Posted by: Janet

By Jim Hart

There are two main types of financing for a business, debt or equity financing. Debt financing tends to be the type of financing you receive from a traditional bank loan and equity financing tends to be financing you receive from venture capital into your business from outside investors. The benefit of debt financing is that it is finite and you will pay down the debt over time to a zero sum balance without any further obligation to the lender. The down stroke to debt financing is that traditional lenders will take a hard look at your business including how long it has been in existence, income from operation, expenses and will require hard assets for collateral for the loan. Additionally, lenders will most certainly want you (and any other principals of the organization) to personally guarantee repayments of the loan. Another disadvantage of debt financing is that your organization will be burdened with some other type of regular payment (usually a monthly payment) depending on the terms and conditions of the financing and this can absorb critical cash flow, especially with small business.

The benefit of equity financing or venture capital is that you will be receiving money in exchange for equity in your business in the form of stock or some other form of equity like percentage of income or gross/net sales. A primary benefit of this type of financing is that typically there is no monthly payment requirement to investors. Instead, you are giving up ownership interest, most often, permanently.

Traditional lenders, banks for example, will look at your business much differently than venture capitalist. Bankers want a zero-risk or near-zero risk position when they provide financing and will rely almost completely on the operating economics of the business with little regard for “potential future growth”. They want to see strong cash flow backed up by hard assets before they do a deal—the ingredients that most small business lack or they wouldn’t be seeking financing, right? Venture capitalist, on the other hand, tend to consider the management team and the potential future growth of the business more heavily than actual operating numbers, especially for small business with large potential but few sales and little or no operating history. Although these two lender types vary in their approach to analyzing a business for funding, you can be sure that careful scrutiny of you business will be conducted…

Besides the actual operating economics and pro forma analysis, both types of lenders will look closely at two particular documents: 1. Your business plan. 2. Your bank or loan request package. These two documents, if assembled correctly, can make the difference between success and failure when dealing with either lender type.

There are plenty of free SBA related materials that tell you how to create blue-chip, boiler plate business plans but they tend to be written for perfect businesses and not the average Joe who is less than picture perfect. If you are seeking some type of financing for your business I strongly suggest that you visit our site and check out our business e-books. We have several that cover a variety of topics and there are specifically two that will be a real treasure for you to own. One is called Power Planning (a powerful report on writing a wide variety of business plans) and How To Raise Money For You Business (teaches you how to assemble professional loan requests packages). They are priced at $5 each and can be worth millions in the hands of the right person. I am not trying to hype product, I am simply giving you a heads up.

Article recommended by: Janet Schlarbaum

Author: Cornie Herring

People always say that investment is a money game with the playing rule of “high risk with high return and low risk with low risk”. You may want to invest in an investment portfolio that is able to give a good return and stock market is always the best choice in term of high return. But you aware that investment in the stock market will cause you to lose all your money as well, because the game rule said “high risk is high return and low risk comes with low return”. Hence, stock game might not suit your risk profile; you may want to look for an alternative that can give comparatively good reward but with much lower risk than stock. If you are categorized in this group, then mutual fund can be your game.

Mutual Fund Is A Risk Sharing Game

A mutual fund is simply a financial medium that allow a group of investors to pool their money together with a predetermined investment objective. The pooled money will manage by a fund manager. The fund manager is a person who is widely expert in stock and bond markets. He/she is responsible to invest the pooled money into specific securities, usually stocks and bonds. When you are buying shares of mutual fund, you will become one of the fund’s shareholders. All the gains and losses will be shared among the fund’s shareholders. Hence, mutual fund is a risk sharing game.

Compare to stocks and bonds, mutual funds are one of the cost effective and an easy playing game. You do not need to really expert in stock and bond market because the fund manager will take care of it; and you do not need to crack your head to figure out which stocks or bonds to buy, because you have the expert, the fund manager to make the decision for you.

You do not need a lot of money to get your start the game; you decide the amount of money you plan to invest into the mutual fund. Some mutual funds may even let you start with just $100. The best part is the cost effectiveness. By pooling money together in a mutual fund, investors can purchase stocks or bonds with much lower trading cost. The biggest advantage of mutual funds as compare to stocks or bonds is “diversification”.

Diversification Will Lower The Risk

Investment experts always advise that if you want to invest you money, “Don’t put all your eggs into the same basket; else if the basket fall, all you eggs will break”, some will happen on your money, if you invest in one stock, if the stock perform negative, you loss all you money. Diversify your investment to spread out your money into many different types of investments. When one investment is down, another might perform in up trend.

Hence, with the diversification of your investment, you will reduce your risk tremendously.

You can diversify your investment by purchasing different kinds of stocks and bonds instead of one. But it may take weeks to buy all these investments. In contrary, you can get these done by purchasing a few mutual funds and mutual funds automatically diversify your investment across many stocks and bonds.

In Summary

Mutual fund is a risk sharing investment portfolio, it’s provides you a medium of investing your money into a high earning stock & bond market while automatically diversify your investment to reduce your risk. Hence mutual fund can be your alternative of investment portfolio that will give you higher reward and lower risk.

Article published by: Mark Schlarbaum

Author: Jim Brown

The financial services that an investor chooses to use will help them create smart investment strategies for online trading. They might choose to trade with an investment management company or they might choose to go it alone and trade on Wall Street with the help of an investment broker. Every decision that they make on their investments will have a direct impact on their financial future.

The smart investment strategies will begin with a definite plan. The planning phase of the investment process can be aided by the help of a financial professional who is thoroughly involved with the online trading world and knows which routes an investor can take to get the most out of the money that they are willing to invest. The investment strategies that are open to an investor can have a short-term or long-term effect on their financial future.

The smart investments will be ones that are diverse. An investor has a better chance of success if they choose to create an investment portfolio that contains well rounded numbers of stocks, bond, annuities, certificate of deposit accounts, and accounts for personal and business use. How aggressive the investor wants to be in his approach to building wealth will determine which smart investment strategies to take.

Some investors prefer to take the route of online trading because it is so quick and simple to do. The investor will be able to see all investment assets in every account that is created and be able to see in real-time the current prices of the stocks and bonds that make up a portion of their portfolio. The online trading investor has access to investment professional’s 24-hours a day through the online forums and blogs that are on the online trading website.

The investor can determine what the smart investment strategies will pay off through the use of handy calculators posted on the online trading website. The investor can also use these calculators to determine if they have a solid investment platform to work with before they begin transacting trades online. These calculators can help the investor plan out a monthly budget or a budget strictly for business use.

Helpful article collected by: Janet Schlarbaum

Author: Steve Selengut

Stocks, bonds, index funds; averages, recessions, market rallies and corrections; mutual funds, technical analysis, financial statements; commissions, taxes, and discount brokers. Just how much do you know about investing, or perhaps a better question: is there any “know” in the investment vocabulary? So many terms, ideas, and strategies; so little time and money! Here’s a list of thirty mostly-true or mostly-false comments for you to kick around with your friends and fellow investment bloggers:

1. Every Properly Diversified Portfolio will have up to 5% of its market value in each of these areas: miscellaneous speculative opportunities, gold or other commodities, small cap stocks, and global index funds.

2. Financial Professionals are well trained in all aspects of investing, investment portfolio design, and management. Consequently, a significant portion of their compensation is tied directly to how well they help their clients develop high quality, properly diversified, and goal directed portfolios.

3. Buy-and-Hold continues to be the proper investment strategy for most individual investors, especially if automatic reinvestment of income is part of the package.

4. It’s a better Investment-Income Strategy to buy shorter duration corporate and municipal bonds (rather than higher yielding long-term debt) because the market value doesn’t fluctuate as much with anticipated changes in the direction of interest rates, and that is the most important concern with income investing.

5. If an investor can learn to control his own Greed and Fear, he will have a much better chance of investing successfully.

6. Asset Allocation is a strategy used by investors to move assets from weak market sectors to strong ones in order to improve the growth of the Investment Portfolio’s bottom line.

7. No Load Mutual Funds are particularly good for investors because the mutual fund company does not charge anything for its services.

8. In the long run, investing in the stock market will assure you of keeping up with Inflation.

9. The proper gauge of your total Investment Portfolio Performance is the change in market value over the course of a calendar year, compared with the change in one of the more respected stock market averages during the same period of time.

10. Quality, Diversification, and Income are considered by many investors to be the three basic principles of investing.

11. Mutual Funds have always been a safer route to long-term investment success than trying to create your own portfolio of individual securities.

12. The Dow Jones Industrial Average is comprised solely of investment grade companies, and generally gives a clear indication of what is going on in the stock market.

13. Smart Cash is an integral part of any asset allocation formula because it allows investors to time the market successfully. Professional market timers know precisely when to move into or out of cash in anticipation of the next major directional change in the market.

14. It is a well-known fact that there are certain Core Portfolio Securities that belong in all investment portfolios if long-term success is to be expected.

15. There is no such thing as a freebie on Wall Street.

16. Closed End Mutual Funds (CEFs) are not popular with Wall Street professionals because they are inherently more risky than normal mutual funds.

17. Packaged Investment Products are designed with a sincere concern for the financial well being of the average investor, and are good for everyone.

18. Zero Coupon Bonds are an important part of the fixed income portion of the investment portfolio, especially when retirement is contemplated within five years or so.

19. The second step in every stock purchase should be the establishment of a Stop Loss Order. Such an order assures you that your losses will be limited to a specific percentage of your purchase price.

20. The IGVSI tracks the market value of a small but elite group of New York Stock Exchange equities.

21. The Four Most Important Investment Ideas include: buying only high quality securities, diversifying properly, using discount brokers exclusively, and establishing reasonable profit-taking targets.

22. Profit Takers and Traders hurt the average investor.

23. Investment Grade Value Stocks will be the next red-hot market sector.

24. “Sell your losers and let your profits run” is the essence of sound Investment Management thinking.

25. The November Syndrome is the partial result of the interaction of Wall Street institutional window dressing and the Infernal Revenue Code.

26. It is important that you take your Tax Losses regularly, particularly if you have held the losing position for less than one year.

27. Annuities, particularly Variable Annuities, are perfect investments at retirement both for people of limited resources and for the wealthy.

28. Technical Analysts can predict the future movements of the economy, individual securities, and the stock market with a very high degree of accuracy.

29. Index funds will always beat the market, or market sector, that they are designed to track.

30. The keys to successful investing are Asset Allocation using only two investment buckets: Equity and Income, and the development of realistic expectations about their market value performance.

Author: Jay Moncliff

Is offshore investing only for the rich and famous? Probably not, although most of us don’t know a lot about offshore investing. Here is a simple primer for the fledgling offshore investor.

Offshore investing is simply placing your investment dollars in an account with a bank that is not in the United States. There are several advantages to investing offshore.

First, there is less regulation. Some may feel that this makes the investment riskier, but that is not necessarily the case. It does allow the fund manager or company to act more freely. The lack of regulation also means less taxes. Most offshore accounts are invested in countries that have minimal tax laws for these investments. That means that more of your money is available to work for you.

Privacy is also an issue for some investors. Most of the countries typically involved in offshore investments have laws making it illegal for the investment firms to release any information regarding their investors. There is virtually no governmental reporting. This ensures that your investments and personal information will be confidential. For many who want privacy, this is a major benefit of offshore accounts.

In our lawsuit happy society, those with assets want to protect them from litigation. Many of the offshore countries chosen have laws that don’t recognize foreign awards so the assets placed in these countries are not subject to seizure. Although not a major consideration for everyone, for many it is a factor in deciding to choose an offshore investment vehicle.

Many of the offshore jurisdiction have much less complicated estate laws and tax structures. Utilizing offshore accounts for estate planning purposes is becoming more and more popular. Many set up an offshore charitable foundation in countries with favorable estate tax laws.

In order to set up an offshore investment account, an individual must either reside in or establish a legal presence in the offshore country that will make the gains taxable in that jurisdiction and not the onshore one. There are several companies that will help you set up a corporation and complete the required paperwork to get started in offshore investing. These firms will help you set up a corporation called an International Business Corporation (IBC) or a Limited Liability Corporation (LLC).

If you’re happy with your existing portfolio, but you want to move it offshore, you can move to a brokerage firm offshore once the legal paperwork is completed. The brokerage account will be opened under the name of the IBC, and then the brokerage completes your orders in the name of the IBC. Your personal identity is never involved. Of course, these brokerages can invest in offshore mutual funds or any investment worldwide.
Offshore investing may not be for everyone, but if you have assets that you want to protect from seizure, you want to maintain the strictest confidentiality, or you want to seek tax relief, investigate the possibilities. You may find that offshore investing will help you reach your financial goals.

Author: Mark Walters

Wealth is an abstract. It is sometimes defined as fecundity or sustainable spending. It is defined as the primary goal for investors and is measured by the level of ‘expendable income’ or ‘capital’ in their portfolio.

Many people define wealth by the total of their assets including real estate, funds, and investments. Others measure it by calculating the amount of money they can afford to spend. Either way, it is important to pick one method of calculating wealth, and stick to it.

How wealth is defined dictates how a person approaches investing. Benjamin Graham states that the investment management is the management of risks, not of returns. This is the foundation of a well-managed precept.

There are several methods of managing risks. Each one provides several benefits, depending on the investor’s aggressive behaviors or willingness to accept high-risk ventures. However, understanding risk can be tricky. One person, such as a broker, may consider a stock that does not perform well as a high-risk stock. A private investor may consider a low-risk stock anything that does not drop below the 10% level.

Individual Risk

This is the risk associated with the investor’s personal wealth. What can the investor afford to lose? And, how long can that investor leave their funds untouched. It is also important to calculate how much that investor needs to gain, and in what time span.

Managing Individual Risk

This is easy to calculate in the short term. Just estimate how much money can be comfortably invested. In the long run, it involves a few in-depth calculations. The amount of gains expected, and the impact of failing to meet expectations is a risk that must be written in black and white. When an investor is planning for their retirement, the funds must grow. The rate at which they grow depends on the number of years before retirement.

If the money is not needed, and its loss will not have a major impact on the investor’s wealth, then the investor can look at biotech stocks that may skyrocket if the lab discovers a new drug, or a cure for a disease, or will bottom out if the lab loses their funding.

Market Risk

This is the risk associated with the different markets. Can an investor survive a stock dive, or if the real estate bubble bursts. This will determine whether the investor can manage mutual stocks, or should stick with blue chip stocks. It will also determine whether the investor purchases a good home in a good neighborhood, expected to appreciate 10% in ten years, or penny stocks that might double in eighteen months.

Managing Market Risk

This risk is associated with the area in which the money is invested. One way to manage this risk is to stay within markets the investor understands. Another way is to avoid buying into both fields. Gold and Real estate are solid, but when they are increasing, stocks decrease, and vice verse. By understanding the risk and expectations in one, two, and five decades, the investor can create a good diversification package.

The first two have statistically based solutions; increasing risk tolerance addresses an emotional challenge. One way to manage risk tolerance is to minimize the negative impact of the negative risk.

There are two ways to manage risk. First, by building a cushion against risk. Second, by ignoring it.

Author: Joseph Kenny

Getting a good investment portfolio is something that everyone needs who does any kind of investing. Having a good spread of investments is also a good idea, in the event that one area of investments takes a loss. Here are some tips about how to get an investment portfolio that is well balanced and should enable you to weather most storms.

By investing in only one area of the market, you are more apt to run into a larger loss if that part of the market does poorly during a given time period. On the other hand, if you diversify enough, other profitable areas can make up for poor growth in one area. This allows you to continue doing at least reasonably well in some areas - in other words - all is not lost.

Diversify Into More Than Type of Market

A balanced portfolio will not resort only to trading in various types of stocks, but should also include some items that are more financially sound, even though they may not yield such a high increase. To your stock trading, you need to include bonds, trust funds, and possibly even property. The principal, simply stated, is that you do not want to risk losing everything. Though the interest rates are not as good on the bonds, yet they are stable and will provide a good hedge against loss - even in a rather economically strapped time. Trust funds do even better with interest than bonds, they are much more stable than stock in general, but they also can have their bad days, too.

A general rule in investing in stock is that you should never invest more than you want or can afford to lose. The reason is obvious - you could lose it all. But by taking a percentage of your investments and dividing them up between these various investment instruments, you should be able to gain a much more stable portfolio, and still end up with some for retirement.

Market Transactions By Sectors

The market is generally made up of a number of sectors - each one consisting of several groups of industries, and each one with their own share of stability and instability. While one sector, such as telecommunications, may not be doing as well as it once was, other areas may really be thriving. Only by a constant watching of the market will you be able to discern these developments, and know which one is worth investing in. A safer way to pick stocks is to be careful what advice you receive (the best being those who have successfully traded for years), as well as the means used to determine which ones are “good investments.”

Instead of just going out and buying the stock of a particular company, it is a real good idea to use stock options. These “tickets” (my word for a call option, or a put option) allow you to be ready to make stock purchases or sales, depending on what you want to do. They can save you a considerable amount of money and give you a window to see what may transpire with the company you are looking at. For instance, if you buy a “ticket,” and it costs you $400, you have a window of opportunity that will give you a little time to make your transaction. It is not an actual commitment to do so - just a readiness. Instead of just going and buying that $5,000 worth of stock, and possibly losing thousands, by using this ticket method, you may only lose the cost of the ticket.

Learn the Options Available To You

When you want to create a really stable portfolio, it is a real good idea to make a strong effort to learn all you can about the various techniques of investing, understanding the stock market and mutual funds, as well as products that you can successfully invest in.

Author: Andrew Winthorp

Asset management is conventionally assumed to be a term that describes the processes carried out by the financial industry for wealth and portfolio management. In modern day business practice, this term can extend to equipment, infrastructure and even digital information. With company processes extending from the ‘cradle to the grave’, managing the stages of a companies asset lifecycle not only maintains them in good working order, it reduces the costs, increases productivity and extends the useful life of the asset. In capital intensive industries where the cost of equipment and systems is high, effective asset management can result in a significant improvement to a companies bottom line.

The monitoring and reporting process associated with asset management allows companies to make more informed choices about the distribution of resources. With inventory monitoring and pre-determined maintenance schedules, companies can reduce the capital costs associated with poor asset management and overstocked inventory levels. This capital can be reallocated to other areas of the organization for process improvement or business expansion. Managers can spend less time in fulfilling equipment requirements and more time on business initiatives that support the companies overall goals and objectives.

Asset management software permits companies to monitor and manage extensive information systems. With organizations increasingly dependent on information flows and critical data, maintaining system integrity and protecting infrastructure from external attacks has become critical for a companies operational viability. Monitoring software permits network scanning of hardware for external connections, data access and the installation of programs not approved as part of a companies technology mandate. With real time reporting and email alerts, it managers can reduce system support requirements and focus on central core it objectives. This ultimately improves productivity by reducing downtime and freeing up time that would otherwise by consumed by administrative tasks.

Author: Eri Rahman

Easy access to investing information and the availability of online trading has made life much more enjoyable and less costly for do-it-yourself investors. The Internet has brought the “trading” desk to millions of households and it is now possible to buy and sell shares, options, warrants, interest rate securities and managed funds from your own home. All you need is a computer and an internet connection. In addition, you can do your own research on a particular company or fund manager as well as finding out what some stock brokers are recommending to their clients. Much of this information is free or available at a reasonable cost and you can save yourself hundreds, or even thousands of dollars in fees and commissions every year via the internet. Rather than go through a full service stockbroker or investment advisor, why not give it a try?

When building your own stock portfolio, here are some pitfalls you need to avoid!

While you can find a plethora of good information on stocks, you can also find very poor information. Each website claims to have the latest hot picks or the “top ten” stock buys and often they contradict each other. Who do you believe and what about the scams?

You will undoubtedly come across websites and chat rooms that give investment advice or tips about investments, but many of these are not qualified to do so. The information may be wrong or misleading and some websites even repeat incorrect rumors.

There is overwhelming evidence that you will not become rich by listening to the advice of others. As an investor you need raw information, not recommendations. You would not buy a car just by looking at it…nor should you buy a company’s stock without doing significant research. There is no point trying to take control of your finances if you are going to rely solely on a “tip” from a newspaper or a broker or an internet chat room. It is true that someone may know more about a particular company or stock than you, but they could easily be wrong - so do your own homework!

You need to be certain that you have sound reasons for investing in a particular company. Does the company have an instantly recognizable name? Do you understand what the company does? Do the products or services of the company stand a good chance of being in high demand in a 10, 20 or 30 year time frame? Does it have a management team that moves with the times and is innovative, yet keeps a firm grip on the company’s finances? Most of this information is available in a company’s Annual Report, but make sure that you read it with a degree of skepticism…most reports are written to promote the company.

In the Annual Report, the financial statements, the balance sheet, the profit & loss statement and the cash flow statements are very important. They are important because they will help you assess if the company is providing value for your money. You are going to be buying stocks at a certain price and you will want to make sure that you are not paying an excessive amount. The financial numbers give you a snapshot of the financial structure, strength and growth rate of the company. This type of analysis is often called fundamental analysis, and also includes analysis of the economy and industries related to the company.

Keep in-mind that the historical and present prices of a stock hold clues to the future price. In practice, most analysts use fundamental analysis for short and long term buy/sell decisions and use technical analysis to confirm the decision.

Internet websites are a great place to collect information about companies. Naturally, a company owned website will attempt to portray the company in the most sympathetic light. Depending on how serious you want to be about investing, it is advisable to either visit or subscribe to investment research websites. Research websites are valuable tools for any investor and provide company reviews, give general investing information, market updates, stock pickers, stock ratings, watch-lists, portfolio managers, charts, share indexes, newsletters, alerts and model portfolios.

Author: Thomas Morva

In a business enterprise, finance is the connecting link of all the functional areas such as production, personnel and marketing, so the management of finance is vital to the smooth performance of the organization. The basic financial operations are investment, which deals with acquisition of fixed assets; financing, which deals with raising required funds from various sources; and profit appropriation, which deals with appropriating the profit earned by the enterprise among the suppliers of funds.

Regarding investment, assets/ projects are to be selected only by considering their net returns. Regarding financing, it is to be ensured that the firm gets the required financing at the lowest possible cost. Similarly, regarding profit appropriation it is to be seen that sufficient funds are provided for the developmental activities of the enterprise, without impairing the interest of the suppliers. In a firm where these operations are planned and controlled properly it can be said that there exists efficient investment management. Thus, investment management may be defined as that part of managerial activity which is concerned with the planning and controlling of the financial resources of a firm.

As every business activity requires investments, investment management is closely related with other areas of management. When investment is managed properly, other areas will also show good performance. Investment management helps in monitoring the effective deployment of funds in fixed and working capital. This will, in turn, ensure better working of the enterprise.

All the operations and resources in a business organization are managed with the same broad objective, i.e., to attain the objective of the enterprise. So each resource or area should be managed in such a way as to contribute to the fulfillment of the objective of enterprise. However, there are specific objectives for each functional area. In the case of investment, the objective is to ensure that the firm obtains the required finance at the lowest possible cost, and uses it in the maximum beneficial way.