The Healthy Finance with Low Risk

Not all of us are given high salaries; that’s a fact. However, what we are given are countless opportunities to grow and multiply the resources we have. We only need to know where to look and what to do.

If you are reading this, then you have come to the right place because we will be your mentors who will guide you to achieve great financial goals. Whether it is for your business or for your personal finances, we will give you a wide range of financial strategies that you can apply given your situation.

Our company believes that you are your best asset. Knowing this, we aim to maximize your capacity to earn without having to overwork you physically. You might be thinking that we will give you a sales talk into investing money, that is only partly true minus all the frills. We are firm believers in making wise investments and although this is one of the strategies we highly recommend, we understand that not everyone is willing to take the risk. Because of this, we have come up with strategies that are low risk but at the same time, are high impact.

But first of all, what is a risk? As with anything we do in life, there will always be a risk. In the financial world, risk means the probability of your asset or investment to produce way less than it was supposed to or the probability of it having close to no value. Risk is often associated with volatility. Volatility measures the rate of how much the price increases and decreases over a period of time. If there is a wide range of values that the asset can reach, then it means that it is highly volatile. Usually, this is what people are trying to avoid.

Investing in low-risk opportunities that give high returns is a golden way to multiply what you have now. In fact, having low-risk investments will help you be at ease with your current state and with your future. This is because high-risk investments tend to hit your finances and nobody wants that. Considering this is important for us because apart from multiplying your money, we want to make you financially stable in preparation for your retirement.

You might be shocked and say that it is too early, but with us, we plan to give you a lifetime of financial stability and so we work on the little financial steps that make you live more comfortably each day.

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Don’t Let Credit Cards Take Over Your Life

Credit cards have made buying things easy. When you don’t have cash on hand, all you have to do is hand over your card, get it swiped and voila! Your purchase is done.

The concept of credit cards is for you to have credit that you can use which you pay on or before the due date. But before you ever have a credit card, you would have to go through an application process and where your credit limit or your capacity to pay off your credit is deliberated.

While it’s fairly easy to get a credit card these days and it is as easy to keep using credit cards, proper usage is still a must so as to save you from incurring debt. This is because as you get carried away with using your card, you might go beyond your credit limit, and what’s worse is that you won’t have enough finances to pay off your debt by the end of the month.

To avoid those situations, here are a few tips on how to use credit cards wisely.

First of all, you have to know how much you can afford to pay and how much your credit limit is. It’s important to know these things because they will be your guide to wise spending. As a rule of thumb, you should just spend half of what you are earning and save or invest the rest. In this way, you can allocate your money well and you are sure that you have enough savings to pay off whatever it is you will be buying.

Secondly, be mindful of how much credit you have every once in a while. Like what was said earlier, you can be easily carried away with handing your credit card and swiping it. It’s highly recommended to list or to take note of all your purchases using your credit card.

Another tip is to avoid exceeding your credit limit. Never ever go past the credit limit as it reflects badly on credit companies. Moreover, you should also avoid maxing out your credit limit while you’re at it.

Last but not the least is to be responsible in tracking your transactions. This is to make sure that all purchases were made by you and no unnecessary expenses are being loaded to your card. An example of this is past loans that were being paid via credit card. You can do this by checking your credit report given together with your billing statement.

Having a credit card is easy and nice to have, but it also comes with a great responsibility. It isn’t supposed to be complicated because all you have to do is use it wisely, don’t exceed your limit, and then pay the bills on time. Sticking to these three things will actually save you from a lot of credit trouble.

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How Do Bid Bonds Work In Construction?

Construction Contract

It might not be obvious why construction project owners require bid bonds, but there is a very simple rationale behind this. In most projects, contractors are chosen through the process of bidding. Unfortunately, some choose to bid too low in order to win. Once they win, they suddenly either back out or change their cost at the last minute. This means that owners end up with a higher cost or worse, without a contractor at all.

The risk is high given that many contractors are going out of business and even municipalities are going bankrupt. There is nothing worse than seeing a construction project that is stopped right in the middle, leaving it unfinished. This is the reason why project owners are looking for protection, an assurance that the contractor will have the financial capability to finish the job.

History Of The Bid Bond

In federal projects, bid bonds are required by law. This came about during the end of the 19th century when many contractors were going bankrupt before the project was completed. This is why in 1894, Congress passed the Heard Act, authorizing the use of bid bonds on projects funded by the federal projects. This was updated when the Miller Act was updated in 1935. This stipulates that bid bonds are mandatory for all bidders on every federal project. Nowadays, private firms have also adopted this requirement for their construction projects.

How Do They Work?

Contractors who want to bid for a construction project will need to look for a surety company that will issue them a bid bond. For some more information on companies who offer bid bonds, go to When they submit their bids, this should also be presented at the same time. The bid bond assures the project owner that the contractor who wins the bidding process will take the job under the terms they specified on their bid.

A bid bond will require a cash deposit, which they will forfeit when they back out or change any terms of their bid. It will range between 5 and 10% of the contract amount, depending on how big the project is. If they sign the contract at the amount they specified, then they will receive their deposit back. Contractors who do not win the project will get their bid bonds or cash deposits after the opening of the bid or once the contract is signed.

The bid bond assures that project owners will recover any costs incurred if the winning contractor backs out. The surety company will pay them the difference between the 2 lowest bids.

The Purpose Of Bid Bonds

Owners minimize the risk during bidding by requiring a bond. It will protect them from contractors who submit frivolous or unrealistic bids because they will be under obligation to push through on their bid or pay the bond premium.

Moreover, surety companies will do a check of all contractors who want to submit a bid. They will look at their financial records to make sure they are stable enough to fulfill the contract and see the construction all the way to the end. When they back the bid bond, they take on the risk so they have to make sure they are serious contractors.

Unfortunately, some contractors who are newer might find it difficult to get bid bonds, or might have to make bigger deposits due to the lack of experience. However, the Miller Act allows them to post a 20% cash deposit in lieu of the bid bond. Even for bigger, experienced contractors, it is very hard for these contractors to bid on a few jobs because they will not be able to provide the deposit for all of these bid bonds.

Still, bid bonds fulfill their purpose of weeding out contractors who are not serious or capable of finishing the project or even signing the contract. In the end, it is in the interest of all parties when bid bonds are required so that the construction is finished with no hitches whatsoever.

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How Does a Bid Bond Work?

When a certain project has to be built, the owners do not just assign or name a company to do it for them. They want to find someone who can do it for them at the lowest price without compromising quality. To achieve this, they invite contracting companies to bid for it.

Companies that want to participate in the bidding are required to secure a bid bond in order to qualify as a bidder. During the bidding, the interested parties submit a proposal to undertake the project. They submit a cost estimate for the project. The customer will award the work to the contractor that has submitted the lowest bid.

What is a Bid Bond?

So you could ask: What is a bid bond? A bid bond is one of the requirements in order for a contractor to qualify to bid for a certain project. This bond is an assurance to the project owner that it will be completed according to the terms and conditions of the contract. If the contractor fails, the bid bond will be used by the owner to have the project completed.

Requiring contractors to place a bid bond will protect customers from those companies that might not be able to complete the project because they lack the capability to do so. There were cases of builders becoming insolvent before what they are building is even finished. This served as a lesson to agencies that have establishments to build. Hence, a bid bond has become a prequalifying requirement for all bidders.

This means that all contractors that aspire to be awarded the project have to provide a bid bond. If a winning bidder cannot enter into the contract, the project will be given to the second lowest bidder but the winning bidder will have to pay the difference between his cost estimate and that of the second lowest bidder. The amount to cover the difference in cost will be taken from the bid bond.

How Does Bid Bond Work

For example, Contractor A won as the lowest bidder but did not enter into a contract with the customer. If his cost estimate is $100,000 and that of the second bidder, Contractor B, is $120,000, Contractor A will have to pay the $20,000 difference. This is made possible through the bid bond. This will save the customer or project owner from having to cover the discrepancy between the lowest and second lowest bids.

Bonded contractors have the advantage over those who do not have a bond because during the selection process, project owners will only consider those that are guaranteed to have the capability to finish the project through the bid bond. Bid bonds have a flat rate of $100 to $250 for small projects. For big projects, it is computed as a percentage of the total bid amount such as 10% or 15% of it. This is a convenient way of keeping the confidentiality of all the bids.

Contractors use the services of underwriting companies to come up with the amount needed for their bid bond. To be qualified, they have to provide relevant information. These include your bid amount, the date of the bidding, previous bond record, the number of years that your company has been in existence and your credit score. For a bid amount of more than $250,000, you might be asked to submit more documents to qualify for a bigger bond.

It takes time to process a bid bond but to expedite things, always have at hand all the documents and financial records needed before you apply.

How does a bid bond serve as a guarantee to project owners? If ever a contracting company fails to comply with all the requirements of the contract, the customer can forfeit the bid bond. Likewise, the underwriting company and the contractor can be liable for all the costs that might be incurred due to the contractor’s failure to complete the project.

Aside from the bid bond, the contractor has to provide a performance bond. This is an assurance that the project will be finished at the date specified in the contract.

With these bonds, customers will be protected from contractors that might not have the financial and manpower to finish what they have started. The lowest bidder who can provide the bonds required will be the ones to be awarded the work.

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