What is a Mortgage Default?

Defaulting on a Mortgage

First Published Date : June 25, 2010 ADawnJournal.com

There are few phrases or words more chilling for the holder of a mortgage than “default notice”. While the appearance of those words at the top of a letter are never what anyone wants to see, they hold a special dread and fear for the mortgage holder because of the genuine fear that the bank’s next step will be to take possession of their house. This fear comes about – with good reason – because the money lent in a mortgage is considered a “secured loan” – that is to say that it is given strictly on the basis that collateral is provided. “Collateral”, for the purposes of a loan, essentially means security. If you don’t pay the loan, then the bank have something of equal value that they can reclaim from you.

It is never desirable to default on a mortgage. The payments can be difficult to keep up, that much is undeniable. A mortgage is, in a lot of ways, the most challenging kind of borrowing that an account holder can take out. Although the longer term of the borrowing and the frequently lower interest rates (available because the loan is secured) lowers monthly payments, the fact that they are stretched out over a long term can mean that there is some doubt in the mind of the borrower over whether the conditions will always exist that make it possible to meet monthly payments. Therefore, especially in the early to middle period of the term of the loan, there will be some recurrent dread of one day defaulting on the mortgage. It is for this reason also that many people who are in a position to do so pay off their mortgage early.

If you default on your mortgage it does not mean that the house you have secured it on will be repossessed. In actual fact, banks tend to prefer not to go that far. It is up to you as a borrower to keep in contact with the bank and stay true to your intention of paying monthly payments at a sustainable rate. If you have already made a substantial dent in the principal of your mortgage, the bank may well be willing to restructure a loan for the remainder, over a longer term so as to allow smaller, affordable monthly payments. How long the term will be depends on factors such as your continuing earning potential and how much is left to pay off. Although you may not be able to stick to the original term, a difference of a few years may be all it takes to make that monthly payment manageable.

Aside from this method, you may have the opportunity to remortgage with a different lender – paying off your old mortgage with a loan that covers the remaining principal and interest, although the earlier you decide on this the better – missed payments and particularly expired default notices will put black marks on your credit file, making it harder to get a decent remortgaging deal, if you can get one at all.

Some Facts About China’s Economy

China Economy Facts

First Published Date: July 3, 2010 ADawnJournal.com

China is one of the most fascinating countries on Earth. It has existed in one form or another for 5,000 years, has influenced the world immensely and even today it is a dominating country on Earth. While in the 20thcentury China was a developing nation, these days it is not only developed, but it may be the superpower of the 21st century.

At this moment, China’s economy is the third largest in the world, just behind the United States and Japan. With a GDP of $4.91 trillion, it is fast becoming the biggest economy on the planet and it has the second highest net-worth behind the United States with $8.77 trillion. In addition, China has the fastest growing major economy on the planet, with a 10 percent growth rate over the past 30 years on average per year. China may be a huge economy, but it’s per capita income is only $3,677, which puts it 97th in the world. That will change as time goes on though because China is the second-largest trading nation in the world, and the largest exporter, while also being the second largest importer.

The growth of China’s economy has also helped its citizens come out of poverty. The level of poverty in China fell from 53 percent in 1981, to 2.5 percent in 2005. That being said, 10 percent of the population, or over 100 million people, still live in extreme poverty. The infant mortality rate has also fallen as China has grown in economic power, falling roughly 39 percent between 1990 and 2005. Maternal mortality also fell by 41 percent in that same period, while the access to telephones increased by 94-fold to 57.1 percent of the population having telephones.

China has a lot of trade going through its borders, and its currency is highly traded on the world’s markets. Currently, foreign exchange reserves have risen dramatically. In 1999, foreign exchange reserves in China stood at $155 billion, and by 2000 that had gone up to $10 billion. In 2005 it had risen to $800 billion. By the end of 2006, that had gone up to $1 trillion, and by 2008 it was nearly $2 trillion. In 2008 as well, China replaced Japan as the largest foreign holder of U.S. treasury securities with $585 billion. This was the first time that had ever happened.

The two biggest sectors of the Chinese economy are agriculture and industry, both of which employ roughly a total of 70 percent of the labour force and account for roughly 60 percent of the GDP production in the country.

For many, the sudden emergence of China took them by surprise. The country has risen fast and very strongly in the past few years, becoming a country that is going to be very powerful in the 21st century. As time goes on, more and more people will be looking at China, rather than the United States, as the main driver of the entire world’s economy.

What is Opportunity Cost?

Opportunity Cost

First Published Date: July 4, 2010 ADawnJournal.com

There are a lot of complicated concepts in economics, and while some are easier than others, all of them are important to understand. Economics is a diverse field with many things at play, and if you want to invest, or just save money, you should at least have a basic understanding. This brings us to opportunity cost, something that you may not have heard of, but which you deal with on a regular basis.

Opportunity cost is the cost that is associated with the next-best choice available to you based on two, or more mutually exclusive choices. It is a very important factor in economics and it helps blend the relationship between scarcity and choice together. Thanks to opportunity cost, resources that are scarce and difficult to obtain, are therefore used more efficiently. This also means that opportunity cost goes well beyond economies and financial costs, and into other areas including pleasure, lost time, utility and more.

First created by John Stuart Mill in the 19th century, opportunity cost has become a cornerstone of economics around the world, helping to shape the world we currently live in. Now, opportunity cost may seem rather foreign, and slightly difficult to comprehend, but to help you here are some examples that illustrate opportunity cost.

·   Someone takes $50,000 and puts it into a stock, while the person makes money if the stock goes up; they have lost the money that would have come from leaving the $50,000 within the bank, where they would have collected interest on it. Therefore, the opportunity cost to that person, who chose to invest in stocks than leave it in the bank, is the interest they would have received on their savings.

·   An individual walks into a store and must decide between spending $20 on a video game or on a new pair of jeans. If the person buys the jeans, the opportunity cost is the video game, while conversely if they buy the video game the opportunity cost is the jeans.

Opportunity cost is not just about material or monetary items; it is about what has more value to a person. For example, if a person can afford to go see one movie, and must choose between action and comedy, they must assess which will give them more enjoyment. If they choose the action movie, then the opportunity cost is the comedy, while if they choose the comedy, the opportunity cost is the action movie.

As you can see, the opportunity cost is something you use on a regular basis throughout your life. When you are choosing between what TV shows to watch, what book to buy, which turn to make on the street and more, you are using opportunity cost. Understanding opportunity cost, especially in finances, will then allow you to get the most out of your decisions and help you earn more money, or save it based on the decision you make. Opportunity cost is something you may not have heard of, but it is something you use every day of your life.

Canadian Popular ETFs

 Some Popular ETFs in Canada

First Published Date : July 10, 2010 ADawnJournal.com

Investing in exchange-traded funds is considered to be one of the better ways to invest in the stock market. Where usually you are trying to beat the stock market, with exchange-traded funds you are only mirroring the index itself. This means that there is a better chance for long-term rewards. Of course, conversely you will end up having lower reward because there is lower risk. However, with lower risk comes the long-term ability to slowly build your investment without worry that you will lose it all. In Canada, ETFs are a very popular because they are somewhat safer investment vehicle than others and here are the most popular ETFs within Canada.

·   iShares CDN Jantzi Social Index: if you want to be socially-responsible with your investments, then this is the ETF for you. All the stocks on this index are picked through an extensive process that must meet criteria in terms of environmental records, social records and governance. This index has consistently outperformed the TSX 60 Index, which it mirrors.

·   iShares CDN LargeCap 60 Index: The most popular ETF in Canada, it consistently does well, leading the list of the most active TSX stocks. More than any other ETF in Canada, this is the choice for most investors who want to invest securely and safely.

·   Claymore S&P/TSX Cdn Dividend: This ETF tracks the TSX Canadian Dividend Aristocrats Index, which has stocks and income trusts on it that have, for at least five straight years, continually raised their dividends on an annual basis. One of the biggest benefits here is that there is a high yield dividend, twice that of other ETFs, plus the fact that there is very little competition on the ETF when compared with other ETFs like iShares.

·   Horizons AlphaPro Managed TSX 60: One of the more unusual of ETFs, this one is actively traded, which is unusual for ETFs as most use simple index tracking, rather than having a broker populate a list of stocks. What the broker will do is take the index and play around with the stocks on it to find the best option. The one drawback is that the ETF has only been around for a year and a half, so there is very little history to go on.

·   Claymore Canadian Fundamental Index: This ETF uses a basic index approach in that it will look at various factors based on things like revenues and cash flow, which gives a better and higher rating to stocks that are undervalued. Each year in March, the stock is rebalanced to reflect any changes in the world of the stock market. This index routinely does better than others, making it very popular for ETF investors.

If you are investing in ETFs, then you are probably doing it because it provides you with long term rewards and lower risk. If you are in Canada, then these are some of the ETFs you can keep an eye on to meet your investment goals to give you consistent rewards well into the future.

Malaysia Travel Blog: The Kuala Lumpur Tower (KL Tower)

Kuala Lumpur Travel Blog: Part 8 | A Tower Inside a Forest

My last full day in Kuala Lumpur was Dec 19, 2019. I had a Half-Day Kuala Lumpur City Tour starting at 9:00 AM. My flight from Kuala Lumpur would leave the next day on Dec 20 at 10:25 AM.

My Half-Day Kuala Lumpur city tour lasted only 3 hours and I didn’t have any repeats from my Discover Amazing Kuala Lumpur City Tour, except the National Mosque.

This time, I had two female companions from the USA, so we were three people in one car.

We took some pictures in front of the Petronas Towers, which once used to be the tallest buildings in the world from 1998 to 2004.

We also visited Kuan Ti Temple, Sri Mahamariamman Temple, KLCC Park, The Kuala Lumpur Tower (KL Tower), and much more. The Kuala Lumpur Tower, at 421 meters tall, gave me an opportunity to experience aerial views of greater Malaysia.  KL Tower is located within the Bukit Nanas Forest Reserve, making it the only tower in the world located inside a forest.

After finishing the trip, I was back in my hotel by 2:00. I went to the mall in the same building for lunch and evening coffee. I spent some time taking pictures of the hotel (DoubleTree Hilton Hotel Kuala Lumpur) swimming pool, which was pretty nice.

DoubleTree Hilton Hotel was one of the best Hilton hotels I have stayed in, so I was happy to have free time to spend in the hotel vicinity and in my suite.

Tomorrow, I will be heading for Toronto. My flight will leave KUL in the morning and this all-business-class-trip will have 3 different flights. I will talk about all that in upcoming posts.