Team Dinks, Author at Dinks Finance

How to Maintain Good Credit

Posted on July 27, 2015 - 12:12 pm by Team Dinks

This post is a contributed post from USA.gov. See their Financial Self-Defense Kit for advice on how to build financial confidence as well as safeguard your finances.

“It takes many good deeds to build a good reputation, and only one bad one to lose it.”

— Benjamin Franklin

Your credit history is your financial reputation. And just like your professional and personal reputations, your credit history takes many years to cultivate, can be easily damaged, and will follow you for the rest of your life.

Sound intimidating? Good. Are you scared? Don’t be.

Yes, maintaining good credit is important. Nearly everyone will need to borrow money from a lender at some point — say, for buying a car — and your credit history determines whether you qualify for a loan and, if you do, what interest rate you pay. It can make or break your application for a credit card. A prospective landlord can check it to judge whether you’ll be a responsible tenant. Potential employers may request your credit reports to see if there are any red flags.

Luckily, many resources are available to help you learn how to successfully establish — and maintain — a healthy financial reputation. Here are three tips for creating a stable foundation for good credit:

Monitor your credit reports

Understanding your financial habits — such as payment history and spending patterns — can help you improve them! Your credit score is generally based on information in your credit reports. Mistakes on your credit reports could hurt your credit score, so check them regularly. Make sure to check that your reports don’t contain any errors, such as incorrect contact information, closed accounts listed as open, or an item like an unpaid debt listed twice.

If you find something wrong in a credit report, you should contact both the credit reporting agency that produced it and the creditor that provided the information.

Pay your bills on time

This is one of the simplest ways to keep your credit score strong — yet, with the hustle and bustle of everyday life, it can be easy to lose track of time and miss payment deadlines. Set up auto-payments or electronic reminders to ensure that you won’t be hit with late-payment penalties. Paying bills late can also hurt your credit score, which in turn can raise your interest rate — meaning that you’re out even more money.

It’s a common misconception that the best way to improve a credit score is to pay off all of your accounts and close them. Get up to speed on your payments and stay on schedule, but be careful when closing accounts. Doing so eliminates some of the credit available to you, making balances appear higher when compared with the combined credit limit of all of your accounts. Also, if you managed that account well and made payments on time, closing it will remove all the positive benefits of your responsible credit behavior on your report and score.

Don’t get close to your credit limit

Credit scoring models look at how close you are to being “maxed out,” so keep your balances low in proportion to your overall credit. Experts advise keeping your use of credit at no more than 30 percent of your total credit limit. That means that if you have $12,000 of available credit, you shouldn’t use more than $3,600.

You can decrease your credit utilization ratio over time by paying as much of your credit card balance as possible each month. If you can, pay more than the minimum balance due; this will increase your available credit and decrease your utilization ratio faster.

Just as a shining professional reputation can take you far in your career, your credit score can make or break your financial status. To learn more about how to establish a stellar financial reputation, visit FinancialProtection.USA.gov.

Luxury Real Estate in Miami, The Ultimate Investment Trend

Posted on June 9, 2015 - 12:49 am by Team Dinks

miami real estate, miami properties, miami investment

My wife and I have been craving for investing in a luxury property in Miami, it has been our greatest dream since we got married. In order to reach our goal, we have common savings and hopefully, working a little harder we will be able to invest in the city of the sun and beaches.

Why investing in Miami?

Miami is a vibrant city which has became globally recognized as a true metropoli, it’s one of the three hottest cities for real estate investment worldwide, alongside with NY and London.

Outstanding features:

High quality of life and continually improving.
Low cost of living, compared to NY or LA.
Low taxes.
It is a fast expanding city.
Hosts many relevant events, shows and festivals.
Wealthy classes usually choose Miami as a location of primary residences.
Excellent transportation system.
It has the biggest port on the Eastern Seaboard of the US, great platform for the trade and tourism industry.
Real Estate buyers come from all over the world, making of this city a melting pot of the most diverse cultures.
It is considered the “Business Hub” for Latin America.
Important American companies look to establish their headquarters in Miami.
Beautiful beaches and unique weather make of this place a truly paradise.

Miami is one of the most populated cities in America and one of the wealthiest economies in the world, occupying a GDP leading position in the United States, definitely it’s the best place whether you want to own a luxury home or invest in real property.

Popular neighborhoods in Miami

Coconut Grove

Trendy and diverse, it’s a popular destination both for locals and tourists, has tons of shops, fine restaurants and a vibrant nightlife. Suggested place for youths, couples and people interested in a sophisticated way of life and ongoing entertainment.

Coral Gables

Neighborhood preferred by people who is seeking a place to establish a life in Miami, it’s quiet, has friendly areas for bikers and pedestrians to roam, it’s near to the center of the county, offers all kind of buildings; from luxury condos to picturesque apartments. You can also find beautiful parks, banyan trees in every corner, fine restaurants, bookstores, theatres, art cinemas and the greatest public pools in America.

Key Biscayne

Key Biscayne is also a resort area that boasts of beautiful beaches and parks. It’s one of the most exclusive areas in Miami where you can truly enjoy the allure of south Florida and escape from the city daily grind. The island is well sought after by wealthy people and real estate investors who are attracted by the exclusivity of the island, its social scene, safety, high quality of life, luxurious waterfront mansions with access to the open bay, its proximity to Coconut Grove, Miami Beach and the Financial District in Brickell. Definitely it’s an idyllic place to raise your family.

And when it comes to investing…

Nothing better than consult with certified Realtors® to make the right decision on where, when and how to invest your money. These real estate brokers belong to the National Association of REALTORS® (NAR) and subscribes to its extensive Code of Ethics and pays annual dues.

There are many real estate agents out there, but the best agent for you is an experienced professional that understand the customer needs, likings, concerns and knows your market. It is a good idea to contact a well-known and verified real estate agency in Miami before making any decision, this is the wisest way to invest your money.

Now you have many more reasons to invest in a luxury property in Miami and enjoy of the countless benefits of living in one of the trendiest places in America, go ahead and take the first step to the life you deserve!

How to Talk About Finances With Your Significant Other

Posted on May 5, 2015 - 12:15 am by Team Dinks 4

The following is a guest by Erin of Everything Finance Blog.

Whether you’re in a new relationship or have been with your partner for several years, it’s equally important to talk with them about finances. Money can be one of the biggest issues in a relationship, so it’s important to discuss it early on.

A majority of financial problems can be avoided by talking about your financial views and values with your significant other beforehand. That’s why you should talk about finances with your significant other sooner rather than later.

Let’s take a look at how you can accomplish that.

How to Break the Ice

We’re going to start from the beginning here. If you’re in a newer relationship, you might be wondering how you can even broach the topic of money. After all, it’s taboo to some people, and it can get awkward.

When you’re meeting someone for the first time, talking about money can be a little tricky. It’s not something you have to jump into right away (as in, the first date), but when things start getting serious, you should ask your partner about their financial beliefs.

This doesn’t have to be anything in-depth, but try and get a feel for whether they’re a saver or a spender. What do they value? Are they okay with spending on things you think are a waste? Are they thinking about their future, or are they living paycheck to paycheck?

Sometimes, you can tell these things just by observing the spending habits of your significant other. If you don’t like what you see, it’s worth talking about.

Money can be a serious deal breaker. If you love to save money, and can’t understand why people struggle with shopping addictions, you might not want to be with someone who’s careless with their money. You generally want to be on the same page, financially speaking, or as close to it as possible. This will help you avoid any future conflict, and it will set expectations from the get-go.

That’s not to say if you’re on opposite ends of the spectrum, it won’t work out, but you should be aware of the potential challenges involved.

How to Have the Conversation

Are you at (or past) the point of considering combining your finances with your significant other? Maybe you both want to open a joint bank account to make paying the bills easier, or maybe you want to take the extra step and have shared checking and savings accounts.

Whatever the case is, you want to be absolutely sure you can trust your significant other with your money. It’s important to talk about how you’ll be spending it beforehand.

The best thing to do is set up a date ahead of time where you’ll meet to talk about your finances. You’ll both have time to prepare to make it a meaningful conversation. Make it clear what the meeting will be about, why you’re having it, and what you hope to get out of it.

Remember to be respectful during this talk. Money can be a touchy subject, and it’s easy to make someone go on the defense. Don’t make accusations – seek to understand your partner’s reasoning.

This can be difficult, especially if you had different financial experiences growing up. Our families influence our financial habits and values a lot. If you’re coming from two different viewpoints, that’s okay – just be sure to put yourself in your partner’s shoes instead of jumping to conclusions.

We’re all human, and we’ve all made financial mistakes. It’s better to be compassionate and forgiving when possible.

However, it’s also important to know what constitutes crossing the line. If you find your partner hasn’t been truthful to you about their spending or their debt, you have to decide whether or not you can still trust them, and what they can do going forward to regain your trust.

What to Review

Not sure what to talk about during your meeting? Here’s a list of things you should touch upon when it comes to discussing your finances:

Debt: Do you or your significant other have any debt you’re bringing into the relationship? You need both need to be aware of the situation and how it affects your finances. From there, you’ll also need to decide how you’ll pay it off. Will you resent your partner if you help them out, or is “our” money applicable to debt as well?
Goals: Are you both on the same page when it comes to your financial goals? If you’re not sure, now is the time to gain clarity on what you’re working toward. Do you both want to save for a house, or a car, or to start a family? Are you prioritizing debt? Develop a list of financial goals you want to achieve and set up a timeline for achieving them. You’ll both stay motivated and know what’s expected from each of you.
Bank Accounts: Will you be fully combining your finances, only having a joint checking account, or maintaining your separate accounts as is? Make sure you’re both comfortable with what you decide – don’t pressure each other into making a decision.
Address Issues: The need to discuss finances with your partner may have been spurred from a fight about money. If you’ve been bottling up any issues you’ve taken with your significant other’s money management, now is the time to bring it up. Again, do so in a respectful way. Don’t talk your partner into a corner.
Budgeting: If you and your partner do decide to combine finances, it might be a good idea to set up a joint budget together. Take the time to evaluate your spending and ensure your budget aligns with your values and goals.

How to Continue the Conversation

If all goes well, you should set up monthly dates where you meet to review what’s happened with your money. This is a great way to hold yourselves accountable to any financial goals you may have made, and it’s always a good idea to keep a pulse on your accounts. You can review your spending and the progress you’ve made on your goals.

Have a shared budget? Take the time to review it here. It’s important to check in with each other to see how you feel about your spending, what you think you can improve on, and what changes need to be made.

For example, perhaps your significant other thinks the grocery budget needs to be increased, or you want to suggest cutting cable. You can use the meeting as an opportunity for proposals.

Have an Open Line of Communication

All relationships need open lines of communication. Without communication, you won’t be on the same page, and that’s bound to cause issues – even outside of your finances.

It’s important to foster trust and communication to experience financial success with your significant other, regardless of what stage your relationship is in. Don’t be afraid to broach the subject, and encourage honest discussion around money by being empathetic.

Erin M. is a staff writer at EverythingFinanceBlog.com. Follow us on Twitter, Facebook, and Pinterest.

Is Student Loan Debt Ever Okay? 5 Degrees Worth the Investment

Posted on April 27, 2015 - 3:07 pm by Team Dinks 1

There’s no disputing that more education usually leads to a better job and higher pay. Unfortunately, most people don’t have the cash up front to pay for a graduate degree, so student loans are a necessity — and student loans must be paid back, often with budget-busting monthly payments. The changing jobs landscape means some previously “fool-proof” degrees, such as a JD, no longer guarantee a high-paying job that justifies student loan debt. If you are considering going back to school to prepare for a career change, here are five degrees that are worth the investment.

Master of Business Administration

Image via Flickr by GotCredit

Everyone knows that an MBA from Harvard or Wharton or another world-class school is the ticket to an earnings gold mine, but an MBA from a smaller, less prestigious school still leads to a huge boost in pay and lifetime earnings, as well as a wealth of new career opportunities. MBAs are in demand as HR specialists, financial analysts, and IT managers across all industries and easily command six-figure salaries even early in their careers.

Master of Healthcare Administration

The Affordable Care Act changed the financial paradigm in healthcare delivery; new financial models have replaced the traditional fee-for-service reimbursement model. As a result, the focus is shifting toward the business side of healthcare, increasing the demand for healthcare administrators with an executive MHA. The Bureau of Labor Statistics predicts an employment growth of 23 percent for this occupation, much higher than average. Master’s level healthcare administrators command salaries in the $110,000 to $150,000 range on average.

Master in Finance

People with a master in finance are prepared to enter the lucrative world of investment, banking, and business, snagging lucrative jobs such as controller, investment analyst, financial manager, and CFO. The financial crisis of 2008 and the Dodd-Frank legislation passed to prevent future banking crises has sharply increased demand for individuals with deep insight into finance and regulation. With employment growth in the mid-teens and average salaries for master’s level financial analysts in the $105,000 to $140,000 per year, the MFin degree is a worthwhile investment.

Master in Information Systems

After the high-profile hacks in the past few years — Sony, Target, Home Depot, for example — businesses are putting a bigger emphasis on information security and cybersecurity. IT has been a high-growth industry for decades, but today’s businesses are looking for candidates beyond the bachelor’s level who are knowledgeable about security. The BLS predicts growth for IT managers and IT security analysts of about 15 percent, higher than average. The salary range for MIS holders varies by industry, but most can expect to earn about $125,000 per year.

Master of Science in Health Informatics

It’s no surprise that healthcare degrees dominate the list; it’s hard to overstate the changes that healthcare reform has brought to the industry. The MSHI combines deep analytics and statistics with healthcare data; MSHI degree holders can work in a variety of places, such as pharmaceutical and medical device manufacturers, hospitals, and insurance companies. Health informatics employment growth is exploding, and average salaries are in the $125,000 to $150,000 range.

While advanced degrees aren’t always in your best financial interest, these five degrees will pay off in the long term.

Make Room for Your Furry Friends with Pet-Friendly Home Improvements

Posted on December 17, 2014 - 1:32 pm by Team Dinks

Preparing your home for new pets may mean you have to complete some pet-friendly home improvements. Not only do you want a pet-friendly house devoid of poisonous plants and potential choking hazards, but you also want construction materials resistant to the destructive nature of frenzied felines and pernicious pups. Consider remodeling ideas for pets that will give them a safe place to play, while keeping your home habitable for humans as well.

Pet-friendly flooring to reduce stains and scratches

One of the most important pet-friendly home improvements is flooring, which can mean the difference between minor clean-ups and major home repairs. The following types of pet-friendly flooring each have benefits and drawbacks, so consider which works best with your furry friends and home design.

Linoleum: As the quality of linoleum flooring improves, it’s becoming more popular among pet owners since it’s easy to clean and replace if necessary. Simple to install and available in multiple designs, it’s also more affordable than wood or tile.
Hardwood floors: Easier to clean and maintain than carpet, a light to medium finish wood floor will also reduce the appearance of scratches. But be wary of hardwood floors with sneaky pups. If you don’t catch the puddle in time it could stain the floor and you may need to sand or refinish the entire floor.
Stain-resistant carpeting: Choose carpets designed to prevent pet stains from seeping through to the floor. It’s also a good idea to choose carpeting that will blend with any fur your pets shed. A low pile, inexpensive carpet with synthetic fibers and without continuous loops may be a good option.

Odor-reducing remodeling ideas for pets

No matter how much you love your pets, you would probably prefer to do without pet odors. Take advantage of these tips for removing pet odor and pet-friendly home improvements that can prevent odor in the first place.

Steam clean upholstered furniture and carpets regularly
Use a vinegar and water mixture to remove odor from hardwood and linoleum floors
Choose paint that eliminates or reduces odors
Keep litter boxes in a separate room with a cat door so they can go in and out easily. Also, choose a kitty litter formulated to reduce odors.

Create a pet-friendly space just for them with home equity financing

Whether you want to give your pets their own room, or install fencing with room to run, a home equity loan or home equity line of credit can help you finance the project. In fact, you can secure flexible home equity financing to use on just about any pet-friendly home improvement.

Sponsored content was created and provided by Citizens Financial Group.

Is It a Good Idea to Convert Your 401k to Gold?

Posted on November 30, 2014 - 8:44 pm by Team Dinks

convert 401k to gold, investments, financial advice, financial strategy

These days, the market seems like it’s doing great. Bullish trends have assisted 2 of the 3 United States blue chip indices in breaking their all-time records several times over the past year; with the third posting incredible gains as well. However, as always, what goes up eventually has to go down. As a good investor, it’s your job to figure out when the market is going to go up, and when it’s going to go down; all while making decisions that will allow your investments to grow as a result of your intuition. Today, we’ll talk about why I think we’re in for a market correction and why it might be a good idea to consider the “Convert 401k to gold” strategy.

Why I Think A Market Correction Is On Its Way

A market correction is anytime we see downward trends in the market resulting in losses of 10% or greater. There are currently several red flags that tell us that the possibility of a market correction in the near future is very real. Here are the three signs I’ve been watching the closest.

Geopolitical Issues – We all know that war tends to drive world markets down. That’s something that most of us experienced at the launch of the “War on Terrorism”. Well, today the terrorist issue is rising again. Every day, when I watch the news, I’m seeing more and more about the terrorist group called ISIS as well as several other groups that are becoming more active. Aside from the terrorist concern, there are also major concerns about Russia’s invasion of the Crimea Peninsula in Ukraine. As a matter of fact, the Russian/Ukraine crisis has grown to the extent that sanctions were placed on Russia and more action is being considered. The bottom line is that the geopolitical climate today is a bit gloomy.

High Stock Valuations – The higher the stock valuations are the more investors overpay when purchasing stocks. At some point, history tells us that investors will become wise to this mistake; ultimately prompting a sell off that will lead to a market correction. Today, stock valuations are dangerously high. The metric I use to track this is the Schiller PE ratio. In times of sustainable growth, this ratio is usually 16. Currently, it’s at 26.5; telling us that investors are currently grossly overpaying for stocks.

Worldwide Economic Climate – While things are going great here in the states, the Eurozone isn’t feeling the love. As a matter of fact, the multi-country currency is currently on the brink of a recession. When the world economy doesn’t do well, eventually that trickles down to other countries like ours.

Final Thoughts

After looking at the factors mentioned, it’s hard to argue that the bull market is going to continue for a long stretch. In reality, we’re looking at market correction relatively soon. By converting your 401k to gold, instead of losing money during the market correction, you’ll have the ability to realize gains!

How to Get Started with Binary Options

Posted on November 20, 2014 - 12:15 am by Team Dinks

Binary Options has become a popular investing strategy over the last year or so. That’s because of the fast paced nature of Binary Options and the ability to earn money quickly.

However, that doesn’t mean trading binary options is for everyone. Before you dive in let’s look at some basics of how it all works and how you can get started.

Binary Options Basics

In a nutshell binary options is a form of financial betting. You choose an asset (which could be stocks, commodities, or even an index) and then you guess whether you think that asset will go up or down.

Once you’ve decided on that you put up money as well as an expiry date.

For example, let’s say you think stock XYZ will go up in value a certain percentage by tomorrow. You’ll then place your trade betting your desired amount along with your expiry date of tomorrow. If you win you could stand to gain a lot of money (this will largely depend on the amount of money you put up.) If your “trade” was wrong you could lose everything you put up.

Before you jump into trading binary options I would highly suggest that you first start with a demo. A demo is a free account that allows you to use fake money to place your wagers. After you get used to that you can then begin to look for a brokerage.

Choosing a Binary Options Brokerage

After you understand all the rules and have practiced with a demo account you can then look for a brokerage to trade with. Not all brokerages are created equal so it’s important you take the time to pick the right brokerage to suit your needs.

Here are some things you can look for:

Regulations – Because of regulations some brokerages can offer higher leverage than others. (Leverage is basically like a loan a broker gives you.) There’s no right or wrong when it comes to choosing because of leverage – it depends on what you’re comfortable with in the first place.
The Company’s Financials – You obviously don’t want to place a lot of money in a company that might go bankrupt.
Trading Platform – This is another characteristic that is based purely on personal preference. Some trading platforms will be easier for you to use than others, some may offer mobile trading, etc.
Payouts and Assets Offered

Conclusion

Before you get into binary options trading take your time and make sure you fully understand what you’re doing. Since there are so many different options it might take you awhile to find your groove.

Start with a demo account and work from there!

Smart Ways to Cut Corners

Posted on November 19, 2014 - 12:15 am by Team Dinks 1

cut corners, saving money, budgeting, personal finance, family finances

Even in the best of times, saving money is advantageous. Saving money and being frugal are cousins. Many people who are wealthy have money because they live beneath their means. Saving is important across all economic boundaries. Take a look at these seven helpful tips to help your family cut corners.

Get Rid of Debt

Good debt or bad debt, it is all debt. Get rid of it. As a family, make a realistic budget and then stick to it. Organize your expenses and income so that you see how money you spend money. Save your receipts and add them up in a journal. You might be amazed how much money gets spent on small items. Coffee is a prime example of how quickly a small purchase adds up quickly.

One $3 cup of coffee per day for five days equates to $15 a week or $780 a year. That is an amazing amount of money. Little things add up quickly. This is not just a job for mom; it is a job for everyone in the family. Avoid ATM fees by using a money transfer site, such as Ria Money Transfer. It’s quick and easy, and the fees are significantly lower than those of banks.

Build an Emergency Cash Reserve

Experts agree; 3-6 months of income equals an emergency cash reserve. The money in the reserve is what you live on when you lose your job. Use it for capital repairs for your home or car. Do not use it to buy a big screen TV, even if yours breaks. Make a clear definition of what an emergency means. Keep a regular savings account for incidental spending. Save for big-ticket items and pay cash.

Create a Bigger Savings Account

If you have money burning a hole in your pocket, invest in a bigger savings account. Set savings goals and work as a family to meet those goals. Break out your budget and find extra money. Compare your cable bill and cut back. Downgrade your cellular plan to something more affordable. If you spend $100 a month on cellular phone bills, then at the end of the year you have spent $1200. In ten years, you have spent $12,000. That is just for service and not for phones.

Budgets work well because they show you the truth. You just need to look.

Become a Smarter Shopper

Avoid being a brand snob. What you wear does not make you a better person. Being a better person makes you better. Teach your children how to shop. If they want something special, let them pay for it. When children pay for their stuff, they respect it and you a lot more.

Save money at the dollar store. Plan meals, and make a grocery list. Sticking to your list will cut the bill. Make your lunch for work and school. The less money you spend, the more you save. Don’t be shy about using coupons. Buy in bulk when prices are good.

Learn to Invest

Even if you just invest in CDs or bonds, your money will be earning interest. Your bank wants you to save money. Work with them by checking out their investment programs. Compare rates and terms. Look for hidden fees, and your money will grow.

Grow a Garden

Even a small container garden saves you money. If you have room, a raised garden bed produces hundreds of dollars a season in produce. Why spent that money at the grocery store? If you are new at gardening, stick to easy to grow plants. Summer squash and tomatoes grow easily, and they produce a lot of food.

Teach Your Children The Value of Money

Children and teens spend over 100 billion dollars annually. They also influence how parents spend money. Teach your kids how to value money, and your savings will grow. Allow them to earn an allowance and teach them how to save. It will help them when they are adults.

Nearly every household bleeds money. Stop the hemorrhage by paying attention to your budget. If you don’t have a budget, make one. It is the single most powerful tool available.

Image via Flickr by StockMonkeys.com

Why Life Insurance Matters

Posted on November 18, 2014 - 8:48 am by Team Dinks

life insurance, advantages of life insurance, benefits of life insurance, importance of life insurance

The old adage of ‘there are only two things in life that stay the same; death and taxes.’ remains as true today as when the phrase was first coined. Life Insurance isn’t like other insurances in that it may be useful at some point; life insurance is inevitably useful. Unfortunately, many put off purchasing policies until later in life when in reality it is best to purchase sooner in life to get it’s full advantages. There are many reasons that life insurance matters and hopefully this article will impart some of the many benefits.

Peace of Mind

There are few things more tragic than unexpected loss of life. First and foremost, life insurance is there to provide for those left behind financially when death creates a hole in their support structure. Funeral costs are high and burdening family and friends with these expenses can be crippling. Insurance can help fill this very material need and leave peace of mind that the financial blow will be softened if not alleviated altogether. Insurance providers will coach as to the amount to insure needed to make certain that family and friends’ immediate needs will cared for while setting the premiums at an affordable level.

Investment

Many Insurance companies, Manual Life being a prime example, create life insurance packages with investment components attached. The idea being that the insurance premium is set at a certain amount and any money paid over that premium amount goes into an investment portfolio determined by the client and the insurance representative. Over time the investment will grow and become self sustaining such that the interest earned will be enough to pay the premiums. At that point, payments into the plan can stop while the investment continues to grow. It is an elegant savings vehicle that couples the peace of mind of an insurance policy with the savings of an investment portfolio. This type of investing can also act as an income tax shelter.

Retirement

For some retirement is far in the future and for others it is a much closer reality. The beauty of life insurance, from the eyes of a lender, is that it will activate and thus it is treated like a capitol asset that can be borrowed against. A ‘policy loan’ is an excellent way to live comfortably in retirement without needing an extravagant amount of money saved. This method works well when paired with the investment policy described above to further circumvent income tax if the money has been sheltered thus far.

Inheritance

For those worried about estate planning and leaving inheritance for surviving family, life insurance is an effective tool. Lawyers and financial planners should be involved and a plan drawn up along with the will to avoid any confusion. All matters of estate should be very clearly detailed so that the policy holders wishes are known and can not be mistaken once the policy is activated.

REIT to Boost Transparency in Real Estate Sector

Posted on November 2, 2014 - 10:52 am by Team Dinks

India’s economy has gone through some fluctuations over the past number of years. But it’s beginning to get out of its most recent slump, especially in the real estate market where rapid growth is starting to take a firm hold.

According to the India Brand Equity Foundation, the Indian real estate market has turned into one of the largest globally recognized sectors. Compared to many other global real estate markets, it’s also one of the fastest growing. Additionally, India is currently ranked third in the world in land area that is LEED (Leadership in Energy and Environmental Design) –certified, with close to 12 million square miles of eco-friendly space.

A good deal of the current real estate growth is connected to the heavy development in a number of sectors including retail, hospitality and entertainment, economic services, and information technology services. The entire Indian real estate market is expected to reach US$180 billion by 2020. A recent development that has become an important factor in the future growth of the real estate market is the Indian government’s authorization for foreign REITs to invest in the country.

What is a REIT?

REIT is an acronym for Real Estate Investment Trust. According to a report released by EY in collaboration with the Federation of Indian Chambers of Commerce and Industry, REITs are real estate investment companies that act like regular stocks in that they offer common shares to the public. But they have two unique characteristics; the majority of their profits must be distributed to stockholders as dividends and they exclusively manage income-producing properties. The FICCI/EY report lists four categories of REITs:

Equity – These REITs deal with direct ownership of property and their income is largely based on collecting rents.
Mortgage – Aptly named, these REITs exclusively handle property mortgages. But they don’t just purchase existing mortgages and mortgage-backed securities, they also provide loans to property owners for mortgages. A large fraction of their revenue comes from the interest generated on mortgage loans.
Hybrid – Hybrid REITs are a combination of the previous two. They invest in mortgages and properties.
Sector-specific – Unlike the previous three, which generally deal across a wide range of real estate sectors, these REITs focus on particular kinds of property. The FICCI/EY report lists three sub-categories under sector-specific REITs.
- Housing – Receiving the vast bulk of their revenues from leasing their holdings, housing REITs purchase residential property for long-term holding. They usually control a diverse range of residential properties that they lease, manage, and renovate when needed.
- Industrial – Industrial properties like warehouses, manufacturing centers, and undeveloped land are what these REITs look for. They generally own properties across an extremely diverse range of businesses and professions.
- Hotel – These REITs deal with all sorts of different hospitality properties such as, hotels, resorts, conferences centers, and certain airport properties. Generally, the majority of their revenue is generated through the direct income provided by their properties.

Benefits of REITs

REITs provide a number of benefits over investing privately on your own. Money Control lists four particular benefits REITs can provide investors. The first is that they provide an excellent route for diversifying your portfolio. Buying into a REIT can give you the opportunity to invest in large scale real estate that would be far beyond your reach normally. REITs are also excellent if you’re looking for more consistent and relatively immediate financial gain because they are required to distribute the majority of their revenue as dividends. The portion of revenue that goes into dividends is commonly around 80 percent globally and 90 percent in India. There is also almost always a cap on debt-to-asset ratios which help to reduce risk.

The final major benefit Money Control discusses is the reduced volatility and increased transparency REITs give real estate markets. They do this through releasing information about average rents, tenant profiles, occupancy levels, and more on a semi-regular basis in order to reduce information asymmetry, which many claim is responsible for market volatility.

Taxes

Not all aspects of REITs and their taxation have been entirely worked out by the Indian government. And most discussions will deal with aspects that affect foreign investors. However, there is good news about REITs and taxation; the dividends distributed to stockholders will be exempt from tax, as will any interest accumulated by the REIT, according to Mondaq. There is a lot more information about REITs and tax than there is space on this page, so go do some research to learn more.

REITs and You

So it seems that REITs will do a lot of good for the Indian real estate market and economy. But what about you? For one thing, investing in a REIT is very accessible. HBJ Capital states the minimum investment is only Rs.2 Lakh. Additionally, many of the management and due diligence tasks required when investing in property are dealt with my the REIT itself, so you’re free from any responsibility in those regards. Plus, with around 90 percent of revenue going to dividends, you’ll receive money on a regular basis throughout the year.

The diversity a REIT can give your investment portfolio is excellent, and you can use the income from your dividends to search for additional property from sources like Unitech Group to further diversify your assets.

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