What Can A Credit Union Do For You?

Some of the 190 million credit union members around the world are enjoying the benefits of saving with a credit union. You could be one of them.

Credit union members enjoy many benefits, including lower loan rates, competitive rates on savings and lower fees, a say in how their financial organization is run, and many others.

Common Bond
Credit unions are for everyone, but a credit union’s common bond defines its ‘field of membership’ which could be a place of employment, a professional body, church or school association, or your community.

Here’s how to find a credit union to join:

• Ask your colleagues at work. Your company may sponsor a credit union or may be a sponsor group that has access to a credit union. Many employers may directly deposit your salary to the credit union.

• Ask your family. Does your spouse’s employer sponsor a credit union? Most credit union invite family members to join. Each credit union, however, may define ‘family’ differently. At some, only your immediately family members are eligible. At other credit unions, family may include extended family members such as grandparents, uncles, cousins and aunts.

• Quiz the neighbours and your friends. Some credit unions have a community ‘field of membership’ serving a region defined by geography rather than by employment or some other association. Parish credit unions fall into this category. Your telephone directory can also assist you in finding credit unions.

Investing Basics – Four Things You Must Know

Although most of us use the terms “saving” and “investing” interchangeably, in reality they are two completely different concepts. Remember, you should save; however, you do not have to invest. When you save a portion of your money in a regulated deposit-taking institution, it is insured to a limit. On the other hand, when you invest, you are taking a risk that you could lose your entire principal. Investments offer a higher return for your willingness to take that risk. That is the nature of investments.

1. Your savings, obligations and age matter – a lot! In other words, you should not invest until you have saved and given yourself a comfortable cushion. In the current environment of rising cost of living and job losses, aim for a minimum of 12 months. If you have high expense obligations, then you cannot afford to risk money that you could lose (remember, that is what an investment is). The older you get, the less risk you can afford to take with your funds, because your potential working years are declining as you near retirement age.

2. Only invest in products and services you understand. How many times have people tried to convince you about a “sure thing”, and told you “here’s a hot tip’? It may very well be, but if the person telling you cannot explain the investment and why it’s such a “hot tip” or a “sure thing”, then those are grounds on which you should doubt it. And, it would be prudent to understand what influences the investment – what external factors are likely to make the investment do well or do badly. No one is expecting you to be an expert, but it’s your money, therefore you should be able to evaluate if what the “expert” says make sense.

3. Be conservative and invest with solid reputable institutions. We are living with the certainty of uncertainty. Safe is better than sorry. Therefore, you need to do your due diligence and resist the temptation to be lured by the promise of unusually high returns, when you may have doubts about the strength or soundness of an institution. Remember, regulated institutions are monitored while regulated institutions are not. And, return of principal is just as, if not more important than return on principal.

4. Know Yourself. Believe it or not, this one of the most critical things about investing -knowing your own risk tolerance. You may get a great tip, understanding what the investment entails, understand that it’s an investment (as opposed to savings), and be comfortable with the institution, but the product may just be too risky for you. On the other hand, remember that not all investments carry the same risk, and some may just be right for you, once you have sufficient savings tucked away.