Sunday, July 29, 2007

Interest rate rises and mortgages

Once again the OCR (Official Cash Rate) has been increased affecting our mortgage rates here in New Zealand. With interest rates constantly increasing here are some ideas to help prepare when your mortgage fixed rate comes up for review.

1. Complete a budget so that you know how much you have as a surplus. If there's a deficit and you have less money to spend than you have coming in, tweak your spending and see where you can save. Get rid of unnecessary spending. You may need to ‘pull your belts in’.

2. Don't put all your mortgage debt on to one term, split it so that you have say six months, one year, two years. This way you can take advantage of rates if they have lowered in the interim, or at least you won’t have them all maturing at the same time. Also if you have the benefit of receiving a lump sum payment (bonus or inheritance) you can pay it off one of the loans as they fall due.

3. Do not take a term longer than two years. This is only my personal opinion. I have seen too many people that have fixed for longer terms only to find they are locked in and if they want to sell or the rates have come down there are penalties to change the term.

I remember when interest rates where up to 22% - let’s hope we never see those kinds of rates again.

Monday, July 23, 2007

Protect against credit card fraud

The most common way for criminals to get credit card information is through phishing, which involves a fake email that appears to be sent from your credit card company. Normally, this fake email states that there was an error with your account, or that it was accessed by unauthorized personnel and needs your attention.

Spotting fake emails isn’t hard to do - as long as you know what to look for. The most obvious hint is the fact that they don’t even have a credit card from the company that has sent the email. For others, the link is what gives the fake email away. Whenever you get an email from a credit card that you believe to be fake, you should always hover your mouse over the link, then “right click” the link with the mouse and select “view source”. If the link is indeed fake, the website address that comes up will be something other than that of a credit card company.

Saturday, July 21, 2007

Why Diversify?

“Don’t put all of your eggs in one basket!” You’ve no doubt heard this said many times throughout your life…and when it comes to investing, it is even more important. Diversification is the key to successful investing.

The key is to invest in several different areas and not just one. That means different industries within equities, different companies for your fixed interest and bonds, as well as a mix of properties. It also means including international investments.

Having all your money in one investment alone is dangerous. If that lone investment takes a significant plunge or worse still is in receivership, you will most likely find that you have lost most or all of your money. On the other hand, if you have invested in ten different shares, and nine are doing well while one plunges, you are still in reasonably good shape.

By diversifying your investments, you will find that you have a lower risk of losing your money, and over time, you should see better returns.

Friday, July 20, 2007

Pay yourself first

It's nearly always possible to save a little money no matter how small the income is and no matter high your expenses seem. Even if you're only able to tuck away enough for one coffee a week, I think it's wise to get into the habit of saving early on. Taken out of your income before you have the chance to spend it and you'll soon get used to not having it. And when the bigger dough starts rolling in, you'll already have some sort of system set up to put money away.