Mar
30
About negative mortgage convexity
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The term “negative mortgage convexity’ refers to a typical economic industry language and implies that the value of mortgage bonds reacts unusually to the alterations in interest rates compared to the other bonds.
The financial experts say that the rate of a mortgage bond is negatively associated with interest rates. If there is a rise in the rate of interest, immediately there would be a fall in the mortgage bond price. Similarly, the bond prices rise with the fall of interest rate.
Now, mortgage bonds are comprised of a group of mortgages. Negative mortgage convexity takes place if the group of mortgages is paid off much earlier. The early repayment in turn reduces the duration period of the entire bond. Thus, a thirty year mortgage bond rather than acting like the actual one would be more like a twenty five or twenty year bond. Hence, the relation is a negative one.
Mar
28
Is investing on Fixed Annuity safe?
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A fixed annuity plan gives you the liberty of having a safe place which will give you great gains and lesser risks. Fixed annuities also give you the freedom from heavy taxation as they have a lot of options. Fixed annuities are much more liquid compared to the other kind of investments. The reason for this is that you can withdraw some amount from the principal amount. The penalty amount is also as less as ten percent only. So it is you who are at an advantage anyhow.
The rate of return depends on the period of the investment that could range from three to ten years, and with the increase in the year the rate of return gets better. The rate of return also depends on the market condition apart from the maturity period. Most importantly, the final or actual amount that you earn is not affected because your returns are not taxed at all.
Mar
26
Managing your personal finance cleverly
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Having troubles managing your personal finances profitably? Facing frequent cash crunches which you absolutely cannot avoid? If so, by planning and managing your personal finance properly can help you combat these unforeseen contingencies such as debt problems. Now, what is managing personal finance all about? Well, basically it deals with keeping a balance between what comes in that is your income and what goes out, that is your expenses. You might have not taken this whole concept seriously enough before, but managing your personal finances is very essential if you want to have a good credit record.
A simple way to keep a track of your income and expenditure is to maintain a budget. You can prepare a budget weekly, fortnightly or monthly according to your convenience. Now, a simple trick that can help you manage your personal finance is by keeping your expenses lower that your income level, i.e. what you spend should never exceed your earnings. The next thing to keep in mind is to avoid taking overwhelming debts. This can do away with the whole budget planning can cause major problems in your personal finance management. Hence keep these essentials in mind and you will do just fine in managing your personal finances.