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Best CD Rates


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Certificate of deposits with longer maturity periods pay higher rates than those with shorter maturities. It could be said that the best CD rates have the longest maturities. Some investors believe that a certificate of deposit is the best and safest investment. Others invest in a certificate of deposit to supplement their retirement income. Regardless of the reason, all types of investors want to earn the highest CD rates i.e., best CD rates.

In order to achieve best CD rates, investors need to shop around either online, through newspapers, banners on local institutions, or with the help of brokerage firms to find out which banks and credit unions offer best CD rates all the time. Before purchasing CDs that offer best rates, customers need to consider two factors, the length of the maturity period and the current interest rate environment. Investors who lock up their money in long term CDs will earn a better rate of interest than those who buy short term CDs. This is due to the fact that when customers purchase CDs with longer maturity periods, they commit their funds in the investment for the entire maturity period before they can withdraw. The investor foregoes alternative courses of investment. For all these risks that investors experience, banks pay best CD rates on such units. Similarly bulk buying also fetches investors best rate because banks may insist on meeting minimum requirement for offering best rates.

It is not advisable for the investor to stay with the same bank for more than one year. By sticking with the same bank, investors lose the chance of getting the highest and best CD rates offered by other banks and credit unions. Generally, the interest rates offered by credit unions, which are non-profit organizations, are the best when compared to those offered by commercial banks.

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Beginners Information About Trading Penny Stocks Online


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Since writing about trading penny stocks online over at my blog, I received several emails about the subject and it seems to have generated a good deal of interest.

People have been trading stocks online since the very early days of the internet, and nowadays it is a simple matter for anyone who decides they want to get involved to start online trading.

However, there are several things you should be aware of before deciding to start trading stocks, not least of which is that it is a gamble, and this applies regardless of your knowledge or experience. You need to have some money to invest and it should be money that you can affors to lose. Bear in mind the worst case scenario – i.e. that you could get it horribly wrong and your investment could disappear overnight. Fair warning if you don’t want to read any more.

Much has been written about trading stock online, in particular penny stocks, and by far more qualified people than me.

If the idea of an exciting risky investment strategy appeals to you, trading penny stocks could be the adrenalin fix you are seeking. It’s pretty simple to get started, but success or failure are equally possible results.

Firstly, penny stocks are usually defined as stocks trading at below $5 a share. Some people consider this arbitrary amount differently and would say that $2 would be a better yardstick, but, whatever the definition, these are shares usually traded outside of the major exchanges. They are often volatile and unpredictable and their performance is very difficult to monitor or foresee.

It is fair to say that stock trading at a few cents a share is the most risky investment anyone could make – many experts would say foolhardy in the extreme. The temptation to buy thousands of shares for a few cents is one that often results in many people getting their fingers burned. What you have to remember is that there is a reason the stock is so cheap – it really isn’t worth much and the likelihood of making a killing on such shares is far from the foregone conclusion that some people will try to convince you it is. Establishing the likely performance of these stocks is usually virtually impossible as often there is very little information available on the companies to do any kind of meaningful analysis.

Don’t be lured into buying stocks just because a newsletter or email tells you it is a sure thing. There are plenty of sharks out there who will engange in the practice known as “pump and dump”, whereby they will attempt to generate unsubstatiated hype about a particular stock in the hope that there will be a rush to buy, enabling them to sell on their worthless holdings to unsuspecting hopefuls. You really must excercise caution and do your own “due diligence” – if you don’t, you will soon end up regretting impulsive penny stock purchases.

Trading stock online is not difficult, and once you have a basic understanding of how it works and decide to give it a try, you will need an account with an online stockbroker.

For penny stock trading Lowtrades.com offer a very good service. To set up an account you will need to submit an application form by post. This can be downloaded in PDF format from their site. Once you have opened an account you will need to fund it (more details of how to do this are listed at the site too) and then, you are ready to trade.

In very simplistic terms you will place orders with your broker via the online trading interface and they will carry out your buying and selling instructions. Each trade you carry out, buying or selling, will cost you a small commission to the broker. With Lowtrades usually around $5.

Presumably your interest in penny stocks means that you are looking to make quick returns. It is true that he rewards can be tremendous – it is entirely possible to make hundreds of dollars in a day. By the same token, get it wrong and the losses can soon mount up too. Day trading is not always profitable, but it’s always risky. Day traders buy stock and aim to sell it on the same day for a profit – the age old buy low, sell high strategy. Of course, if the stock price falls, you have a decision to make – sell it at a loss, or hold on in the hope that prices will recover and you can mitigate your losses.

You have to understand that not every stock you buy will appreciate in value during the course of one trading day. This means you could end up with your risk capital tied up in one company, leaving you unable to make any other trades until you offload the stock. Having all your eggs in one basket is therefore not a great trading strategy.

For those with limited funds to invest, this can present a bit of a dilemma. There is little point buying so few shares that even if the price rockets upward, you will make only a few dollars – you must also remember to deduct brokerage fees from overall profits too. If you are working with only a small amount of capital, you are going to need to find resonably priced stock that allows you to buy a few hundred shares, certainly not less than 100. For example, if you can secure 300 shares and the price rises by 25 cents, you will net yourself only $75 less any commissions – hardly earth shattering. On the other hand if the stock value increases by a dollar, you have $300. The basic math is simple enough, so you need to look carefully at whether an investment is likely to be worthwhile relative to the amount you are able to invest.

It goes without saying that the more investment capital you have, the more you stand to make, or lose.

Opening a trading account is straightforward enough once you know the kind of account that you need. For a simple individual cash account some brokers will require a minimum deposit and others will not. Shop around to find the best deal for your own personal circumstances. Charges will vary too, and these all affect your bottom line, so make sure you know how much each trade is going to cost you.

Finally, I will repeat my earlier advice – never invest anything that you can’t afford to lose. Penny Stocks are a gamble, and if you don’t have the constitution for risking the purchase price, don’t start with online trading of any kind. Sit back and have a good think about what you are planning to do and what you hope to achieve through your investments. If you are thinking of day trading you will need to be in a position to monitor your stocks throughout the trading day – if you are not going to be able to do this, you will not be able to sell when the need arises – i.e if the price should spike briefly.

If you want to start trading penny stocks online, read up on the subject carefully and learn as much as you can. There are plenty of helpful websites such as AllPennyStocks.com where you can begin to learn and I have also included some useful resources below for those wanting to learn more. Never let anyone tell you that it’s as easy as falling off a log though – if it was, we’s all be millionaires by now!

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Be Cautious When Studying Mutual Fund Ratings


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Wherever you look, you will find various rating systems on mutual funds, each of which uses a different approach. All of them are designed to weed through the thousands of funds to get to the best ones. But is there really such a thing? Does a high rating really mean a fund will do better in the future? Many people seem to think so. A recent study showed that Morningstar, North America’s most recognized rating system for funds, has a tremendous influence on fund sales. If Morningstar gives a five-star rating, those funds typically enjoy increased sales as a result.

While ranking providers are careful to warn investors that their ratings don’t foretell the future, the star system is, unfortunately, used by some investors as if they were reading Consumer Reports to purchase a new drill. Supporters of the ranking approach argue that there’s no subjective component to the star rating. It isn’t determined by an analyst’s review, and can’t change simply because the service dislikes the fund’s manager or its investment strategy. And that’s good.

Performance will vary. Fund performance often falls off and risk levels rise during the subsequent three years after a fund is given an initial five-star Morningstar rating, suggests another recent study by Matthew Morey, a professor at Pace University. One reason for this is that after receiving a five-star rating the size of the fund grows dramatically, which then makes the fund unwieldy to manage, he suggests. Since Morey’s study was completed, Morningstar also has changed the way it doles out top rankings to make them more precise. One of the biggest problems with all rating systems is that they are not necessarily predictive in nature. This means they’re not really set up to tell you whether certain funds will necessarily do better in the future. For the most part, the ratings indicate how much you might have made and how much aggravation you faced in the process.

Combining risk and return. For example, one five-star fund might post moderate return scores, but incredibly low risk scores. Another five-star fund might have much higher-risk scores, but its return score could be strong enough to help it still rank in the top 10% of the pack.

In some cases, in fact, it’s not even the same fund to begin with. Remember, after a management change, the rating stays with the fund, not the portfolio manager. Therefore, a fund’s rating might be based almost entirely on the track record of a manager who is no longer with the fund.

Understand how the ratings were developed. Too many people put emphasis on the results without knowing how the results were achieved. If you are going to use ratings, take the time to understand how they were developed and what they really mean. It is not the destination but the journey that counts.

Past performance is no guarantee of the future. You have probably heard this disclaimer a thousand times before, but it is really important to understand. Most rating systems have little to no predictive element in them. It’s natural to think that the best performer of the past will be the best performer in the future. Unfortunately, it’s not that simple. Just think about it; if it were that easy, investors would just continue to buy last year’s winners knowing that they will be this year’s winners. And that seldom works.

Ratings are a very important element in trying to distinguish between good and bad funds. Good research, however, goes far beyond just looking for five stars or an A+. When evaluating funds, look at the quantitative, measurable characteristics of a fund: returns up against the benchmark, costs, risks, taxes and manager tenure. Use rating systems as part of your research, but remember: just because the analysts give them top marks, it does not mean they will be the best investment in the future, and doesn’t it mean that they’ll be the best investment for you in particular. Take the time to understand how the ratings were achieved. This will be the first step to educating yourself about funds.

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Basic Principles Of An Investing Club


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Investment clubs are created by individuals who not only want to pool their funds together to make a joint investment but would also like to gain knowledge on the various types of viable investment opportunities that are available in the market. Each member of the club contributes periodically an agreed amount of money to purchase growth stocks by means of a dollar cost averaging approach.

The dividends as well as the capital gains are usually reinvested to gain more interest. The security purchases are voted upon by the club members. This is also one way of decreasing personal risk of club members. There are also investment clubs that allows non-club investors to participate in larger investments of the club provided of course that the non-member investors receive a much lower share of commissions.

Likewise, it is also the role of investment clubs to assist their club members in becoming more knowledgeable in all aspects of investments. A well-known trade group for investments clubs is the National Association of Investors Corporation (NAIC) which is a non-profit organization that provides guidance as well as imparting investment knowledge as part of its membership.

A good choice of investment clubs are those that have been around for many decades already and have a track record of having a continuous increasing interest in the stock market. By joining investment clubs, small investors are given the opportunity to increase their buying power, share their collective knowledge and socialize while earning from their investment. Another good benefit derived from investment clubs is the fact that investors are not expected to invest a great deal of money but still will be able to receive a greater amount of interest that is usually possible if you have similarly invested a big lump money.

A typical investment club usually meets once a month and members are given individual responsibility of researching investments and then sharing their ideas with the other members of the club. Likewise, these meeting also served as an occasion for members to contribute to their monetary fund, which is intended for purchasing stocks, mutual funds as well as other types of feasible investments.

One of the main goals and objectives of an investment club is the opportunity to learn. Most investment clubs spent a great deal of effort and time in research since they believe that a well-researched investment plan has a much greater chance of success. This is also the reason why risk is minimized when joining an investment club.

Starting an investment club is not really that difficult and does not require any special knowledge. In fact, a group of friends or even co-workers can decide to set up an investment club. This is usually a good place to start as you will know the people you dealing with.

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Basic Investing Rules


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Investing your money can be a great way to ensure your financial future. With the right investment choices, you can be sure to have money for emergencies, to put towards the education of your children, and to have available when the time comes for you to retire. There is a key word in the preceding phrase however- “right”. If you make the wrong investment choices, you may just end up where you started or worse, flat broke. Most people who invest wisely by making the right decisions with their money follow the same basic investment pattern, although they may define it by another name. It might be that you are the cynical type who chooses to believe that the basic rules could not possibly be as easy as they seem, in an area that seems so complex. It is true. However, that these rules have withstood the test of time.

First of all, make sure that the money you choose to invest is indeed earmarked for the purpose. As in any form of gambling, there is nothing to be gained and everything to be lost when it comes to investing. Do not put up money that you cannot afford to lose should the market take a downturn.

One rule that people seem to refuse to apply in any area of their lives, including the world of investing, is lean not on your own understanding. Most of the time, this is the result of people balking at entrusting another person with their money, believing that with a little understanding they can work the market themselves. This reasoning is fundamentally flawed. In the first place, most people will not be able to begin to unravel the complicated graphs, pie charts, and statistics by which the investment world relates its information. In order to understand what the numbers mean, you will need to have some basic training. There may come a time after you have had some experience in the market that you will be able to make sound decisions on your own, but the initial get-your-feet-wet phase is not the time to attempt it. Check the background of the advisor you choose, as there are a lot of brokers out there looking for a quick fleece. The best brokers will have years of experience, a variety of investment backgrounds, and will probably cost you much less than you might think.

Think long term. Unless you invest millions of dollars initially, it will take time for your investments to mature and begin to accumulate substantial gains. The best investments are proven over time, and thus it is best to place your funds in long term choices. The details of this are plain- it is best to forget about this money in terms of a cash fall back, at least for a number of years.

Diversification is an oft-flogged truism of the investment world. A good portfolio will include cash and cash equivalents (GICs, fixed annuities), growth investments (stocks), and growth and income investments such as mutual funds. Diversification ensures that you do not have all your eggs in one basket should any part of the market experience a downturn. Note that diversification means not only investing in several areas, but also making sure that no one area contains a disproportionate percentage of your funds.

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Bank Foreclosure Profit Opportunities


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In Many Cases, The Lender Or Agency Simply Wants To Get Rid Of Foreclosure Bank Owned Properties Quickly – Even If It Means Selling At A Low Price
Upkeep of foreclosure bank owned properties costs more than selling them cheap. Whether you are a homebuyer or a foreclosure homes investor, foreclosure bank owned properties allow you to buy properties at a fraction of their market value. Lenders aren’t chartered to own and manage property, so they face close scrutiny and pressure from state and federal regulators to dispose of foreclosed properties quickly – especially if they’re on a regulator’s “watch list”.

The second reason why foreclosure bank owned properties are sold at below market value has to do with their condition. And because they’re dealing directly with the bank they can eliminate the 6 percent sales commission if they act fast – before the bank lists the property with a real estate agent. Bank foreclosed homes are sought out by investors because of their profit potential.

In many cases, the lender or agency simply wants to get rid of foreclosure bank owned properties quickly – even if it means selling at a low price. Foreclosure bank owned properties are an excellent opportunity for anyone who wants to save money on their next real estate purchase. It is not uncommon to find bank foreclosed homes sold at prices much lower than their market value.

Foreclosure bank owned properties are priced at up to 5% to 50% off their market value, simply because of the way you can buy and sell foreclosure bank owned properties. It is possible to gain a nice return on your investment when you invest in bank foreclosed homes. Foreclosure bank owned properties are homes that have been repossessed by a government agency or lender due to non-payment of the mortgage. When their REO departments are loaded with foreclosures, investors are able to finagle below-market interest rates with little or no cash down.

When A Homeowner Cannot Pay The Mortgage For A Few Months At A Time, The Bank Will Initiate Foreclosure Proceedings Against The Owner
In order to get the best deals on foreclosure bank owned properties, you need to be prepared and shop wisely. The owner will be anxious to sell to avoid having a foreclosure as a black mark on their credit report. Bank foreclosed homes are homes that are owned by banks or other lending institutions because of the lender having foreclosed on the property. Once you find some foreclosure bank owned properties you like, though, you still need to research.

Researching foreclosure bank owned properties can help you tell the deals from the duds. After the foreclosure is final, the bank foreclosed home will be offered for sale, either directly by the bank, or through real estate auctions. When a homeowner cannot pay the mortgage for a few months at a time, the bank will initiate foreclosure proceedings against the owner.

You cannot let emotions rule your purchase, and you cannot assume that all foreclosure bank owned properties are sold at below market value. If the property has accumulated enough equity, the investor will make a very nice profit. What Are Bank Foreclosed Homes?

Bank Foreclosed Homes Auctions
Bank Foreclosed Homes Auctions. For each home you consider, determine your closing costs, actual house costs, incidental costs, and financing costs. Sometimes the bank foreclosed homes will be sold at real estate auctions.

Once you calculate the cost of any repairs needed, add it to the total cost of the property. Remember to account for the time that it will take to repair the bank foreclosed home.

This approach means that you wouldn’t reimburse them for any accumulated charges such as interest, late charges, foreclosure fees, legal fees, nor any advances they might have made toward senior loans, property taxes, insurance. Sometimes an inspection is not possible, so you should only make bids that leave a nice margin for any unknown repairs. Get a market value for the home and an estimate for the repairs that need to be done.

To figure the number of loan payments made, start when the deed of trust recorded and end with the delinquency date that’s listed on the recorded Notice of Default. On the other hand, if you do it carelessly, you could end up paying a lot more for the bank foreclosed home than it is worth. Hiring a professional assessor and inspector to examine the property for you.

Find out how much homes in the same neighborhood sell for as well. At the most, you shouldn’t pay the bank any more for their equity in the property than what they originally lent on it minus the payments that were actually made on the loan.

If You Are Looking For An Investment, Make Sure That You Will Get At Least 15% Or More In Profit Through Renting Or Selling, And Remember That Many Foreclosure Bank Owned Properties Allow You To Earn More On Your Investment
An important aspect of investing in bank foreclosed homes is having good listings so that you can get to the properties before they are gone. Good bank foreclosed homes do not stay in the market long.

If you are seeking a home, look for foreclosure bank owned properties in areas you would like to live that have the amenities you want. A better use of your time and money is to sign up with an online bank foreclosed homes listings service.

Whether you are looking for foreclosure bank owned properties that are investments or a home will determine which foreclosure bank owned properties are deals for you. These foreclosure bank owned properties you are considering should save you money on your home so that you can enjoy equity fast. If you are looking for an investment, make sure that you will get at least 15% or more in profit through renting or selling, and remember that many foreclosure bank owned properties allow you to earn more on your investment.

Bank Foreclosed Homes Listings. Buying up lenders’ REO’s (real estate owned) is a workable approach when it’s a Buyer’s market and lenders have lots of REO’s they are anxious to get rid of. Finally, insist that the lender provide you with all the customary buyer safeguards such as escrow, title insurance, homeowner’s warranty, termite clearance. You can get bank foreclosed homes listings from courthouses, lending institutions, government agencies.

And Lender Deals Typically Include Title Insurance, Which Removes Much Of The Risk That Accompanies Buying Homes Earlier In The Foreclosure Process
If the property fails to sell at auction, or if the lender ends up as the highest bidder, the home becomes REO, or “real estate owned” by the bank. Often these homes are sold to buyers who don’t even know they are buying a foreclosure, and go through the entire process as they would with any other home. And lender deals typically include title insurance, which removes much of the risk that accompanies buying homes earlier in the foreclosure process.

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Ballon Strangles, A Better Trades Strategy


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I have often taught that there is a countermove for everything that a market or stock can throw at you. You may not know it but there is one. This is generally a true statement because if you wait too long, there are some situations you can’t get out of but for the most part there is a way to respond to and survive just a bout anything. IF YOU KNOW WHAT TO DO AND HOW TO DO IT. The emphasis is to make the distinction that knowing is not enough. You must know how and that takes training. However it does start with knowing what.

I developed the Balloon Strangle as a way to counter the effects of high volatility and unpredictability (ie. Danger) of news announcements that happen when the market is closed. This would be like earnings after hours or an anticipated Board meeting or a court ruling. Something that could move the stock in a big way but you don’t know for sure which way. Conventional wisdom (and it is good advice) is to avoid this like a plague.

A conventional strategy to mitigate the effects of volatility is the strangle or straddle play. Traditional positions for a strangles and straddle are at or near the money. You take opposing positions so that either way it goes you have a winning position. You hope that the move is big enough that the losing position goes to zero and then the winning one can make money. Problem… near the money position are expensive and the move must be quite large to erase one position and still move far enough to make money on the other one. But the idea is that you are somewhat insulated from the unknown. At least you can stay even as one goes up in value and the other goes down.

The Balloon Strangle was a twist using the leverage of Out of the Money positions. If you use a graphic to show the option prices you will often see a leverage point in the curve created by plotting the option prices. It occurs in the Out of the money positions. It represents a spot where the value of the option changes much faster in one direction than the other. In other words if the stock moves one way the value of the option changes very fast but very slow if it moves the other way.

Here is an example of a Balloon Strangle on an earnings play with YHOO. I played this because of the potential YHOO had to move far enough to make the cost of both an Out of the money call and a put pay off. The potential was for a double of my money.

Now YHOO sits ½ way between the important price levels. This is the perfect setup for this play. The YHOO earnings usually has a big move and it is has clear targets.

Now here is what happened. YHOO moves like it was following a script. The upside move goes right to resistance.

Now the results… YHOO moved up to resistance and hesitated. 2 hours into the trading day and at the next sign of hesitation I pulled the plug on the trade. Resistance seemed to be holding, I got what I was looking for in an up side move so I sold both positions. The net of $1.75 was very close to the estimate of $1.70.

By the way, as the day wore on and YHOO did not make any attempt to move higher, the Oct 42.50 began to drop in value much faster than the stock sagged. This dropped the 42.50 calls over .50 while the stock pulled back .60. Waiting for the end of the day would have cost me over .50. The play was to be in only to catch the reaction to the news.

This strategy takes practice and applies to potentially good sized moves. Always practice with out funding first.

Ryan with Better Trades

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Avoiding suspicious activity reports in cash transactions


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Many people ask “just what is considered illegal or suspicious activity when moving cash?” Some people have gone to the bank with the cash proceeds of a garage sale or a car sale on the weekend, and recounted horror stories of multiple questions by bank employees and have sometimes been reported to the government as suspected criminals.

The reality is that such reporting is very plausible. Most western countries have enacted cash transaction legislation that mandates it. In Australia, anything over $10,000 must be reported to regulators, and any amount under that that bank staff deem suspicious. Likewise in the U.S. So, if you’re unusually scruffy-looking and wander into a bank with $4,000 cash to deposit, it’s very possible you will be reported by the teller. (See our article Money Laundering Defined on the web site www.powerprivacy.com for details on U.S. Currency Transfer Reports, or CTRs.)

Here’s a list of most things that can trigger staff’s suspicion and get you reported next time you go to the bank. Banks will not give you a list of or even admit the existence of these criteria, regardless how much you ask:
– A customer refuses to provide identification or explain the purpose of a transaction.
– A customer has a known criminal background and engages in substantial transactions.
– A customer is ignorant of basic facts regarding the transaction or is unconcerned about rates, taxes, etc.
– A customer is controlled by another person, particularly where the customer appears unaware, infirm or elderly and is accompanied by a non-relative.
– A customer conducts cash transactions when his/her employment or business does not ordinarily generate or require such amounts of cash.
– A customer repeatedly sends or receives wire transfers of any dollar amount when his/her business does not normally require or originate such wires.
– A customer has no apparent source of income, yet conducts repeated transactions.
– A customer offers a seller a gift, gratuity or bribe to complete a transaction.
– A customer divides transactions into smaller amounts to avoid identification or reporting requirements.

Suspicious Customer Behavior
– Customer has an unusual or excessively nervous demeanor.
– Customer discusses your record keeping or reporting duties with the apparent intention of avoiding them.
– Customer threatens an employee attempting to deter a record keeping or reporting duty.
– Customer is reluctant to proceed with a transaction after being told it must be reported.
– Customer suggests payment of a gratuity to an employee of the financial institution.
– Customer appears to have a hidden agenda or behaves abnormally, such as bypassing the chance to obtain a higher interest rate on a large account balance.
– Customer who is a public official opens account in the name of a family member who begins making large deposits not consistent with the known legitimate sources of income of the family.
– Customer makes a large cash deposit without counting the cash.
– Customer frequently exchanges small bills for large bills.
– Customer’s cash deposits often contain counterfeit bills or musty or extremely dirty bills.
– Customer who is a student uncharacteristically transfers or exchanges large sums of money.
– Account shows high velocity in the movement of funds but maintains low beginning and ending daily balances.
– Transaction includes correspondence received that is a copy rather than original letterhead.
– Transaction involves offshore institutions whose names resemble those of well-known legitimate financial institutions.
– Transaction involves unfamiliar countries or islands that cannot be found in an atlas or map.
– Agent, attorney or financial advisor acts for another person without proper documentation such as a power of attorney.

Suspicious Customer Identification Circumstances
– Customer furnishes unusual or suspicious identification documents and is unwilling to provide personal background data.
– Customer is unwilling to provide personal background information when opening an account.
– Customer opens an account without identification, references or a local address.
– Customer’s permanent address is outside the bank’s service area or outside the country.
– Customer’s home or business telephone is disconnected.
– A business customer is reluctant to reveal details about the business activities or to provide financial statements or documents about a related business entity.
– Customer provides no record of past or present employment on a loan application.
– Customer claims to be a law enforcement agent conducting an undercover operation, when there are no valid indications to support that.

Suspicious Cash Transactions
– Customer comes in with another customer and they go to different tellers to conduct currency transactions of less than $10,000.
– Customer makes large cash deposit containing many $50 and $100 dollar bills.
– Customer opens several accounts in one or more names, then makes several cash deposits that are less than $10,000.
– Customer conducts unusual cash transactions through night deposit boxes, especially large sums that are not consistent with the customer’s business.
– Customer makes frequent deposits or withdrawals of large amounts of currency for no apparent business reason, or for a business that generally does not generate large amounts of cash.
– Customer conducts several large cash transactions at different branches on the same day, or orchestrates persons to do so on his behalf.
– Customer deposits cash into several accounts in amounts below $10,000 and then consolidates the funds into one account and wire transfers them outside of the country.
– Customer attempts to take back a portion of a cash deposit that exceeds $10,000 after learning that a currency transaction report will be filed on the transaction.
– Customer conducts several cash deposits below $10,000 at automated teller machines.
– Corporate account has deposits or withdrawals primarily in cash rather than cheques.
– Customer frequently deposits large sums of cash wrapped in currency straps, stamped by other banks.
– Customer makes frequent purchases of monetary instruments for cash, in amounts less than $10,000.
– Customer conducts an unusual number of foreign currency exchange transactions.
– Customer frequently uses foreign currency to purchase bank cheques under $3,000.

Suspicious Non-Cash Deposits
– Customer deposits a large number of traveller’s cheques often in the same denomination and in sequence.
– Customer deposits money orders bearing unusual markings.

Suspicious Wire Transfer Transactions
– Non-accountholder sends wire transfer with funds that include numerous monetary instruments of less than $10,000 each.
– An incoming wire transfer has instructions to convert the funds to bank cheques and mail them to a non-accountholder.
– A wire transfer that moves large sums to secrecy havens such as the Cayman Islands, Hong Kong, Luxembourg, Panama or Switzerland.
– An incoming wire transfer followed by an immediate purchase by the beneficiary of monetary instruments for payment to another party.
– An increase in international wire transfer activity, in an account with no history of such activity or where the stated business of the customer does not warrant it.
– Customer frequently shifts purported international profits by wire transfer out of their home country.
– Customer receives many small incoming wire transfers and then orders a large outgoing wire transfer to another country.
– Customer deposits bearer instruments followed by instructions to wire the funds to a third party.
– Account in the name of a currency exchange house receives wire transfers or cash deposits of less than $10,000.

Suspicious Safe Deposit Box Activity
– Customer’s activity increases in the safe deposit box area, possibly indicating the safekeeping of large amounts of cash.
– Customer often visits the safe deposit box area immediately before making cash deposits of sums less than $10,000.
– Customer rents multiple safe deposit boxes.

Suspicious Activity in Credit Transactions
– A customer’s financial statement makes representations that do not conform to Generally Accepted Accounting Principles.
– A transaction is made to appear more complicated than it needs to be by use of impressive but nonsensical terms such as “emission rate,” “prime bank notes,” “standby commitment,” “arbitrage” or “hedge contracts.”
– Customer requests loans to offshore companies or secured by obligations of offshore banks.
– Customer suddenly pays off a large problem loan with no plausible explanation for the source of funds.
– Customer purchases certificates of deposit and uses them as collateral for a loan.
– Customer collateralises a loan with cash deposits.
– Customer uses cash collateral located offshore to obtain a loan.
– Customer’s loan proceeds are unexpectedly transferred offshore.

Suspicious Commercial Account Activity
– Business customer presents financial statements noticeably different from those of similar businesses.
– A large business presents financial statements that are not prepared by an accountant.
– Retail business that provides cheque cashing service does not make large withdrawals of cash against cheque deposits, possibly indicating that it has another source of cash.
– Customer maintains an inordinately large number of accounts for the type of business purportedly being conducted.
– Corporate account shows little or no regular, periodic activity.
– A transaction includes circumstances that would cause a banker to reject a loan application because of doubts about the collateral’s validity.

Suspicious Trade Financing Transactions
– Customer seeks trade financing on the export or import of commodities whose stated prices are substantially more or less than those in a similar market situation.
– Customer makes changes to a letter of credit beneficiary just before payment is to be made.
– Customer changes the place of payment in a letter of credit to an account in a country, other than the beneficiary’s stated location.
– Customer’s standby letter of credit is used as a bid or performance bond without the normal reference to an underlying project or contract, or in favor of unusual beneficiaries.

Suspicious Investment Activity
– Customer uses an investment account as a pass-through vehicle to wire funds, particularly to off-shore locations.
– Investor seems unconcerned about the usual decisions to be made about an investment account such as fees or suitable investment vehicles.
– Customer wants to liquidate a large position through a series of small transactions.
– Customer deposits cash, money orders, traveller’s cheques or bank cheques in amounts under $10,000 to fund an investment account.
– Customer cashes out of annuities during the “free look” period or surrenders early.

Suspicious Employee Activity
– Employee exaggerates the credentials, background or financial ability and resources of a customer, in written reports the bank requires.
– Employee frequently is involved in unresolved exceptions or recurring exceptions on exception reports.
– Employee lives a lavish lifestyle that could not be supported by his or her salary.
– Employee frequently overrides internal controls or established approval authority or circumvents policy.
– Employee uses company resources to further private interests.
– Employee assists transactions where the identity of the ultimate beneficiary or counter party is undisclosed.
– Employee avoids taking holidays.

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Avoiding Day Trader Status With Better Trades


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Due to an overwhelming request of questions about Day Trader Status I have decided to write this newsletter to look at these issues. Whether you know about it or not, you don’t want to accidentally learn about Day Trader Status by a notice from your brokerage firm saying that you are now tagged as a Day Trader!

WHAT IS A DAY TRADER?

A Day Trader is someone who does four intra-day trades in five consecutive trading days. Let me address some terms here to help you understand this better:

Intra-day trade: A trade that is opened and closed in the same trading day (round trip).

Five Consecutive Trading Days: These are calendar days that the market is open, all in a row. For example:

If the market was open on Monday through Friday that would be five consecutive days.

Then we would have Tuesday through Monday for the next five consecutive days (unless Monday was a holiday in which case it would then be Tuesday through Tuesday.

Next, we would have Wednesday through Tuesday, and so on. The key is five trading days in a row.

HOW TO AVOID IT

One of my favorite students, Debi D, taught me to use a calendar to record my intra-day trades. By placing an “X” on the day

you do intra-day trades, (2 X’s if you do two, 3 X’s if you do 3 in that day) you can avoid accidentally getting to four by

looking at your calendar. Make sure you mark the days the market is closed on your calendar.

WHY DOES IT MATTER?

I thought it mattered a lot, but after my research for this newsletter, it appears there actually are some great benefits

being classified as a “Day Trader” if the $25,000 is not an issue for you. Basically there are two issues at hand:

ISSUE ONE: Your brokerage firm will likely impose the NASD requirements of maintaining at least $25,000 in your trading

account – and you have 5 days to comply. If you have this kind of money there is no issue! However, if you are starting out

with limited funds to trade it could be a big issue! One important note – always ask for one time of forgiveness! Many

students told me they did and the status was removed – so ASK! There may be a way around it, but I am not sure. From my

reading of the requirements, the penalty for not complying is that you are subject to cash only trades, (which are what we

were doing anyway with options)!

There is a really incredible benefit though if you are tagged a Day Trader and maintain the $25,000 minimum value in

your account. You may be eligible for day-trading margin, which is 4 times account buying power. WOW DO I EVER LIKE THIS

ONE!! This buying power may only be used intra-day and may not be held past market close. Orders exceeding Day-Trading Buying

Power will be rejected.

ISSUE TWO: Tax Consequences with the IRS

Actually upon my research into the IRS Publications it does not appear as bad as I thought. A tax firm specializing in trading activity, says:
o They allow a full deduction of all trading losses in the year they occur, thereby circumventing the historical $3,000 net capital loss rule.
o They allow full current expensing of trading expenses without limitation, thereby circumventing the limitation on miscellaneous itemized deductions.
o They enable the active trader to still take advantage of the beneficial long term capital gain rules.

o They enable the active trader to circumvent the restrictive “Wash Sale” rules normally applied to investors, thereby alleviating a huge record-keeping nightmare.

o They allow the active trader to deduct losses on open as well as closed positions.

Continuing on with my IRS research:

You would report your trader’s activity as a business on Schedule C of your 1040, possibly allowing all the deductions for your classes and tools, versus a limitation on deduction for passive trading that would have had to be reported on your

Schedule A with a 2% AGI limitation deduction. But here is the sweet deal: you can still elect to report your gain or loss on

Schedule D as a capital gain unless you made the mark-to-market election, (which has you claim the income as ordinary income on Form 4797 instead of Schedule D – see IRS Publication 550 for more information on this). Just to be safe, you better talk to an accountant that specializes in stock market trading. Being a retired accountant, I want to tell you that most accountants will not know how to treat your trading income properly – you need to understand this.

The proper classification of your investment activities is important to determine how income and expenses are to be reported.

Traders that buy and sell securities frequently can report their purchases and sales result in capital gain and loss, and their deductible expenses are trade or business expenses.

Happy Trading!

Darlene Powell with Better Trades

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What Is Your Investment Style?


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Knowing what your risk tolerance and investment style are will help you choose investments more wisely. While there are many different types of investments that one can make, there are really only three specific investment styles – and those three styles tie in with your risk tolerance. The three investment styles are conservative, moderate, and aggressive.

Naturally, if you find that you have a low tolerance for risk, your investment style will most likely be conservative or moderate at best. If you have a high tolerance for risk, you will most likely be a moderate or aggressive investor. At the same time, your financial goals will also determine what style of investing you use.

If you are saving for retirement in your early twenties, you should use a conservative or moderate style of investing – but if you are trying to get together the funds to buy a home in the next year or two, you would want to use an aggressive style.

Conservative investors want to maintain their initial investment. In other words, if they invest $5000 they want to be sure that they will get their initial $5000 back. This type of investor usually invests in common stocks and bonds and short term money market accounts.

An interest earning savings account is very common for conservative investors.
A moderate investor usually invests much like a conservative investor, but will use a portion of their investment funds for higher risk investments. Many moderate investors invest 50% of their investment funds in safe or conservative investments, and invest the remainder in riskier investments.

An aggressive investor is willing to take risks that other investors won’t take. They invest higher amounts of money in riskier ventures in the hopes of achieving larger returns – either over time or in a short amount of time. Aggressive investors often have all or most of their investment funds tied up in the stock market.

Again, determining what style of investing you will use will be determined by your financial goals and your risk tolerance. No matter what type of investing you do, however, you should carefully research that investment. Never invest without having all of the facts!

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