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Market Analysis

Take Advantage of Tax-Free Municipal Bonds

When you purchase a municipal bond, you’re loaning money to a municipality, city, village, county, or state. Typically, the municipality borrows money to pay for infrastructure projects such as building or repairing roads or a community center. The municipality generally pays back the bonds with money made from those projects – by paying off a bridge bond with money that is raised from bridge tolls, for instance.

Most municipal bonds are exempt from federal taxes on the interest they earn. Additionally, if the bond is issued in the state that you live in, you may owe no state taxes either. However, interest on some municipal bonds, often called private activity bonds, can still fall into alternative minimum tax guidelines and to state and local taxes. Also, buying and selling municipal bonds can be subject to capital gains taxes.

Nevertheless, tax-free investments can make your portfolio more tax efficient, especially if you fall into a high tax bracket and if the current tax policies are changing for the worse. Municipal bonds can help you diversify your fixed income positions as well. Additionally, municipal bonds are generally considered low-risk adding steady income to your portfolio, thereby can be very attractive to risk-averse investors.

Tax-free vs. taxable bonds
Municipal bonds, because they are generally more conservative and because the income is protected from federal income taxes typically pay lower interest rates than comparable taxable bonds. If you fall into a higher tax bracket, then tax-free investments become more valuable to you.

To decide whether a tax-free bond is better than a taxable bond, convert the tax free yield into its taxable equivalent yield. The formula to accomplish this is simply: Tax-equivalent yield = Tax-free yield / (1- your federal tax bracket).

For example, let’s say you want to get into a tax-free bond that pays 2%, and you’re in the 28% federal income tax bracket. Further, assume you live in the state that issues the loan so there aren’t any state or local taxes that apply to the municipal bond. For someone in your situation, the tax-free bond’s equivalent taxable yield is 2 / (1 – 0.28). Your bond’s tax-equivalent yield is 2.78%. That’s potentially a good purchase if comparable taxable bonds are paying 2.5% but the arrangement might not be as lucrative if comparable taxable bonds are yielding 2.8%.

Let’s look at another example. Say you and your spouse file jointly and report a net taxable income of $245,000 which makes you fall in the 33% federal income tax bracket in 2010. Assume that state and local taxes don’t apply. Below is a small table that shows tax-free bond yields and their taxable equivalents.

In this situation the investor may consider purchasing a tax-free bond yielding 2.5% or a comparable taxable bond yielding 4%. In this scenario it would be wiser to buy the taxable bond, because the taxable bond’s yield is greater than the tax-free bond’s tax-equivalent yield of 3.73%. The table below shows possible tax-free bond yields and their taxable equivalents.

Municipal bond mutual funds
Municipal bond mutual funds offer greater portfolio diversification for investors that are not looking to dabble in individual bond purchases or want to buy into multiple municipal bonds.

The formula is the same as it is for a single bond. Say a taxable bond fund offers a yield of 3% while a tax free fund offers 2.5%. An individual that falls into the 28% tax bracket would find, using the previous formula, that the tax-free bond’s tax-equivalent yield of 3.47% is more than the taxable bond’s yield, making it a better decision to buy into the tax-free fund.

A Financial Advisor can provide you with more information on municipal bonds and guide you on how to incorporate them into your overall portfolio that suits your investment goals.

Market Analysis

Pension Annuity Vital To Take The Open Market Option

Annuities are a form of insurance, called longevity insurance. A person buying an annuity with their pension savings has a guarantee that their pension will continue to be paid no matter how long they live after their retirement date. For most pensioners/retirees buying an annuity will be a better choice than income drawdown (unsecured pension), and under current rules it becomes compulsory at age 75. There is no obligation to take the annuity offer from the pension fund manager used when saving for the pension, in fact shopping around for the best annuity rate using the open market option will often yield more retirement income.

Many people feel confused by annuities, and simply go with the first deal they are offered, which will be from the company they used when saving for their pension. This is quite unfortunate, as research has shown that annuity rates can vary by up to 40 per cent between providers.

Each retiree must make a number of decisions about what to do with their pension fund on retirement. According to the current legislation, these decisions must be made between the ages of 55 and 75.

Part of the pension pot may be withdrawn immediately as a tax free lump sum. This is normally limited to 25 per cent of the total, although those with very small funds are allowed to withdraw 100 per cent. The remainder of the fund can then either be slowly withdrawn, or an annuity can be purchased.

The first of these options is often called income drawdown, although the latest official name is Unsecured Pension (USP). The problem with USPs (over the longer term) can be seen in the case of a pensioner who chooses to take 5 per cent out of his fund every year. If he then lives for 20 years after retiring, he will have no pension left to live on.

So, although income drawdown/USPs are permitted under the rules, it is always recommended that regular financial advice should be taken. Normally there will be a point at which purchasing a pension annuity becomes the best option, and under current rules annuities must be purchased at age 75.

Most people will receive a pension annuity offer from their pension fund provider when they reach retirement age. The pension annuity is a type of insurance policy, basically it is insurance against living too long and running out of money (longevity insurance). Annuities give a guaranteed income for life, in return for the retiree’s pension savings.

Annuities are provided by life assurance firms, and it is the life firm that bears the risk that the pensioner may live for a long time after retirement. In this case the firm will lose money, as they will have to pay out more money than they received originally, but for them that is balanced by other pension annuity customers who die earlier than the average time.

Market Analysis

Gucci Plans to Take the Share of China Luxury Products Consumer Market

“If everything goes well, the China’s Luxury Products Consumer Market will be the main market in the world.” Patriziodi Marco, SEO of Gucci said.

In the “Global luxury market report” released by Bain & Co in the end of 2009, it was reported that the total amount of luxury products consuming in China Home increased by 12%, reached to 9.6 Billion US Dollars. And Chinese people bought the luxury products overseas for about 11.6 billion US dollars.

China, overpasses the USA, becomes the second biggest country of Luxu Items Consuming, with the first one is Japan.

From the 2nd half year of 2008, many world-know brand named products met “Waterloo”, and Gucci seemed to take it earlier. And that is why Gucci is so eager for the blossom in China’s market. They so far own 35 outlets in China, covering 26 cities; and they plan to open another twenty stores in the next 3 years.

However, the big investment into the decoration of the grand stores adds more financial burden to Gucci. And they are now planning to take some stores which are not so costly, to make sure they could make money soon when they are ready to the market.

Patriziodi Marco said that, the Gucci Items now pay more attention to the better grade of matching of different products, and they much focus on the special design and crafts for the mid-and-high prices. Some examples improved this much, they are the classic collection from Gucci, such as New Jackie, Icon Bit Bags, New Bamboo Gucci Bags, and Diamante luggage series. They just enjoy a good market for these products can be afforded by more and more mid-class people.

In the marketing and sales, Gucci emphasizes the luxury tradition and fashion, the unique soul in Gucci brand. They start to show people the brilliant craft process directly; become one of the sponsors for the Equestrians; release the GuccilifestyleApp for I Phone; and set up outlets for Icon Sneakers.

All the Gucci did is to get itself ready to take bigger share of China Luxury Products Consumer Market.

General Business

Take Advantage Of A Used School Bus Sale

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Buying a used bus can be an extraordinarily business decision as it helps the buyer maximize the profit accrued from the transaction. A general perception may out be among people/buyers that used bus sales may not be a wise decision for various reasons as there can be various costs related to maintenance which really can be a burden for the buyer who just invested lots of money buying the used bus. Notwithstanding, buying old automobiles has been in practice for long for various obvious reasons including of the reason that it benefits both the seller and buyer.

When someone has made up his mind to buy a used school bus the primary necessity appears is where to buy it. Depending upon the location of the buyer, the decision of the place of buying the school bus should be taken. The nearby location would certainly add and offer benefits from the transaction. There are certain places which can be used to buy an used bus e.g. school districts, municipal governments, professional dealers, etc. A new trend in the business has been online auction wherein bus owners or middlemen are offering used school bus sale at attractively low price to prospective borrowers.

The emergence of Internet has been extremely beneficial for online sales wherein borrower can access to the used bus sales and buy online. Many of the online sellers of school buses provide attractive discounts to buyers; several of them post the snap of their vehicles online so that potential buyers can see, analyze and bargain about the prices. Offering an attractive platform to buyers and sellers, Internet can be used to further the interests of buyers and sellers. Now, borrowers can log in to the website and can search various school buses old and new available at the time. Similarly, a request can be sent to dealers operating in the region or city regarding the requirements for the wanted school bus.

Why school buses or used buses sale can be ideal investment can be answered positively with the support of the fact that in fact these buses are new buses which were confiscated by the sellers as buyers did not pay or were unable to pay the loan amount. Though called used buses, these buses often times are new in the sense less used. Sellers want to sell the bus so that they can pay the rest of the amount to the finance company and in such a hurry the bus is sold at throw away prices which ultimately benefits borrowers. A wide range of school buses on sale are sold at prices lower than the actual price.

General Forex

Take A Position On Global Currencies Through FX Trading

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FX trading is foreign exchange currency trading. This type of CFD trading takes into account the fluctuations in foreign currencies and uses this fluctuation to buy or sell into a currency, therefore profiting from these fluctuations. It is considerably easy to trade forex CFDs. They come in forex pairs. There are at least 60 different FX trading pairs.

The first-named currency in the FX trading pair is bought or sold into with respect to the second-named currency in the quoted pair. When you expect the first-named currency to increase in value, you buy into the pair. And when you expect the value of the first-named currency in the quote to decrease in value, you sell the FX trading pair.

FX trading CFDs are available as mini-contracts as well as the regular contracts. FX trading CFDs are much better and advisable as compared to direct investment in currencies because Forex contracts can be bought and sold quickly. Also, CFD trading involves only a fraction of the actual capital outlay required to directly buy a foreign currency.

You can choose any of the several FX trading pairs available. These are spread across several international currencies. Depending on your interest and knowledge about a currency, you can choose the pairs. In order be successful in Fx trading, you need to follow the global news and understand the factors that affect the currency value and Fx trading. You should also have updated information regarding the currency and the global markets. You need to understand how FX trading works and learn to make the best use of the software platform that is used for CFD trading like forex. Technical analysis and technical charts provide lots of information about the performance of a particular forex CFD. You can use them along with their research as a basis to make useful decisions that can prove hugely profitable.