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Stocks and bonds. Doubtlessly, you’ve heard of them, and if you have been reading my articles, you know what they are. If you have not been, you should! But here is a quick update: stocks represent a portion of ownership in a company, and a bond represents money that a company “borrowed” and has to pay back on set dates. You might have heard that bonds are “safer” to invest in than stocks, but is this true? How are bonds traded, and what are the differences between a stock market and a bond market? Hopefully, this article can put these questions to rest.

Unlike the stock market, bonds markets don’t generally have a centralized trading system. Instead, bonds will be traded in decentralized, dealer based over the counter markets. When an investor purchases or sells a bond, the counter party to the trade is usually a bank acting as a dealer. Another difference between bond markets and stock markets is that at times investors don’t pay broker’s fees to dealers with whom they buy or sell bonds. Instead, the dealers get their money by collecting the spread, which is the difference between the price at which the dealer buys a bond from one investor and the price at which he sells the same bond to another investor.

In terms of volatility, bonds are usually somewhat safer than stocks, especially short and medium dated bonds, but the value of stocks can definitely change. Bonds are liquid – it’s fairly simple to sell a bond investment, and the safety of a fixed interest payment that you will receive twice a year is attractive. Bondholders additionally enjoy certain legal protections: in the United States if a company goes bankrupt, its bondholders will be paid before stockholders because they are creditors.

But, bonds also come with their risks. Fixed rate bonds are subject to interest rate risk, which means that their market prices will shrink in value when the interest rates rise. Bonds can also be subject to other risk factors such as call and prepayment risk, reinvestment risk, event risk, liquidity risk, credit risk, inflation risk, yield curve risk, volatility risk and sovereign risk. Price changes in a bond can also affect mutual funds that hold these bonds immediately. If the value of the bonds in a trading portfolio has plummeted over the day, the value of the portfolio will also have fallen.

Finally, in the case of bankruptcy, due to a hierarchy of creditors that have to be paid that bondholders are not on top of, there is no promise of how much money will go to repay the bondholders even though the money will go to them first before shareholders. In such cases bondholders have been known to lose some or all of their money when this happens.

Mallory Megan works for Rapid Recovery Solution and writes articles on national collection agencies. Also published at Investing In Bonds- How Is It Done And Is It Safe?.

A recession brings on economic uncertainty. Consumers aren’t willing to spend money, and banks aren’t always willing to lend it. But believe it or not, a recession is a good time to save money on a home loan, as long as you are prepared.

Recessions represent an ideal time to take out a home loan because banks are more willing to offer cheaper interest rates. The cheaper rate can save the buyer thousands of dollars over the duration of the loan. Who doesn’t want that?

You need a high credit score to qualify for good home loan rates during a recession. Check your report for errors, and if you find them, get them corrected. If you have high balances on your credit cards, pay those off. If you have late payments, establish an on time payment history of at least six months. A year is even better.

Second, make sure you have money in the bank. You will not only need between three and 20 percent of the home’s total cost for a down payment, but you will also need a minimum of two or three months of mortgage payments in the bank. These are called reserves, and most lenders require reserves in order to obtain a home loan. Your lender can provide specific details on the down payment and reserves requirements.

Always carry documents that verify employment, income, and assets. The individual cannot simply tell the lender he has a job and expect to win the loan. No, documentation includes paycheck stubs and bank account statements.

This documentation is even more important if you are applying for a home loan during a recession because you need to prove to the lender that you can afford the home loan and will make your monthly home loan payments. Be prepared to provide at least three months worth of documentation. Collect the necessary documentation and have it on hand prior to applying for the home loan in order to speed up the application and approval process.

Although the current economy does not look promising, do not fear the chance of earning a loan. Home loaners still need business, but they will remain more selective until the economy changes. Inform the lender that you are speaking with other lenders and they will be more inclined to offer a cheaper deal.

Buying a home is time consuming and intimidating, but a lot of that stress is reduced with the appropriate steps already conducted by the prospective home owner. This includes a strong credit report and proof of available funds.

Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.

Buying a new home costs a lot of money, however some of that outrageous expense can be reduced if you research and do your homework.

When you apply for a home loan, make sure you have a high credit score. This is common sense in the world of home loans. Poor credit equals either a rejection of the loan or a very high interest rate.

Check your credit report before you apply. This is also common sense. The credit report will inform you on how good your credit score is and if there are any mistakes in the report. Remember, credit reports are the primary way banks can decide if you are responsible and trustworthy or not.

Pay down your credit card balances and make your payments on time. This behavior will improve your credit score and help you maintain a high score so you can get the best home loan rates.

Always shop around and gather more than one insurance quote. This may sound like a nuisance, but it really helps you save money in the long run. Lending is a competitive business, which means lenders will compete against each other for your service. Competition equals lower rates for you, the home owner.

It’s always advisable to ask the seller to pay your closing costs. Selling costs are expenses paid when you obtain the home loan. The selling costs can range between 3-7% of the total home’s value, including points, taxes, title insurance, financing, and other settlement costs.

If the seller will not cover the closing costs, inform the bank and discuss lowering the closing rate. The bank will likely work with you, so do not be afraid to ask.

Purchasing a new home is an overwhelming experience, and unless you have millions of dollars to spend, you are going to need a home loan. Trust the lender as a friend and allow them to work with you. But always do your homework and make sure you are getting the best deal possible.

Tom Martens is the content coordinator for South Arica?s leading Homeloans portal which amongst others offers Bond origination services for all major banks.

Purchasing a home is a decision that can lead to financial security. However, financing is often a confusing process especially for first time home buyers. Obtaining information on the different types of home loans is one of the most important steps to getting started in the home buying process. There are many different types of products available.

Knowing your credit score before you even go a bank or mortgage company is imperative. People with high credit scores are most likely to get lower interests rates and to be approved for higher loan amounts.

Besides the credit score, having a steady job will also influence the type of loan you receive. Most banks and lenders will want to see copies of your W-2s, your tax papers and possibly your pay check stubs. Having a steady job shows you not only have a sense of responsibility, it shows you can pay back the loan.

There are many stipulations to getting a home loan. Many times, the bank will offer a second mortgage that will have a higher interest rate and is generally shorter than the standard 30 year contract. Many people will do this if the current interest rate is lower than it was when the home was purchased.

For people that are in strong financial positions but do not have a big enough down payment then the possibility of securing two different loans from the bank or mortgage company might be an option. Be sure to read the fine print, because some time the second mortgage (which is the smaller of the two) will not be the standard 30 year time span, it can be any where from 5 to 15 years depending on the lender and the circumstances. A higher interest rate is usually applied to the second mortgage as well.

Of course, there are other options available to prospective buyers as well. Adjustable rate mortgages (ARMs) have interest rates that vary each month according to market trends, this means that the mortgage payment will vary. Another option is an interest only loan, in which the buyer only pays interest on the loan for a specified period of time and then starts paying on the principal at a later date, when they are making more money.

Obtaining the best deal on home loans is something that homebuyers should strive for. Keeping track of your credit score and current financial situation can put you in a favorable position with lenders. Be sure to compare rates and products from various lenders before you sign any paperwork, because one lender might be able to get you a better deal in the long run.

Graham McKenzie is the content coordinator for a leading South African leading Homeloans and Bond Origination portal which provides access to Nedbank Homeloans.

Experienced traders know how to invest internationally. Over time they have developed the skills and knowledge that has enabled them to move their money around and still keep their losses to a minimum. For the inexperienced trader, without that knowledge you would be best off keeping your money in places where you know what is going to happen.

Investing internationally is risky business considering the fact that your money is going out of the country. By investing locally you have a lot more control over your investments as they are generally right there were you can see them. You can move your money around easily and it generally has more liquidity as you can transfer it from one asset to the next with little or no headache at all.

Moving off-shore money around is a different story on the other hand. You need to remember that you are working in different currencies and different markets. Keeping that in mind, two important aspects from each of these can and must be applied to your investments.

There are two very important aspects to be considered before investing internationally. Since the international trading is done in different currencies, you need to know and understand how the exchange rate and exchange market function. There are millions of traders trading actively on almost a daily basis. Various factors govern the appreciation or depreciation of currencies and in fact your own currency may increase, decrease or even disappear if not monitored regularly. It is imperative that you watch the movement of your country’s currency and your own money with a hawk’s eye. Through experience and time you will be able to identify the indicators that will give you a roughly sensible idea of how things will turn out in the international market.

The second most important aspect is how the actual foreign market operates itself. As an able investor locally, you may know your market like the back of your hand, but the minute it comes to an off-shore market, you are playing a whole new ball game. There are new rules that come into play and if you need to know them inside and out before you can start making sensible investment decisions in that market.

To give you an idea of where you can start looking, you can try out things like foreign bonds or the forex market to begin with. If those don’t tickle your fancy, you can try out a couple mutual equity funds or even direct investment for that matter.

They all have their benefits and obvious returns that you should look into before making your investment, by simply knowing what to look for you can maximise returns and minimise your risk.

Have you been looking for a good international investment strategy that works for you? Before you waste your time looking for a good strategy, look at BeforeYouInvest.com’s investing for beginners guide before you do anything else. BeforeYouInvest.com reviews everything from stock market investing to the international investment strategy so take a look.