold! This is what we all hear. Truth be told, there is a lot of money in gold these days. It is more...

How You Can Apply For A Loan

When it comes to applying for a loan, the amount of paperwork you have to complete and hoops you have to jump through largely...

Why Do You Need To Save For Later

Saving through your professional life is but a compulsion. It is an essential factor as it gives you a sense of independence and security....