Maybe it was in a finance class in college. Or maybe it was on the evening news. Wherever it was, you've probably heard the term "microfinance" before, but you might not know exactly what it means. With the recent explosion of microfinance in the United States and abroad, you'll be hearing more and more about this revolutionary approach to philanthropy in the coming months and years.
So, just what is microfinance?
To put it as simply as possible, microfinance is the practice of giving very small loans to poor citizens with the goal of helping them start their own businesses so they can pull themselves and their families out of poverty. In other words, microfinance isn't a hand out; it's a hand up that allows the poor, mostly women, to achieve sustained financial success.
Microfinance United States is based on the age-old concept of "Give someone a fish, feed them for a day. Teach them to fish, feed them for a lifetime." That's why microfinance is about more than just loans. In addition to providing the underprivileged with small loans, microfinance agents also educate loan recipients on how to create and run a profitable business and how to manage and grow their money. This allows the money raised for microfinance to create a much longer, more sustained impact than a simple charitable donation could ever yield.
It's important to note that microfinance in the United States and abroad is a loan system. These small loans are paid back with interest, and you might be surprised to learn that the poor are actually excellent credit risks. When properly educated, the recipients of these loans are financially prudent. In fact, the microfinance industry has given loans to over 100 million poor people, with a payback rate of 97%!
The goals of the microfinance industry are simple:
• To eliminate extreme poverty throughout the world
• To empower the working poor to lift themselves out of poverty
• To promote gender equality
Examples of Microfinance United States
Although the concept of microfinance dates back to 1973 in Brazil, it's only been over the past few years that microfinance has really started to popularize in the United States. Several non-profit organizations are dedicated to the cause of empowering the working poor.
One recent example of this is the revolutionary Lingerie Miami program, created by Renata Black. This event brought out top fashion designers and A-list celebrities for the purpose of raising money for microfinance in the United States and several other countries. The fashion show was so successful at raising funds to empower women that it's being spread to New York in 2010. Future plans call for these philanthropic lingerie fashion shows to be held in major cities throughout the world.
All funds raised at these fashion shows are sent directly to microfinance institutions throughout the world. These funds are then carefully distributed in small loans to the working poor, mostly women, with the goal of helping them start their own small businesses.
Are you interested in taking part in the microfinance United States revolution? Visit http://www.lingeriemiami.org today to learn how you can help.
Thursday, November 26, 2009
Saturday, November 14, 2009
CBA points to improvements in economy
Bad debts have reached their peak the Commonwealth Bank of Australia (CBA) claims, as more people make use of its monetary assistance services.
An increasing number of people are taking advantage of the financial assistance services on offer from the Commonwealth Bank of Australia (CBA), it has been revealed.
Pointing out towards a rise in customer take-up of such a programme, the financial services firm indicates that arrears have remained largely stable during the third quarter of this year.
It was also revealed that there were slight improvements in the amount of money issued to consumers through CBA and Bankwest home loans, while "a continued prudent approach to wholesale funding" is taken.
Meanwhile, an improvement in the firm's credit card portfolio was also noted, as credit quality trends were deemed to generally be moving in line with expectations
However, the bank - which includes the Commonwealth Gold credit card in its range of products - points out that in spite of some improvements in its group net interest margin, are a number of challenges remain.
This is particularly the case in regards to bank deposits, where margins are stated to be under pressure.
Such comments come as Australian banking figures from the firm indicate that cash earnings for the three-month period stood at $1.4 billion.
CBA chief executive officer Ralph Norris points out: "Whilst the economic outlook has improved since our results in August, the pace and extent of the recovery remains unclear. We will therefore continue to retain our conservative business settings until such time as a sustained improvement is evident."
He adds that although it is likely that the level of bad debts have reached their peak some of the bank's "customers are continuing to face financial hardship".
Such comments come as the bank announced last week that rates across its range of variable home loans and deposit accounts were to rise following the Reserve Bank's decision to increase interest rates to 3.5 per cent.
An increasing number of people are taking advantage of the financial assistance services on offer from the Commonwealth Bank of Australia (CBA), it has been revealed.
Pointing out towards a rise in customer take-up of such a programme, the financial services firm indicates that arrears have remained largely stable during the third quarter of this year.
It was also revealed that there were slight improvements in the amount of money issued to consumers through CBA and Bankwest home loans, while "a continued prudent approach to wholesale funding" is taken.
Meanwhile, an improvement in the firm's credit card portfolio was also noted, as credit quality trends were deemed to generally be moving in line with expectations
However, the bank - which includes the Commonwealth Gold credit card in its range of products - points out that in spite of some improvements in its group net interest margin, are a number of challenges remain.
This is particularly the case in regards to bank deposits, where margins are stated to be under pressure.
Such comments come as Australian banking figures from the firm indicate that cash earnings for the three-month period stood at $1.4 billion.
CBA chief executive officer Ralph Norris points out: "Whilst the economic outlook has improved since our results in August, the pace and extent of the recovery remains unclear. We will therefore continue to retain our conservative business settings until such time as a sustained improvement is evident."
He adds that although it is likely that the level of bad debts have reached their peak some of the bank's "customers are continuing to face financial hardship".
Such comments come as the bank announced last week that rates across its range of variable home loans and deposit accounts were to rise following the Reserve Bank's decision to increase interest rates to 3.5 per cent.
Friday, November 13, 2009
Keeping Track of your Bank Account Balance – Easy as 1,2,3....
Keeping track of your bank account balance has never been easier. Long gone are the days when the only way to accurately discover how much was sitting in your current account was to traipse down to your local branch, or pick up the phone and call the bank’s telephone banking department.
Now, the vast majority of account holders can determine their balance - and indeed do the majority of their banking - 24 hours a day, seven days a week via the internet. Offered by all the major high street banks online banking allows account holders to effectively self-serve their banking needs. Setting up direct debits, standing orders, arranging bill payments and transferring money between accounts can all be easily done online as well as host of other services, dependent upon the user’s bank.
But, those who are regularly out and about and unable to access online banking may wish to sign up for free text alerts to their mobile phone. Offered by most UK high street banks, by subscribing to mobile phone alerts a bank account holder can receive notification of their balance on a weekly basis; on a particular day and time of their choosing. The balance sent is normally taken from close of business the night before and most banks also offer details of the last few transactions on the account as well as the overall balance.
In addition, banks now allow the receipt of text alerts when an account holder slips into the red or their account balance falls below a set figure and most also offer the facility to order PIN numbers, cheque books, paying-in books and various other bank account items by text. Banks may charge a monthly fee for those mobile banking features, examples of which also include the facility to request balance information instantly by text; extremely handy for anyone about to make a purchase but unsure as to whether they have enough cleared funds to pay for the transaction.
Finally, if all else fails then account holders can always pick up the telephone and talk to someone, or listen to an automated service to discover their balance. High street banks have been offering telephone banking services for some years and - just like online banking – most require prior registration before being allowed to use the service. However, once registered it is easy to use and telephone banking can also be used to request a host of current account services; many similar to online banking services. Whatever method you choose, it really is easy and convenient to keep track of your bank balance these days.
Now, the vast majority of account holders can determine their balance - and indeed do the majority of their banking - 24 hours a day, seven days a week via the internet. Offered by all the major high street banks online banking allows account holders to effectively self-serve their banking needs. Setting up direct debits, standing orders, arranging bill payments and transferring money between accounts can all be easily done online as well as host of other services, dependent upon the user’s bank.
But, those who are regularly out and about and unable to access online banking may wish to sign up for free text alerts to their mobile phone. Offered by most UK high street banks, by subscribing to mobile phone alerts a bank account holder can receive notification of their balance on a weekly basis; on a particular day and time of their choosing. The balance sent is normally taken from close of business the night before and most banks also offer details of the last few transactions on the account as well as the overall balance.
In addition, banks now allow the receipt of text alerts when an account holder slips into the red or their account balance falls below a set figure and most also offer the facility to order PIN numbers, cheque books, paying-in books and various other bank account items by text. Banks may charge a monthly fee for those mobile banking features, examples of which also include the facility to request balance information instantly by text; extremely handy for anyone about to make a purchase but unsure as to whether they have enough cleared funds to pay for the transaction.
Finally, if all else fails then account holders can always pick up the telephone and talk to someone, or listen to an automated service to discover their balance. High street banks have been offering telephone banking services for some years and - just like online banking – most require prior registration before being allowed to use the service. However, once registered it is easy to use and telephone banking can also be used to request a host of current account services; many similar to online banking services. Whatever method you choose, it really is easy and convenient to keep track of your bank balance these days.
Thursday, November 12, 2009
Value of Money
Measuring the exact value of money
Syed Zahid Ahmad
Often it is said that money value is declining, but we have yet to find any statistical report over it. The Reserve Bank of India (RBI) as monetary regulator in India monitors different monetary ratios like 1) GDP/Broad Money, 2) GDP/Narrow Money and 3) GDP/Currency with public etc. to evaluate the impact of money on income velocity. But still after 75 years of monetary regulations, RBI is not in a position to tell us exact figure of decline in money value because its approach misses some important factors like growth of credit and accrued interest etc. in broad and narrow money. Actually RBI does not use the concept of gross and net liquidity to measure the value of money at a given point of time.
The value of all commodities and services could be measured in terms of money, but money cannot be measured through itself. Since money is used to measure and exchange the goods and services produced in any economy, it is better to evaluate money value in proportion of Gross Domestic Products (GDP). The value of GDP at Market Prices in proportion of Broad Money may reveal lowest value of Money whereas Value of GDP at Market Prices in proportion to currency with the public reveals the highest money value. It would be confusing to denote different money value at a time, so it is desirable to find actual money value at a given point of time.
Considerably it is the liquid of money which allows economic transaction in any economy. Since the actual liquidity in the market differs from Narrow Money (M1) and Broad Money (M3), we need to evaluate actual liquidity in the market which enables sale of GDP at market prices. So, it is better to compare the components of M1 and M3 with respect to actual liquidity. Only then we would be able to understand what RBI is missing to evaluate the actual money value.
The Narrow Money (M1) constitutes of three factors a) Currency with the public, b) Deposits (other than Banker’s deposits) with RBI and c) Demand Deposits; whereas the Broad Money (M3) is equal to Narrow money plus Time Deposits. Since Time deposits pull liquidity from the market and discourages economic transactions, RBI in general considers Narrow Money as total liquidity in the market.
But there are other factors considerably increasing the liquidity in the market which are not considered by RBI in calculating Narrow or Broad Money. The first is Bank Credits which as proportion to Narrow Money has increased by 194.41% during 59 years (from 27.07% in 1950-51 to 221.48% in 2008-09). Similarly bank credit as percentage of GDP at Market Prices has increased by 46.73% during this period, as it was just 5.42% in 1950-51 which increased to 52.15% in 2008-09.
The second factor is the accrued interest over Time Deposits which may be used by the depositors periodically or after maturity. Considerably annual interest on Time deposits as percentage of Narrow Money was just 0.98% in 1950-51 which was found 22.41% in 2008-09. This as percentage of GDP at Market Prices has also increased by 5.08% during 59 years (from 0.20% in 1950-51 to 5.28% in 2008-09). Thus bank credits and interest on time deposits when added to narrow money increases gross and net liquidity above and above the narrow and broad money in the economy.
So if we really want to evaluate actual liquidity in the market, we need to add these two components into the narrow money. To know about net liquidity in the market we have to add Bank Credits into Narrow Money and to get gross liquidity, we have to add accrued interest on time deposits into net liquidity.
The amount of Gross and Net liquidity reflects the gross and net purchasing capacity of consumers. So, to evaluate the exact money value at a given point of time, we need to divide the value of GDP at Market Prices with Gross Liquidity or Net liquidity. The outcome will be actual value of money. After analyzing the available data for last 59 years (1950-51 to 2008-09), we have found that the value of money declines considerably if we divide GDP at Market Prices with Gross Liquidity, or Net Liquidity or even with Broad Money. This decline moderates if we divide GDP at Market Prices with Narrow money. Contrary to these evaluations, if we divide GDP at Market with Currency with public, the value of money is found to be increasing. Who will accept this analysis that value of money has increased during 1950-51 to 2008-09? Better we should consider the value derived by dividing GDP at Market Prices with Gross Liquidity as real value of money which has considerably declined by 2.66 points (from 3.9 points in 1950-51 to 1.2 points in 2008-09).
If we use this mechanism of evaluating the currency value, we may go on evaluating currencies of different countries. The respective points of currencies in different countries may allow us fix actual rate of currency exchange instead of taking purchasing power parity, SDR or US Dollars as base to calculate currency exchange rates. The value of currency in different countries by dividing their GDP with their gross liquidity may help us evaluate exact currency value of different countries, which may be compared among nations to fix exchange rate of currencies at international level. Let’s hope the monetary regulators at international level will start behaving rationally and do justice in protecting values of their currencies and adopt fair currency exchange rates for different countries.
Syed Zahid Ahmad
Often it is said that money value is declining, but we have yet to find any statistical report over it. The Reserve Bank of India (RBI) as monetary regulator in India monitors different monetary ratios like 1) GDP/Broad Money, 2) GDP/Narrow Money and 3) GDP/Currency with public etc. to evaluate the impact of money on income velocity. But still after 75 years of monetary regulations, RBI is not in a position to tell us exact figure of decline in money value because its approach misses some important factors like growth of credit and accrued interest etc. in broad and narrow money. Actually RBI does not use the concept of gross and net liquidity to measure the value of money at a given point of time.
The value of all commodities and services could be measured in terms of money, but money cannot be measured through itself. Since money is used to measure and exchange the goods and services produced in any economy, it is better to evaluate money value in proportion of Gross Domestic Products (GDP). The value of GDP at Market Prices in proportion of Broad Money may reveal lowest value of Money whereas Value of GDP at Market Prices in proportion to currency with the public reveals the highest money value. It would be confusing to denote different money value at a time, so it is desirable to find actual money value at a given point of time.
Considerably it is the liquid of money which allows economic transaction in any economy. Since the actual liquidity in the market differs from Narrow Money (M1) and Broad Money (M3), we need to evaluate actual liquidity in the market which enables sale of GDP at market prices. So, it is better to compare the components of M1 and M3 with respect to actual liquidity. Only then we would be able to understand what RBI is missing to evaluate the actual money value.
The Narrow Money (M1) constitutes of three factors a) Currency with the public, b) Deposits (other than Banker’s deposits) with RBI and c) Demand Deposits; whereas the Broad Money (M3) is equal to Narrow money plus Time Deposits. Since Time deposits pull liquidity from the market and discourages economic transactions, RBI in general considers Narrow Money as total liquidity in the market.
But there are other factors considerably increasing the liquidity in the market which are not considered by RBI in calculating Narrow or Broad Money. The first is Bank Credits which as proportion to Narrow Money has increased by 194.41% during 59 years (from 27.07% in 1950-51 to 221.48% in 2008-09). Similarly bank credit as percentage of GDP at Market Prices has increased by 46.73% during this period, as it was just 5.42% in 1950-51 which increased to 52.15% in 2008-09.
The second factor is the accrued interest over Time Deposits which may be used by the depositors periodically or after maturity. Considerably annual interest on Time deposits as percentage of Narrow Money was just 0.98% in 1950-51 which was found 22.41% in 2008-09. This as percentage of GDP at Market Prices has also increased by 5.08% during 59 years (from 0.20% in 1950-51 to 5.28% in 2008-09). Thus bank credits and interest on time deposits when added to narrow money increases gross and net liquidity above and above the narrow and broad money in the economy.
So if we really want to evaluate actual liquidity in the market, we need to add these two components into the narrow money. To know about net liquidity in the market we have to add Bank Credits into Narrow Money and to get gross liquidity, we have to add accrued interest on time deposits into net liquidity.
The amount of Gross and Net liquidity reflects the gross and net purchasing capacity of consumers. So, to evaluate the exact money value at a given point of time, we need to divide the value of GDP at Market Prices with Gross Liquidity or Net liquidity. The outcome will be actual value of money. After analyzing the available data for last 59 years (1950-51 to 2008-09), we have found that the value of money declines considerably if we divide GDP at Market Prices with Gross Liquidity, or Net Liquidity or even with Broad Money. This decline moderates if we divide GDP at Market Prices with Narrow money. Contrary to these evaluations, if we divide GDP at Market with Currency with public, the value of money is found to be increasing. Who will accept this analysis that value of money has increased during 1950-51 to 2008-09? Better we should consider the value derived by dividing GDP at Market Prices with Gross Liquidity as real value of money which has considerably declined by 2.66 points (from 3.9 points in 1950-51 to 1.2 points in 2008-09).
If we use this mechanism of evaluating the currency value, we may go on evaluating currencies of different countries. The respective points of currencies in different countries may allow us fix actual rate of currency exchange instead of taking purchasing power parity, SDR or US Dollars as base to calculate currency exchange rates. The value of currency in different countries by dividing their GDP with their gross liquidity may help us evaluate exact currency value of different countries, which may be compared among nations to fix exchange rate of currencies at international level. Let’s hope the monetary regulators at international level will start behaving rationally and do justice in protecting values of their currencies and adopt fair currency exchange rates for different countries.
Tuesday, November 3, 2009
Cholesterol and Life Insurance
It's in the news and seems to pop up in commercials every five minutes...the warnings and apparent medication fixes for elevated cholesterol. Needless to say, cholesterol has an impact on your life insurance eligibility and perhaps more importantly, your life insurance rate. Let's look a little closer at how cholesterol readings affect your life options.
First, why is cholesterol important to life insurance anyway? Anything that has a bearing on life insurance eligibility must tie in with mortality rates. Mortality rates are essentially the odds of passing away at a given age based on certain demographic information (area, health status, etc). If a habit, health status, or attribute affects this mortality rate based on historical data, the life insurance company is going to be very interested.
Think of elevated or skewed cholesterol as a common bedfellow with heart-related and arterial diseases. Over the last few decades, it has become apparent that higher total cholesterol, elevated LDL (the bad cholesterol) and the ratio between LDL and total cholesterol have a statistically relevant correlation with heart disease, heart attacks, strokes and other cardio-pulmonary diseases. We don't really need to know what the reason is for this correlation...just that it exists. Cholesterol is one of those issues that may go on for decades unchecked. This accumulated damage can lead to problems later on. It's not uncommon to have a person find out they have elevated cholesterol as the result of the paramedical exam that constitutes part of the life insurance enrollment process. We've had surprised reactions such as "I don't have high cholesterol!" only to show the results. Cholesterol requires a blood test (usually while fasting to get a more accurate reading). It's important to address elevated cholesterol with your doctor for health reasons, but let's look at how life insurance companies will view it.
Each carrier will have different requirements for cholesterol readings. Life insurance is actually more lenient regarding total cholesterol than most health insurance carriers. Health carriers usually want total cholesterol under 200. Life insurance companies are typically satisfied under 240. It's possible to qualify for the best health class with a reading under 240 (assuming healthy in other regards). As you go up from here, the health class will adjust which essentially means you will pay a higher rate. You can expect (other health issues being equal) that a higher tier will be triggered from 240-259 and then another tier from 260-279. It might be difficult to qualify for life insurance with cholesterol over 280 but contact us to see if there are options we can use in such a situation such as no medical life insurance. There are new options available to address such a situation.
The life insurance companies also look at your HDL (high density lipid) to total cholesterol ratio. HDL's are the good cholesterol which have more of a protective effect within limits. If a higher percentage of your total cholesterol is derived from HDL's as opposed to LDL's (low density lipid), then that is beneficial. For the best health class, you typically want the ratio of total cholesterol to be less than 5 times the HDL's. The next health class down requires this ratio to be below 6.5 times. Beyond 7.5 times, it becomes more difficult to qualify for standard life insurance plans.
These are two main cholesterol components that impact life insurance: total cholesterol and the ratio of total cholesterol to HDL's. With non medical life insurance plans and the newly created hybrid plans, we may be able to find alternative options to address your particular situation. With extensive knowledge of the carriers underwriting requirements and guidelines, we can help help you find life insurance options that work better with your current cholesterol make-up.
First, why is cholesterol important to life insurance anyway? Anything that has a bearing on life insurance eligibility must tie in with mortality rates. Mortality rates are essentially the odds of passing away at a given age based on certain demographic information (area, health status, etc). If a habit, health status, or attribute affects this mortality rate based on historical data, the life insurance company is going to be very interested.
Think of elevated or skewed cholesterol as a common bedfellow with heart-related and arterial diseases. Over the last few decades, it has become apparent that higher total cholesterol, elevated LDL (the bad cholesterol) and the ratio between LDL and total cholesterol have a statistically relevant correlation with heart disease, heart attacks, strokes and other cardio-pulmonary diseases. We don't really need to know what the reason is for this correlation...just that it exists. Cholesterol is one of those issues that may go on for decades unchecked. This accumulated damage can lead to problems later on. It's not uncommon to have a person find out they have elevated cholesterol as the result of the paramedical exam that constitutes part of the life insurance enrollment process. We've had surprised reactions such as "I don't have high cholesterol!" only to show the results. Cholesterol requires a blood test (usually while fasting to get a more accurate reading). It's important to address elevated cholesterol with your doctor for health reasons, but let's look at how life insurance companies will view it.
Each carrier will have different requirements for cholesterol readings. Life insurance is actually more lenient regarding total cholesterol than most health insurance carriers. Health carriers usually want total cholesterol under 200. Life insurance companies are typically satisfied under 240. It's possible to qualify for the best health class with a reading under 240 (assuming healthy in other regards). As you go up from here, the health class will adjust which essentially means you will pay a higher rate. You can expect (other health issues being equal) that a higher tier will be triggered from 240-259 and then another tier from 260-279. It might be difficult to qualify for life insurance with cholesterol over 280 but contact us to see if there are options we can use in such a situation such as no medical life insurance. There are new options available to address such a situation.
The life insurance companies also look at your HDL (high density lipid) to total cholesterol ratio. HDL's are the good cholesterol which have more of a protective effect within limits. If a higher percentage of your total cholesterol is derived from HDL's as opposed to LDL's (low density lipid), then that is beneficial. For the best health class, you typically want the ratio of total cholesterol to be less than 5 times the HDL's. The next health class down requires this ratio to be below 6.5 times. Beyond 7.5 times, it becomes more difficult to qualify for standard life insurance plans.
These are two main cholesterol components that impact life insurance: total cholesterol and the ratio of total cholesterol to HDL's. With non medical life insurance plans and the newly created hybrid plans, we may be able to find alternative options to address your particular situation. With extensive knowledge of the carriers underwriting requirements and guidelines, we can help help you find life insurance options that work better with your current cholesterol make-up.
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