This simple question is probably asked thousands of times every single day and can be answered in thousands of different ways. Long ago, I was given what I consider to be the best answer ever for that question! Whatever the best rate is, that a buyer can get at the time the deal is made that works for both parties. THAT is the best interest rate. When both parties come away from the table happy, that is what you call a great deal.

A perfect example of this is related below:
A couple was in the middle of a long divorce that was finally close to finalizing. The woman had not worked outside of the home in over thirty years, had no credit independent of her spouse and no income other than what was to be paid in spousal maintenance. She found the perfect home for herself and her companion dog. However, she had to make an offer while divorce was still pending. The woman’s financing options were worse than limited, they were nearly non-existent.

She purchased the home with an 11.99% APR (annual percentage rate), with a five year balloon payment of $10,000.00 with an additional $5,000.00 balloon payment every five years thereafter. However, the most critical item in the entire contract for the woman was the no pre-payment penalty clause. She knew that the contract would be renegotiated long before the first balloon payment was due.

Although she could have renegotiated the contract sooner, she waited for a full two years. During that time she built her own credit, made wise investment choices with her proceeds from the divorce settlement and proved to the bank that she was a good credit risk. At the time of the original loan, it was the best interest rate she could get to make a deal that was agreeable to both parties.

With the current mortgage market as it is, credit has never been cheaper for the well-qualified buyer and extremely expensive, if obtainable at all for the limited credit holder.

Therefore, it truly does not matter per se what the actual interest rate is for any particular deal on any particular day. What may be good to one person may be incomprehensible to another. What truly matters in the end is that each person comes away from the deal feeling that they got a good deal.

If you use a professional investment company, chances are you have more than likely already discussed many of these issues with your money manager. However, many self-directed investors have had to learn the hard way what pitfalls they should look out for. Knowing what the eight most commonly known investment mistakes are – can help you to increase the value of your portfolio and avoid costly and frustrating errors.

1 Miscalculating your lifespan and the lifespan of your investments.
With today’s medical and pharmaceutical technologies, people are living longer than ever before. Have you properly calculated not only for a longer life, but also for the quality of your longer lifespan?

2 Confusing cash flow needs with income needs.
Cash flow is the amount of money you will need or spend on either a daily, weekly or monthly basis. Income is the amount of money that comes in from all sources, such as rentals, investment dividends, retirement, employment, etc. There is a distinct difference between the two of these.

3 Overexposing your portfolio to unintended risks.
Concentrating your portfolio in specific areas can cause unintended risks. If you have a high percentage of stocks that are sensitive to interest rate fluctuations or commodity prices, this can cause unintended concentration and undue risks.

4 Making investments based on widely known information.
You need to know something that everyone else does not know. Use your instincts, experience, research and your own knowledge base to make investment decisions.

5 Not expanding to foreign securities markets.
Remember the word DIVERSIFY – there are multiple innovative
companies worldwide. Diversity in your investments is key to a successful and
well-constructed portfolio.

6 Miscalculating or completely forgetting the fundamental importance of supply and demand.
The fundamental rule of supply and demand affects everything, especially
that of purchasing or trading stocks. When the demand is high, stock prices rise.

7 Improperly judging risks of short vs. long-term investments.
Keeping a stock too long or not long enough can produce risk. Long-term investments usually have a lower return rate, shorter-term investments are frequently volatile and risk laden. Therefore, the intelligent investor has a diverse collection of both.

8 Overconfidence in your own investing skills.
Everyone likes to believe they can invest without emotional biases getting in their way. The most successful investors are those that can emotionally detach from each investment decision and base each of their investment choices purely on economics.