STOCK COUPONS - (Promotional Offer Codes, Investment Tips, and Reviews)

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Most people have heard of a Line of Credit, but less know what a HELOC is. A Line of Credit is an agreement between a lender and a borrower (usually through a bank) for a loan that is to be paid back over a stretch of time with a specific interest rate attached to it. In most cases Lines of Credit aren’t really secured (but they can be) beyond looking at ones credit history/score. Because of that non-secured lines of credit tend to carry higher interest rates.

HELOC or Home Equity Lines of Credit is a secured version of a loan, using one’s home(s) as collateral. Because it is secured interest rates for HELOCs tend to be much lower than other types of loans. There are numerous types of HELOC offers/deals but in every one you only get charged interest upon using funds from this loan. However, some of these loan contracts may demand that you withdraw a minimum amount each month, ensuring interest payments to them. There is a set time frame when you are permitted to draw money, known as the draw period.

Withdraws from a HELOC can be done with assigned cheques or even through specialized credit cards for customer convenience.

Interest rates on HELOC vary with market conditions and so although you may take out a loan at one rate, one can expect this rate to go up and down throughout its existence.

Repayment methods and frequencies vary by provider. Some may demand you pay a lump sum at the end of its time frame while others may set specific amounts that are paid at consistent intervals. The moment you stop repaying is when the HELOC ends and potential foreclosure begins.

Unlike personal loans and credit cards, the interest on your home equity financing may be tax deductible. It depends on what that loan is used for. If it is towards earning income from a business or property then it is tax deductible thereby reducing the homeowner’s earned income and tax rate.

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Although it may seem counterintuitive on the surface that a company who distributes dividends to shareholders will, in the long term, net you bigger gains than a company who focuses solely on growth with higher share prices by reinvesting every dollar back into its operations, it is a well-studied fact.

Investors tend to not realize this and simply assume it’s all about rising stock prices or market capitalization that determines ones returns completely forgetting that your investment should also include cash paid out.

One popular example is of IBM vs. Standard Oil from 1953 to 2003. If one had invested $1,000 back in 1953 in each company and looked to reinvest any distribution then in 2003 your Standard Oil shares would be worth about $300,000 more than your IBM shares despite the fact that IBM had bigger growth in this period. The difference lies in the amount of money that was distributed as dividends back to its shareholders. Standard Oil had been very generous during their rise and in the process the savvy investor would have made quite a larger fortune.

So although growth stocks may get all the headlines it is usually the less noticed, more boring, types of dividend distributing stocks that focus partly on growth and rewarding their success to their shareholders that ultimately gives one the biggest gains in the long term.

Most people think their only chance of becoming a millionaire is by way of winning the lottery but the reality is the chances of hitting the jackpot is 14 million to 1. The truest and most certain way to become a millionaire is actually much simpler and we’ve discussed it here. It’s through a slow, but consistent saving, investing, and reinvestment approach over time. So although it comes off boring it all comes down to proper discipline and patience that determines ones future financial well-being.

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One of the most powerful and underused investment strategy that can be deployed is dollar cost averaging (DCA). This technique is designed to reduce market risk by making consistent security purchases at predetermined amounts over the course of a period.

Many investors like to make lump sum investment purchases but because market conditions are unpredictable it’s possible that making such a large one-time purchase can result in a lower return than if you were to work into a position by slowly buying small amounts over a long period of time. By persuing this latter course of action it spreads the cost and potential risk over many years, thus padding against market price fluctuations. In other words, it lowers the total average cost/share. This approach also has the benefit of giving one the chance to purchase shares when prices are low and take on fewer shares when they are high-priced.

Dollar Cost Averaging is primarily for long-term investors. And many discount brokers, such as Questrade, offer automatic withdrawal plans for such a strategy.

Index funds are the ideal types of securities for the dollar cost averaging plan because they help diversify your portfolio and keep the cost more stable as you execute your dollar cost approach.

This approach is not without its critics. Because you are only investing a small amount each month, for example, its going to take a long while before a descent amount of shares is held. Also DCA will likely increase transaction costs. Each time you invest a bit more into your portfolio there will be a fee by the discount broker to do so.

Interestingly, if the stock price continues to rise over the period then the DCA plan will result in a higher average stock price than say if you had invested in one lump sum.

When all is said and done the greatest benefit DCA brings is the sense of discipline. Because the investment amount is so small it makes it easier for people to save for the future.