Income Finance

Posts Tagged ‘Risk’

If you’re looking for a short term savings solution, there’s no shortage of banking products available to meet your needs.  Money market accounts, savings accounts and CDs (certificates of deposit) are all common and popular short term investment vehicles.  Other products, such as municipal bonds, treasury bills and I-bonds may be available, but when you’re looking for low-risk savings strategies that still allow you to get a return on your investment, it’s hard to beat CDs.

Getting the Best Rates

Many banks claim to offer competitive rates, but some go beyond the industry standard.  The online bank, Aurora Bank (Equal Housing Lender, Member FDIC) offers some of the highest CD rates available.  Of course, to get the best rates, you’ll either need to deposit a large amount, or keep the CD for a longer length of time (called the maturity date).  Either (or both) of these options can help you get the best possible CD rates.  Maturity date lengths and deposit amounts can vary.  CD timeframes range from 6 months to 5 years, and deposit amounts vary, but it’s best to keep a minimum balance of $ 1,000 in order to avoid any extra fees or account maintenance charges.

Making Money on Your Money

One of the best reasons to consider CDs for short term investments (anything five years or less is considered short-term), is simply because you get the benefits of compound interest.  Every day, the bank pays you interest on the money you’ve deposited in the CD, and at the end of the month, this interest is added to your account on top of what you’ve already deposited.

So you’re essentially making money on the interest that the bank is already paying you.  

Safety and Security

Another reason why CDs make ideal short term investments is because of their safety, security and stability.  Unlike some other banking products (particularly investment-related products like stocks and bonds), CDs are covered by the FDIC – a government institution which protects your deposits up to $ 250,000 per account, against the highly unlikely event that the bank itself goes bankrupt.  It’s worth noting that since the FDIC was created after the Great Depression (credit unions have their own federal institution called the NCUA), not a single person has lost money in their account due to bank insolvency.  

In uncertain economic times, it pays to have money invested across a wide spectrum of banking products.  As you may already know, different products produce different results according to your risk tolerance level, amount to be deposited and how long the money is kept with that particular product.   With this in mind, it’s a good idea to speak with a banking professional about how to use CDs to reach your short term savings and investment goals.  Considering today’s competitive rates, CDs are a low-risk way to keep your savings secure for up to five years.

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Building Industry Credit Risk Analysis Section

First, the risk of building materials industry

(A) the risk of cement industry

The risk of long-term sustained tightening. 2008 1-5 month CPI rose 8.1% in May CPI fell to 7.7%. After the earthquake are still raising the deposit reserve ratio indicating the state adhere to tight policy stance. If the actual fixed-asset investment continued to slow down will adversely affect the cement industry, cement industry, even before the end of the business cycle.

Coal price rise risk. Coal prices soared and greatly increased the cement industry cost pressures, large enterprises competing construction waste heat power generation project is in response to high energy prices. Therefore, the impact of rising coal prices for different sizes of cement enterprises is asymmetric, on waste heat power generation projects with a relatively large-scale enterprises will be less, for small businesses is fatal.

The risk of irrational competition. Large-scale expansion will bring more business competition. Especially in spite of long-term industrial distribution, competing projects, expansion of production capacity in areas such competition more prominent, now is the best classic Sichuan, Hunan is a.

(B) the risk of the glass industry

The main risk is that heavy oil, soda ash and coal price risks. Without exception, these three elements of glass production was up, and all gains amazing. In addition to a price drop of soda ash is expected, the heavy oil and coal are also likely to continue rising.

The risk of frequent cycles overlap. Technical barriers to low flat glass industry, once the industry boom in the high degree of point production can often be expanded within a year. That the consequences of blind expansion of production capacity is overcapacity, oversupply, lower prices, the industry into a downturn.

Second, the appreciation of RMB

Appreciation of the RMB in terms of impact on the building materials industry as a whole is not, but the company, this will make it a certain decline in profitability.

(A) Cement

RMB appreciation in the short term for the cement industry has little effect. China is the world’s largest cement producer, however, the scale of the present export, export part of the small proportion of the total, therefore, exports for the entire cement industry has little effect. Together with various cement raw materials and energy procurement in China, RMB appreciation for the basic domestic sales of cement within the production had little impact.

High against the dollar, but is expected to continue to rise, coupled with low interest rates and low cost, making the continuous influx of foreign capital basis of domestic industry, cement industry will face a second investment upsurge.

First, financial capital (Morgan, Goldman Sachs, etc.) remains positive appreciation of the renminbi, cement industry and capital invested large, long-term returns considerable financial capital must meet the requirements. Generally used to buy into the investment industry leading the way, now the investment, such as JP Morgan Investment Conch, CDH landscape, Goldman Sachs and other investment Mengxi.

Second, industry capital (Lafarge, Howe West Union, Heidelberg, etc.) long-term bullish on the Chinese market and high returns. Opportunity to take advantage of macro-control, holding areas for using the purchase method of quality cement enterprises, such as Western Union Ho acquisition of new century China, Lafarge acquired two-horse, the acquisition of Heidelberg Yuexiu so.

(B) glass

Relative to the cement industry, exports of the industry is relatively larger, the renminbi appreciation on trades have been affected. Perspective on specific companies, export-oriented enterprises (such as Fuyao) the impact on a larger share of its domestic market and import processing enterprises storm is relatively small. At the same time, the processing of glass to maintain a substantial increase in exports, will also be caused by revaluation losses.

(C) steel

RMB appreciation on the best interests of the steel industry is to reduce the procurement cost of the steel industry: At present, about 40% dependent on imported iron ore, iron ore-based raw materials and to account for 30-40% of the cost of steel; benefit of the listed company including Baosteel, Wuhan, Maanshan, Jinan Iron and Steel, Dragons, etc. to import iron ore as the main raw material of the company, the company’s iron ore imports and domestic procurement procurement is basically the ratio of 7:3, the other, such as Anshan Iron and Steel, the new steel Such vanadium-based company owned mining company, was less affected.

RMB appreciation on the negative effects of the steel industry is to increase imports of steel products, while reducing exports. Of course, this negative impact is medium to long term, in the short term spread by domestic demand and domestic constraints, this negative impact can be ignored: First, the current domestic steel demand remains strong, exports, compared to just 4% share of production. From the product structure, exports mainly low value-added products such as wire and the general board, imports Zeyi domestic production or capacity planning can not be of high value-added products, including automotive sheet, ship plate, etc.. Second, the current spreads at home and abroad in more than 20%, even if the RMB is still not make up a spread. Medium and long term, with spreads narrowing, especially in the CIS prices are now closer to domestic prices, the prices of these regions has negative effect on domestic prices, while the RMB appreciation will increase this impact. For the specific impact of the company is negligible, because the steel industry, the ratio of exports of listed companies is very small.

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Your retirement investment strategy needs to be tailor-made with your financial capabilities and retirement goals in mind, and has to involve just the right amount of risk based on your own risk tolerance. Conventional investment wisdom dictates that you should taper off how risky your entire portfolio is as you grow older, but it does not mean that you should have zero portfolio risk twenty to thirty years after retirement where no risk usually means very little profit. Here are some things you need to think about, risk-wise, when it comes to your retirement investment strategy.

Too much risk, no matter how large the potential gains are, is inadvisable. You could stand to lose a huge chunk of your retirement funds and run out of money some time after you quit the workforce. Also, it has been observed that investors who have reached what is called, financial critical mass, (which simply means they have enough cash to retire on) have done so by saving money in increments over a long span of time. While you still work and are years away from retiring, you can still recover from investment losses due to higher risks. You can still recover from any financial mistakes by putting in more hours, finding another job, or applying for a loan. When you are near retirement, you will need to lower overall risk by gradually steering more of your portfolio away from stocks. Despite the possibility of lower gains due to conservative investing, lower portfolio risk is almost always the best way to go for older workers and investors.

Being too conservative is also ill-advised. Some older investors go to extremes and place huge chunks of their money in ordinary savings accounts due to the relative safety it provides. People who do this do not take on enough risk, and may not have a financially secure retirement because of longer life expectancies and not enough funds. You may think that placing your cash in zero to low-risk venues and investments will buffer your funds from market downturns, you should still have portfolio risk in the form of stocks and other riskier investments, which will help you outpace inflation and help you accumulate enough money to live on when you retire.

If you are having trouble identifying how much risk you can tolerate, as well as the proper investments for a retirement portfolio that follows your risk tolerance, you can consider hiring an investment advisor who specializes in financial planning for senior investors. These professionals can help you transition smoothly into retirement with a set of investments that consider numerous factors, such as risk and your retirement investment strategy, to help generate adequate funds for your golden years.

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