Blogging On Finance

There are generally two types of consumer loans available: secured and unsecured. The primary difference between the two is the presence or absence of collateral , which backs the debt and serves as a form of security to the lender against non-repayment.   What Are Secured Loans? Secured loans refer to those in which the borrower pledges an asset as collateral or security for the loan. A secure debt instrument means that the lender can sell the asset to recoup the funds advanced to the borrower in the event of default. The most common type of secured loan is a mortgage, in which the collateral is the mortgaged property. When a borrower takes out a mortgage, the property is used as collateral to secure the loan; the lender maintains an equitable interest in the property until the borrower repays the loan in full. If the borrower fails to make payments, the lender may repossess the property and sell it to recoup the funds owed. Likewise, if a borrower fails to make timely payments on a c

What Is a Recourse Loan? In recourse loans, the borrower is 100% personally liable for the loan amount. This could result in a lender repossessing or foreclosing the collateral stipulated in the loan agreement. If the lender cannot recoup the entire loan balance from the sale of the collateral, it may file a lawsuit and pursue the borrower’s other assets.  Some common types of recourse loans include: ✔ Personal loans ✔ Credit cards ✔ Auto loans ✔ Short-term real estate loans. Recourse Loan Example: If a borrower takes out a $25,000 auto loan to purchase a $32,000 vehicle, the loan will be secured by the car. Should the borrower, after several payments, default on the loan with $20,000 remaining, the lender may repossess the vehicle and sell it to recoup the outstanding loan amount. However, let us suppose that the car has depreciated and can only be sold for $18,000. In such a case, the lender may also seek a judgment from a court and garnish the borrower’s wages to recover the remain

Understand how gold prices are affected by changes in interest rates, inflation, central bank decisions, and crises. Gold is notable for its dual role as a precious metal and an investment. There are more significant factors influencing the development of gold demand and, therefore, its price than those affecting the growth of stocks. Though the gold price has tended to trend upward in recent years, it is also subject to frequent fluctuations. The gold price is significantly influenced by long-term, medium-term, and short-term factors. Global and national economic growth are among the more long-term influences. On the other hand, investors primarily affect the gold price over the short term through geopolitical crises and large-scale futures trading activity. Fundamental and psychological factors influence gold prices to a large extent. So let us look at the six most common factors that affect gold prices.   1. Central Bank Reserves Central banks hold gold and paper currencies in reser

If a business seeks to raise capital for its needs, it typically has two financing options: equity and debt. Debt financing involves borrowing money, whereas equity financing involves selling a portion of the company’s equity.   What Is Equity Financing? Equity financing involves raising capital through the sale of company shares. When a company sells shares, it effectively sells ownership in its company in exchange for cash. Companies may raise money to meet a short-term need, such as paying bills or fulfilling a long-term goal, like investing in future growth.   How does Equity Financing work? The equity financing process involves the sale of a company’s stock in exchange for cash. The proportion to be sold will depend on your company’s investment and the value of your business at the time of financing. With the growth of your business, the value of the investor’s stake will also increase. There are multiple ways for businesses to obtain equity financing, including business angels, c

Despite being often used interchangeably, “private equity” and “venture capital” are not synonymous. Both terms refer to companies that invest in private companies for equity, but they accomplish the task in different ways.   What is Private Equity? In private equity, a group of investors directly invests in a company. Private equity investors generally invest in mature companies that have passed the growth stage. Often, they provide funding to struggling businesses. Additionally, some investors will acquire a business, improve its operations, and then sell it for a profit. Private equity investors always strive to generate a return on their investment by enhancing company value over its initial value. Large institutional investors, including pension funds and large private equity firms funded by accredited investors, dominate the private equity sector.   Pros and Cons of Private Equity A private equity investor will provide you with more than just cash — you will also benefit from the

As an investor, you will likely hold a portion of your portfolio in precious metals, such as gold. By doing so, investors can safeguard themselves against possible losses in the stock market resulting from a downward economic trend. Although this method has proven effective and is still effective, a new alternative, Bitcoin , is challenging this traditional approach to capital preservation. Bitcoin presents a unique investment opportunity as it has been around for long enough to gain recognition and support. It is even showing some promising developments.   Bitcoin A new era of investment and finance began in 2009 with the introduction of Bitcoin. Cryptocurrency exchanges and large-scale Bitcoin mining have gained popularity. Initially, these digital currencies were only of interest to a few enthusiasts. Early Bitcoin speculators discovered in 2010 that the Bitcoins they had previously purchased for fractions of a cent had grown to $0.09 per Bitcoin. Investors and speculators noticed

Many people invest in gold in response to a climate of uncertainty. Here are the top four reasons to invest in gold:   1. Gold as a Hedge Against the U.S. Dollar The notion that gold preserves wealth is of even greater importance in an economic environment in which investors are confronted with a declining dollar and inflation that is on the rise. Gold has traditionally served as a hedge against both of these situations.  Gold is priced in U.S. dollars worldwide, benefiting from the dollar’s depreciation. The reasons for this are twofold. First, gold buyers (such as central banks) must sell their U.S. dollars to complete the transaction. Ultimately, this results in a decrease in the value of the U.S. dollar. Second, a weakening dollar makes gold more affordable for investors holding currencies other than the dollar. The result is increased demand from investors holding currencies that have appreciated relative to the U.S. dollar.   2. Gold as a Hedge Against Inflation Due to its tenden

There is a good chance that investing in real estate is listed as one of the most reliable and intelligent methods of building wealth by any investor. Many people in the U.S. and worldwide rely on real estate investments to increase their wealth and diversify their portfolios.   A solid investment in real estate has long been considered a wise choice. Here are some of the best options for individual investors:   ✅ Rental Properties When you invest in rental properties, you become a landlord. Landlords are responsible for paying mortgages, property taxes, and insurance, maintaining properties, finding tenants, and handling any arising problems. So you need to consider if you will be comfortable with that role. The maintenance of a rental property can be time-consuming and not always enjoyable. Landlords must actively participate in their properties’ management unless they hire a property manager. By carefully selecting your properties and tenants, you can reduce the risk of encountering