Investment Banker

Investment Banker Career Overview: Investment bankers raise funds for corporations by structuring the issuance of securities such as stocks and bonds. They also advise corporations that are contemplating mergers and acquisitions. Careers in investment banking require strong quantitative abilities combined with excellent sales skills, not to mention a large measure of self-confidence.

This is a fast-paced, pressure-packed field noted for long hours and extensive travel requirements. In particular, junior associates should expect to be on call virtually 24/7 for their first few years. The payoff for those who survive this grind is that compensation packages can be extremely generous, allowing a successful person to build a fortune within a relatively short period of time.

Investment Banking Industry Trends: Data from the Boston Consulting Group (BCG) and Thomson Reuters indicate that industry-wide investment banking revenues were down by over 75% in the third quarter of 2008 from the same period in 2007, while the dollar volume of activity (securities issues, loans and mergers & acquisitions) in the first nine months of 2008 was down by around 50% from 2007. 

Investment Banker Career Outlook: The view of senior investment bankers participating in the annual Wharton Finance Conference on November 7, 2008 was:

• Merger & acquisition work should be in demand, especially as corporate restructurings increase in number.
• Capital markets work (such as securities underwriting), by contrast, generally should be weak over the next few years.
• Distressed debt, however, will be one capital markets area with growth prospects.
• Emerging markets will be the other capital markets area worth looking into.
• Boutique firms report booming M&A business, and generally are much stronger than their larger rivals.

In sum, there is still hiring by investment banking firms, though not in the same numbers or at the same pay levels as in recent years. Especially for ambitious new MBAs seeking entry-level positions, it is a challenging environment, but with some opportunities still available.

Loan Officer

Loan Officer Career Overview: A loan officer assists prospective clients in applying for loans and in determining the type and amount of loan that is most suitable for their needs. A loan officer also assesses the creditworthiness of loan applicants, judging their suitability as borrowers and the precise terms (interest rate, repayment schedule, etc.) on which credit may be granted to them. Depending on the position, a loan officer may be expected to actively seek out clients, rather than passively wait for applicants to approach his or her financial institution (bank, credit union, etc.) for credit.

Loan Officer vs. Credit Counselor: The Bureau of Labor Statistics considers a credit counselor to be a subcategory of loan officer, with similar skill sets and levels of compensation.

Loan Officer Specialization: A loan officer tends to specialize in one of three major types of lending: commercial, consumer or mortgage. Commercial lending is the extension of credit to businesses. Consumer lending includes personal loans, education loans, home equity loans and auto loans, among others. Mortgage lending includes loans for the purchase of real estate by individuals (a business normally would be served by a commercial loan officer, even for real estate purchases) or the refinancing of existing mortgages.

Loan Officer Education: A Bachelor's Degree is expected for a loan officer. Coursework in finance, accounting and/or economics is helpful, though not required. Strong quantitative and analytic skills are vital. An MBA can give you a leg up in the hiring process, depending on the firm.

Loan Officer Certification: Most loan officer positions do not require any special certification or licensing. A notable exception, however, is mortgage lending. Most states regulate this field, especially regarding loan officer positions in mortgage banks or mortgage brokerages, rather than in traditional banks or credit unions.

Loan Officer Duties and Responsibilities: The majority of loan officer positions combine sales responsibilities with analytic requirements: selling loans while determining who are appropriate clients, and on what terms. Some loan officer positions are focused largely on the analytics, with no sales dimension and limited client contact. People in these types of jobs are sometimes called loan underwriters. Other loan officer positions specialize in dealing with clients who are having problems meeting their payments. One example is a loan collection officer, who tries to work out agreements with troubled borrowers that adjust the repayment terms.

Loan Officer Typical Schedule: The majority of people in loan officer jobs tend to work a standard 40 hour week. A consumer loan officer is most likely to work set hours from a fixed location, such as a bank branch or office. A commercial or mortgage loan officer often has to work variable hours to confer with clients at the latter's places of work or residence, and thus spend significant time out of the office and on the road.

What's to Like About Being a Loan Officer: Depending on the firm and its policies, a loan officer can have a large degree of professional autonomy, more akin to being an independent entrepreneur than a corporate employee. If the compensation scheme is largely commission-based, there is a close correlation between performance and reward, with high earnings potential. Also, doing your job well can make a discernible, positive impact on your clients' lives.

What's Not to Like About Being a Loan Officer: Rejecting loan applicants who do not meet your institution's lending criteria can be an unpleasant process, as can dealing with clients who have run into financial difficulties and cannot repay their loans as agreed. Also, loan officers who are expected to prospect for new clients can be under heavy pressure to perform, the downside of the greater earning potential that such a position offers.

Loan Officer Salary Range: Per the Bureau of Labor Statistics, median annual compensation was about $52,000 as of May 2006, with the top 10% earning over $107,000. Compensation schemes vary by employer, with varying mixtures of salary and commission. Where commissions are paid, they normally reflect the number and/or value of loans originated. The highest pay packages for a loan officer tend to be commission-based and at large institutions.

Public Finance

Public finance is a field of economics concerned with paying for collective or governmental activities, and with the administration and design of those activities. The field is often divided into questions of what the government or collective organizations should do or are doing, and questions of how to pay for those activities. The broader term, public economics, and the narrower term, government finance, are also often used.

The purview of public finance is considered to be threefold: governmental effects on (1) efficient allocation of resources, (2) distribution of income, and (3) macroeconomic stabilization.

Overview 

The proper role of government provides a starting point for the analysis of public finance. In theory, under certain circumstances private markets will allocate goods and services among individuals efficiently (in the sense that no waste occurs and that individual tastes are matching with the economy's productive abilities). If private markets were able to provide efficient outcomes and if the distribution of income were socially acceptable, then there would be little or no scope for government. In many cases, however, conditions for private market efficiency are violated. For example, if many people can enjoy the same good at the same time (non-rival, non-excludable consumption), then private markets may supply too little of that good. National defense is one example of non-rival consumption, or of a public good.

"Market failure" occurs when private markets do not allocate goods or services efficiently. The existence of market failure provides an efficiency-based rationale for collective or governmental provision of goods and services. Externalities, public goods, informational advantages, strong economies of scale, and network effects can cause market failures. Public provision via a government or a voluntary association, however, is subject to other inefficiencies, termed "government failure."

Under broad assumptions, government decisions about the efficient scope and level of activities can be efficiently separated from decisions about the design of taxation systems (Diamond-Mirlees separation). In this view, public sector programs should be designed to maximize social benefits minus costs (cost-benefit analysis), and then revenues needed to pay for those expenditures should be raised through a taxation system that creates the fewest efficiency losses caused by distortion of economic activity as possible. In practice, government budgeting or public budgeting is substantially more complicated and often results in inefficient practices.

Government can pay for spending by borrowing (for example, with government bonds), although borrowing is a method of distributing tax burdens through time rather than a replacement for taxes. A deficit is the difference between government spending and revenues. The accumulation of deficits over time is the total public debt. Deficit finance allows governments to smooth tax burdens over time, and gives governments an important fiscal policy tool. Deficits can also narrow the options of successor governments.

Public finance is closely connected to issues of income distribution and social equity. Governments can reallocate income through transfer payments or by designing tax systems that treat high-income and low-income households differently.

The Public Choice approach to public finance seeks to explain how self-interested voters, politicians, and bureaucrats actually operate, rather than how they should operate.

From :   Wikipedia, the free encyclopedia
Source: http://en.wikipedia.org/wiki/Public_finance
For:         Public Information, non profitable

Do You Know What Factors Affect YOUR Credit Card Interest Rate?

(This is a guest article by Mirsad Hasic*)

Did you know that the average American family has an average of $5,219 credit card debt with an average interest of 17-20 percent? Yes, very disturbing indeed considering that the interest rate is usurious in every way possible. And with such a high interest rate, it will be tough to get out of debt and shape up one's financial issues.

Keep in mind that the credit card interest rate is the principal means by which the issuers generate revenue from letting the holders borrow the former's money for purchases bought with the credit card. In effect, the holder is paying a fee for the privilege of borrowing money, which will take time to accumulate if not for the credit card issued by the bank.

Since the bank is taking a risk in letting the holder borrow its money, the interest rate is based on how much the former believes the latter is a credit risk. Thus, if you are seen as a high credit risk by the bank, your interest rate will be higher but if you are a low credit risk, your interest rate will similarly be lower.

This is the rationale behind the statements that the interest rate you pay for the credit card is largely under your control and that the quickest way to secure a low interest rate is to become a low-risk holder.

Personal Credit History

Probably the most important factor in the determination of credit card interest rate is the personal credit history of the applicant. With the sophisticated information-gathering techniques used by national and international credit bureau reporting agencies, your personal credit history can be tracked for as long as 10 years ago. Missed payments on utility bills, defaults on loan amortizations for any kind of asset, foreclosures on the house, less than minimum payments on credit cards, and bankruptcy filings on one hand and almost-perfect payment history on the other hand all show up on these credit reports.

Your credit history shows how high or how low a credit risk you will be to the bank. If you have a spotty credit history, the interest rate will be higher. If you have a spotless credit history, the interest rate will be competitive so much so that it will be almost like borrowing the money interest-free. This is not a form of discrimination since any investor will want to protect his interests and that includes banks lending money to the holders.

Length of Credit Profile

The length of time relative to the credit account also comes into play when determining the credit card interest rate. If you have long held credit cards and you have kept them current, chances are that the interest rate will be lower. For new cardholders, the other factors will be considered more than the length of the credit account.

Percentage of Credit Used

But just because you are on top of your various kinds of credits from utilities and mortgages to credit cards does not necessarily mean that the interest rate will be lower. The bank will look into the percentage of available credit being used at the time you have applied for the new credit card account.

As a general rule, banks consider individuals and households using more than 30 percent of their available credit as higher credit risks than those who use a lesser percentage of their available credit. Borrow within your available credit to avoid being imposed higher interest rates on the new credit cards being issued.

Debt-to-Income Ratio

But the banks will not only look at your financial past. Your present and future finances will also be assessed to determine your credit worthiness. First, you will be asked about your current financial status specifically your debt-to-income ratio. You may even be asked for audited financial statements both for your personal and business accounts to provide the bank with an objective perspective into how well you are doing at present in terms of finance. Jobs, businesses and other economic activities will be asked.

Second, you may have to justify your credit card application with proof of a future flow of money into your possession. It can be an inheritance, income from government bonds and other verifiable sources of revenue. Your goal is to show the bank that you have the financial means to pay your credit card balances for their full amounts in the future.

Bank Promotions

Many credit card issuers offer promotional interest rates to attract customers to take out credit cards for their own use. Thus, you will see banks offering a zero percent rate for the first 6 months of use, which you will be attracted to when other issuers are not doing so.

However, you must be aware that the good times cannot last as long as you want it to. The banks will raise the interest rates to bring them in line with their profit goals. You may even be imposed an additional interest rate, no matter how miniscule it may look on paper, when you have been deemed a higher credit risk than was previously thought.

Economic Factors

And then there's the economy to take note of. Along with the bank policies on promotions, the economy is one of the uncontrollable factors that determine your interest rate.

Banks usually base their credit card interest rates on the prime rate, which represents the most favorable rate given to the individuals with the highest credit worthiness. (In other words, these are the holders with the lowest credit risk). The prime rate, in turn, is based on the federal funds rate, which is the rate at which banks charge other banks for credit.

If you want a lower interest rate, be a low credit risk. You have to pay your bills, amortizations and other payables on time; provide for proof of stable finances for the present and the future; and just generally be somebody whom the banks can trust with paying back their money. Even in these tough times, all that is possible.

*About the author: This article was contributed by Mirsad Hasic. Mirsad is the editor of best credit card deals, a consumer oriented site where you will learn how to pick a credit card that suits your needs and also get valuable tips and strategies on credit card debt relief.

*Image Credit: Photograph by Stargazer95050 [via Flickr Creative Commons]

How to Refinance Your Auto Loan

(This is a guest article by Bailey Harris*)

There are several good reasons to consider refinancing your auto loan. If interest rates have dropped or if you have improved your credit score since you originally got the loan, you may be able to get a better rate. There is also a chance of lowering your monthly payment.

Another reason to consider refinancing involves terms. If you don’t like the terms on your current loan--maybe you're making payments for too many years or too few--you can probably get more preferable terms with a new loan.

How a Refinance Works

Getting an auto refinance loan is a lot like getting a traditional auto loan. You fill out a loan application, undergo a credit check, and get approved or denied for the money you need. You can try getting your current loan refinanced through your current lender. However, it is important to remember that your current lender may not have incentive to give you a good rate. Lower interest rates and better terms often mean less money in the bank's pocket.

It makes more sense to get a rate quote from your current lender as well as several other lenders at the same time. This will allow you to compare interest rates and terms and easily determine who can give you the best deal.

Before getting approved for a refinance loan, you will need to fill out a loan application. Most lenders charge a fee for this, but it is almost always less than $25. You will not have to pay closing costs on the loan or other fees typically associated with a home refinance.

If you are approved for the loan and agree to the loan terms, your lender will see to it that your old loan is paid off and a new loan is set up.

Getting Ready to Refinance

Before applying for a refinance loan, it is a good idea to get your credit in order. This not only increases your chances of getting approved for the loan, it also helps you get a lower interest rate, which is what refinancing is all about.

If you currently have bad credit, it is important to know that you can't fix your credit overnight. However, there are a few things that you can do to clean up your report and give your score a boost.

The first thing you will want to do is pull a copy of your credit report. You can get a free annual credit report each year through AnnualCreditReport.com, a centralized site created by the three nationwide consumer credit reporting companies Equifax, Experian, and TransUnion.

Look for any errors or negatives that can be cleared up with a few phone calls or letters. These things are easy to take care of, but can seriously harm your credit. When that's finished, look for negative items or bad debts that are currently in collection. Pay these debts off if at all possible. Some lenders will ask you to do this anyway before giving you a loan. If you cannot pay these items off, be prepared to dispute them or explain why they are there and why you haven't taken care of them.

Some of the other things that you can do to give your credit a quick boost include paying off installment loans, paying off credits cards, and limiting credit card charges to 30% percent of each card's limit. You may also want to try piggybacking off someone else's good credit by getting your name on their card. Every time they use the card and pay it off responsibly, your credit will get a boost.

One final thing to keep in mind is that having multiple credit inquiries can damage your credit score if they are not made within a specific time frame. When shopping for an auto refinance loan, make sure that the lenders all check your credit within a two week period. This will allow the multiple inquiries to be processed as a single hard inquiry, which is much less damaging to your credit score.

More Auto Refinancing Tips

An auto refinance is almost always worth exploring. However, you should be careful to do the math to make sure that refinancing is the right thing to do. You can almost certainly get a lower payment by lengthening the term of your loan, but this could leave you paying more interest than necessary. If lowering your payments is the only way that you can afford the vehicle, this scenario may make sense. The key is to evaluate your individual situation and then go from there.

You should also be careful to read all of the fine print and know what you are getting from the loan. Specific things to ask the lender about include the interest rate, the length of the loan, and minimum monthly payments. You may also want to make sure that there are no prepayment penalties attached to the loan so that you have the option of paying the loan off early or refinancing later on without problems.

*About the author: This is a guest post from Bailey Harris.

*Image Credit: Photograph by Dave Dugdale [via Flickr Creative Commons]

Long Term Care Insurance - expect premium increases

I've long been skeptical of long term care insurance (LTCI) being priced properly.  A recent article in the New York Times noting MetLife's decision to stop issuing LTCI policies business gives a good example of my cause for concern.

The article states that, in addition to MetLife's LTCI problems

"The two leading players in the industry are trying to raise prices, too. Genworth Financial is seeking an 18 percent increase on older policies held by about 25 percent of its customers. And John Hancock has filed for permission to raise premiums for about 80 percent of its customers by an average of 40 percent. It has also temporarily stopped offering new long-term care insurance plans through employers while it tries to figure out what to charge."

The article goes on to say that 11 companies that were in the top 10 in market share at some point over the past decade have bailed out of the LTCI marketplace.

It hardly instills confidence that the two leading LTCI companies can't figure out what to charge for their insurance, and is no doubt unsettling for people who bought insurance from a company because of its high standing in the LTCI world to think that their premiums which are already not cheap might increase 20-40%.

Healthy Eating Tips You Can't Afford to Miss (Especially if You Are on A Tight Budget!)

(This is a guest article by Louise Baker*)

College is an exciting time and busy time. For most students, eating healthy is not a top priority. Often students will live off sodas and junk food. In addition, most college students have a tight budget. Students will eat food that is cheap such as the college staple of a sixteen-cent package of Ramen noodles.

Stay Home and Cook

Although college is fun at times, it can also be quite stressful. With poor diet and exercise, many college students gain weight or just feel unhealthy. Most colleges and universities offer healthy choices on campus including healthy snack machines. This makes eating healthy much easier. To stretch a budget it is essential that a student eat out as little as possible. Most students have a small microwave and small refrigerator in their dormitory rooms or many students live off campus in apartments.

Cheap and Healthy Meals

Although Ramen noodles are high in sodium, the noodles are the undisputed cheapest of cheap meals. These days you can create a hearty and healthy meal using this package of noodles. If you are unable to cook chicken, you can purchase canned chicken and canned vegetables. Add both to your Ramen soup to create a filling and healthy meal.

Stock up on a few jars of Alfredo sauce. You will find a popular brand for under two dollars. You should also purchase a few packages of pasta. You will find many brands available under one dollar per package. Purchase store brand frozen mixed vegetables for under one dollar as well. Heat up the Alfredo sauce and add water to the empty jar. Fill the empty jar halfway and shake. This gets the excess sauce that is stuck to the sides of the jar. Pour this into the heating sauce. Alfredo sauce is thick and you will create more sauce by adding the water. Then add your mixed vegetables to the sauce. When your pasta is cooked, pour the vegetable and Alfredo sauce over it. This is a hearty, healthy and delicious meal. You will have plenty of left overs for additional meals.

You can purchase a dozen small eggs for less than one dollar and fifty cents. You can purchase an off brand of whole wheat bread for the same price. For less money, you can buy a package of flour tortillas. Purchase a package of cheese and ham. You can make a breakfast sandwich or breakfast burritos for an entire week. Eating breakfast will help you focus on your studies and curb your appetite until lunch. This also makes for a great snack if you happen to have a late night in the student library.

Give up Sodas and Drink Water

Students spend an average of fifteen dollars a week on canned sodas. The healthy alternative is to drink water. You can purchase a water bottle that you can fill up at the campus water fountains. If you prefer filtered water, invest in one of the many water filter devices. Either way, you will save a tremendous amount of money if you drink water instead of sodas. Water is much healthier and it will keep your appetite under control.

If You Have to Buy Lunch

Most students do not have time to run back to their dorm room for lunch or to their apartment. Each night pack a lunch and snacks. This way if you get up late and are in a hurry, your lunch is ready to go. If you find yourself without your lunch, you can choose healthy alternatives on campus. You can usually eat in the campus cafeteria for under two dollars if you order a vegetable plate and drink water. The vegetable plate usually comes with a choice of three vegetables. Macaroni and cheese is not a vegetable, however, it is always available on the vegetable plate. It is high in fat; however, it is a fantastic comfort food. Therefore, as long as you have chosen two healthy vegetables go ahead and enjoy the macaroni and cheese.

You Can Eat Healthy For $20 Per Week

For approximately twenty dollars a week, you can eat healthy and eat well. You can stretch your money even further if you shop wisely. Make sure you visit your local discount grocer and shop the sale items. Stock up on healthy snacks such as trail mix, pretzels and baked chips. Every college student needs some junk food and these are healthy alternatives. You will find that if you eat breakfast, you will feel great and your appetite will remain under control. Your breakfast can be made the night before and reheated the next morning. All of the meals mentioned can be made under fifteen minutes and are cheap and healthy.

*About the author: Louise Baker is a freelance blogger who usually writes about online degrees for Zen College Life. Her most recent article ranked the best web design schools.

*Image Credit: Photograph by libraryman [via Flickr Creative Commons]