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Understanding Savings Bonds

Understanding Savings Bonds

What is a Savings Bond?
A savings bond is a conservative investment that enables an individual or corporation to maintain a fixed return following the purchase of the bond. Savings bonds are issued by financial institutions or government agencies that are in need of raising money for public goods or other services. When an investor purchases a bond they deliver a lump-sum payment to the issuing agency and in return they receive a “promise” that the issuing agency will repay the investment plus added interest upon maturity of the bond.
Savings bonds were initially created to finance the First World War. The instruments were created to finance the war and were originally known as “Liberty Bonds.” Not only were the bonds packaged as an investment idea, but they were also marketed as a patriotic movement; those that purchased the bonds were helping the United States army by directly funding the army.


Types of Saving Bonds


Series EE Savings Bond
The series EE bond is issued at 50% of face value and reach maturity 30 years from issuance. The Series EE Savings Bonds are among the most conservative form of fixed-income an individual can invest in. Interest is added to the Series EE Savings Bond monthly and paid when holder cashes the bond upon maturity.
The bonds are designed to reach face value after 17 years; however, an investor can hold the bonds up until 30 years so the bonds can accrue more interest. Interest on the bonds is taxable at the federal level only and the bonds are marketed only towards individual investors. The Series EE Savings Bond are sold at a discount and redeemed at an amount that includes the interest income. Interest, therefore, is calculated monthly, but paid only until redemption. 

Series HH Savings Bond
Series HH bonds are sold at discount and mature at face value. Dissimilar to T-Bonds and agency-issued bonds, the Series HH Savings Bonds are nonmarketable. In addition, the Series HH Savings Bonds pay interest semi-annually. 

Series I Savings Bonds
The Series I Savings Bonds are issued at face value and possess a variable yield that is primarily based on inflation. The interest rate attached to savings bonds consist of two components: the first portion is a fixed rate which remains constant over the life of the bond and the second component contains a variable rate, which is reset every six months from the time the bond is purchased according to the current inflation rate.
Similar to EE Savings Bonds, I Savings Bonds are issued to individuals with a limit of $5,000 per investor per year. Individual investors may purchase the limit of both types of Savings Bonds for a total of $10,000 per year. If an individual redeems the bonds before five years they will incur a penalty of three months unpaid interest. 

Bond Funds Explained

Bond Funds ExplainedWhat is a Bond Fund?

Income funds or bond funds are terms used to describe a particular type of investment company—primarily mutual funds, unit investment trusts, or closed-funds—that invest solely in bonds or other types of debt-laden securities.

Depending on the company’s investment policy and objective, a bond fund may concentrate its strategy in a particular type of debt or bond security. For example, bond funds may allocate the majority of their capital towards the investment of municipal bonds, corporate bonds, mortgage-backed securities, government bonds, zero-coupon bonds, or fixed-rate bonds. Additionally, bond funds may develop a portfolio to combine or mix any of the aforementioned debt securities.

The types of debt securities that bond funds will possess will vary in regards to the risk, duration, return, volatility, and other features associated with the debt securities.

What is the risk Associated with investing in a Bond Fund?

An individual who invests in a bond fund is susceptible to obtaining a loss of their investment. A typical misconception among many investors is that fixed-income securities or debt securities such as bonds and bond funds possess little to no risk. Similar to any investment, bond funds are subject to a number of investment risks including, interest rate risks, credit risks, and prepayment risks.

A bond fund’s prospectus will disclose the aforementioned risks and all other risks associated with the fund’s investment strategy. Before investing in any bond fund, an individual or entity should carefully review and read all of the available information, including the prospectus and the most recent shareholder report issued by the bond fund.

Credit Risk: The risk that the issuers of the bonds owned in a bond fund’s portfolio may default—meaning the bonds fail to pay the debt they owe on the bonds that have already been issued. The credit risk may be minimal for funds that primarily invest in U.S. Government bonds.

Interest Rate Risk: The risk that the market value of the bonds owned by a bond fund will fluctuate as interest rates rise and fall. For example, when interest rates rise, the market value of bonds owned by bond funds will generally decrease. Typically, all bond funds are subject to this type of risk, but bond funds holding bonds with longer maturities are subject to this form of risk than funds that hold bonds with shorter maturities. As a result of this type of risk an individual can lose money in a bond fund, including those individuals who invest only in government bonds or insured bonds.

Prepayment Risk: Risk that the issuers of the bonds owned by a fund will prepay them at a time when interest rates decline. As a result of interest rates declining, the fund may reinvest the proceeds in bonds with lower interest rates, which can reduce the fund’s overall return.

Tax advantages Associated with Municipal Funds?

Bond funds who invest in municipal bonds pay interest which is exempt from federal income taxes. Furthermore, interest obtained on the bonds of some states is exempt from taxation by that particular state. Not all of the income received from a municipal bond fund; however, will be exempt from federal or state income tax. The particular fund’s prospectus will elucidate upon any tax-exempt features.

Amortization Calculator At A Glance

Amortization Calculator At A GlanceWhat is an Amortization Calculator?

An amortization calculator is a fundamental resource used by individuals or entities that are indebted to a mortgage company or financial institution. The amortization calculator will display (subsequent to the satisfaction of a few variables) the remaining payments left on their particular loan or mortgage. By revealing this information, the individual or entity who took out the loan can observe the expected payments until maturity and thus develop an appropriate budget to ensure that they meet such obligations.

An amortization calculator is a free resource offered by the majority of lending institutions in the United States. The resource is free and easy to use and requires only the basic information attached to the particular loan or mortgage.

The loans associated with an amortization schedule typically possess a maturity date of 20-30 years. As a result of this long-term nature, the payments made towards both the principle and the interest would be difficult to evaluate without the inclusion of an amortization calculator.

In addition to revealing the expected monthly or periodic payments, the amortization calculator will reveal the percentage and total amount of the payments as they coordinate to paying off the interest and principal of the loan. Following the input of the required information, the amortization calculator will reveal the expected payments to maturity in an easy to follow and easy to understand table. The table, which effectively is known as the amortization table, will deliver each month’s payment and reveal how each payment is used to satisfy the interest and principal obligations of the loan.

What information is needed in an Amortization Calculator? 
To view the expected payments of a loan or a mortgage and to understand how each payment affects the remaining principle and interest of the loan an individual or entity must satisfy the following components of the amortization calculator: The principal balance of the loan in question, the rate of interest attached to the loan, the maturity schedule of the loan (the loan term), the starting month and starting year that the loan was issued.

In addition to this generic information, some amortization calculators will offer the user optional information, such as: the monthly additional principal prepayment amount, the one-time prepayment amount, and the annual principal prepayment amount of the loan.

When the above information is entered into the calculator (amortization calculators are typically offered on lending websites) the resource will construct a table that is unique to the user based on the loan information given.

National Finance Center

National Finance CenterWhat is the National Finance Center?

The National Finance Center is an agency of the United States Federal Government that aims to provide human resources, along with administrative and financial services to the coordinating departments and sub departments of the government. The center is responsible for organizing and delivering numerous administrative roles for coordinating agencies as they pertain to such matters as health insurance, payroll, and various human resources needs.The National Finance Center was established in 1973 and is located in New Orleans, Louisiana. 
In essence, the National Finance Center acts as a middle-man to expedite the functions of a government department. Through the implementation of technology and administrative services, the National Finance Center offers coordinating government agencies the ability to carry-out human resource’s functions and administrative roles necessary to maintain the stability of the department.
The National Finance Center maintains a customer base that is currently composed of over 130 federal organizations or departments, representing all three branches of the federal government.
The National Finance Center is the singular Shared Service Center provider positioned under the Office of Personnel management and the Human Resources Line of Business initiative. The National Finance Center’s human resources department is delivered as an organized system suite which supports a governmental agency’s services aligned with payroll and personnel action processing.
Additionally, the human resource system streamlines the recruitment and classification process of a government department. In essence, the National Finance Center offers the various subdivisions of government with an organized system to help maintain the body’s stability. The National Finance Center achieves such a goal through the implementation of efficient administrative and financial services to better organize and carry-out payroll as well find candidates who best fit the body’s job description.

What does the National Finance Center Provide?
As stated before, the National Finance Center operates as a liaison between 130 federal departments and their ability to carry-out various administrative and human resource-related functions. The National Finance Center provides this service through the implementation of a well-organized financial system that will deliver an efficient method to find and subsequently compensate employees. The primary functions or roles the National Finance Center include the following:
o    The National Finance Center operates a highly-developed an integrated payroll/personnel system. This system is then transferred to the coordinating government departments who use the system to carry-out their various administrative needs.
o    The National Finance Center also maintains and operates the Centralized Enrollment Clearinghouse System for the Office of Personnel Management. The Centralized Enrollment Clearinghouse System reconciles records between the federal payroll office and the various Federal Employee Health Benefits providers.
o    The National Finance Center maintains and operates the Direct Premium Remittance System, which is the primary method used for billing and collecting health insurance premiums of participating government bodies.

Knowing The Banking Regulations

Knowing The Banking RegulationsWhat are Banking Regulations?



Banking regulations are a form of government regulation which place certain restrictions and requirements, and guidelines on individual banks. Banking regulations are instituted to effectively restrict financial institutions from engaging in predatory lending techniques or fraudulent techniques aimed to take advantage of customers or businesses who conduct transactions with the underlying bank
Objectives of Banking Regulations:
The basic objectives of banking regulations, and their particular emphasis, will vary between jurisdictions; countries will impose different banking regulations that are typically based off their macro-economic conditions and the overall stability of their markets.
The most common objectives of banking regulations are:


o    Banking Regulations are placed on financial institutions to reduce the level of risk that bank creditors will be exposed to. These prudential regulations are imposed to protect individuals and business entities who deposit funds into banks; over-leveraging or an increased exposure to a shaky credit market could result in massive defaults.
o    Banking regulations are also introduced to limit an institution’s systemic risk; this form of risk refers to disruption resulting from adverse trading conditions for banks which may cause major or multiple bank failures.
o    Other forms of banking regulations will be placed on a financial institution to avoid misuse and to effectively reduce the risk of banks being used for criminal activities, specifically laundering the proceeds of criminal acts to bank accounts.
o    Banking regulations may be instituted to protect banking confidentiality
o    Lastly, banking regulations are imposed to properly allocate credit streams. Lending is a primary function of a bank; as a result, banking regulations are created to direct such liens of credit to more favorable sectors to limit the risk of default.
General Principles of Bank Regulations:


•    Although banking regulations will vary widely across countries and jurisdictions, there are general principles of bank regulations that exist throughout the world
•    Minimum Requirements: Banking regulations will impose minimum requirements as it pertains to capital ratios to promote the principle objectives of a bank.
•    Market Discipline: Banking regulators will impose restrictions that will publicly disclose the financial information of a bank. This information is used by depositors and creditors to assess the level of risk of the underlying bank and to subsequently make investment decisions. As a result of this regulation, the bank will be subjected to market discipline and the agency imposing the banking regulations can use market pricing information as a direct indicator of the bank’s financial stability.
•    Supervisory Review: Banking regulations will impose a licensing process on the underlying bank; such a license is required to carry on the everyday business of the bank. The regulator (agency who imposes the regulations) will supervise the licensing process to ensure that the underlying bank meets all compliance issues. If a bank fails to acquire a license or fails to adhere to such compliance issues, the regulatory agency will respond to the breach through obtaining undertakings, imposing penalties, giving directions, or revoking the bank’s ability to conduct business.

Your Guide to Understanding FOREX

Your Guide to Understanding FOREXWhat is FOREX?

FOREX is the abbreviation commonly used for the term ‘Foreign Exchange’, which is the financial instrument facilitated in the trading and exchange of foreign currency for other forms of currency. Within the realm of trading FOREX, an activity undertaken within the FOREX Market – also known as the Foreign Exchange Market – a variety of factors exist within the dynamic of FOREX, exchange rates, monetary systems, economics, and financial circulation.

When is FOREX Used?

The instrument and process involving the foreign exchange of currency can be undertaken in two primary settings; these settings are commercial activity and travel:

Travel-Based FOREX

In the event that an individual wishes to travel abroad – typically on an international level – they may be subject to undergo the exchange of currency; this exchange may take place involving currency native to their respective country of origin, as well as the currency utilized within the country being visited. The FOREX Rate – Foreign Exchange Rate – is applicable to the terms of this exchange in a variety of measures:
Upon entering a country other than the country of one’s origin, the exchange of currency for the acquisition of the native currency may be deemed as a useful practice; as a result, all purchases, negations, and financial activity can be substantiated and accepted within the bounds of that country – while certain currencies are more widely accepted than others, an individual country or nation bears no obligation to accept foreign currency with regard to commercial transactions.
The FOREX Rate applicable to the two countries – both the country from which the traveler comes, as well as the country in which the traveler visits – is an important dynamic to investigate; the initial FOREX rates with regard to exchange of foreign currency upon arrival will not necessarily mirror the FOREX rates upon departure.
Individuals participating in travel-based FOREX activity are encouraged to investigate preexisting trends and behaviors of the currency facilitated within a particular destination country; countries or nation experiencing severe decline in the valuation of FOREX rates risk the rendering of eventual loss upon subsequent exchanges
Commercial FOREX Trading
Akin to the Stock Market, which allows for the trading of stocks, shares, investment, bonds, and additional commodities subject to market fluctuation, the FOREX Market allows for individuals to participate in the exchange of foreign currency within a commercial setting; the FOREX Market is guided by the current – albeit fluctuating – FOREX rates with regard to the valuation of foreign currency – currency with increased FOREX rates may result in financial gain, while currency undergoing a decline in valuation may render financial loss:
In tandem with investment brokers, FOREX brokers exist as well; brokers specializing in FOREX trading are entrusted with funds from their respective clientele with the hope of producing gainful results as a result of trade activity undertaken within the FOREX Market
As per the applicable rate and trend of FOREX Market fluctuation, the innate valuation of currency is both subject to unforeseen and unexpected increases in value, as well as declines in value

Sued: California Accuses JP Morgan of Fraud in Credit-Card Debt Collection

Sued: California Accuses JP Morgan of Fraud in Credit-Card Debt Collection

 

California Attorney General Kamala Harris filed a lawsuit against banking giant JP Morgan on Thursday, alleging that the financial institution engaged in legal and fraudulent debt collection practice against tens of thousands of California residents. 

Harris claims that from January of 2008 to April of 2011, JP Morgan filed in excess of 100,000 lawsuits against consumers in California over uncollected credit card debts, including 469 in a single day. 

To maintain this pace, JP Morgan used a number of illegal shortcuts, the lawsuit alleges. Among those illegal tactics was robo signing, in which employees of JP Morgan produced sworn documents and other legal filings at a substantial pace without verifying bank recrods and reviewing cases for accuracy. 

Robo signing was used on an extremely large scale during the foreclosure crisis as banks scrambled to complete foreclosures throughout the United States as the housing market collapsed.

Among other allegations, the attorney general claims that JP Morgan failed to notify residents of California that they were being sued. Moreover, the personal information of consumers allegedly went unredacted in court documents, increasing the odds of identity theft exposure. JP Morgan is also accused of certifying under penalty of perjury that consumers targeted with suits were not on active military duty without actually checking their background, therefore depriving these individuals of their rightful legal protections. 

“At virtually every stage of the debt collection process, defendants cut corners for the sake of speed and savings, providing only the slimmest veneer of legitimacy to their suits,” the complaint alleges. 

JP Morgan could end up being forced to pay a significant sum in penalties should a judge rule in California’s favor. Each alleged violation carries a maximum fine of $2,500, and a spokesperson for Harris said there are likely to be multiple violations per case for the more than 100,000 consumers the banking giant targeted. This spokesperson also claimed that Harris’s office will continue to investigate this issue on an industry-wide basis, with potential suits being filed against other banking institutions.  

Source: sec.gov

Tesla Sales Eclipse Majority of Luxury Automobiles

Tesla Sales Eclipse Majority of Luxury Automobiles

 

The Tesla Model S, which is priced at a substantial $70,000, is now the hottest electric car on the market. In fact, in the first quarter of this year, sales of the Tesla Model S outpaced similar gasoline models from the top three German luxury models. Roughly 5,000 consumers purchased the Model S while a shade over 3,000 purchased Mercedes’ top-flight sedan.

Sales figures; however, are by no means a perfect comparison as actual selling price for the S-class Mercedes start toward the high-end of the Tesla Model S price Range. Moreover, buyers do not receive the $7,500 federal tax credit for buying a luxury gasoline model.

That said, the Tesla Model S is faring quite well, particularly for a start-up auto maker with a limited network.

Last week, Tesla announced a profit that crushed Wall Street estimates; the relatively young automaker also raised its Model S sales forecasts for 2013 to 21,000 from 20,000.

To continue the positive momentum, Consumer Reports on Thursday called the Tesla Model S the best automobile that it ever tested. The vehicle’s overall performance was off the charts, according to the publication’s head of auto testing. The vehicle earned an almost perfect score of 99 out of a possible 100 points; 1 point was deducted from the vehicle’s score because it cannot be driven long distances without recharging.

Despite early struggles, including a feud with the New York Times over the vehicle’s “super charger” network and delays sparked by traditional car sellers over the sales strategy, the new Tesla model seems to be thriving in this green-friendly market. 

 

Sales: whitehouse.gov

President Obama Says He Will Not Tolerate Wrongdoing at IRS

President Obama Says He Will Not Tolerate Wrongdoing at IRS

 

 
President Barack Obama on Monday vowed to hold accountable employees of the Internal Revenue Service involved with improperly targeting conservative groups that applied for tax-attempt status. 
 
President Obama said during a briefing with reporters that there is no place for personnel of the IRS to single out certain political groups for special scrutiny. Obama cited the ongoing inspector general investigation that is expected to be released within the week; Obama refused to comment on the audit’s findings thus far. That said, Obama made it clear that there would be significant repercussions for any wrongdoing. “We will wait and see exactly what the details and facts are,” Obama Said. “However I have got no patience with it, I refuse to tolerate it, and I will make sure we find out exactly what happened on this.” President Obama’s remarks came during a joint press conference with British Prime Minister David Cameron.
 
The Internal Revenue Service apologized on Friday for targeting groups with words like “Tea Party” and “patriot” in their names during a briefing with the director of the agency’s exempt organization’s division. The Internal Revenue Service said they admitted the improper scrutiny because Lois Lerner (the director of the exempt organization’s division) was previously asked about it during another meeting, but there were concerns over whether the IRS purposefully timed Friday’s revelation to get out in front of the IG report. 
 
In a statement released over the weekend, the Internal Revenue Service announced that agency senior leaders did not know about the situation’s severity at an earlier point. 
 
The Internal Revenue Service has two political appointees—the chief counsel and the commissioner—and thus far, officials have indicated a number of “low-level” employees to be involved in singling out certain groups improperly. 
 
The Republican Party is enraged over the IRS’ admission that it targeted a number of conservative groups and are calling for investigations. “It is clear that the Internal Revenue Service cannot operate with a shred of the American people’s confidence under current leadership,” claimed Senator Marco Rubio of Florida, in a May 13th statement to Treasury Secretary Jack Lew. In this letter, Rubio urged the Treasury Secretary and Obama to terminate the commissioner. 
 
 
 
Source: whitehouse.gov

Does Obamacare Help the Female Population?

Does Obamacare Help the Female Population?

 

With Mother’s Day behind us, President Obama spoke to a group of women—including a number of moms—about the ways the new Affordable Care Act is already providing aid to millions of Americans like them.

“The female population in particular has more control today over their own care than ever before,” the President of the United States said. “I am pleased to be joined today by many women who contacted us to describe what the Affordable Care Act does for them.”

Carol was just one of the women who contacted President Obama, and today, she introduced him in the East Room. Carol’s son, a recent college graduate and survivor of a traumatic brain injury, was able to stay on his family’s health care policy instead of being removed off the plan this year. Procuring coverage on his own would have been virtually impossible, as Carol mentioned to the President. “Given my son’s history, he would be uninsurable under the archaic set of laws. Instead of finishing law school, my resources and my son’s resources would have been channeled into somehow finding an insurance policy that would cover him.”

Carol and her son, according to the Whitehouse, are why the new Affordable Care Act lets you people stay on their parent’s healthcare plan until they reach the age of 26, President Obama said. 

Another woman named Alycia also spoke about the benefits the new laws bring to her family. “Alycia is the mother of Avey, who is a 3-year-old girl who is battling Leukemia,” President Obama explained. “Imagine what this is like for a parent. While you are just figuring out how to take care of a baby, you have to figure out how you are going to pay for expensive treatment that could save your baby’s life. This is why the Affordable Care Act made it illegal for unscrupulous individuals in the insurance industry to discriminate against children like Avey.”

President Obama mentioned a few more ways the Affordable Care Act is helping people throughout the United States. “Insurance companies can no longer impose lifetime limits on the amount of care you undertake, or drop you from coverage if you get sick, or discriminate against your children who have preexisting conditions,” President Obama said. “And women are now given access to free preventive care like mammograms, checkups, and cancer screenings, so you can evaluate and catch preventable illness on the front end. Because of this Act, seniors on Medicare can now receive free checkups and preventive care with zero deductibles or co-pay. These individuals also receive discounts on prescription drugs, which have already saved over 6 million seniors more than $700 each.”

Source: whitehouse.gov

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