interest

Tax time: Review your Income Sources…

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It’s nearly tax time here, and as usual all the banks and financial organizations that you do business with have sent out their paperwork. So now is a good time to review those sources of income.

I received a tax paper from HSBC bank just last week. I took a quick gander at the paper only to discover that the interest that HSBC paid me for last year amounted to just NT$280 for NT$150,000+ deposits (and no, it wasn’t a checking account). That amounts to about 0.2% pa. How little is that? That’s like 3 Americanos at Starbucks.

So I decided to close that account and move that money into an account earning more than 10X that. It’s wise from time to time to check your savings accounts and make sure of the interest rate on each particular account. Banks are well known, especially in the UK and US, for having teaser rates that go down quickly, and some accounts become quite uncompetitive in triple time. So you have to keep checking online or in the newspapers about your bank account’s interest rate, to make sure you’re not losing out. There’s no sense in letting banks make free money off your investments.

Both Citibank and HSBC here offer higher rates than 0.2% on demand deposits, but both of these banks have minimum requirements for deposit amounts. I noted though on closer inspection that in Taiwan, the HSBC minimums were lower than Citibank, but that the Citibank interest rates were much more competitive than HSBC. In fact, HSBC has been running a promotion for their HSBC Direct service that promises to pay much higher interest rates than other banks. And it’s true, the deposit rate is much higher, but when compared to Citibank’s rates, it is about 25% less than you could get with more careful saving.

So it pays to shop around for your banking; it also pays to keep an eye on your savings, too; and don’t be attracted by teaser rates.

February 2007 Income Update

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I guess it’s about time that I deliver my report to you all on my streams of income. The format for these reports is very flexible at the moment, as I go on with these reports, I hope to standardize the information more. However, I’ll present the information for February in the same way as January.

Well first, I have to restate January’s results by an additional $7.99. I missed an $8 payout for a posting from Payperpost. And I ditched Adbrite permanently. I had hoped that they would provide an additional source of income and alternative to Adsense, but after nearly four weeks of total inaccessibility (except through a proxy server) and no ads on my website, I finally mailed them to find out what was going on. They tweaked their ‘settings’ (whatever that means), and I ‘tweaked’ mine. Now Adbrite is history, I took a 1c bath on that!

February 2007.
Payperpost $149.00
Google $5.65
ReviewME $0.00
Other Blogs $15.00
Adlinks $10.63
Stockbroker $57.35
Hosting $107.69
Bank Interest $14.74
Journal $37.64
Business $307.69

The total for this month was in fact much higher: $705.39 altogether. I guess there were several new items:
a Chinese New Year bonus from my business (small, though welcome!), I finally sold a copy of my journal (a subscription, no less), and a customer from my hosting service renewed his hosting with me for another 12 months. Other changes included selling less text links on the top left ( perhaps a result of my blog dropping one PR placing from 5 to 4), I didn’t have any new clients for February at all (March is different!) on that count. Also, income from Investments dropped this month, as end of year capital gains distributions and bonuses were not included in February. On the bank interest front, I’m now making more as my CDs are renewing at higher and higher interest rates, currently approaching 2% (local rates here).

How is March shaping up? Well, I already sold two links for the year which will produce a nice bump. Interest income will increase somewhat as will dividend income. I’m increasing holdings in both areas from cash holding and cash in low interest bearing accounts.

A general overview will look at the range of income and the range of types of income. I’m not looking to only create an income from online activities, but also from ‘real’ world activities. In fact, there are 10 types of income in the statement. However, the general arrangement is below (for six months average)

Blog $168.36 46.07%
Stocks $66.37 18.16%
Hosting $32.12 8.79%
Bank $10.70 2.93%
Business $87.91 24.05%

General notes: Interest rates in Taiwan are different from U.S or U.K rates. All of these figures given are Gross Results – not including any taxes.

Anyway, the averages are much more favorable and suggest that I’ve reached about 30.4% of my target over the last 6 months, but February, it was nearly 2x that, at about 58.8%!

There are still two challenges ahead, though. #1 how to increase the total income to the minimum of $1200 per month and #2 how to stabilize the income over a longer period!

This is the Year of the Golden Pig (Boar)! I wonder if that will bode well or not for InvestorBlogger!

Personal Loans: Do you have an action plan?

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You’ve all seen the ads: just call this number for low-interest personal loans or easy payment plans or “loan now/pay later”.

They sound attractive, and can entice people to borrow to purchase whatever they want. So, for many people, taking out these personal loans is a convenient way to purchase what they want, when they want it, without committing cash upfront to the purchase. Such loans go for all sorts of purchases: cars, hi-fi, skis, holidays, renovation, … But …

Yet, too often they give precious little thought to the structure of the deal, to looking around for the best interest rates or, worse still, reading the actual loan agreement, in their rush to secure financing for whatever they are about to purchase. In fact, it is quite likely that they spend more time researching the product reviews or service manual for their intended purchase than looking for a good value loan.

Now, as an investor+blogger, you will know that loans are not ‘evil’ per se. In fact, a loan at a good time can be a very good way to invest, e.g. it can allow early purchase of a service or product that can increase your personal productivity greatly (a car loan), increase the value of a house significantly (a loan for renovation), or even allow you to start a new business (an equipment loan).

But. as responsible people, we really need to spend the time to understand the nature of the loans, the latest interest rates and finance news, the terms of the loan as well as the term of the loan, and whatever penalties may apply. It helps us to manage our risk and provide planning options, both of which greatly benefit our wealth management.

So here is my action plan, for responsible borrowing:

When you have identified a product or service that you would like to borrow money for, create a time line of at least one month prior to the purchase of the item to secure a loan. Do NOT commit to purchasing just yet. And certainly, avoid using any affiliated loan that comes with the service/product (e.g. car loans are often sold along with the car), until you have completed your research.

The first week: Look for all the specific loan information you can find. Go to the bank and inquire. Search the internet. Read the ads on the newspaper. Make phone calls, if you need to. Collate your information.

The second week: Now, begin to analyze the information that you have at hand. Be prepared to read all the literature you collected. Create your list of loan priorities: rates, availability, terms, penalties, etc.. Prioritize that list. Then create your shortlist of appropriate lenders.

The third week: Begin the process of contacting the lenders. Check the rates they are offering, the requirements they have for loans (e.g. payment protection), etc.. Do not commit just yet. You may have several candidates that are at the top of the shortlist.

The Fourth week: Do not be afraid to walk away from a lender, at this stage. Do not sign any agreement if you are not happy. You still have other lenders that are on your shortlist. If you have the benefit of dealing with people face-to-face or on the telephone, information about these other lenders may be very useful when you need to negotiate the terms.

But be prepared to walk away if the terms are unfavorable to you, or change late in the process. Some lenders do this, in the hope that borrowers will not notice, or find it too late to change.

A final note: if you can delay purchasing and lending, this will stand you in much better stead. You no longer have a deadline to purchase within, BUT it’s likely that the lenders will have targets to meet to qualify for bonuses from their company. Therefore, if the lender starts saying things like ‘offer good for 24 hours’, s’ign now and we’ll throw in xxx’, or similar type offers, you need to be aware: they are trying to create a sense of urgency, and usually it’s for their benefit, NOT yours.

Sponsored by Select Loans.