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Understanding Interest Rates

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By Luis Dominguez

Union Bank, N.A. Vice President and Branch Manager Miracle Mile

Whether you are borrowing money for a large purchase, such as a home or business, or are deciding where to invest your savings, interest rates can be a key factor. Interest is the cost of borrowing money, and is based on the concept that lenders are entitled to a return on their investment. Interest compensates a lender for allowing a borrower to use their money for a period of time, and assuming the financial risk of doing so. This also applies to when one deposits money into an interest-bearing account. They are essentially “lending” money to a financial institution that it can in turn use to make loans, so the depositor is paid interest on their deposit. The amount of interest paid on a loan depends on a number of factors: the dollar amount loaned or borrowed, the interest rate, length of time involved in the transaction and the repayment schedule, and the method used to calculate interest.

Simple interest Whether making a deposit into a savings account or obtaining a loan, interest is expressed as a rate and is calculated as a percentage of the total amount borrowed (the principal). Simple interest is figured once. For example, if you purchase a $1,000 savings bond at 5 percent interest, you would earn $50 in interest at the end of the year in simple interest.

Compound interest Compound interest is interest paid on the principle as well as previously earned interest, so the money you earn in interest becomes part of the principal, and also starts to earn interest. If you are saving money in an account, compound interest works in your favor by increasing your earnings. Compound interest works the same way for certain loans and credit cards, but in these cases grow the outstanding balance, making it increasingly difficult to pay off the loan if only the minimum payment is made.

Periodic Interest Rate Interest rates are often quoted on an annual basis. However, most financial institutions do not calculate interest annually, but rather at the end of a certain time period, such as semi-annual (every six months), quarterly (every three months), monthly (12 times per year) or even daily (365/366 times per year). The more frequently an investment or debt compounds, the more quickly the principal grows, so in order to calculate how much interest is being charged or earned over each compounding period, you must consider the periodic interest rate. The periodic interest rate is the interest rate charged on a loan or realized on an investment over a specific period of time. This calculation is made by dividing the annual interest rate by the number of compounding periods.

For example, let’s say you have $1,000 in an interest-bearing account that is earning 5 percent interest and the compounding period is monthly, instead of annual as in the previously mentioned savings bond scenario. The interest is calculated monthly and therefore as 1/12th of 5 percent, or 0.417 percent each month. When calculated this way, the account will yield $51.20, thanks to the compounding interest effect taking place on a monthly basis.

APR vs. APY Interest rates are also often quoted as an annual percentage rate (APR) or an annual percentage yield (APY). The APR reflects the measure of interest on an annual basis without taking into account compound interest. The APY is the same interest rate measure, but it takes into account the interest rate and compounding period to give you a single number that represents how much you will earn from that investment in one year.

As in the previous example, the account that paid $51.20 in interest due to compounding monthly interest had an APY of 5.12 percent, even though the APR was 5 percent. APR and APY are tools that give you a single number to help you compare “apples to apples” when shopping for financial products. When in doubt, it may helpful to consult your banker or financial advisor to walk you through and give you an accurate picture of the impact interest rates have on your financial future.

The foregoing article is intended to provide general information about interest rates and is not considered financial or tax advice from Union Bank. Please consult your financial advisor.

New School to Honor Educator Mildred D. Henry Groundbreaking set for August 23

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Black Voice News Staff Report

Dr. Mildred D. Henry has worked for over 28 years with underprivileged youth in San Bernardino and has remained committed to giving students a second chance to succeed. Now the veteran educator will have a school named after her. The Dr. Mildred D. Henry Elementary School groundbreaking will be held on Thursday, August 23 at 10 a.m. The school will be located at 1250 West 14th Street in San Bernardino. The 13.9-acre school is scheduled to be completed in July 2013 and will house approximately 564 students in 24 classrooms. The school is named in honor of local educator and Cal State San Bernardino professor emeritus Dr. Mildred D. Henry, executive director and founder of the Provisional Accelerated Learning (PAL) Center.

The center is a subsidiary of Provisional Educational Services, Inc., a community-based 501(c)(3) non-profit organization that has provided education and employment to youth and adults for 25 years. The PAL Center has successfully specialized in working with at-risk youth in dropout prevention and recovery programs. The site offers the PAL Charter Academy High School, grades 9 through 12, and youth employment programs, the largest of which is the Workforce Investment Act (WIA) Youth Employment Program. Besides Mildred Henry Elementary, the District recently broke ground on several more campuses, including George Brown, Graciano Gomez, and Little Mountain Elementary Schools. In addition, two new schools are opening their doors to students this month, Norton Elementary and Indian Springs High School.

Padua Hills Art Fiesta returns Sunday, November 4

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Last year, the Claremont Museum of Art revived the tradition of the Padua Hills Art Fiesta held by Claremont artists from 1953 through 1959. The event was enthusiastically received by the community with 600 people attending.

The 9th Annual Padua Hills Art Fiesta returns with an outdoor art show, art and craft demonstrations, folk music, tacos and Jamaica punch. This year's exhibit will feature original Fiesta artists Rupert Deese and Harrison McIntosh. See attached full press release for more details. Photos available upon request. Studio visits and artist interviews can be arranged including with Harrison McIntosh who turns 98 on September 11.

• Sunday, November 4, from 11am to 4pm at 4467 Padua Ave., Claremont. Tickets will be $8 for adults, children under 18 are free. Claremont Museum of Art members will receive a 25% discount.

• Over Twenty area artist will display and sell their work under shady olive trees of the beautifully restored Padua Hills Theatre.

• An Art Exhibit, Rummy & Harry: 60 Years in the Studio, will showcase the ceramics of Rupert Deese and Harrison McIntosh. Historic materials will highlight their long friendship and the studio they shared since 1950.

• Art and craft demonstrations provided by area arts organizations will include ceramists from the AMOCA Ceramic Studios, craftsmen from Maloof Woodworkers, CCAA Museum of Art watercolor painters and artists from the dA Center for the Arts.

• ARTstART students will lead children in creative Art Activities.

• A Music Stage will feature local folk musicians.

• Festive foods from Casa de Salsa's taco bar and Spaggi's will be served with traditional Jamaica punch and fresh lemonade.

• Holiday shopping gets an early start with unique handmade artwork or art books.

USC Summer Residential Program!

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By Jordan Brown

This summer I attended a summer residential program at University of Southern California. It was very beneficial in getting ready for high school and college. During this program with the National Association of Peer College Advisors (NAPCA), we took over 40 classes about college readiness and high school. We also got the “college experience”, by staying in the dorms. We learned the value of education while making lots of strong friendships at the same time. This program is a great one to attend. College readiness is stressed at NAPCA, because everyone there (incoming eighth graders to incoming seniors) is planning to go to college. Throughout the time, we had to get into groups by our intended major. In those groups, we created a power point to present at the end of the program for our peers and family. We also got a chance to visit the school for the major of our choice. I went to the school of business, and the school of journalism and communications. The experience was unforgettable. It helped me to better understand the environment of the college and the programs it has to offer. We had classes on many different things from writing a college application statement to time management. The classes also worked in the area of teamwork. We had to work with people we didn’t know and get comfortable enough to present different ideas. In our classes we learned about the A through G requirements. Not just to meet the requirements but to take all the recommended classes too.

College students pick their university by the experience they’d like to have. In a class, we received an opportunity to learn about sorority and fraternities. We took a visit to the houses; the girls got to walk through the houses and see how the sorority sisters lived. The boys visited fraternities. We took other field trips to restaurants and skating. We got to know our suite and roommates very well, considering we didn’t know them at all. The dorms are set up as suites with six people in each one. We all collaborated on what we learned in the classes and made bonding friendships. Overall, my summer experience was educational and memorable. I hope to use the tools I received in high school and in college. It was great preparation for my education in general. If you’d like your child to attend the National Association of Peer College Advisor’s program next summer, go to their website at www.napcaonline.org to learn more.

Street Positive Fathers Event

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Planning for the Million Father March is underway for the September 8, 2012 event. Located at the former March AFB in Riverside, CA, Boykins states "The choice of Cross Word Christian Church is both symbolically and logistically practical given the goals and objectives we have set with this year's march. Those participating will truly be part of the kind of history their children's children will speak about one day. So, participants definitely want to make sure they bring their cameras. And, walking shoes. Onlookers will truly see the Power of Fathers Moving As One in support of their children's education."

The proposed march route is approximately 2.2 miles.

Planning for the Million Father March is underway and those wishing to volunteer should contact (909) 880-9427. Additionally, efforts are being made to collect canned goods and bottled water to support youth and families in transitional living facilities.

The themed event, "I Am My Child's Superhero", will offer a commemorative t-shirt, as well as, a book entitled "A Fragile Child's Cry" by author H. L. Stampley to promote literacy. Stampley participated in the 2009 Million Father March, which was dedicated to fathers of disabled children.

Boykins, who since early 2007, has helped organize the national outreach effort founded by Black Star Project's, Phillip Jackson in 2004, says he and Bishop Sykes have met and discussed the importance of father involvement on numerous occasions. Sykes has spoken widely on the subject and routinely interacts with "Men of Valor", a church ministry at CWCC, to progress those who are fathers and those who one day will become fathers. In addition to providing the welcome and greetings to attendees, he will also conduct the event's annual "Back-to-School" prayer.

Another instrumental community partner involved in bringing the Million Father March to the Inland Empire is Pastor James Baylark of Good Hope Missionary Baptist Church in Perris, CA. Pastor Baylark is slated to speak on "The Church and the Streets."

Important topics covered during the 2012 Inland Empire Million Father March will include mental health, academic achievement, child safety, student violence, incarceration, parent-teacher partnerships, graduation rates and goals, as well as, college and trade-school support. The event will also feature guests speakers, panel discussions, open mic, entertainment, resources and food offerings. Dr. D.C. Nosakhere Thomas and son, Kamaal Thomas, who was recently awarded the Gates Millennium Scholarship and featured on ABC7 Cool Kids will serve as father-son emcees for the event. Kamaal will attend UC Davis in the fall. Participation and attendance is expected to be significant.

Exhibitor space is limited and will be available on a "first come - first served" basis. Contact Ms. Jessica Garcia at (909) 556-4650 to request an application. For additional updates and information regarding the Inland Empire Million Father March visit www.streetpositive.com.

NOTE: the Los Angeles Million Father March will be hosted by LAMFMOC and held at Mona Park in Compton, CA on September 29. "I Am My Child's Superhero."

4Positive Knowledge P.O. Box 9044
San Bernardino, CA 92427
Tel: (909) 880-9427

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