The Economic Advisor

Why Renting is the New American Dream

Homeownership used to be an integral part of the American dream. Nearly every person wanted to find a strong career, purchase their own home, and strive towards building their own little slice of solace. Unfortunately, that is no longer the case. In the face of the terrible economy, many Americans are more focused on simply surviving and saving enough for a reasonable retirement.

However, that hasn’t stopped a few from dreaming of homeownership, and that is no surprise considering how deeply ingrained that dream is in every American. But homeownership is no longer the money saving option that it once was. In fact, with the stricter lending requirements most conventional lenders now hold, homeownership is less affordable than ever before forcing renting to now become a more integral part of the American dream for the following reasons:

Mortgage Fees

When you decide to purchase a home through a conventional lender, however, you have to put down a deposit which is usually close to 20 percent of the home’s purchase price. You will also have to pay closing costs, which can total several thousand dollars, and when combined with a high down payment, is more than most people can afford. When you choose to rent instead of buy, the only thing that you will be putting down is a refundable deposit.

Monthly Payments

In addition to the fees associated with the purchasing of a home, a home also comes with a monthly mortgage as well as private mortgage insurance and homeowners insurance. While a mortgage payment can be about the same as rent, renting requires neither mortgage insurance or homeowners insurance – saving you several hundred dollars a month. Instead renters have the option of purchasing renters insurance which is usually only $20 a month or less.

General Expenses

While purchasing a home is expensive upfront, it also comes with higher fees that last throughout the duration of ownership. General maintenance must be performed, homeowner association dues must usually be paid, and property tax is due at the end of each year – all of which total well into the thousands of dollars. When you rent a property, nearly everything is included, and you don’t have to worry about paying property tax or paying for general maintenance.

Saving money by not purchasing a home may allow many who have been forced to pinch pennies due to the poor economy the option to provide a great life for their families and adequately save for a comfortable retirement. While choosing to place your extra belongings into one of the various storage unit facilities so that you can rent may not seem like a glamorous option, choosing to so may actually be the best way for many to secure the American dream that they seek to achieve.

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Tips for Those Who Want to Get into Forex Trading

There are many professional companies out there who trade in foreign currency. You may have heard of Alpari Forex Trading for example, but the good news is that you do not have to be part of a large company to get involved in Forex trading. There are many individuals interested in this type of currency trading and if you want to get started, then you may be interested in a few tips.

Be realistic when you enter the Forex market because it is unlikely that you will have overnight success. Don’t be tempted to use robots because they do not work and there is no guarantee that you are going to have success no matter how much books you read, how many video tutorials you watch or how much trading software you have. You need to have experience in this market to become successful. You will learn from your mistakes and as you gain more experience you are going to come across strategies that will work for you.

As previously mentioned it is better to stay away from Forex robots because they only really work for sellers. For buyers they are not so great. It is better to gain some knowledge and then use that knowledge to make money.

Try to be sensible when getting involved in Forex trading. If you have early success then don’t rush into making bad decisions because you are excited about the prospect. Think carefully before any investment and make your decision based on what you know. If you let your emotions get the better of you, then you are more likely to make rash decisions.

It is better not to go against the main trend in the market because of the risk involved. It is much better to follow the trends especially to begin with as this will ensure that you don’t end up feeling very stressed out about the prospect of large losses.
Protect your capital by placing a stop loss order on your account. This means that you will be protected from any large losses if there is a huge unexpected shift in the market.

Learn as much as you can about Forex trading before you begin so that you will understand how it works. This is the best way to make sure that you know what you are doing and so that you will not end up losing big.

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What Actually Affects Currency Exchange Rates

Alterations in exchange ranges have a wide variety of causes and effects. The value of currency is in a near constant state of flux, affecting consumer spending, supply and demand, and ultimately the state of the economy itself. Therefore, exchange rates impact all consumers, whether you’re a top-tier investor on Wall Street, an executive at the US Treasury, or simply your Average Joe opening up a new checking account at an Aurora Bank. What influences the exchange rates themselves? Here are the most widely agreed upon factors:

Balance of trade

The value of a nation’s exports minus the value of its imports yields a figure that can tell you its balance of trade. This figure will either indicate a favorable trade surplus or an undesirable trade deficit, both of which can affect supply and demand in critical ways. The balance of trade is influenced by production costs, the price and availability of raw materials, trade taxes, tariffs and restrictions, and environmental and safety regulations.

Economic forecast

The average rate of growth that modern nations pursue is about 2% a year. Too much more than that and you get inflation and wage earners being unable to afford the cost of living. Banks attempt to adjust to economic growth by altering interest rates. These interest rates, as we will address momentarily, affect currency rates.

Interest rates

Central banks toy with interest rates in order to modulate retail rates and impact borrowing habits. Lower interest rates usually lead to an increase in consumer spending. This especially affects investors who sometimes see low interest rates as a reason to switch currency, as they try to avoid lower asset yields.

Employment

Employment has one of the more palpable affects on the economy and, therefore, exchange rates as well. When employment levels are lower consumer spending is too, among both the employed and the unemployed. This leads to a weaker economy, which in turn affects the value of the currency.

The health of the central banks

The actions of a nation’s centralized banking institutions, such as the purchasing of government bonds in order to get money flowing, have a lot to do with exchange rates. It’s a risky move, because it can set off a chain reaction of deflation in the currency.

These five factors are the ones most cited in exchange rate analysis. The overall status of the global economy can also affect how local governments and their regional banks respond to their own national financial crises.

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