Basics of Investing

Archive for May, 2008

Question: Can someone explain to me the pros and cons of high and low interest rates?

i.e When is the best time to buy a house? when interest is high or low? What are other kinds of investment that has to deal with interest rates and how so?

Answer: If you owe money (Credit Card, Home Loan, Car Lone, Personal Loan), low interest rates. If someone owes you money or you are investing money, high interest rates.

All investments deal in interest rates, unless you are dealing with a fixed bond (which is basically interest, just not much). The higher the rate, the better return you will see on your money, the lower the rate the less money you will see. If you are investing money, you want a higher rate so your money makes more money for you. If you are buying something, you want a low interest rate so more of your money goes toward paying off what you are buying instead of going to pay for the interest.

In the Stock Market, rates are determined after the money is made or lost based and on how long it took to get that way. If you double your money in a year, then the rate is 100%, if you lose half of your money, then the rate is -50%. Your average savings account gives between 1%-3% per year for just having your money sit there, not great, but better than sitting under your bed…

Sexy Love by Ne-Yo & Poker Face by lady Gaga/ INVESTMENT version/ AC09201