That Google should say that an AdWords advertisement’s position on the page affects its conversion rate by only about 5% results from their having an enormous amount of data which they are considering in toto. If they were to consider the data from an individual advertiser’s standpoint, the statistics would appear very different. Just as relevance is so important in a Google AdWords ad itself, so must it be in analysing the statistics.

Advertisers sell or market different products or services at different prices. For Google to issue a blanket statement that covers all advertisers is misleading.

Some AdWords facts

- The ad in position #1 gets 8 times as many clicks as the ad in position #5.

- The ad in position #4 gets 2 times as many clicks as the ad in position #5.

- Positions #5 to #9 are almost identical; position #10 drops to 25% of these.

- Position #3 gets 25% more clicks than position #4.

- Position #2 gets 100% more clicks than position #3.

- Position #1 gets 60% more clicks than position #2.

Actual figures are:

Position::CTR

#1:::::::7.94%

#2:::::::5.00%

#3:::::::2.47%

#4:::::::1.96%

#5:::::::0.90%

(Figures obtained from a survey of 1,200,000 clicks.)

The reasons for this are psychological. The sponsored ads in positions #1 to #3 are located immediately above the organic (free) search engine results, and look very similar to them. It is natural for people to click on the ad at the very top-left of the page. Ad #4 is at the top of the narrower column at the right, while ad #10 is at the very bottom and tends to all but ignored.

- To move an ad from position #5 to position #4, you must either:

1. Pay more per click, or

2. Improve ad text and landing page relevance.

- Most web sites have a conversion rate of > 2%. To achieve this, either:

1. Ensure that the landing page is the actual product page, not the ‘home’ page, or

2. Display a custom page that corresponds exactly to the search query that the visitor entered. (This is known as “parroting”.)

Why Google’s “5% difference in conversion rate” statement is misleading

Do not be fooled into thinking that the Click-Through Rate is directly proportional to the conversion rate (and thereby profits). Most certainly it is not! Although Google says that ad positioning has little effect on conversion rate, this is because such a statement is based on all ads across the entire spectrum of products and services, and they even themselves out.

It is more likely, however, that “tyre-kickers”, product researchers and price-comparers will click on the ads in the higher positions, thereby increasing the advertiser’s costs without a sale.

On the other hand, visitors with a high “online commercial intent” (OCI), i.e., those who are ready to buy are just as likely to click on an ad in a lower position as one in a higher position, because they are studying several options carefully before spending their money.

Proportionally, therefore, ads in lower positions have a higher profit margin than those in higher positions.

This effect becomes more highly marked as the product price increases and the more competitive the product price is. In other words, people are more likely to compare prices, when the product costs more, and are more likely to buy from the site with the lowest price, best service, etc. Then your ad might as well be in a lower position for which you pay less.

Conversely, if the product is low-priced for quick turnover, requiring little thought on the buyer’s part, the higher ad positions would result in greater overall profits.

Be all this as it may, there is always one inescapable fact. Although certain markets are larger than others — and some are huge — they are all finite. Sooner or later an advertising campaign’s profits will begin to tail off and drop, whether it be because the market has become saturated or because so many competitors have jumped onto the band-wagon.

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3. Other Google AdWords Strategies

Most AdWords campaigns are managed poorly, through either lack of knowledge or an aversion to tedious work. This makes it possible for you to get targeted traffic extremely quickly and easily, using clever strategy together with automated tools.

Google AdWords Ad Positioning

Although the profit margin on the product or service offered is a large factor, tests have proved that the first ad position on the first page is, generally, not the most profitable. Yes, it gets the most clicks, but it’s often a spontaneous action by the surfer before studying the ad. Sometimes the surfer is merely browsing the subject and is not ready to buy (commonly known as “tyre-kickers”).

Tests show that the further down the page an ad is, or, occasionally, even on the second page, the greater is its conversion rate. The surfer has taken the time to read the ad carefully because he is ready to buy. Furthermore, the clicks are fewer; so, your overall pay-per-click bill is less than for a higher-positioned ad. The downside is that the click-through rate (CTR) of the lower-positioned ads is lower, which affects your Quality Score adversely and raises your cost per click.

A happy medium is to aim for positions 4 to 6 on Google’s first page. (You can use the “Show Estimated Ad Position” and “Estimated Avg CPC” columns in the on-line Google AdWords Keyword Tool to determine the cost-per-click to bid for each of of your exact match keyword phrases, and then you can set those bids accordingly. These figures can, however, be notoriously inaccurate. Always check your keyword phrases’ positions afterwards in the ‘Avg Pos’ column on the Ad Group’s ‘Keywords’ index tab or by testing with a search on the main keyword phrases.)

“Google Search” ads, “Content Network” ads, “Search Network”/”Search Partners” ads, “Placement” ads

You can specify different maximum bid amounts for these various types of advertising. Because the quality of their traffic tends to be lower, bids for the Content Network (“entire network” option) and Search Network (Search Partners) (see Tactics > Search Network) should be kept lower and be more tightly controlled than those for Google Search traffic and the Content Network (“Placement ads” option). In the early stages of a new Google AdWords campaign, it is advisable to go with only Google Search traffic and switch other options off, to help you to control costs. Once you’ve discovered the keywords that produce the highest return on investment (ROI), you can enable other options for those keywords to see what results they produce.

If you find that a Google Search traffic campaign is too competitive, don’t just abandon Google AdWords altogether; try a Content Network Placement ad (see Tactics > Placement Ads), bidding either CPC or CPM (q.v.).

Testing and Tracking

Ad Variations

Despite what you may think of your copywriting prowess, you will not write the perfect ad at the first attempt. You may need ten attempts before you find the best formula. Although you may hazard a reasonable guess at the advertisement text that would attract visitors, the ONLY way to KNOW what ad text achieves the highest click-through rate (CTR) is split-test two ads simultaneously.

Although changing just a single word can make a difference, do not split-test two ads that resemble each other that closely; Split-test two radically different ads. (Switch off Google’s option to show the better-performing ad more often than the other, as that would distort the test results.) After between 20 and 50 clicks it should become apparent which of the two ads is out-performing the other. Then replace the inferior ad with another and split-test again. Repeat this process again and again, each time reducing the textual differences between the two ads until you arrive at the one that performs best of all.

To track the click-through rate (CTR) of your ads, go to your Google AdWords campaign web page, click on the Campaign name; click on the Ad Group name; click the ‘Ad Variations’ index tab; check the ‘CTR’ column.

Always keep all the Ad Variations that you create, to check that you don’t repeat any inadvertently.

Landing Pages

Split-test your landing pages in a similar way, to discover which style, layout, text, call to action, etc. achieves the highest conversion rate. To track the conversion rates of your web pages for various keywords, go to your Google AdWords campaign web page and click on the ‘Conversion Tracking’ item on the ‘Campaign Management’ index tab.

Always save all the landing pages that you create, to check that you don’t repeat any inadvertently.

Keywords

After a new campaign has been running for about a month, check the click-through rate (CTR) of all the keyword phrases in each Ad Group on its ‘Keywords’ index tab. Click the ‘CTR’ column header to sort the keyword phrases, mark the checkbox of all keyword phrases with a CTR of less than 0.5% and either ‘Pause’ or ‘Delete’ them. (If you have many keywords, it’d probably be quicker to do this in your specialist AdWords software tool and upload the keyword list to your Google AdWords campaign again.)

0.5% is considered the benchmark of a poorly performing keyword. Such keywords cause your ad to be displayed but, for some reason, the people using the keyword in their search terms don’t connect it mentally with your ad, and don’t click on it. If several keywords have a low click-through rate (CTR), the overall click-through rate (CTR) of your whole Ad Group is reduced and its Quality Score will be affected adversely. Eventually, this Ad Group’s lower Quality Score will also affect the Quality Score of your entire Google AdWords campaign.

This check should be performed weekly thereafter.

If you really want to use those poorly performing keywords, remove them from the Ad Group and create a new Ad Group for them, or even a new campaign, so that they don’t affect your overall Quality Score.

The Bottom Line

Great importance is attached to the click-through rate (CTR), but, to put it in perspective, it is only a means to an end. A high click-through rate (CTR) does not make you a millionaire in itself; It’s revenue that counts. Your revenue is determined by the successful interaction between keywords, Ad Variation and landing page, all three working in harmony together.

Maximum CPC Bid

Don’t be afraid to bid higher than necessary for keywords in a new Google AdWords campaign during the first few days. This will establish your campaign with Google and, as your click-through rate (CTR) rises, your maximum CPC bid amount to achieve the same ad position will fall dramatically. Then you lower your bids and check again the next day. Repeat this process until your bids are minimized. You do this for all the keyword phrases in the Ad Group. If there are too many keywords to deal with manually, invest in specialist software to calculate the bids for you.

CPC or CPM?

Google ‘Content Network’ advertising (see Tactics > Content Network) gives you the option to specify your keywords’ maximum bids as cost-per-click (CPC) or cost-per-thousand-impressions (CPM) (“M” is the Roman numeral for 1,000, “mille” in Latin). CPM can be useful if the Quality Score is low or the cost per click (CPC) is high. If you opt to pay for impressions rather than for clicks, Google couldn’t care less about Quality Score or click-through rate (CTR) or even relevance; You simply pay each time your ad appears. Of course, it’s still in your interest to ensure that you follow the advice about relevance already given.

It’s your responsibility to track the performance of your CPM ads, because Google doesn’t do it for you. Obviously, you won’t want to keep paying for ads that don’t convert. Moreover, you’ll still have to bid high enough to get your ad to be displayed in the desired position within an ad unit on an AdSense publisher’s web page, or even at all, and that cost could be quite high on a good-quality, popular web site that you choose for a ‘Placement’ ad (see Tactics > Placement Ads).

Keywords

Unless you have a six-figure annual budget and would be happy with a mere 10% return on investment (ROI), don’t bother bidding for popular 1-word keywords, such as “mortgage”. The competition for most single-word keywords is fierce, unless the niche is very esoteric. Moreover, searches on single words are made most frequently by people who are simply not ready to spend their money; they are merely investigating the market, gathering information; in other words, they are “tyre-kickers”. 1-word keywords would probably bankrupt you very quickly.

2-word keywords are a better bet, but they can still command a high cost per click in competitive markets, surfers who search on them may still not be ready to buy, although they’re getting there.

Keyword phrases of three words and up are known as “long-tail” keywords. (Note that the word “keyword” in pay-per-click advertising can mean a phrase of more than one actual word, e.g., “New York”. A “keyword phrase” consists of more than one “keyword”.)

3-word keyword phrases have the highest conversion rate, according to tests. People who type three words as a search term have usually done their investigations, know exactly what they want, and are now ready to buy.

4-word keyword phrases fare slightly less well, perhaps because the searcher may indeed be ready to buy, but is comparing prices for a very specific item, or is doing some academic research.

Don’t understimate the power of negative keywords! If you sell tulips, you don’t want your ad to appear when someone searches on the term “grow tulips”. Although they may not click on your ad, it’d be an unnecessary impression, and its click-through rate (CTR) would suffer. Specify “grow” as a negative keyword. (Of course, if your Ad Group contains only exact match keyword phrases, there’s no point in specifying negative keywords.)

Landing Page

Relevance is covered above, and is by far the most important attribute of a landing page. Here is some advice about other ways to encourage Google to enhance your Ad Group’s Quality Score.

Google values “real” web sites more highly than mere single-page “mini-sites”. The robot checks for links to other web pages, particularly a ‘site map’ page and ‘privacy policy’ and ‘contact us’ pages. A ‘terms of use’ and an ‘about us’ page may also help. Hyphenate these page names as the file names, e.g., ‘privacy-policy.html’. Place the links to these pages at the very bottom of your landing page, in the footer, using as small a font as a human would consider reasonable. You want to reduce the risk as much as possible that your visitor will click away from your landing page.

Minimize the landing page’s load time. It is believed that Google uses this as an element in its Quality Score algorithm. Keep images and JavaScript to a minimum. They weigh the page down. (Google cannot follow JavaScript links anyway.)

How to Attract Visitors

What makes a person click on your ad instead of someone else’s? The answer is the same as to the question why a person clicks the ‘Buy’ button on your sales page: good copywriting. That’s a separate subject, but, suffice it to say here that your ad must be not only relevant, but also compelling. Imagine that you are the searcher, looking to buy a product or service like yours. Look at other ads offering something similar. What attracts you to one and not another? Ask your friends and colleagues what they think.

You have only a 25-character headline and two description lines of 35 characters each. Don’t squander them on waffling about your company. The consumer couldn’t care less about you or your company. The consumer has a problem to be solved, a need to be satisfied, a desire to be fulfilled. So, mention the problem, the need, the desire. And, most important, tell the consumer that the solution, what he needs, what he wants is only a click away. Tell him to “Get Help Now” or to “Find It Here”. That’s the ‘call to action’.

www.AdwordsCampaign.net is updated frequently with free advice about Google AdWords strategy, tactics, tips tricks and techniques for success in AdWords advertising.

Most AdWords campaigns are managed poorly, through either lack of knowledge or an aversion to tedious work. This makes it possible for you to get targeted traffic extremely quickly and easily, using clever strategy together with automated tools.

1. RELEVANCE

A primary aim is to reduce your cost per click (CPC). Google will favour you with a low cost per click if you master the concept of relevance. If you don’t, your pay-per-click rate will be high, your profits will suffer, your campaigns will probably fail, and your competitors will beat you.

Google is the undisputed leader (by far) among search engines because it provides searchers with results more relevant than those of any other. When a surfer types in a search term, Google’s complex algorithm returns pages that match closely the words searched for.

Google applies the same principle to AdWords advertisements. Ads that are more relevant than others are given preferential treatment. Less relevant ads are allowed to compete, but they are penalized by a high cost per click.

Google AdWords employs two distinct modes of measurement of relevance: A. Robot; B. Human.

A. An automated program compares the search term not only to your advertisement text, but also to the keywords in its Ad Group, to the URL of the specified landing page and even to the textual content of the landing page itself, to determine how relevant these components are to each other. If all four are tightly integrated with the search term, you’ll pay a very low cost per click — perhaps only 5 cents — and still command a high position on Google’s first page. Any component that does not match the search term closely causes the CPC to rise, perhaps even by a factor of a hundred!

B. Every time Google displays your ad, it records the fact. This is known as an “impression”. If a surfer clicks on the ad, Google records that also, and divides the number of clicks by the number of impressions. The result gives your ad a “click-through” rate (CTR). A similar calculation is made for your keywords that appear in the search term, to give them their own click-through rate. Google AdWords assumes that, if a human clicks on your ad, it is probably relevant to the search term typed in.

As your CTR rises, so do your keywords’ Quality Scores, and, as more and more keywords’ Quality Scores rise, so does the Quality Score of the entire Ad Group. The higher the Quality Score is, the lower will be the cost per click. Conversely, the fewer clicks your ad gets whenever it’s displayed, the lower your Quality Score and the higher your cost per click will be.

How to Increase Relevance of the 4 Components (keywords, ad text, URL, landing page)…

If you create a campaign manually (rather than by “brute force” means), use only one keyword phrase per Ad Group, e.g., “adwords guide”, and specify exact match initially. Once the Ad Group’s Quality Score has increased, expand it to phrase match also, to capture phrases such as “online adwords guide” and “adwords guide for beginners”. (To specify broad match, to capture search terms like “adwords online guide” and “guide to adwords”, is impractical unless you use “brute force” software.)

Use the precise keyword phrase in the heading of the Ad Variation, and sprinkle the keywords in the two description lines.

Use the keyword phrase, hyphenated or unhyphenated, in the display URL, e.g., “/adwords-guide” or “/AdWordsGuide”. Not only does Google’s robot consider it relevant, but humans do, too, and are more likely to click on the ad.

Use the keyword phrase, hyphenated or unhyphenated, in the destination URL of the landing page, e.g., “/adwords-guide.html” or “/AdWordsGuide.htm”.

If possible, register domain names, both hyphenated and unhyphenated, containing the keyword phrase. Use the hyphenated one in the display and destination URLs, and redirect the unhyphenated one to the hyphenated one for other promotion purposes.

Use the keywords in the landing page content as follows:
– The precise keyword phrase in the title tag;
– In the keywords and description metatags;
– The precise keyword phrase in the first h1 heading tag and variations of it in other h1, h2, h3, etc. tags;
– Sprinkle the keywords liberally but naturally throughout the content, particularly among the first and last 25 words, but do not commit the Google crime of “keyword stuffing”, which is penalized.

Ideally, the landing page should relate ONLY to the SPECIFIC product, service or information being offered in the ad, and the objective of the visitor’s search term should be IMMEDIATELY OBVIOUS to his eyes as soon as he lands on the page. If your ad sends the visitor to a web site’s general home page, or the visitor has to spend time looking for his objective on the landing page, you’ll lose him in seconds and your click cost will be wasted. Furthermore, The Google robot will see the landing page as irrelevant, and the keyword’s Quality Score will be reduced, thereby increasing its cost per click.

Here’s a quick trick that almost nobody uses because it is so little known. If you must include some irrelevant words that would dilute your web page’s content in Google’s eyes, “character reference” encode them with one of the free conversion tools available on the Web. For example, the words “New York” are utterly irrelevant on this web page; so, they are encoded in its HTML as “New York”.

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From PPC-PayPerClick.net

Pay Per Click advertising & Pay Per Click Management (Web SEO PPC)

Your PPC advertising costs are too high! You spend too much time on PPC management instead of running your business! Your site’s position is too low!

Finding this blog probably means that at least one of the symptoms above applies to your business. If you could save countless hours of frustration, trying to reduce your PPC cost per click AND raise your site’s position on the search page, would you be interested?

If you’re already familiar with pay per click management in your business, you’ll undoubtedly know that the easiest way to raise your web site’s position on the search results page is to raise your PPC cost per click bid. This eats into your profits, of course, and can even render a pay per click advertising campaign so uneconomical that it has to stop. Reduced advertising means reduced sales. It’s very easy to lose a lot of money on pay per click advertising, especially Google Adwords PPC campaigns.

There’s more to pay per click management than just raising your PPC bid!

It is a fact that most PPC advertisers — almost all actually — throw money away and waste their time on their pay per click campaigns, because, to put it bluntly, they really don’t know what they’re doing. It is possible to put your PPC advertisement in one of the top few positions on the first page of Google and still keep your pay per click bid low, thus preserving your profit margin and increasing your sales!

Since the advent of Google AdWords, PPC management has become very sophisticated indeed, and constantly increases in complexity as the Google algorithm changes and savvy competitors vie for the top spots. It is now quite a science.

What can you do to make your pay per click advertising campaign successful?

To explain the numerous methods to make a PPC advertising campaign successful would fill a book which would be constantly out of date. To wring maximum profit from pay per click advertising requires the careful application of all the methods; Applying only some of them simply will not suffice. The principle of the “aggregation of marginal gains” must be applied; Everything must come together at the same time. If your advertisement is not in certain prime positions on the first two pages, or it appears beneath that of a direct competitor, it will not be clicked!

Very broadly, the keys to a successful pay per click advertising campaign are exhaustive research, accurate targeting, setting spend limits, constant tracking, testing and re-testing. Not many business owners have the time or the inclination for all that, and their PPC campaign fails as a result. As alluded to in the previous paragraph, the genius is in the detail.

Using PPC advertising services can mean PPC management success.

It is very unlikely that the top Google AdWords positions for highly competitive products or services are occupied by DIY PPC campaign managers. It is probable that the entire advertising campaign is handled by a pay per click firm, expert in Web SEO PPC. A good pay per click company keeps abreast of the technology and requirements to achieve successful Web SEO PPC, not to mention the many tips and tricks which can give a PPC advertiser an edge.

Furthermore, it’s not only technology, but also psychology which can make the difference between a profitable and an unprofitable pay per click advertising campaign. What makes a visitor click on one advertisement and not another? A company specialising in pay per click services should be well aware of the psychological aspect of PPC advertising.

Why use Abacus Data Systems pay per click services?

If there is a market for your product or service, and it’s priced competitively, we see no reason why your PPC campaign should not be profitable. As long as it remains in profit, it makes sense to continue with it. Our profit therefore depends on yours.

Nevertheless, there are plenty of our competitors’ advertisements displayed at PPC-PayPerClick.net. You can compare Abacus with them all, if you wish. Contact us at PPC@AbacusData.com, and see what we have to offer you.

Related software by Abacus Data Systems:
Keyword Assistant — Landing Page Creator.

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From PPC-PayPerClick.net

What is pay per click?

In case PPC advertising is new to you, here’s a brief explanation.

Millions of searches are made on the Web every day, encompassing every conceivable kind of product and service.

The results of these searches appear in the free listing, occupying most of the search engine results page, and in smaller areas at the side, top or bottom of the page, sometimes known as “sponsored ads”. It is very difficult indeed to get a web site to the top of the free listings, which is the reason for the existence of pay per click advertising. These smaller areas are reserved for PPC advertisers.

Pay per click advertisers bid an amount of money for position among the sponsored ads. The higher your bid is, the higher your ad’s position will be. You pay only when a searcher clicks on your ad, and goes to your “landing page”. This is the page you want your visitors to see first.

The amount you pay is not necessarily the amount of your bid; it is slightly more than that of the next lower bid. It may sound simple, but you can easily lose a lot of money if all the elements of the science of pay per click management are not in place. The aim of every PPC advertiser is to achieve the best position for the lowest cost. Constant tweaking is required to maintain this balancing act.

As just a couple of examples, if you want to outdo your competitors in your local area, you can gain an edge over them very cheaply with a Google AdWords PPC campaign, simply because you won’t be competing with the entire world. Similarly, your ad would have a greater chance of success with “Cobra 427 for sale” than with “Cars for sale”. In short, the more narrow your target market is, the easier, and therefore cheaper, it is to reach them.

Is your web site good enough to make the most of pay per click advertising?

In our blog for those already involved in a PPC advertising campaign we referred to the “aggregation of marginal gains”. Your landing pages must be finely tuned to the search phrases people are likely to use to find your product or service. This applies to PPC advertising as well as to search engine optimisation (SEO) for a high position in the free listings, in order to keep your pay per click cost low. This fact is all too often overlooked.

Web SEO PPC is part of the Abacus pay per click service. Because our success is measured by yours, we may suggest a rewrite of the text, and even a radical redesign, if your site is very PPC-unfriendly. If you don’t have a web site at all, we can create one for you quite quickly, the style reflecting the nature of your business. Here are a couple of ideas:
industry-specific web site design, local business web site design.

Related software by Abacus Data Systems:
Keyword Assistant — Landing Page Creator.

Dynamically updated information on business is freely available at WorldWideNewsArticles.com

Go to WorldWideNewsArticles.com for hourly updated general and business news and daily articles on business topics.

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From WorldWideNewsArticles.com/Finance

Financial Terms Explained

0% finance

An interest-free loan — you repay only the amount of money you borrow. Such loans are often offered on items that manufacturers or dealers are keen to sell, perhaps because it is an unpopular model or it is about to be replaced by a new model. The deposits might be large, sometimes up to 50% of the list price of the item.

APR

Annual percentage rate. The true cost of a loan, including all the interest and concomitant charges and fees. The lower the APR is, the cheaper is the loan.

Balloon payment

The final payment at the end of a personal contract purchase (PCP).

Bank base rate

The interest rate set by the national bank. Finance houses add their own percentage to the base rate to calculate interest on loans. When the bank base rate changes, lenders’ rates change accordingly.

Capital amount

The amount that you borrow from a lender.

Compound interest

The most common type of interest, where interest accumulates not only on the amount you borrow, but also on the interest itself if your regular repayments are less than the interest accrued during the regular repayment period.

Conditional sale

Another term for hire purchase (HP).

Cost to change

The difference between the trade-in price a dealer would give you for your car and the cost of the car you would buy from the dealer.

Deposit

The amount of money you pay towards the cost of the item at the time of the purchase.

Depreciation

The amount of money the item loses in value over a given period, usually annually.

Early repayment

If you decide to repay a fixed-term loan before its termination date, the lender will almost certainly charge you an early repayment penalty. Such penalty usually decreases over time, until it disappears altogether after a stated period.

Equity

The difference between the prevailing value of the item and the amount of money you still owe for it. If what you owe is greater than the value of the item, it is called ‘negative equity’.

Fees

Extra charges added by the lender. Be careful to understand the full costs of the loan by looking at the annual percentage rate (APR).

Flat rate

The amount of interest payable per year as a direct proportion of the amount borrowed, without compounding. It is also called simple interest.

HP

Hire purchase. The total amount you pay, i.e., the purchase price of the item plus any interest throughout the entire repayment period, is divided into equal monthly payment instalments. Only after you have paid the final instalment does the item belong to you. Failure to repay the loan will result in the item being repossessed by the lender, who will then sell it to recover the outstanding debt.

Interest only

Your regular repayments to the lender cover only the interest accrued during the regular repayment period. The capital amount of your original borrowing remains the same, and must be repaid at some fixed future date.

MGFV

Minimum guaranteed future value. Most vehicle manufacturers guarantee that a car will be worth a certain amount at the end of the personal contract purchase (PCP) payment period, usually equal to the final lump sum you can pay to buy the car outright. If the car is worth less than this, you can hand it back to clear the loan. If it is worth the same or more, you may be able to use its value as a deposit on a new car.

PCP

Personal contract purchase. The monthly repayments are made lower by setting aside part of the vehicle’s value as a lump sum to be paid at the end of the loan period. You can either pay the lump sum and own the car outright, or use your stake in the car as a deposit to buy a new one.

Personal loan

This is similar to hire purchase (HP), but the loan is unsecured; so, the lender cannot repossess the item if you do not repay the debt. The lender can, however, still sue you in Court to recover the money still owed.

PX

Short for part-exchange, meaning that you trade in your car or other item as partial payment to get a new one. Its part-exchange value is usually considered to be much less than its actual value, because the trader must resell it.

Repayment mortgage or loan

Your regular repayments are greater than the interest accrued during the regular repayment period. Thus, the capital amount that you borrowed decreases gradually. This means that the accrued interest proportion of the repayments and the amount you owe both become steadily less, until the capital amount is paid off completely.

Residual value

The value of your new car or other item after a specified period of time and/or usage, according to trade reckoning. For example, three years or 60, 000 miles, in the case of a car.

Secured loan

A loan which gives the lender a lien on your property. If you default on the loan, the lender can take possession of the property, and sell it to recover the debt.

Simple interest

See ‘Flat rate’.

Trade value

The estimated price your car or other item would fetch if sold at auction or by one dealer to another. It is always much lower than the price dealers charge retail customers.

Unsecured loan

A loan which does not give the lender a lien on your property. There is greater risk to the lender, and such loans are therefore more expensive.

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From LifetimeMortgageEquityRelease.com

Why consider a Lifetime Mortgage?

One asset which has almost certainly risen in value during recent years is your home. Indeed, compared to the price you paid for it years ago it is probably worth a small fortune now. In those countries where the property market is well developed, the value of the average home has increased by about 20 times during the last 35 years. If you get an up-to-date valuation of your home, its present-day value could surprise you, especially if you have not had your property valued for a while. Be that as it may, it does not help you if you cannot actually gain access to the money tied up in your home.

There are several ways to unlock the cash tied up in your property. You could move to a smaller home or to one of less value, perhaps by moving to another part of the country where property prices are lower, or even to another country. Such “downsizing” gives you the maximum value from your home, but there may be “downsides” also. For example, you might love the area in which you live, or you might consider that moving would cause too much disruption or be too expensive.

Assuming that your mortgage has been paid off, or, at least, almost paid off, a lifetime mortgage offers you another option. It is a serious step, however, and, before deciding on a lifetime mortgage, you should consider whether other savings or assets could be used preferably to fund your intended purchases or your retirement.

What is a Lifetime Mortgage?

A lifetime mortgage has been the most popular means of equity release for quite a while. (See Ways to Release Equity in your Home for a detailed comparison of the lifetime mortgage with other equity release methods.) Simply put, a lifetime mortgage is a way to borrow money against the value of your home without having to repay the loan as long as you live. There are no regular repayments of interest or capital, and you continue to be the legal owner of your property, and to live in it as normal. The loan and the interest thereon are repaid to the lender when your property is eventually sold. The stipulation is that your home must be sold as soon as you (and your partner in the case of a joint lifetime mortgage) die or move into permanent long-term care.

Lifetime Mortgage facts to consider

Before you sign the application documents for a lifetime mortgage, you should weigh certain facts, to see which way the balance tilts.

– You can use the money released for any purpose.
– If you move home before you (and your partner) die or move into permanent long-term care, you can usually move the loan to your new home.
– You can sell your home at any time, in which case the loan must be repaid. Because a lifetime mortgage is a long-term arrangement, there may be a financial penalty for early repayment.
– Regardless of how long you (and your partner) live, you should never owe more than the ultimate sales price of your property. Ensure that there is such a “no negative equity” clause in the documents you sign.
– Your tax position could be affected, as could your eligibility for any means-tested State benefits.
– Your heirs will inherit less, because the loan and the accrued compound interest will be deducted from your estate. (See examples below.)

These are the most important points to consider. There are others, and they vary according to the lender. You should talk to an independent financial adviser, if you are unsure of anything at all. You should also, of course, discuss the matter with your heirs.

Lifetime Mortgage examples

Property value = 250, 000
Loan = 100, 000
Your equity = 150, 000
Property is sold after 10 years

Loan interest rate = 6% (compounded monthly): After 10 years you owe 181, 940
Property value increase = 3% (compounded annually): After 10 years = 335, 980
You get 100, 000 now, and your heirs inherit your equity 154, 040 after 10 years

Loan interest rate = 6% (compounded monthly): After 10 years you owe 181, 940
Property value increase = 5% (compounded annually): After 10 years = 407, 220
You get 100, 000 now, and your heirs inherit your equity 225, 280 after 10 years

Loan interest rate = 7% (compounded monthly): After 10 years you owe 200, 970
Property value increase = 3% (compounded annually): After 10 years = 335, 980
You get 100, 000 now, and your heirs inherit your equity 135, 010 after 10 years

Loan interest = 7% (compounded monthly): After 10 years you owe 200, 970
Property value increase = 5% (compounded annually): After 10 years = 407, 220
You get 100, 000 now, and your heirs inherit your equity 206, 250 after 10 years

If you do not take a lifetime mortgage, you get nothing, and your heirs inherit the full value of the property. The maximum amount you can borrow depends on your (and your partner’s) age. The greater your age (or the age of the younger partner) is, the more money you can borrow. If you wish to bequeath a minimum estate, you can apply for the maximum amount as a lifetime mortgage, and enjoy the rest of your life on the equity released.

Dynamically updated information on mortgages is freely available at LifetimeMortgageEquityRelease.com

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Introduction

It is hoped that this article will help you to gain and maintain good health and/or greater happiness in life through not only the usual advice on diet and exercise, but on the lesser treated subjects of the emotions and attitude.

What is Health?

How do you define health? Is it a state of complete physical, mental and social well-being? Is it merely the absence of disease or infirmity? Or is health a resource for everyday life, rather than the objective of living; a positive concept, emphasising social and personal resources as well as physical capabilities?

Good health is harder to define than bad health (which can be equated with the presence of disease), because it must convey a concept more positive than mere absence of disease, and there is a variable area between health and disease. Health is clearly a complex, multidimensional concept. Health is, ultimately, poorly defined and difficult to measure, despite impressive efforts by epidemiologists, vital statisticians, social scientists and political economists. Each individual’s health is shaped by many factors, including medical care, social circumstances, and behavioural choices.

Health Care

While it is true to say that health care is the prevention, treatment and management of illness, and the preservation of mental and physical well-being, through the services offered by the medical, nursing and allied health professions, health-related behaviour is influenced by our own values, which are determined by upbringing, by example, by experience, by the company one keeps, by the persuasive power of advertising (often a force of behaviour that can harm health), and by effective health education. Healthy individuals are able to mobilise all their physical, mental, and spiritual resources to improve their chances of survival, to live happy and fulfilling lives, and to be of benefit to their dependants and society.

Achieving health, and remaining healthy, is an active process. Natural health is based on prevention, and on keeping our bodies and minds in good shape. Health lies in balancing these aspects within the body through a regimen consisting of diet, exercise, and regulation of the emotions. The last of these is too often ignored when health advice is dispensed, but can have a pronounced effect on physical well-being.

Diet

Every day, or so it seems, new research shows that some aspect of lifestyle — physical activity, diet, alcohol consumption, and so on — affects health and longevity. Physical fitness is good bodily health, and is the result of regular exercise, proper diet and nutrition, and proper rest for physical recovery. The field of nutrition also studies foods and dietary supplements that improve performance, promote health, and cure or prevent disease, such as fibrous foods to reduce the risk of colon cancer, or supplements with vitamin C to strengthen teeth and gums and to improve the immune system. When exercising, it becomes even more important to have a good diet to ensure that the body has the correct ratio of macronutrients whilst providing ample micronutrients; this is to aid the body in the recovery process following strenuous exercise.

If you’re trying to lose weight by “dieting”, don’t call it a diet, first of all — successful dieters don’t call what they do a “diet”. A healthy diet and regular physical activity are both important for maintaining a healthy weight. Even literate, well-educated people sometimes have misguided views about what makes or keeps them healthy, often believing that regular daily exercise, regular bowel movements, or a specific dietary regime will alone suffice to preserve their good health. Despite the ever-changing, ever-conflicting opinions of the medical experts as to what is good for us, one aspect of what we eat and drink has remained constantly agreed by all: a balanced diet.

A balanced diet comprises a mixture of the main varieties of nutriments (protein, carbohydrates, fats, minerals, and vitamins). Proper nutrition is just as, if not more, important to health as exercise. If you’re concerned about being overweight, you don’t need to add the extra stress of “dieting”. No “low-fat this” or “low-carb that”; just healthful eating of smaller portions, with weight loss being a satisfying side effect. Improve health by eating real food in moderation. (For many reasons, not everyone has easy access to or incentives to eat a balanced diet. Nevertheless, those who eat a well-balanced diet are healthier than those who do not.)

Exercise

Physical exercise is considered important for maintaining physical fitness and overall health (including healthy weight), building and maintaining healthy bones, muscles and joints, promoting physiological well-being, reducing surgical risks, and strengthening the immune system. Aerobic exercises, such as walking, running and swimming, focus on increasing cardiovascular endurance and muscle density. Anaerobic exercises, such as weight training or sprinting, increase muscle mass and strength. Proper rest and recovery are also as important to health as exercise, otherwise the body exists in a permanently injured state and will not improve or adapt adequately to the exercise. The above two factors can be compromised by psychological compulsions (eating disorders, such as exercise bulimia, anorexia, and other bulimias), misinformation, a lack of organisation, or a lack of motivation.

Ask your doctor or physical therapist what exercises are best for you. Your doctor and/or physical therapist can recommend specific types of exercise, depending on your particular situation. You can use exercises to keep strong and limber, improve cardiovascular fitness, extend your joints’ range of motion, and reduce your weight. You should never be too busy to exercise. There’s always a way to squeeze in a little exercise, no matter where you are. Eliminate one or maybe even two items from your busy schedule to free up time to fit in some exercise and some “YOU” time. Finding an exercise partner is a common workout strategy.

Emotions

You may have heard about the benefits of diet and exercise ad nauseam, but may be unaware of the effect that your emotions can have on your physical well-being and, indeed, your longevity. Like physical health, mental health is important at every stage of life. Mental health is how we think, feel, and act in order to face life’s situations. Prolonged psychological stress may have a negative impact on health, such as weakening the immune system.

Children are particularly vulnerable. Caring for and protecting a child’s mental health is a major part of helping that child to grow into a normal adult, accepted into society. Mental health problems are not just a passing phase. Children are at greater risk for developing mental health problems when certain factors occur in their lives or environments. Mental health problems include depression, bipolar disorder (manic-depressive illness), attention-deficit / hyperactivity disorder, anxiety disorders, eating disorders, schizophrenia and conduct disorder. Do your best to provide a safe and loving home and community for your child, as well as nutritious meals, regular health check-ups, immunisations and exercise. Many children experience mental health problems that are real and painful, and they can be severe. Mental health problems affect at least one in every five young people at any given time. Tragically, an estimated two-thirds of all young people with mental health problems are not getting the help they need. Mental health problems can lead to school failure, alcohol or other drug abuse, family discord, violence, or even suicide. A variety of signs may point to a possible mental health problem in a child or teenager. Talk to your doctor, a school counsellor, or other mental health professionals who are trained to assess whether your child has a mental health problem.

Control your emotions. If a driver overtakes you on the wrong side, or pulls out of a side road in front of you, don’t seethe with rage and honk your horn; You’re hurting no one but yourself by raising your blood pressure. Anger has been linked to heart disease, and research has suggested that hardening of the arteries occurs faster in people who score highly in hostility and anger tests. Stay calm in such situations, and feel proud of yourself for doing so. Take comfort in the knowledge that such aggressive drivers only increase their own blood pressure. Your passengers will be more impressed with your “cool” than with your irascibility.

If you are in a constant rush, feeling that every second of your life counts, just slow down a little. Yes, every second does count, but consider the concept of quality of life. Compare how you feel when you’re in a hurry with how you feel when you’re not. Which feels better? Rushing everywhere increases your stress level. The body tries to overcome stress by making certain physiological adjustments. Some time after you slow down, the physiological adjustments and the stress symptoms revert to normal. If you don’t ever slow down, the physiological adjustments and the stress symptoms persist. It is this persistence of the body’s response that matters. You may develop physical, physiological or psychological problems, and may not be able to lead a normal life. Many cases of stress are somehow connected with money, or rather the lack of it. Such people struggle to make ends meet or to acquire more material possessions. This brings us to our final discussion: attitude.

Attitude

It is always pleasant to enjoy the fruits of our labours, of course. Sometimes, however, it seems that whatever we do, it’s just not enough to be able to afford that new car or that foreign holiday. So, what do we usually do then? We work harder, longer; we increase the stress on our minds and bodies; we spend less time with our families and friends; we become more irascible and less likeable people. If you find yourself in this situation, just stop for a moment, and consider: Is it all worth it? What is the purpose of life? Surely it is to be happy. You’ll probably be happier if you adopt the philosophy that true quality of life is not to be found in material things. If you convince yourself that you want less, you’ll need less. If you need less, you’ll cope with life more easily, and the happier, and therefore healthier, you’ll be. Buddha called this “enlightenment”. Enjoy a “good-health attitude”. Focus on your abilities instead of disabilities. Be satisfied with what you have, rather than be dissatisfied about what you don’t have and probably never will have.

If you simply cannot cope with a healthy diet, exercise and emotional control, but genuinely prefer to eat junk food, be permanently drunk, be under constant stress, and be disliked by others, then enjoy your life while it lasts, but understand that the trade-off is that it will probably not last long. If you accept this willingly, you’ll be happy. There is some merit in the philosophy that it is better to live a short, happy life than a long, miserable one.

Conclusion

Personal or individual health is largely subjective. For most individuals and for many cultures, however, health is a philosophical and subjective concept, associated with contentment, and often taken for granted when all is going well. The evidence that behavioural factors such as diet, physical activity, smoking and stress influence health is overwhelming. Thus, health is maintained and improved not only through the advancement and application of health science, but also through the efforts and intelligent lifestyle choices of the individual and society. Perhaps the best thing you can do for your health is to keep a positive attitude. Optimal health can be defined as a balance of physical, emotional, social, spiritual and intellectual health. Maintain a positive attitude!

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