Monthly Archives: October 2017

Standby Letter of Credit Is Useful for Financial Funding

The format of letter of credit under a Standby letter can also be beneficial for payment on a deal. When reclaimed, the letter pay costs a broker and also the letter can be beneficial in a land development work to make sure that the permitted people investment will be assembled. The corporations to a Letter credit are generally a recipient who is to earn the money, the issuing bank of whom the applier is a client and the advising bank of whom the recipient is a client.

The key thing to remember with the standby letter of credit is bank it deals only in documents or goods and does not comprise them in the assurance and bond between two groups immediately. The only anxiety of issuing the bank is the circumstances and terms of the letter. There are numerous banks that are capable of providing this letter.

The Categories of standby Letter of credit:-

  • A performance Standby: – This category of letter maintains accountability except paying money, comprises of the advantage of loss happens from a fails to pay of the applicant in completing the fundamental deal.
  • An advance payment Standby: – This category of letter maintains the commitment of early payment done by the recipient to the supplier.
  • A bid bond or tender-bond standby: – This letter maintains the commitment of the contender to accomplish a contract if the contender is rewarded a bid.
  • A Counter standby: – This supports the emergence of an independent replacement by the recipient of the contradict replacement.
  • A Financial Standby: – This maintains the duty to pay the amount, inclusive of any tool pointing a duty to pay the rented amount.
  • A direct Pay: – This substitute maintains payment when due of a primary duty especially in relation with financial substitute without access to an offense.
  • An Insurance Standby: – This maintains a protection responsibility of the contenders.
  • A commercial standby: – This maintains the responsibility of a contender to pay for services and goods in the occurrence of no expense by other modes.

In relation to other types of letter of credit, the standby letter of credit is more profitable for commercial. This kind of letter uses original bill and documents of shipping in order to earn amount for the retail from a buyer to seller.

 

Consider While Selecting a Financial Planner

To ensure your financial planner is well-qualified in personal finances and impartial in his advice, consider the following five things:

1. Planning Credentials: Having a highly-regarded credential in financial planning, such as Certified Financial Planner (CFP) or Personal Financial Specialist (PFS), confirms that the professional you intend to work with has acquired the education and experience necessary to serve as a financial planner. CFP and PFS credentials are awarded to only those individuals who have met the certification requirements of education and experience in planning for personal finances. In addition, they have to pass the certification examinations and agree adhere to the practice standards and continuing education requirements.

2. Subject Matter Expertise: Financial planners are planning professionals, not necessarily subject matter experts. For example, a financial planner will be skilled in tax analysis and planning,but unlike a Certified Public Account (CPA) or an IRS Enrolled Agent (EA) he might not necessarily be a subject matter expert when it comes to tax rules Similarly,a he could be skilled in chalking out an investment plan, but unlike a Chartered Financial Analyst (CFA) he may not be an authority in the subject of investments. Work with a financial planner who is also a subject matter expert in those areas of personal finance that are important in achieving your financial goals.

3. Client Specialization: Not all financial planners serve all types of clients. Most specialize in serving only certain types of clients with specific profiles. For example, a personal planner may build his expertise and customize his services to serve only those individuals and families who are in certain professions, or a particular stage of life with specific financial goals and net worth. Ask whether the planner specializes in serving only certain types of clients with specific profiles to determine whether he is the right fit for your situation and financial goals.

4. Availability: He or she should be regularly available, attentive, and accessible to you. Ask the planner how many clients he currently serves and the maximum number of clients he is planning to serve in the future regularly. This clients-to-planner ratio is one of the key factors in assessing your planner’s availability to you in the future. Also, ask which planning activities are typically performed by the planner and which ones are delegated to a para planner or other junior staff members. Lastly, make sure the planner is easily accessible via phone and email during normal business hours.

5. Fee structure: The fee structure largely determines whose interests he serves best – his client’s or his own. A Fee-Only professional charges only fees for their advice whereas a Fee-Based professional not only charges fees but also earns commissions, referral fees and other financial incentives on the products and solutions they recommend for you. Consequently, the advice from a fee-only one is more likely to be unbiased and in your best interests than the advice from a fee-based financial planner. Work with a professional whose fee structure is conflict-free and aligned to benefit you.

The Origin Of Islamic Banking

This banking system is based on the principles of Islamic law, also referred to as Sharia law, and guided by Islamic economics. The two basic principles are the sharing of profit and loss and the prohibition of the collection and payment of interest by lenders and investors. Islamic banks neither charge nor pay interest in a conventional way where the payment of interest is set in advance and viewed as the predetermined price of credit or the reward for money deposited. Islamic law accepts the capital reward for loan providers only on a profit- and loss-sharing basis, working on the principle of variable return connected to the actual productivity and performances of the financed project and the real economy.

Another important aspect is its entrepreneurial feature. The system is focused not only on financial expansion but also on physical expansion of economic production and services. In practice, there is a higher concentrated on investment activities such as equity financing, trade financing and real estate investments. Since this system of banking is grounded in Islamic principles, all the undertakings of the banks follow Islamic morals. Therefore, it could be said that financial transactions within Islamic banking are a culturally distinct form of ethical investing. For example, investments involving alcohol, gambling, pork, etc. are prohibited.

For the last four decades, the Islamic banking system has experienced a tremendous evolution from a small niche visible only in Islamic countries to a profitable, dynamic and resilient competitor at an international level. Their size around the world was estimated to be close to $850 billion at the end of 2008 and is expected to grow by around 15 percent annually.

While system of banking remains the main component of the Islamic financial system, the other elements, such as Takaful (Islamic insurance companies), mutual funds and Sukuk (Islamic bonds and financial certificates), have witnessed strong global growth, too. Per a reliable estimate, the Islamic financial industry now amounts to over $1 trillion

Definition Of Bonds

Bonds by definition are an instrument of indebtedness. While that doesn’t sound very appealing and not very much on the side of making money, in fact they are used to make money. It is a case of debt security. Your company wants financing and so to get that you get into the bond market.

The issuer holds the holder debt and then pays interest and/or repays the loan at a later date. Think of it like a regular loan, only the time you have to repay them can vary largely, most have a 30 year term, some have upwards of 50 years and some don’t have a maturity date at all.

You, if you hold bonds will have to pay interest at fixed times throughout the term, usually on a regular basis and they, in turn will fund your endeavors to finance long term investments. Regular small businesses wouldn’t necessarily have to go down this road, but large conglomerates and the government itself do.

The bond is a form of a loan, albeit a large one. The holder of it is called the lender (think bank or larger) while the issuer is the borrower. Banks aren’t the only institutions that can issue bonds, as public authorities, credit institutions and companies can also do it to build their wealth.

The common process is one of underwriting, where one or more securities firms join together to form a syndicate. This syndicate then buys an entire issue of bonds from the issuer and then resells them to investors around the world. This is the case for many transactions, however, the government has bonds issued at auction which is a whole other issue entirely.

While both stocks and bonds are securities, they do differ in how they are bought, how they are sold and how they are traded. Stocks for instance don’t have a maturity date that you have to pay them off by as they are things you purchase in the first place. Having stock in something is a whole other idea to having a bond in it.