Put all your debts in one basket: the advantages of debt consolidation

The economic downturn has had far reaching repercussions, and due to the subsequent lack of available credit, settling debt has become even more problematic than ever before. One method that is used to settle outstanding debt more effectively is debt consolidation.

Debt consolidation involves taking out a loan in order to pay off several other loans or outstanding debts. The reasons debt consolidation is advantageous is that it secures a lower interest rate or fixed rate, and simplifies the debt repayment process through lower monthly repayments.

Debt consolidation often involves taking out a secured loan against collateral, for example a house or mortgage. This collateral is what allows for a lower interest rate, as if the asset owner defaults on debt repayments, it will lead to the foreclosure of the collateral. Therefore, the risk to the debt lender is lessened in this case, so the interest rate is lower than in unsecured circumstances.

Debt consolidation is often useful when paying off credit card debt, as credit cards carry a much higher interest rate. Therefore debt consolidation can balance out the high interest rate of the credit card repayments with the lower interest rates against collateral, thereby accelerating the repayment process. 

Despite the potential financial benefits that debt consolidation offers, it is important to speak to a qualified debt advisor before consolidating any debts. Debt consolidation, as discussed above, is ideal for those who have multiple debts and want to simplify these debts and reduce monthly payments.

However, debt consolidation, although attractive in theory, may not be the best solution for your individual financial situation. This is especially relevant if it is not likely that will be able to repay your debt, even over an extended period. Debt consolidation is also not favourable for debts with a lower annual interest rate or APR (Annual Percentage Rate), as you will pay more interest in the long term.

Therefore, debt consolidation offers a theoretical advantage to consumers with high interest debt. However, the threat of predatory lending exists, and so consumers should be wary of unscrupulous companies when refinancing debt repayments. To clarify, predatory lending is the practice of unfairly placing customers in undesirable financial circumstances through overburdening them with several loans. According to www.investordictionary.com, predatory lending is “…the practice of convincing borrowers to agree to unfair and abusive loan terms.”

According to Ian Wason, the MD of a prominent independent mortgage brokerage, as quoted in an article on www.justmoney.co.za, “Lending criteria and loan to values are fluctuating almost daily. Consumers need to be approaching every possible lender when trying to purchase a new home or consolidate their debt. If they don’t, they could be missing out on saving themselves a fortune.”

In order to go about consolidating your debt, make sure you speak to a qualified lender such as Bassetto Investments. Offering personalized loan services, Bassetto Investments can help to advise you on personal loans that can potentially help to settle your debt more efficiently. For more information about the financial services that Bassetto Investments has to offer visit www.bassettoinvestments.co.za

Source:

Debt Consolidation article. Available at Wikipedia.org [Accessed 7 March 2009]

Debt Consolidation information. Available at debtconsolidation.co.za [Accessed 7 March 2009]

Definition of “Predatory lending”. Available at investordictionary.com [Accessed 8 March 2009]

“Home Loans are like a box of chocolates”. Available at: justmoney.co.za [Accessed 7 March 2009]

The Why and How-to of investing in the Stock Market

The global economic downturn has negatively affected stock markets worldwide, most notably the Wall Street stock exchange, which has reached a 12 year low. According to a report on Engineering News Online, “Wall Street shares tumbled after investors lost faith that the US government will be able to stabilise the financial system”.

However, this does not mean that you should give up investing in the stock market altogether. Despite plummeting share prices, it is still possible to invest in shares. All you need to do is better educate yourself on the risks involved, and how and where to invest.

The assumption that only the wealthy can invest in the stock market needs to be debunked, as in fact, you may unwittingly already have invested in shares, for example unit trusts, life assurance policies and retirement annuities. If you have over R5000 to invest, it is possible to increase your wealth through buying shares in the local stock market, namely the Johannesburg Securities Exchange (JSE Limited).

Shares are issued by companies in order to raise capital, and these companies can be listed on Securities Exchange. Companies that are listed are compelled to meet certain requirements, and have their accounts audited and financial history examined. Therefore, investing in a listed company guarantees a greater degree of protection, as transparency is essential for JSE listed companies.

Shares that are bought in certain companies are then traded in the stock market. Depending on supply and demand, the fluctuating prices of shares determines their potential value. Shareholders are then given a share of any profit made by the listed company, which are known as dividends. These dividends are usually paid to shareholders quarterly, annually or bi-annually.

The more profit a listed company makes, the higher the value of the shares - which leads to an increase in the share price. Additional profit can also be made by selling your shares when they are worth more than when you bought them. However, as the current global economic downturn demonstrates, share value plummets when companies cease to make a profit.

If you buy shares in a listed company, you become a shareholder. Shareholders are kept up to speed with developments in the financial standing of company, and shareholders meet regularly to vote on important company issues, such as the appointment of company directors and the company’s future.

Despite the global economic gloom, the truth is that investing in the stock market is risky either way, and there is never any guarantee that you will make money by investing in shares. However, if you are patient, investing in shares can provide you with adequate return in the long term. It is also important to only invest money in the stock market if you can genuinely afford to do so.

If you are looking to make small investments in the stock market, with the help of a qualified consultant, visit www.bassettoinvestments.co.za. This specialized financial services company can provide personalized assistance with small investments, as Bassetto Investments offers “… the chance to invest small amounts, while yielding high returns.”

Source:

Du Preez, L. (2004) “All about investing in the share market” Available at: persfin.co.za [Accessed 8 March 2009]

Reuters (2009) “Oil extends losses after Wall St plumbs 12-year low” Available at: engineeringnews.co.za [Accessed 8 March 2009]

Between 2007 and 2008 the price of a diamond from the top range of color, clarity, cut and carat went up by over 50%. 

As diamonds in larger sizes become increasingly rare and valuable, any easily visible and readily understood pricing system has been difficult to establish. Martin Rapaport produces the Rapaport Diamond Report, which lists prices for polished diamonds. The Rapaport Diamond Report is relatively expensive to subscribe to, and as such is not readily available to consumers and investors. Each week, there are matrices of diamond prices for round brilliant cut diamonds, by colour and clarity within size bands, and also other shapes. The price matrix for brilliant cuts alone exceed 1,400 entries, and even this is achieved only by grouping some grades together.

Bassetto Investments currently have stones at RAP -30%.

We have attached some pictures below for your perusal. If you’re interested in investing in diamonds, please contact us….

All stones prices and their certificates are available upon request.

Stone: Diamond

Shape: Emerald

2.086 Cts.

Color: K

Clarity: I1