Why to choose a variable-rate Mortgage

With a variable-rate mortgage, the payment can fluctuate as interest rates rise or fall. For this reason, you usually get a better rate — to reflect the uncertainty and increased risk.

Although the central bank rate has not changed much over the past year — and is not expected to soon — lenders have been narrowing the gap between the two rates. That means it’s a good time to consider a variable mortgage before the gap gets even smaller.

Here’s an example of the potential savings. The best available five-year fixed rate stands at around 3.2 per cent and the five-year variable at 2.6 per cent, representing a 0.60 percentage point spread. You could save $2,700 annually on a $450,000 mortgage — the average price of a Toronto home — by going variable.

So, if you can sleep at night with the risk that your mortgage payment might change, a variable rate wins out. Here are some other factors in its favour:

1. Variable mortgages are historically cheaper. In the last 50 years, variable rates have been an average of 1 per cent cheaper than fixed rates, says James Laird of True North Mortgage. According to Bank of Montreal research, the last time fixed rates held advantage over variable rates was in the late 1980s.

2. Variable rates are near historical lows. The Bank of Canada has indicated it plans to keep rates low in the face of uncertainty over North American and European economies. The U.S. Federal Reserve has promised to keep interest rates low through 2013 and Canadian rates cannot diverge far from American ones. Some people in the mortgage industry are saying interest rates could fall further.

3. Variable rate penalties are typically lower. With a fixed mortgage, the penalty to break your mortgage is the greater of three months’ interest or the Interest Rate Differential (IRD). A variable rate, on the other hand, is only subject to the three months’ interest penalty. The much feared and little understood IRD penalty too often comes close to the cash savings you would earn with the new, lower interest rate, taking away much of the incentive to refinance. Most of the 8 per cent of Canadians who refinanced in 2010 in fixed mortgages would have paid the higher IRD.

4. You can lock in at any time. If for whatever reason during your variable mortgage term you wish to lock in all or part of your mortgage at a fixed rate, you have the freedom to do so without any penalties or costs.

5. You start saving right away. Because of the current spread between fixed and variable rates, the savings are immediate. Even if interest rates rise, the increase would have to be big enough to wipe out the savings reaped at the beginning of the mortgage.

Variable rates are riskier, but it’s a gamble that pays off. If you’re still unsure, you could go half fixed and half variable, in which case you’ll never be more than half wrong.

Source: Kerri-Lynn McAllister | moneyville.ca

Get the jobs that aren't advertised

The Challenge
It’s true that about 80% of all jobs aren’t advertised. Although most job hunters spend hours every day responding to online openings, let’s face it: it’s probably easier to break into the Pentagon than to be noticed via an online job application. If your resume doesn’t have exactly the right key words, it lands in the hiring manager’s trash folder. And speaking of hiring managers, let’s take a moment to recognize that they’re just as overwhelmed by the stack of online applications they get as you are by sending them. That’s why hiring managers are, in fact, looking for you elsewhere -­ by asking their current employees, colleagues, recruiters and friends.

Plant Many Seeds
Being on a job hunt is a lot like being a gardener: you must plant many seeds, because you never know which green shoots will surface. So, here are a few ways to tap into your secret job market:

Start with Your Own Contacts
Make a list of all your closest colleagues, college buddies and past employers. Don’t forget Uncle Harry – working relatives can be a great source of job leads! Send your contacts a copy of your resume and ask to network with them. Be sure you’re prepared with a professional resume and an idea of what position fits your skills. Call everyone on your list, and don’t hang up the phone until they’ve given you at least one new referral. You’ll quickly build an impressive network of new job lead sources.

Join LinkedIn
Social networking is a great way to expand your network. Set up an account on LinkedIn and post your profile and resume there. You can look for former colleagues, alumni, professional associations and other connections. Recruiters frequently search for applicants on LinkedIn, so put your best professional face forward.

Look for Temporary Work
Taking a temporary assignment has multiple benefits. First, it gets you out of the house and into a professional environment, which keeps your spirits high during a long stretch without work. Secondly, it generates income. Thirdly, you’ll add another employer to your list of references. Finally, temporary assignments can often lead to full-time job offers. Head to your local temporary job agency and sign up.

Share Job Leads with Other Job Seekers
It may sound counter-intuitive to give leads to your competitors, but who’s more up-to-date on the latest job openings than fellow job hunters? These folks have their ears to the ground and might know of a job that isn’t a good fit for them, but could be for you.

Tell Your Tennis Buddies…
… or your golf buddies, or your book club friends or whoever else might be in your social circle. Even if they haven’t worked directly with you, they still know you pretty well. They can recommend you for those qualities you exhibit socially, such as a good character, a positive attitude and a sense of team play.

Ask for Help
If you’ve applied for a job, ask those in your network if they know anyone at your target company. A call made on your behalf to a company “insider” can elevate the visibility of your resume and credentials, which is especially important in today’s highly competitive environment. Those in your network are happy to help, especially if you can clearly give them a specific task to carry out.

Unearth Exciting Job Opportunities!
With persistence, creativity and a little luck, you, too, can tap the hidden job market and unearth exciting job opportunities from the oddest places.

Source: Yahoo.com

Top 2 Stocks For Cashing In On Obama’s Stimulus Plan

While the politics behind President Obama’s stimulus plan are debatable…

The potential for making money from this rare $787 billion investment in America is undeniable.

Because unlike the nebulous “bailout plans” that are propping up the U.S. automakers and floundering financial institutions like Citigroup and Bank of America, this stimulus plan isn’t a bailout.

It’s a massive investment that will hand billions of dollars’ worth of projects to healthy, competitive businesses. (Like the companies you’ll discover just ahead…)

And this may be your one-time chance to invest in the companies that could see their revenues soar once the stimulus money rolls in…

But a quick word of warning — not all stocks will go up in the months and years ahead. There will be some big names that never recover from this downturn…

Just as the brutal bear market of 1973-74 sounded the death knell for many darling stocks of the day, like Bethlehem Steel and Johns-Mansville…

At the same time that it set the stage for historic run-ups by a handful of companies like Radio Shack (a gain of 1,557% between 1978 and 1983!) and Wal-Mart (a 1,900% surge from 1973 to 1983!).

The bottom line in all this: You can make a very profitable decision right now. By striking at this rare historical moment, you could build for yourself and your family a comfortable lining of wealth.

Of course, you need an edge. A trusted, independent resource. And that’s where The Motley Fool comes in!

Because while a lot of so-called experts are picking “Obama stocks” that might jump up a little bit in the months ahead…

The Motley Fool’s Inside Value investment advisory service team of researchers dug deeper…

They scoured the world of undervalued stocks… looking for those rare investments that change lives. The stocks that will be talked about decades from now…

And the only stocks that can deliver that kind of long-term performance are the ones with pristine balance sheets and high intrinsic values that sit smack-dab in the slipstream created by a monster trend — the multibillion-dollar trend of Obama’s epic investment in America!

So let’s dive right in… and take a look at the one company that’s in a prime position to cash in on the coming Internet expansion boom…

And take a look at our next investment… it’s a rock-solid company that’s in the sector the U.S. Department of Labor estimates will generate 3 million new jobs by 2016.

And by 2010, Americans will be faithfully handing over $2.6 trillion each year to companies in this industry. Discover how you can profit from this phenomenon…

Overhauling The U.S. Healthcare System

How about a quick quiz to test your healthcare know-how? Pencils, everyone:

1. Approximately what percentage of the U.S. population is uninsured?
1. 1%
2. 5%
3. 15%

Answer: C. The Census Bureau estimates that some 46 million Americans were uninsured in 2007.

2. In 2004 (the year for which the most recent data are available), which location had the lowest infant mortality rate?
1. Cuba
2. Detroit, Mich.
3. Russia

Answer: A. Cuba’s infant mortality rate was 5.8 per 1,000 births, compared with Russia’s 11.5 and Detroit’s 15.5.

3. Which product does Starbucks [Nasdaq: SBUX] spend more money on?
1. Coffee beans
2. Health insurance for employees

Answer: B.

You don’t have to be a neurosurgeon to realize that something seems awry here. When a nation spends more than $2 trillion a year (roughly 16% of the gross domestic product) on health expenditures yet has a healthcare system ranked 37th in performance in the world, according to the World Health Organization, or when “a doctor… can get more data on the starting third baseman on his fantasy baseball team than on the effectiveness of life-and-death medical procedures” — as stated in a New York Times op-ed — something certainly needs revamping.

To bring America’s health care up to speed, the government is investing more than $140 billion into the sector. Some of the money will update the industry’s technological capabilities, some will fund research, and the remainder will increase Medicare and Medicaid budgets. One company clearly stands to benefit: UnitedHealth Group [NYSE: UNH], the country’s largest provider of health care services.

UnitedHealth operates with four divisions, but the bulk of its business ($75.9 billion, out of $81.2 billion in revenue during 2008) comes from its health care services segment. It provides both fee-based and traditional risk-based coverage to small and midsize companies as well as to families and individuals. Under the fee-based plans, UnitedHealth simply acts as an intermediary, collecting fees for administering the plan and leaving insurers with the potential risks of higher costs. With risk-based coverage, UnitedHealth collects monthly premiums that are ideally 15% to 20% higher than the costs it will pay out in claims.

Government-sponsored health plans like Medicare and Medicaid also fall into this division. For these, UnitedHealth bids on contracts from the government and manages the program with the government’s funds. The size of UnitedHealth’s network gives it a competitive edge when bidding for these plans, meaning it’s likely to receive the bulk of the money coming from the stimulus plan.

And then there’s Obama’s campaign promise of universal health care. Bruce Berkowitz, founder of Fairholme Capital Management and manager of the Fairholme Fund [FAIRX], which owns nearly 1.5% of UnitedHealth’s outstanding shares, believes that if this promise comes to fruition, the government could only accomplish it in one way: by using the managed health care companies, of which UnitedHealth is the largest.

Its current share price more than accounts for the possible risks, meaning we believe there is significant value to be found, with high potential reward. This investment is exactly what the doctor ordered.

Our next company is smack-dab in the momentous effort to rebuild America’s transportation infrastructure. Find out the name of the company that’s in the perfect position to cash in…

Rebuilding America’s Highways

Any driver knows that our roads could use some TLC. But just how bad are they?

According to the American Society of Civil Engineers, more than a quarter of our nation’s bridges “are either structurally deficient or functionally obsolete.” As for our roads, we “spend 4.2 billion hours a year stuck in traffic,” sucking some $78 billion out of our economy. Not only does this cause unnecessary damage to our cars, but these road conditions lead to 14,000 deaths a year.

Over the past two decades, as government spending skyrocketed to historic highs, infrastructure spending has plummeted to record lows.

So to bring our roads up to speed, the stimulus plan is slated to invest nearly $30 billion in our highways and bridges, which alone should help create more than 500,000 new jobs. It should also fuel economic growth because, as Gov. Arnold Schwarzenegger of California recently put it, “The faster we can move people and goods, the stronger our economy is.” Some have estimated that every $1 invested into highways generates $5.40 in economic benefits.

Vulcan Materials [NYSE: VMC] is one company whose products will see a significant spike in demand as our roads are revamped. According to company data, Vulcan is the nation’s largest producer of aggregates (think crushed stone, sand, and gravel), a top-five asphalt producer, and a top-10 concrete producer, operating with a strategically significant coast-to-coast distribution network.

About 20% of the company’s revenue comes from the residential market. Growth here will likely stay slow until the housing market recovers — but the overwhelming majority of Vulcan’s revenue comes from public projects such as highways, so the increased demand in this area should more than compensate for the residential slowdown.

This company has an enormously wide moat, with assets that are not easy to come by, making Vulcan a dominant player in a high-demand industry today. It’s trading more than 40% below our estimated intrinsic value, with a 3.8% dividend — now is as good a time as any to buy stock.

Next up is the smartest way to cash in on the coming “Green Energy” boom. Find out its name and ticker symbol…

The Smart Way to Invest in Green Energy

We’re willing to bet the phrase “energy-independent America” was one of the most-used taglines of both Senator McCain’s and President Obama’s campaigns. But it hasn’t disappeared — it just made an appearance in the economic stimulus plan, with nearly $79 billion allocated to this initiative in the form of tax credits, grants, and dedicated research.

Despite many experts claiming to know whether it will be specifically wind power or biofuels that ignite a green revolution, there is simply too much uncertainty and too many unknown variables to discern which technology will emerge as the most profitable. Not to mention that no green energy company has yet to dig a wide moat — heck, many aren’t even profitable at all.

But that’s not to say you should avoid this emerging sector in its entirety.

Rather, we think that if you want exposure, it makes the most sense to not put all your green eggs in one basket. That’s why we think an inexpensive ETF like PowerShares WilderHill Clean Energy [NYSE: PBW] is the smartest way to go if you want to profit from green technology.

This ETF has positions in roughly 50 clean-energy names with business models ranging from manufacturing green-friendly auto parts to manufacturing solar energy equipment. Most of its positions are in small caps, with the weighted average market capitalization clocking in at just $2.3 billion. Even though the portfolio is relatively diverse, an investment in this ETF will likely be volatile. We certainly wouldn’t recommend overweighting your allocation here, but long term it’s sure to be a winner.

But if all this government spending has you worried about inflation, discover an investment that will help you protect your nest egg…

Inflation-Proof Your Portfolio

The stimulus plan’s passage brings the total price tag of the government’s intervention to an astonishing $9.7 trillion. Two Bloomberg columnists calculated that that’s would be enough to pay off more than 90% of America’s mortgages.

That many dollars added into the economic system, coupled with rock-bottom interest rates, means one thing is certain: Inflation is a-comin’.

Knowing that it’s inevitable, we have one final investment recommendation that will counteract the effect inflation could have on your portfolio over the long term: Vanguard Inflation-Protected Securities [VIPSX].

This mutual fund is a cheap and easy way to get access to Treasury Inflation-Protected Securities, or TIPS as they’re known in the bond world. The principal on TIPS is adjusted upward as inflation rises (likewise, it falls during deflationary periods), so your interest payments similarly rise with inflation (or fall with deflation). With inflation on the horizon, this is a smart way to ensure that a portion of your portfolio will keep up with it. It makes sense to have a significant portion of your bond allocation in TIPS, especially if you’re in or nearing retirement, and this Vanguard fund is the cheapest one out there to help you do so.
What to Do Now

There you have it — our five best ideas for how to profit from this momentous economic stimulus package, all arising from our in-depth analysis and independent research.

Truth be told, the same holds true for all the stocks recommended in Motley Fool Inside Value, the investment advisory service behind our top picks: Sprint Nextel, UnitedHealth Group, and Vulcan Materials.

But it doesn’t have to stop there. The Motley Fool just put the finishing touches on its brand new premium report highlighting the very best small-cap stocks, selected for you by some of the nation’s top independent equity analysts.

Source: fool.com

When you refinance your home loan, you actually need to get a new mortgage. You are then required to present to your mortgage company the pertinent documents needed for the processing of your application. The whole process of obtaining these documents can take a lot of time. This is why most people prefer the option of getting what are known as No Doc Mortgage Refinance loans.

Getting such a loan approved is easy, especially if you have good credit history. All the lender needs are your credit score and your social security information. Your credit report will be pulled to check on your credit score. If all is good in this end, then the lender can feel confident enough to grant you the loan without requiring the presentation of certain documents. But you still have to be wary since not all lenders give out No Doc Mortgage Refinance loans. Plus, your credit score has to be extremely high to make any lender confident enough to grant such a loan.

The great thing about getting a No Doc Mortgage Refinance loan is that you can keep your privacy. A lot of people are not comfortable sharing all sorts of information to their lending companies, but this cannot be helped because this is required. Lending companies need to know the employment status, the income earned, and other financial information about their applicants. With the No Doc Mortgage Refinance loan, borrowers can then do away with the disclosure of such information.

The main catch, however, is that with refinance home mortgage loans that require no documents actually come with higher interest rates. However, if you prefer the privacy that comes with No Doc Mortgage Refinance loans, then this becomes a small price to pay. Still, if you are considering getting a loan to avail of lower interest rates, then this type of loan will not work well for you at all. You should then check the other options available in the market.

Source: www.ezinearticles.com

So if you’re looking for ways to accelerate your retirement, here’s how you can move the date of your retirement party up a few years:

1. Add cash.
Yes, it takes money to make money. So the first step in starting and growing your retirement nest egg is finding ways to get more cash into your retirement accounts.

When times are tight, saving more can be a tall order. But you may get some help. If your employer offers a matching contribution to your 401(k) plan, you might double those extra savings. Similarly, Uncle Sam offers benefits in the form of deductions for contributions to 401(k) plans and traditional IRAs, as well as tax credits for low- and middle-income taxpayers who contribute to IRAs.

It takes a little more than $550 per month in savings, earning a 7% return, to get to $1 million over the course of a 35-year career. But if you can add just $100 per month to that — including what your employer puts in and your tax savings — you can cut more than two years off your wait.

2. Embrace stocks.
Saving more is great, but there’s only so much you’ll be able to put aside. You have to make the most of what you have.

People are often too conservative in their retirement investments. Despite the sometimes violent ups and downs of the stock market, the long-term return on stocks far exceeds that of less risky investments like bonds and bank savings accounts. If you have all your money in cash, you won’t lose a penny — but you’re lucky to make 1%-2% right now. Even target funds and other balanced retirement options have sizable portions of their assets in bonds.

A 7% return is a reasonable average for a portfolio that has slightly more in bonds than in stocks. But throughout most of your career, you can afford to take more risk. Owning more stock could raise that return to 9%, lopping off almost five more years from your target.

3. Hit for the fences.
If you only want to match the S&P 500, buying index funds is easy. To get higher returns, however, you’ll have to find stocks that will outperform the index. Here are some examples from the past 20 years:

Those stocks have done particularly well, especially given how badly stocks have done since 2000. But you don’t have to belt all your picks out of the park to retire sooner. If you can eke out just another couple of percentage points on your average return — boosting it to 11% — then that’ll cut another 3 1/2 years off your target.

4. Become a cheapskate.
So far, we’ve only looked at half of the story. How much you spend plays just as important a role in retirement as how much you save. And while many expenses go away when you stop working, new ones quickly take their place — things like travel, entertainment, hobbies, and medical care.

But you have a lot of control over many of these expenses. If it’s worth it to you to spend less in retirement, you won’t have to save as much before you retire. Cutting 10% off your spending means you’ll get to your smaller goal a year earlier.

All in all, combining these four simple tips can let you retire as much as a decade or more sooner than you otherwise would. That thought just might be enough to make even a bad day at work seem brighter.

Source: Fool.com