10 Financial Practices to Improve Your Financial Health

Having a healthy financial life is not difficult, it just takes discipline and a little planning. Schools rarely teach personal finances classes, so sometimes adults need to learn the basics of personal finance. Luckily, once the ideas and plans are in place, it will become easy to have great financial health. Here, are 10 financial practices to improve your financial health.

Two Incomes
Many people get a great paying job but use all their money at the end of the month. A way to get over the hump is to have a second job. This can be an easy job 1 day a week waiting tables. Any little extra income is going to a long way in improving your bank account balance.

Debt
Debt is not evil by any means; there are some terrific uses, such as home and car loans. One should be careful to minimize debts, especially credit cards. Credit card debt can carry extremely high interest rates, making them difficult to pay off. Getting ahead is extremely hard when one is trying to make payments to credit card companies.

Credit Cards
With that being said, a credit card can be an enormous asset. Not only can one get cash back with credit cards, but they offer superb protection. It is essential to have a credit card or two.

Vices
Many people enjoy drinking, smoking and gambling. These vices can be extremely expensive and offer remarkably little return. It would be best to minimize vices, as the return on investment is nonexistent.

Credit Score
Getting and maintaining a phenomenal credit score is tremendously beneficial. Anyone looking to get a car, home or student loan, will want excellent credit. Having excellent credit can save a person hundreds a year in interest rates.

Insurance
Make sure to not go cheap on insurance. Many people look to save money by lowering insurance coverage. This is okay if it is done by shopping around. Not having health insurance, or having minimal car insurance can leave one vulnerable in critical times.

Healthy
A great way to save money is to live a healthy lifestyle. Cooking at home and riding a bike instead of walking will save money and improve health. This will also improve ones bottom line with lower health care costs.

Purge
A lot of people have an abundance of junk that they do not need. Anyone looking to get ahead should get rid of excess possessions. Not only do they get in the way, they can also cost money to store. Plus, if you sell your possessions not needed, you will get an influx of money.

Recurring
Watch out for recurring bills; it is easy to forget them. A gym membership here, Netflix there, it adds up. Sit down and go over all of your monthly fixed costs, cutting some of them will be beneficial.

Taxes
Take advantage of tax benefits, such as retirement accounts or write-offs. Billions of dollars are lost a year in tax write-offs. Simply because some people do not include them when filing taxes.

It is extraordinarily easy to improve ones financial health. It just takes a little bit of discipline and organization. The exciting thing is it is easy to stick to better financial decisions once put in practice.

Roger Hammerson writes about finance, self help & more at http://homeownersinsurance.org.

Yale Endowment Fund Asset Allocation

An endowment fund or what is popularly known as a financial endowment is the name given to the money which is transferred to an institution which can differ from academic, to cultural and religious institutions. One of the most common and known names in this category is the Yale Endowment Fund. Yale endowment fund is known as the pioneer in the approach which followed the process of investing heavily in investments like real estate and private equity. David Swensen, in his career spanning 25 years, is credited with starting this

Yale Endowment Fund management.
Asset allocation allows investors to manage risks and their portfolio’s volatility. Portfolio owners can maximize their returns only by allocating their assets appropriately. It is not the funds or individual stocks in your portfolio that count but the manner in which investors chooses to combine the assets and give a proper structure to their portfolio so that they can increase their returns.

Yale Endowment Fund Asset Allocation approach has been received well by many investors. The model has produced great returns for many investors. A look at the Yale Endowment Fund Asset Allocation model suggests that the fund uses simple allocation methods and is yet amazingly effective.

Yale Endowment Fund Asset Allocation model focuses on investing in multi-asset class (including cash, bond or equity), which offers higher annual returns and reduces risk and volatility since the investor does not depend on one particular class of assets. The Yale Endowment Funds accesses the leading private equity, hedge and institutional fund managers, which is what makes them so successful and assures the investors of greater returns.

The Yale Endowment Funds Asset Allocation model relies mainly on the modern portfolio theory. The modern portfolio theory was designed by Professor Harry Markowitz who also won the Nobel Prize for designing the theory. The theory basically portrays how by simply diversifying assets that are variedly co-related with each other, investors can minimize risk and improve the returns from their portfolio.

The Yale Endowment Fund managers focus on five basic principles, which has become the very basis of the Yale Endowment Fund Asset Allocation model. These principles include, investing in equities, as being an owner is much better than being a lender, holding a portfolio that is diverse, fine-tuning asset allocations at extreme valuations and avoiding market timing, investing in private markets that do not have complete information and low liquidity to enhance returns on a long term basis, using managers from outside for all except the most indexed or routine investments and allocating capital to investment organizations managed and owned by people who actually do the investments on their own to minimize conflicts of interest.

Based on these very principles, the Yale Endowment focuses on diverse assets and has always invested primarily in equities. The success of the Yale Endowment Funds Asset Allocation model resulted in other lager endowments following the same model. In a matter of a decade that ended on 30th June 2008, Yale Endowment offered a return of 16.3 per cent on an annual basis to its investors. Yale Endowment Funds increased to 22.9 billion dollars from a mere 6.6 billion dollars in ten years.

The Yale Endowment Funds Asset Allocation model has been consistent in achieving higher investment returns and less volatility owing to its approach of investing in multi-asset class. Therefore, those investors who chose to shun the traditional model of investment and adopted the Yale Endowment Funds Asset Allocation have realized that the application of multi-asset class principles to a portfolio that is based on index is what that can help them in maximizing their returns.

The fund follows the following principles which are being described briefly below:

Increased Diversification, and re-allocation during the period of extreme valuation for the asset classes.

This model was followed for diversifying the endowment fund into different other portfolios for providing a cushion to the losses that might be in the offing for the fund. This model followed a simple principle of diversified portfolio carrying lower risks with higher returns.

Allocation of more funds to equity.

The principle behind this model was that it is always better to own something in return of your investment rather than lending money out as a mode of investment.

Using active managers rather than following an easy method of investment.

Yale actively pursued the policy of active approach of management strategies, with the planning to stay ahead of the market by some percentages year on year.

Hiring of outside investment firms.

This model was followed to ensure that there remains no conflict of interest between the managers handling the fund and the income generated by the fund. To ensure the same, Swensen hired external investment firms and other primary investors for handling the fund.

Increasing the fund allotment to private markets along with non-asset classes.

Non-asset classes or the commodities were added to the fund’s portfolio as it was believed and these commodities provide a better value than the normal equity as this class of investment carries low risk due to their low dependence on the equity and other markets.

Though these principles gave good results to Yale in the beginning but gradually they were criticized by financial gurus and fund managers world -wide. It had a bad year in 2009 with the fund suffering losses and was not left untouched by the financial crisis which had shaken the world market. Still, the consolation remains that though Yale suffered losses during FY09, it had always maintained that most of the fund is invested into asset classes which come with risk along with returns on a comparable table with private equities. Though, it is true that diversifying the fund can definitely provide with the shock absorbers that are required for protecting a fund as big as held by Yale, but still one cannot fight the abnormalities of the market. This fund comes with some important lessons for other big funds while also providing some important insights with small investors though it is advised not to blindly follow these models.

[The following is a guest post]

How to Manage Your Money When Working Overseas

Working overseas can be an excellent opportunity for just about anyone. Not only to learn about new cultures and new ideas. Working overseas can also give the employee significant tax benefits. With the internet, it has become much easier to manage personal finances from overseas. It is essential to properly setup the management of your money while working overseas. Here, are 5 tips on how to manage your money while working overseas.

Local Bank Account

When working overseas, it is essential to have a local bank account. This can be a bank that with headquarters in their country, or a bank with an international presence. Many people rely on direct deposit to get their paychecks, therefore, thinking they do not need an account. If any problems arise or a human is needed, having a local bank will be beneficial.

Foreign Transaction Fees. There are a few credit cards that do not charge a foreign transaction fee. A foreign transaction fee is charged by most credit card companies when a card is used overseas. The typical charge is 3 percent, which can add up quickly. Luckily, there are a handful of credit card companies that offer a card that does not add a foreign transaction fee. This will be a tremendous money saver in the long run.

Online. Every bank or credit card has a website. When working overseas, it is essential to sign up for online bill pay services. This makes paying credit cards and other bills online remarkably easy. Sign up for electronic statements, they will be emailed directly. They are just like any other statement you would receive in the mail. Another great benefit of online services is the ability to communicate. One can log into their credit card account and easily message a representative, since calling may be difficult.

Second Bank Account. Keep a bank account in the United States open, this is a terrific way to transfer money. Western Union and other wire places charge massive fees. There are a lot of banks that allow a bank to bank transfer for free. It would be extremely easy to have a relative or friend deposit money into your account, then initiate a free transfer. The transfers can go both ways, so in addition, the money can be sent home.

Inform them. When going overseas, inform the banks and credit card companies. If a credit card or ATM card is suddenly used in a different location, it may be declined. Many card companies have fraud alerts in place, for example, when someone uses a card 5,000 miles from home. A simple call to the credit card company will help prevent them from freezing the account. It is much easier to do it before leaving, but can be done during the trip if needed.

Working overseas can be an exciting and life changing experience. It is crucial to prepare your finances for your day to day life. Ones financial life and dealings back home should not be neglected either. With the internet, it has become extremely straightforward to manage finances while overseas.

Fran Childers writes about finance, travel & more at http://www.homeinsurance.org.

Yale Endowment Fund

The opportunities laid out for endowment funds benefit the students; as well as, the school itself.  In general, a university will be able to generate necessary funds through annual revenues generated from endowment funds.  Although particular schools will vary as to how these funds are allocated, it has remained to be an integral part in drawing out prestige and maintaining a status among the best of the best.  There are numerous endowment funds that support a wide range of programs within a university.  Some examples include: scholarships, fellowships, loans, professorships, research and development projects, and countless other special programs. There is no doubt that these donations; which may reach to the millions of dollars, have made an enormous impact on the school’s quality of education and enrollment.  One such school that maintains these high ideals and brings to reality the possibilities of acquiring excellence in all respects is Yale University.

Building the Foundations

Yale University and its law school has established several successful ways to place endowment funds at the peak of their purpose, accepting gifts that merit different programs and facilities to enhance teaching and offer students every resource to succeed.  As it were, certain amounts in gifts will merit a particular program to be named.  $500,000.00; for example, will allow the creation of a research fund.  A gift of several millions will name a certain position within the faculty, depending on the amount.   Most endowment funds will go toward continuing advancements in student opportunities; both for undergraduate and graduate courses.  Under the graduate program, $7 million will name students as tutors, scholars, and program directors.  While some gifts will create an endowment fund that will directly benefit the law school and its initiatives to sustain innovative programs, others will impact the surrounding facilities.  These endowment funds may encompass the development, renovation, or construction of different buildings, classrooms, halls, library, and other structures within the scope of the learning environment.

Shaping the Future

One of the main objectives of endowment funds; at least within Yale, is to create a future that is rich in educational resources and to create career opportunities.  This is done through various forms of development found by way of endowments.  Perhaps the most important aspect would be in establishing scholarships programs to assist in the growth and development of students.  In fact, a pledge of $10,000.00 to $50,000.00 will undoubtedly aid in the payment of tuition fees, which can be spread in increments within a period of approximately five years.  It is financial aid; in this respect, that sets standard for progress and ultimate success; especially for Yale University.  In its rich history, Yale has proved itself to be among the top universities in the world.  Its efforts in establishing endowment funds have truly made the school shine above many others.  It has used resources appropriately to the advantage of its students and those who dream of getting quality education.  Endowments given are not only gifts to the school, but they are gifts to ensure a more successful future.

What makes Yale Endowment Fund interesting is that its asset allocation model could perhaps offer us insights into our own asset allocation and how we ought to manage our investment portfolio.  But that is perhaps best left to another posting.

Investing in United States Real Estate

Many people are beginning to commit long term resources in the United States Real Estate market. The current US Dollar value is not as strong, and mortgage rates have plummeted. This has made it difficult for property owners to see good selling rates; however, buyers and investors are taking advantage of this to grow their business reach, and future fall backs. Many see real estate as a smarter form of investment, as compared to stocks and other unstable riskier ventures. Sales have been increasing over the years, and as an investor, it is important to get a real estate broker in the market to get you solid options before you make an offer. 

Naturally, the coastal areas of the United States have seen the most action in real estate activity. The East coast drew most Europeans, and the west saw more Asians flock to invest in their real estate options. The reason for this is probably proximity of the East to Europe and the West to Asia.

The exchange rate is definitely a great determinant of United States real estate activity, and many foreigners and even locals are looking to cash in on this window that is closing by the day. Mortgage rates are equally on the cards; a three decade fixed rate can hit an 8 month high of over seven percent. 

The United States real estate market has gotten great advertisement from the internet. MLS listings and other resources have brought more options on; Just listed homes, sold homes and new construction on duplexes, condos and other properties to the table. Investors can now take a property tour from their desktops and see just what is on the menu for them. 

Colorado and other cities in the States are booming in real estate sales and acquisitions. Foreclosures are slowly being replaced by short sales, and sincerely speaking, there hasn’t been a better time to invest in United States real estate. Investments like golf properties, resorts and other recreational real estates are equally on sale in the United States. 

Phoenix and Florida are other areas that have seen great influx of investments in real estate lately. These areas have some of the best environments and technological advancements that encourage people from all over the country, and the world in fact to settle down here. Real estate listings show lots of properties to you in the States, and you can be sure that these listings are not unscrupulously refreshed. They are listed to give you the ideal listings to pick from. You can choose from many cities, and go with a serene, tranquil real estate to settle down in. Access to essential amenities is well thought of before listing these properties. The children can go to school with ease, you can navigate to work and around town with relative ease, and many other investment opportunities are open to you as you reside in the states. You can easily raise a family and grow a business in these cities and provinces. So get your funds together and jump on this wagon, because real estate investment in the United States of America has become a cake worth taking a bite if you live in today. 

Investing in Emerging Markets

The emerging markets are often referred to the markets in the developing economies. These markets offer investors, great returns, high profits and long time safe investments. The question why investing in developing economies or emerging economies is profitable has a simple and a logical answer.  These economies as the name suggest are growing; still there are lots of market share and the customer buying potential, which is not properly tapped. This is why all developed economies and investors from strongly established economies like United States of America prefer to invest and reap beneficiary returns from their investment in the emerging markets like; Chine, India, Brazil, Colombia, Argentina and many more.

In last few years United States of America have been able to sustain growth in their markets due to their investments in the growing economies; their investors have gained good profits with their calculated investments in these booming markets. There are many sectors where an investor depending upon their interest and keenness can look to invest their share and increase their profits; one of the most preferred and beneficial investment sectors that have always given a good profitability equation to its investors is the Real Estate. In developing economies, the growth in the economy is directly proportional to the growth in the Real Estate, and the rise in the property rates with the high demand in the market always brings a good return on the investment. A part from real estate; Pharmaceuticals, insurance sector and power sector offers good opportunity to invest as these sectors offer a great scope of return to the investors.

A part from investing in the emerging economies; the investors can also look for the investment in the already established economies like Unites States. No economy can come close in guaranteeing a successful return on investment than the United States, with strong government support and powerful financial banking one thing, which an investor is always sure while investing in this strong market is the fact that their investment are always going to be safe and secure. Even in the global slowdown era, where world has seen a dip in all the major economies; united States have been able to hold its fort and have made sure that the investors are not losing their money.

A good economy for investment is one that can offer investors the options and is strongly and ably backed by the government; it must have a good foreign investment policy in place and have a healthy political atmosphere in the country because the political disturbances have a daunting consequences on the rate of the economy growth, and no investor would like to have an overnight change in the government policy structure, therefore political stability of the country is must. This is the reason why investors all over the world enthusiastically eye United States and other emerging economies as their favored destination to invest as one thing these markets ensure is the continuous dynamic growth in their growth rate which is good for both the investors and the economy.

When Is The Best Time to Invest?

When is the best time to invest?  This is probably a question that many new (or even old) investors might ask.  After all, market timing seems like an important factor when it comes to making investment decisions.  And most people won't want to be buying into a stock when its share price seems to be so high.

Perhaps I will share this quote that I saw recently.  It is by Sir John Templeton.





"The best time to invest is when you have money".
- Sir John Templeton




So probably the important question is not when to invest but what or where to invest one's money in.