Introduction

With base rates at historical lows, many savers and investors are frustrated with the interest rates that are being offered by banks and other financial institutions.

In fact it will not surprise you to learn that a bank considers its customers as it cheapest source of funds, offering less than half a percent on current accounts and up to a generous 3 to 4 % on longer term savings and bonds.

With credit again starting to become tight between banks the London Interbank Offer Rate known as LIBOR is starting to rise well above the bank base rate. With the base rate at 0.5% 1 week Libor is now 0.91% and 1 year Libor is now 1.699%.

If you also factor in that inflation is running around 4% to 4.5% with the current interest rates being offered, savers and investors are losing purchasing power by holding their savings in the banks.

It used to be considered very safe to hold your money in a savings account, but as the current credit crisis has highlighted the banks are not as safe as savers once thought. Even though most governments around the world have guarantees in place to protect savers funds, it should be noted these guarantees only cover in theUKup to £85,000. This guarantee also only covers a financial group, therefore if your funds add up to a total above this amount across a number of institutions all covered by one banking licence you are still running a risk.

Make sure your funds are in different banking groups. You can check which banks belong to which group at the FSA website. For example both RBS & Nat west are covered by the RBS banking licence.

It should be remembered that income tax needs to be deducted from those very generous rates offered by the high street.

The Search for Alternatives

A lot of savvy investors are now looking for alternatives to the traditional high street bank or building society in order to preserve their capital against the ravages of inflation. Remember at a time of high inflation borrowers benefit at the expense of savers as the true value of their debt is eroded by inflation. The government wants this as it reduces the real value of the government debt and helps them manage the servicing of that debt.

What we have now is an environment where Governments around the world are in effect penalising prudent savers and investors in order to help out the profligate spending of the government and domestic borrowers.

]]>

There are now a number of ways that individuals can now become banks themselves and cut out the traditional banks & building societies. It should be noted that these alternatives though paying a higher return do come with some form of risk either in terms of credit risk (i.e. the borrower defaults on their loan, a bit like Greece is about to do) or liquidity risk (i.e. you will not have access to your funds for a given period of time)

The Growth of Peer to Peer Lending

This is a term that has been used in the press to describe borrowing and lending between parties that does not involve a traditional financial institution. Examples of which can be credit unions or some of the new internet based business such as Zopa.com

Zopa is an internet based business that matches up borrowers and lenders on its website, with the advantage of providing higher returns to lenders and lower rates to borrowers. Zopa takes a small commission between the two parties which is significantly lower than the running costs of a bank.

Zopa offers a number of different markets that the lender can choose from, they include the following:

36 month loans 60 month loans Credit score individuals A*, A,B & C Young people.

Interest rates on loans start at around 5.9% pa for a 36 month loan to an A* borrower to 9% to a young person for the same term.

60 month rates are slightly higher and start at 7% and go to 9.8%. The higher rates reflect the fact that your money is tied up for longer.

Zopa tries to manage the risk of default on loans by undertaking a detailed credit scoring on the borrower which is considered much more stringent than that undertaken by the banks.

Risk is also managed further by allocating your funds across a number of different borrowers so that if anyone defaults your loss is minimized. Zopa states that if you have over £500 in the system your money will be spread across over 50 different borrowers.

If you need to withdraw your funds prior to the lending period being completed, there is a facility to input a request to withdraw your funds. The system will match your withdrawal with another lender that wants to put their money into the system and that will enable you to withdraw your funds.

A Higher Return Alternative to Zopa

Traditionally Zopa is for smaller lenders who want to earn higher rates than those offered by the banks.

If you have an amount of over £10,000 to invest there are a number of better options out there where your return can achieve returns of 12% per annum.

A number of bridging companies borrow funds from investors at 1% per month and then lend to individuals and businesses at higher rates. The money is secured against the value of the property with the bridging company having a first charge on the property purchased.

In some cases the bridging company with take a floating charge over other assets of the individual or business if they don’t feel there is sufficient security for the loan.

The bridging period can be for as little as a day normally up to 12 months with the average being 6 months. This is normally the period where a borrower can refinance with a mortgage and reduce their borrowing costs.

There are a number of companies in the market place that pay these attractive rates but, you must feel comfortable that the bridging company is well managed and there legal documentation is well written to protect the security of your funds.

It should be noted that a good bridging company will never expect you to deposit the funds in their account. The funds will normally go direct into an escrow account managed by a solicitor with the sole intention of lending against a particular property purchase. If a company asked you to transfer your funds into their account directly, DO NOT DOES IT.

A well managed bridging company will have a number of deals in the pipeline i.e. property investors wanting to borrow funds as well as a number of investors of funds to match the amounts required.

Summary

With bank interest rates so low, investors are looking for better returns outside the traditional financial institutions. Before lending your funds to an alternative organisation makes sure you understand the risks that you may be taking either through credit loss or liquidity.  Read the legal documentation thoroughly and make sure you are comfortable with the terms & conditions.

Mark Skeels is the Author and Owner ofhttp://www.alternativeinvestmentsinfo.comHe specialises in seeking out high return investments from non traditional sources,  which can be invested in by the average investor.  He seeks to bring knowledge to help individuals take control of their own finances and  not rely on the expensive self serving advice provided by those in the Financial Services industry. Article Source

Gold soars to a new all-time high by Robert W. Colby

Summary: Gold soars to a new all-time high. Gold nearest futures contract broke out to a new all-time high on 9/14/10, confirming its preexisting secular bullish trend. The U.S. dollar nearest futures contract price broke down further below 4-week lows on 9/14/10, again confirming bearish trend f…

Click here to read more More »

300% Barrier Options are offered on Gold futures and will trade on a variety of stocks, commodities and currencies in the near future at Start Options.     When the market starts to become active and the Trader sees that Gold futures are trending with support a trade of a Call Barrier Option can be made at anytime during the trading period at the current price.  When a Barrier Price above the Strike Price is set and if the Gold futures expires at the end of the trading period above the Barrier Price, the return is 300%. Put Barrier Options allow traders to trade barriers below the current price.

Barrier Options are available for trading in the $250, $500 or $1000 stakes on the Start Options platform.

The 300% return rate is significantly higher than standard binary options.

Check out Barrier Options.  They add flexibility to the On-the-Go investor’s portfolio.

by Robert W. Colby

Summary: Technology and Small Cap stocks are lagging behind. Technology stock sector Relative Strength Ratio (XLK/SPY) fell below the lows of the previous 7-months on 9/10/10. XLK/SPY is bearish, below both 50-day and 200-day SMAs, and with the 50 below the 200. The Small Cap Russell 2000 Index/L…

Day Trader: Click here to read More »

S&P 500 Composite Closing Price Fell Below 7-Week Lows by Robert W. Colby

Summary: S&P 500 Composite (SPX, 1,047.22) closing price fell below 7-week lows. Energy stock sector Relative Strength Ratio (XLE/SPY) has been bearish since peaking on 7/1/08 and fell below 8-week lows on 8/26/10. Financial stock sector Relative Strength Ratio (XLF/SPY) fell to a new 9-month…

Day Trader:  Click here to read More »

The Dow Jones industrial average fell about 10 points Wednesday afternoon following news that sales of new homes fell last month to the lowest level on record. It was the latest indication that home sales are stagnating after the expiration of a homebuyer tax credit this spring.

A separate report from the Commerce Department showed that durable goods orders grew only slightly last month, falling shy of expectations and disappointing investors who had been hoping that the U.S. manufacturing sector would continue to pick up.

Market indicators came off their lows for the day as some investors saw value in beaten-down shares. “There are some buyers today,” said Albert Meyer, portfolio manager of the Mirzam Capital Appreciation Fund. Meyer said some investors might see the market as oversold after its recent losing streak. The Dow briefly fell below 10,000 for the second straight day Wednesday before climbing back above that psychological benchmark. It had been down as much as 102 points during the day but recouped much of its losses.

Sandy Mehta, principal and chief investment officer of Value Investment Principals, said stocks are in a volatile range right now, which has been exacerbated by the seasonal summer slowdown in trading. “We rally, we sell off. We rally, we sell off,” Mehta said. “It’s just the nature of the market right now.” The newest signs that the economic recovery is sputtering led many investors to move money into the relative safety of Treasurys, sending their yields lower. The yield on the 10-year Treasury note touched levels not reached since January 2009, when the stock market was heading toward its lowest level in 12 years, and the yield on the two-year remained near a record low. Stocks have been hit hard in recent days because of concerns about whether the economy will fall back into recession or at least be stuck in a prolonged period of very slow growth. The Dow is heading into its fifth straight day of declines. New home sales fell 12.4 percent in July to an annual rate of 276,600, the Commerce Department reported. That was the slowest pace on records dating back to 1963 and worse than the pace forecast by economists polled by Thomson Reuters. A day earlier, the National Association of Realtors said sales of existing homes, a far greater proportion of the housing market, fell to a 15-year low in July. The Dow Jones industrial average fell 9.99, or 0.1 percent, to 10,030.46 in afternoon trading. Broader market barometers were mixed. The Standard & Poor’s 500 index fell 1.74, or 0.2 percent, to 1,050.13, while the Nasdaq composite index rose 1.81, or 0.1 percent, to 2,125.57. About three stocks fell for every two that rose on the New York Stock Exchange, where volume came to 591.7 million shares. The fear among investors is that if the economy continues to worsen, corporate earnings will start to weaken, just as economic indicators have.

For more information visit http://www.worldmarketmedia.com/779/section.aspx/2288/post/market-up-and-down-interday-as-august-slogs-thru

- About the Author: WorldMarketMedia.com (The Global Online Investment Community) is a high traffic stock market, news data website providing cutting edge new media products and services to publicly traded companies worldwide. Our Editor’s Desk authors insightful real-time coverage on the economy, the capital markets and their listed companies. Article Source

Summer Friday and GDP is slighly worse than expected and the economy grew slower, thats not really a shocker, as we digst earnings.  Lets face it Q3 can be a bore and all we really wait for is the Football Season and hope to avoid a market sell off in October.  On this Friday the best thing to do is head to weekend thinking and avoid closing on the lows for the day.

(AP) — Stocks fell and interest rates rose in the Treasury market Friday after the government said the economy grew at a slower pace than expected during the second quarter. The Commerce Department said the gross domestic product, the broadest measure of the economy, grew at an annual pace of 2.4 percent from April to June. That’s less than the 2.5 percent economists polled by Thomson Reuters had forecast.

The Dow Jones industrial average tumbled 106 points in early morning trading.

The report confirmed investors’ belief that the recovery is weakening as unemployment remains high and government stimulus programs end. Consumers cut back on their spending because of job worries and companies spent less to rebuild inventories.

The figure was especially discouraging after the government revised first-quarter growth to a pace of 3.7 percent from 2.7 percent.

The Dow Jones industrial average entered the last day of July up 7.1 percent for the month. The market‘s big gains have come on strong corporate earnings and profit forecasts that conflict with economic reports that point to a slowdown.

In the past few days, however, investors have been more focused on economic reports. Disappointing numbers on housing and unemployment and cautious words from the Federal Reserve have sent stocks lower.

In early morning trading, the Dow Jones industrial average fell 105.96, or 1 percent, to 10,361.20. The Standard & Poor’s 500 index dropped 11.88, or 1.1 percent, to 1,089.65, while the Nasdaq composite index fell 28.50, or 1.3 percent, to 2,223.19.

The disappointing GDP report sent investors into the safety of the Treasury market, which drove interest rates lower. The yield on the 10-year Treasury note, which moves opposite its price, fell to 2.93 percent from 2.99 percent late Thursday. Its yield is used to set rates on mortgages and other consumer loans.

European markets fell after reports that Spain’s credit rating is likely to be cut by Moody’s Investors Service. The potential downgrade comes as the country’s unemployment rate jumped to a 13-year high of 20.09 percent and the government continues to grapple with rising debt problems.

Losses also accelerated in Europe after the weak GDP report.

Spain’s IBEX 35 fell 2 percent. Britain’s FTSE 100 fell 0.8 percent, Germany’s DAX index dropped 0.8 percent, and France’s CAC-40 fell 0.8 percent. Japan’s Nikkei stock average fell 1.6 percent.

Click here for more information.

- About the Author: WorldMarketMedia.com (The Global Online Investment Community) is a high traffic stock market, news data website providing cutting edge new media products and services to publicly traded companies worldwide. Our Editor’s Desk authors insightful real-time coverage on the economy, the capital markets and their listed companies. Article Source

This morning the second quarter Gross Domestic Product(GDP) results were released by the Commerce Department. The second quarter Gross Domestic Product reported was 2.4%. This is sharply lower from the revised first quarter number of 3.7%. Economists had expected the second quarter number to be 2.5%. Therefore, today’s number was not a big surprise. What does this all mean for the market?

Well, today the market is starting out under pressure with the SPDR S&P 500 ETF (NYSE:SPY) trading lower by 1.06 to $109.20. Most commodity stocks are under pressure this morning and this is a sign of deflation. Leading commodity stocks such as Cliffs Natural Resources Inc (NYSE:CLF), and Southern Copper Corp (NYSE:SCCO) are trading lower and remain under pressure. Remember when the U.S. Dollar Index is trading higher on the trading session this will often push the commodity stocks lower. Therefore, always keep a dollar chart open as most professional traders will key off this chart. Remember when the dollar is higher the stock market indexes will deflate. Should the dollar decline or sell off the market will inflate higher.

Since the July lows the markets have surged higher climbing about 10.0 percent from that level. However, since July 16th, the major indexes have been very choppy and volatile. This type of volatile action could be expected going forward. Please remember to keep an eye on the U.S. Dollar Index as that chart will generally give traders a good indication of where the stock indexes are trading. This morning the U.S. Dollar Index is trading higher by 0.15 cents to $81.79 and the market is obviously trading lower.

- About the Author: Nicholas Santiago started trading in 1991. In 1997, he became a licensed Series 7 and 63 registered representative. He managed money for a large, affluent private client group. After applying his knowledge to his client base, he decided it was time to begin teaching those interested in learning his methods. He is an expert in Technical Analysis. He has become an accomplished technician in the studies of Elliot Wave, Gann Theory, Dow Theory and Cycle Theory. In 2007, he partnered with Gareth Soloway to form InTheMoneyStocks.Com and realize his dream of educating others about the truth of the markets. Article Source

Stock Indications Suggest Minor Downtrend for Short-Term by Robert W. Colby

Summary: stock indications suggest a minor downtrend for the short-term, at least, but damages may prove to be limited. S&P 500 Composite (SPX) fell below 5-day lows on 7/16/10, indicating a minor downtrend for the short-tem, at least. SPX fell below its 50-day SMA, remains below its 200-day … Day Trader: Click here to read the full commentary …More »