Results are from the 2013 NSCS Universum Employer Survey.
Take the 2014 survey here: https://start.wetfeet.com/survey/usss/nscs
There are various debts out there. It might seem like a sea of varying types when one is trying to find the right one. Whatever the case may be, knowing the fundamental structure of the types of loans or bonds out there reduces this to just four main types.
To begin, we need to step into the financial world to see this understanding. In finance, a loan can be recognized as a bond which is defined as a debt security—a promise to make periodic payments for a specific period of time. Bonds and loans share the same purpose of a lender providing money to a borrower; however, a bond can be traded in a market whereas loans are most likely to be agreements between banks and customers. This definition expands our horizon into loans not heard of on a day-to-day basis, but we won’t delve into that subject. As far as we are concerned, we are only interested in the basic forms. There are four main structures that encompass a debt security—bond or loan—from which our sea is built on: simple loans, fixed-payment loans, coupon bonds, and discount bonds.
A simple loan is what comes to mind when talking about loans. It involves the lender providing money to the borrower and expecting the original amount at some point in the future along with some interest.
A fixed-payment loan is exactly what the name implies: it consists of fixed payments to the lender from the borrower every period—monthly, for example—for a number of years. The fixed payments comprise part of the original borrowed amount—called the principal—and the interest. This way, the borrower is partially paying off the interest and the principal every period. Many mortgages are fixed-payment loans.
A coupon bond is similar to a fixed-payment loan however the fixed payments consist of only the interest. In other words, borrowers make periodic payments to the lender consisting of only the interest until the end of the loan—called maturity—when the principal is paid back. The periodic payments between the beginning of the loan and maturity pay back the interest.
Discount bonds can be thought of as buying a loan at a discount. A discount bond is a loan that is bought for a lower price and the borrower pays back the principal at maturity. For example, a $10,000 discount bond could be sold for $8,000: the borrower pays $8,000 and the lender gives him a $10,000 bond. At maturity, the borrower pays the lender $10,000. This is hypothetically speaking of course but the idea is there.
Having this basic understanding of the various debt securities out there gives us an advantage when we plan our financial future. Regardless of how the loan is advertised or how lenders can seemingly simplify complicated debts, fundamentally speaking, we can build our understanding of any type of debt security out there by keeping the four main structures in mind. From financing our education to buying our first house, understanding a loan’s basic form allows us to know what to expect when the bills come in and adapt our financial stance in a sound manner.
Categories: biz geek
We spend a lot of time talking about insurance on your health and life, but what about the car?
You might drive a nice car or a beater. You might have enough money to buy a car if your current one is totaled. There are policies that cover you financially if your car is stolen,
damaged by another driver, hit by a natural disaster, or if another driver isn’t insured.
Two of the most important types of auto insurance are liability and comprehensive coverage.
When it comes to how much liability insurance you should have, that can be answered in one word: lots. Liability auto insurance is the cheapest and best buy in the entire insurance world. It really does pay to have a large amount—around $500,000 or so. If you are in an accident that is “your fault,” the liability insurance covers what is considered to be your fault, like the costs to get a car fixed or someone’s medical bills.
If you don’t have liability insurance at that time, you would be responsible for paying that amount out of pocket, which would not be a good situation. Liability auto insurance is a definite must-have, no matter what kind of car you drive.
You should have comprehensive auto insurance as well. Comprehensive insurance pays for when your car is damaged or stolen. If your car is expensive, you need it for obvious reasons. If you are driving a beater, it doesn’t cost much to insure, so just keep the coverage. If you have no money, don’t take the risk of having your vehicle totaled, leaving you with no way to get around. Since you wouldn’t get money from the insurance company or your savings, you would be stuck. Don’t put yourself in that situation. Just eliminate the potential stress by having comprehensive coverage.
If you have some money set aside and are driving a less-expensive car, do a cost-benefit analysis. If it only costs $20 a month to insure a $3,000 car, that’s a good deal, since it will take you a longer time to pay more in insurance costs than it would to replace the car if you had no coverage.
Always make sure you are covered in case life decides to hit you … or your car.
Use your NSCS membership to save an additional 8% on GEICO auto insurance, on top of GEICO’s already low prices! Get your free quote to see how much you’ll save!
This blogpost was originally posted by Foundations U, a personal finance advisory service for students and young professionals. This was reposted with permission from Foundations U.
Facing a big decision about what to do when you finish your undergraduate studies? Get a job? Go back to school? Both? No matter what route you choose to take after getting your undergraduate degree, taking the GRE® revised General Test while you’re still in school is a great move. You are already in the habit of studying and practicing for tests – so taking a GRE® test now while you’re still in test-taking mode will give you a lot of flexibility in the future. Scores are good for 5 years! Plus, the test is accepted by both graduate and business schools around the world – making it the one test that gives you more opportunities – no matter what graduate degree you decide to pursue!
The test-taker friendly design helps you approach test day with confidence because you can skip questions that you don’t feel sure about and come back to them later— and if you reconsider some of your responses, you can even change your answers. Plus, with the ScoreSelectSM option, if you feel you did not do your best on test day, it’s okay! You can take the test again and send only the scores you want schools to see. That’s a confidence booster and it’s an option you can only get with GRE® tests. Learn more about all the ways that the GRE revised General Test can help you get the Power of Confidence to do your best on the test and to make your next move, whatever that move may be. To learn more, visit http://www.takethegre.com/why-take-the-gre
Written by: Christine Betaneli, Manager External Communications at ETS