Investments & Financial Planning

Using foreign currency purchased before you leave will mean you will have cash in hand for immediate expenses when you arrive such as taxis, trains, meals, tips etc. When you arrive at your destination the last thing you will want to do is deal with the hassle of standing on a long line to exchange currency at the airport.

In 1999, 11 European countries qualified under the convergence criteria to use the Euro as their currency: Austria, Cyprus, Belgium, Finland, Germany, France, Ireland, Luxembourg, Italy, Portugal, Spain and the Netherlands. Cyprus, Greece, Slovenia, Malta and Slovakia were later admitted, bringing the total countries to 16. Some countries like Turkey and Romania have expressed a desire to join the EU but have not yet met the criteria to join. Notable holdouts include the Scandinavian countries like Norway, Denmark and Sweden, in addition to England. Though these countries are members of the European Union, they have opted out of using the euro as their standard currency. Some countries, like Montenegro, are permitted to use the euro as their currency but have no representation in the European Union. A key strength of the euro is currency stability. Businesses no longer face risk from currency exchange rates and tourists no longer pay the price of currency conversion. Rising costs (inflation) are kept at bay because countries must maintain a low inflation rate in order to join. Furthermore, because the euro inextricably links the economies of its members, the currency provides a disincentive for countries to go to war with the other. Euro-using countries are unable to set their own monetary policy and instead must abide by the policies outlined by the European Central Bank. This lack of autonomy creates difficulties when countries experience an economic downturn. A specific country, such as Greece, is unable to devalue its currency to keep prices stable and increase exports to raise money. This highlights another weakness; the economic troubles of one country become the economic troubles of all euro members. Not all countries will agree on how to handle these problems either. During the Greek debt crisis of 2010, Germany (regarded as one of the strongest economies in Europe) had very different ideas than Greek leaders on how to extricate Greece from its debt.

Capitalization is the process of adding unpaid interest to the principal loan amount. It increases the balance that future interest accrues on and the total gross amount to be repaid.

A Graduated Repayment option is a repayment option that allows for interest only payments for the first couple of years, usually two or up to four years. It can lower initial monthly payments by as much as 35 to 45 percent.

Negative Amortization is a situation in which the borrower is paying less interest than what is actually being charged for a mortgage loan. The unpaid interest is added to the loan's principal. The borrower may end up owing more than the original amount of the mortgage.

The Prime Rate is the interest rate charged by a bank on loans made to its most creditworthy customers. This rate is used in other variable rates, stated as Prime plus a certain additional percentage.

Ex-Dividend translates to "without dividend" date. It is a date set by the Uniform Practice Committee or by the specific Stock Exchange. It is a date upon which a given stock will begin trading in the marketplace without the value of a upcoming dividend included in the contract price. It is closely related to and dependent on the date of record. It is often displaced as "X" in the stock listing tables in the newspapers.

The U.S. market indexes include the Dow Jones Industrials, NYSE Composite, Amex,Nasdaq Composite, Standard & Poor's 500, Standard & Poor's Mid-Cap, Russell 2000 and the Wilshire 5000.

"Cap" refers to a company's stock market capitalization. This is a gauge of what the market or investors believes the entire company to be worth.
Capitalization is the company's stock price per share multiplied by the total number of shares outstanding.
Market "caps" can change daily if there is a change in the stock price. Small cap is less than $1.5 billion, Mid cap is between $1.5 billion and $10 billion and Large cap is over $10 billion.
Different index's are used to report on large-cap stocks.
The most well-known and widely used is the Standard and Poors 500. Other large-cap index's are the Russell 1000 and the Wilshire Large Cap 750 Index.
The majority of large-cap stocks are in the financial services, technology and healthcare industries.