Devin Consultants Financial Management in Singapore and Tokyo

Devin Consultants, a financial management company with hundreds of satisfied clients who trust the counsel and services we provide through our financial experts. Utilizing the latest technology, we can help you enjoy full online access to our financial management services.

5 bad financial habits to eliminate before starting a business

5 bad financial habits to eliminate before starting a business

 

Managing your finances can be really stressful. There’s so much information to know, mastering all of it seems like an impossible task. Moreover, if you’ve developed some bad financial habits over the years, correcting them may seem extremely daunting.

 

Luckily, it is possible to improve your financial prowess. With a little effort, you will set yourself up for a better financial future, which can be a real benefit when it comes to starting a business. As you overcome your bad financial habits and instill new, good habits, you’ll learn how to manage not only your personal finances but business finances, too.

 

If you want to become more successful and get closer to starting your own business, you need to give up the five habits below. Some of them you’ll be able to give up today, while others will take a little bit longer to overcome. There might be some hard work involved to rewrite these five behaviors, but once you do, you’ll find that the work was well worth the outcome.

 

1) Living paycheck to paycheck

 

Very often, people have no idea what they’re actually spending all of their money on. Before they know it, their bank account is approaching zero, and they’re simply waiting for their next paycheck to come. The bottom line is this: without paying attention, it’s easy to spend the money you should be saving.

 

If you’d like to break out of this vicious cycle, the first step is to start tracking your expenses. If you don’t know where all of your money is going, you can’t give it a purpose. So, track every dollar, understand how much is going in and how much is going out. With this information in mind, you can overcome the bad habit of living paycheck to paycheck.

 

2) Avoiding a budget

 

Figuring out exactly how much money is coming in and going out is the first step to financial freedom, but it’s not the only step. Once you have a grasp of your monthly income and expenses, you’ll need to create a budget.

 

Whether you’re managing your personal finances or your new company’s money, you should always have a budget in place. Creating a working plan that outlines how you’ll cover your expenses and save for the future is key to financial well-being.

 

3) Neglecting your credit score

 

Knowing your current credit score and how you can improve it is paramount to success. Unfortunately, 30 percent of Americans have a bad habit of not checking and knowing their credit scores. Whether you worry about having bad credit or not, you should check your credit score at least once a year. Even if you are doing everything right, errors on your credit report might cause you to have an inaccurate score that threatens your financial health.

 

Although neglecting your credit score is number three on this list, its importance shouldn’t be understated. When you start a new business, your credit will likely serve as your company’s credit history. To secure the best funding and financing available for your future company, you need to start managing and improving your personal score today.

 

4) Failing to review statements and bills

 

Every month — sometimes several times a month — statements and bills roll in. Many of these documents don’t seem to require immediate attention, so people only view them at the end of the month. However, not opening these documents as soon as they arrive can wreak havoc on your finances.

 

If you don’t view your statements when they arrive, you might miss out on important information that should inform your budget. Like your credit, it’s also not uncommon for incorrect items to make themselves onto your statements.

 

Additionally, although you might dread looking at bills, you should catalog and categorize them as soon as they arise. Accidentally neglecting to pay a bill you’ve forgotten about is all too easy, so don’t give yourself the chance. This is a bad habit that doesn’t help your personal finances, and it certainly isn’t something you’ll want to do when you’re running your own company.

 

5) Thinking you can manage everything

 

Many people — especially aspiring business owners — have a bad habit of thinking that they can do everything by themselves. There’s only so much you can learn about building, managing and preserving your finances.

 

Fortunately, you can work with a mentor or a financial advisor that can help you overcome your bad financial habits to achieve financial freedom.

Source: http://devinconsultants.blogspot.co.id/2004/05/5-bad-financial-habits-to-eliminate.html

How to plan your mutual fund investments. Read here

Over the years, mutual funds have come across as a popular and fairly profitable instrument of investment. They have proved to be more hassle free and risk averse as compared to direct stock investments.

 

Here is an insight on how you can plan your mutual fund investment:

 

Short-term investment

 

What?

 

As the name suggests, these investments are made for short periods of time, typically for 12-month duration or even less.

 

When?

 

These investments are a boon in emergency situations. Be it a medical emergency or the sudden need of money for down payment of your car, short term mutual funds can bail you out.

 

What to keep in mind?

 

Since the investment is for a brief period, it needs to be ensured that your investment is insulated from market volatility. It is important as you would not want to see your investment numbers cut a sorry figure at the time of emergency. So, it is advised to invest in low-risk options -- liquid funds like Commercial Papers (CPs) and T-Bills or debt funds like government bonds, company debentures, fixed income assets etc.

 

Mid-term investment

 

What?

 

These kind of mutual fund investments are made for a period of 1-3 years

 

When?

 

If you are planning to launch a start-up or a business, mid- term investments are your best bet. Experts say that these investments can be helpful in case you are planning to buy property or real estate.

 

What to keep in mind?

 

In mid-term investments, your aim should be to have the best of both worlds. That is, you should eye to maximize your capital gains but at the same time you cannot afford to take too much risk as the period of investment in this case, is still not very long. So you can choose to stick with debt funds or maybe opt for Systematic Investment Plan (SIP) or monthly investments. SIP in mutual fund is recommended as a great way for a salaried person to invest in equity markets for long-term basis without understanding the working of equity markets.

 

Long-term investment

 

What?

 

Any mutual fund investment for a period of more than three years is termed as a long-term investment.

 

When?

 

As it is quite evident from the nature of the investment, long-term investments hold good if you are planning for the future. If you want to sort out your retirement plans, save for old- age health issues or nurture your child's education, you should definitely go for long-term investments.

 

What to keep in mind?

 

Since the investment is a long-drawn one, you can take down your guards off to some extent, against market volatility. You won't mind taking a few risks to rake in the maximum possible profits. So you can choose to invest in equity funds i.e. in shares of companies.

Source: http://devinconsultants.edublogs.org/2004/05/07/how-to-plan-your-mutual-fund-investments-read-here

How to Take Advantage of New Investment Opportunities like Cryptocurrency Funds

How To Take Advantage Of New Investment Opportunities Like Cryptocurrency Funds

 

Growing up is scary. Going from not having a care in the world to taking care of everything yourself can be a daunting task. Just paying the bills and buying groceries is enough, but when you start to think about savings and investment portfolios, the adult world can become overwhelming.

 

There’s your retirement fund—known as a 401K—at your job, of course. However, understanding how your 401K makes money can be a little confusing. Once you start thinking about how to invest your savings without help, personal finances can become a formidable proposition.

 

According to NerdWallet, over 60 percent of people 18-34 are opting to use savings accounts to set money aside for retirement. If they set enough aside each month, they may still be in good shape come retirement. But if they invest, they could be significantly better prepared.

 

If you are a risk-averse millennial that fears another stock crash like the mortgage crisis in 2008, technology may have an intriguing solution. The rise of cryptocurrencies such as Bitcoin, as well as safe ways to invest in them has led to an intriguing financial opportunity – cryptocurrency-based investment funds.

 

What Is A Cryptocurrency?

 

To explain what a cryptocurrency fund is, it is important to first understand the breakdown of the assets in the fund’s portfolio. Investing in cryptocurrencies such as Bitcoin, Ethereum, Ripple, and Dash is very similar to investing in currencies. People can use them for buying and selling and can invest in them as they would US Dollars or Euros. However, unlike their traditional counterparts, these cryptocurrencies have a limited supply, and they have to be “mined” in order to be used.

 

Bitcoin became the first mainstream decentralized cryptocurrency in 2009. Since then, several others including Ethereum, LiteCoin and Dash have become increasingly popular, attracting new traders and investors thus increasing the overall market cap significantly.

 

What Is A Cryptocurrency-based Investment Fund?

 

The easiest way to describe a cryptocurrency-based investment fund is to compare it to its traditional counterpart, the classic investment fund. In a traditional fund, your money is allocated between several different investments. Some entail more risk than others, which of course brings more reward. The growth of your equity depends on the volatility of the market and the type of investments that make up the fund.

 

Cryptocurrency funds operate in a similar fashion. eToro’s Crypto Copyfund, for example, is based on a diverse portfolio, currently allocating different percentages to six different cryptocurrencies (Bitcoin, Ethereum, Litecoin, Ripple, Dash, and Ethereum Classic), currently led by Bitcoin, and rebalanced on the first trading day of each calendar month.

 

This fund focuses on cryptocurrencies with a market cap of at least $1 billion (with a roundup of up to 2%) and a minimum average monthly trading volume of $20 million. The weight of each of the CopyFund’s components is decided according by market cap, with a minimum of 5%.

 

Other funds, such as those offered by Metis Management, prefer a more diversified investment portfolio, reserving part of their capital to invest in newer, more radical digital currencies.

 

As cryptocurrencies have gained in popularity, cryptocurrency investment funds have opened the doors to respond to the increasing demand to trade these digital assets in a more regulated way. With several cryptocurrency exchanges operating around the world, cryptocurrency investment funds offer investors a relatively safe method to invest or trade in digital currencies and increase their exposure to a potentially high-value asset class.

 

Are Crypto CopyFunds Worth the Investment?

 

With most new investment trends, it helps to be in on the ground floor. While cryptocurrencies have reached a new phase in their maturity as an investment asset, it’s still possible to get excellent returns investing in them. The top 100 cryptocurrencies have already surpassed $100 billion in value, with Bitcoin accounting for the lion’s share.

 

While they still hold more risk than traditional currencies and other assets, cryptocurrencies are becoming an established opportunity to diversify any investment portfolio. The value of each might remain volatile, but the popularity of cryptocurrencies is expected to continue to increase.

 

Cryptocurrency investment and copy funds such as eToro’s can help investors mediate risk by providing a diversified and transparent way to spread capital amongst the best-performing cryptocurrencies for the highest returns.

 

In addition, since this is a managed fund that updates on a monthly basis with the top cryptocurrencies, it provides a solution for investors interested in diversifying their portfolio with cryptocurrencies, but lack the time or knowledge to capitalize from them.

 

While cryptocurrency prices will undoubtedly fluctuate in coming months and years, finding a way to safely invest and have exposure to one of the fastest-rising investment trends is a vital for forward-thinking traders.

If You Must Invest in Commodities, Here's How

There are ways to access the asset class without investing directly in futures.

 

 

I recently wrote about how commodities are good for traders, but bad for investors as a useful long-term buy-and-hold financial asset. A broad basket of commodities has given investors lower returns than cash equivalents with higher volatility than stocks.

 

That higher volatility means there will be cyclical swings where commodities see huge gains as well as huge losses. The question many investors should ask themselves is this: Is there a better way to invest in commodities since the long-term risk-reward profile is so poor?

 

Commodities are a hedge against much higher inflation, so the past 30 years or so of disinflation haven’t been conducive to strong performance, but there are ways to access commodities in their portfolios without investing directly in futures.

 

Own an index fund. The simplest way to gain exposure to commodities is to own a broadly diversified index fund. The SPDR S&P 500 ETF currently has around 6 percent of its holdings in energy stocks and another 3 percent in basic materials. Foreign stocks have an even higher commodities tilt. The iShares MSCI EAFE ETF has 5 percent in energy names and 8 percent in basic materials while the Vanguard FTSE Emerging Markets ETF has 7 percent and 9 percent, respectively.

 

Invest in sector ETFs. You could also invest directly in these sectors. While this is a much more concentrated bet, ETFs now make it easier than ever to make a bet at the sector or industry level. Here are the returns since 1999 for the SPDR Energy ETF and the SPDR Basic Materials ETF compared to the Bloomberg Commodities Index:

 

 

Both funds have performed much better than commodities with similar volatility characteristics. The only problem with investing in sector funds is that they still have a fairly high correlation to the overall stock market. The correlations for XLE and XLB to the S&P 500 were 0.62 and 0.88 over this time frame. Many investors put their money into commodities in hopes of finding an uncorrelated portfolio diversifier, which sector funds may not provide.

 

Invest in companies that mine commodities. Instead of owning the commodities themselves you could simply own equity in the companies that extract them and put them to use. The Vanguard Metals & Mining Fund does just that. Here are the stats in comparison to the S&P 500 and Bloomberg Commodities Index:

 

 

This fund had just a 0.05 correlation to the S&P 500 in this time, meaning there is virtually no relationship between the return streams. It also had better returns than commodities, but it did so with much higher volatility. It also comes with bone-crushing losses that can be similar to the underlying commodities:

 

 

There have been periods when physical commodities decouple from the equities of the mining companies but both are still quite cyclical. When looking at the types of losses and volatility involved in precious metals and mining stocks it makes for a difficult portfolio holding, even if it ends up providing valuable diversification benefits. Very few investors have the emotional stamina to hold through this type of volatility or rebalance into the pain when necessary.

 

Stick to trend-following rules. Because of the cyclical nature of commodities they can work much better through the use of trend-following rules. Trend-following as an investment strategy seeks to follow the old maxim that you should allow your winners to run but cut your losers short. The goal of trend-following is to reduce volatility and the potential for large drawdowns.

 

The following table compares commodities, stocks and a simple commodities trend-following strategy since 1991:

 

 

Our trend-following strategy in this example follows a simple 10-month moving average rule. Using the same Vanguard Precious Metals & Mining Fund, this strategy shows what would have happened if you would have held that fund when it was above its trailing 10-month moving average price and sold it to buy bonds whenever it dipped below the 10-month moving average.

 

Not only does a trend-following strategy cut the volatility by roughly one-third in this fund, but it also reduces the maximum drawdown in the fund from minus 76 percent to minus 33 percent by going to bonds as losses and volatility began to pile up.

 

This example doesn’t include taxes or transaction cost but it does show how investors can use the cyclical nature of these securities to their advantage. The basic idea is to ride the momentum up when they are rising and try to get out of the way when they are falling, with the understanding that you can’t nail the timing perfectly in either direction.

 

As you can see from the statistics, none of these strategies will be for the faint of heart. But investors do have options beyond investing directly in long-only commodity indexes if they would like to invest in this space.

Source: http://devinconsultants.blog.fc2.com/blog-entry-21.html

How to Speculate In ICOs: 10 Practical Financial Tips

 

  1. Understand the technological risks.

 

Even Olaf Carlson-Wee (who was on the July cover of Forbes), the founder and chief executive officer of Polychain Capital, a $200 million crypto hedge fund that began with $4 million last September, says the number one thing he wants everyday investors to know is, “This is unproven technology and if you don’t know what you’re doing, you shouldn’t interact with tokens — from an investor and security perspective. If you’re naively coming in and saying, I’m going to speculate on this, you’re really going to get burned. It’s like playing against the casino; you’re going to lose, even if you win sometimes.”

 

Crypto assets are not like regular money. They’re also a new technology, and you may not fully understand how to use that technology or, more specifically, secure your tokens. Tales abound of people who mined or otherwise obtained bitcoins back when they were worth almost nothing and stored them on old computers or thumb drives and then accidentally threw them out. (At least one unlucky soul even went to the dump to find his coins, which are worth $2,100 each today.) There’s also been a rash of thefts of bitcoins, ether and other tokens kept on centralized wallets and exchanges such as Coinbase or Xapo or Kraken or Poloniex (as opposed to user-controlled wallets) with hackers exploiting lax customer service agents at telcos, reseting victim’s passwords via text message and then transferring the victim’s crypto assets to the hacker’s own accounts.

 

  1. Understand the business/economic risks.

 

The other reason crypto investing is riskier than traditional investing has to do with the fact that it depends on an emerging field called crypto-economics — the game theoretic system that largely determines a coin’s success. Tokens are trying to create mini economies that have incentives that get the various actors within the system to not just keep it afloat but increase the value of the token. But designing one that actually does those things isn’t easy. Developers could create a coin that enriches only a few and disillusions everyone else, leading the community to abandon the network. Or the business could fail, in which case, demand for their token will plummet, along with the price. Or they could design a really successful business, but design the coin poorly so it doesn’t appreciate along with the adoption of the platform. At this point, it’s not entirely clear what will make any particular token valuable, and even the two frontrunners could easily lose their status — perhaps to some competitor not yet in existence today, a la Yahoo.

 

Carlson-Wee’s advice? “Not to dabble in this with real stake. If you want to buy $10 of Ethereum, and poke around with smart contracts, I encourage that. But use it as a technology, not as an investment, unless you know what you’re doing.”

 

  1. Understand the financial risks.

 

According to CryptoCompare, Bitcoin is down 15% for the last week alone. Ethereum is down 22% over the same time period — and 54% over the last month. Trading your USD for BTC or ETH is not the same as exchanging it for GBP or euros.

 

On June 11, in a Facebook group devoted to crypto trading, someone posted, “I’m strongly considering taking out a $15K loan (at 12% APR) to invest in ETH and BTC … Anyone want to convince me not to do it?” The first response, “Others might try to tell you to not pull out debt to invest, and while under normal circumstances that would be sound advice — these are not normal circumstances.” The comment got 23 likes.

 

June 11 happened to also be the day ETH hit its peak, at $394.66. If that investor did indeed invest his 12% APR-borrowed money in ETH on that day, he would, by now, have suffered a 57% loss. Only put in what you can afford to lose — which excludes taking on any debt — and only allocate money you won’t need for a while, in case you do buy in at the top and need to sit through a downturn.

 

  1. Understand the legal risks.

 

Preston Byrne, a technology lawyer with expertise in virtual currencies, known for his view that tokens constitute securities, says, “There is the very distinct possibility that in 12 months’ time, some of [token sale holders] are going to be arrested and thrown into jail.” If that happens to a token you happened to invest in, your investment could very well tank.

 

The Securities and Exchange Commission has not yet made a ruling on whether initial coin offerings are legal or whether tokens are securities. The only public statements any official has made were in May by Valerie Szczepanik, the head of the SEC’s distributed ledger group, who, speaking for herself and not the agency, said at industry conference Consensus, “Whether or not something is a security is a facts-and-circumstances based test. … You have to pick each one apart, and figure out what are the rights and obligations created by the coin, what are the economic realities, what are the expectations of the parties, what does the white paper say, how do these things actually work and what are their key features?”

 

What she’s obliquely referring to here is the Howey test, which says that if the following four conditions are met, the offering is a security: It is (1) an investment of money, (2) in a common enterprise, (3) with an expectation of profit predominantly (4) from the efforts of others. To summarize a framework put together by wallet and exchange Coinbase, blockchain advocacy group Coin Center, VC firm Union Square Ventures and Ethereum project hub ConsenSys, token sales fit point 1. Whether or not it’s a common enterprise depends on factors like whether the network is live before the token sale or at least operational on a test network. If the crowdsale occurs only when the team has published a white paper but has no tech yet, then that makes the buyers dependent on the actions of the developers, which makes it less of a common enterprise and more like a security. An additional factor considered beyond the Howey test is whether the offering is structured less as a utility token (a token that gives users the ability to do something in the network) and more like a token that entitles the user to equity or a shared of profits. The latter are securities. (Listen to my podcast with Coin Center's Jerry Brito and Peter van Valkenburgh to hear more about the Howey test and what factors determine whether a token is a security.)

 

Although numerous players, such as Carlson-Wee and USV partner Fred Wilson, have pointed out that regulators’ hands are somewhat tied because too draconian regulation could lead U.S. investors to flee to wallets and exchanges in other jurisdictions, where they will be even more vulnerable, that does not negate the fact that these investments come with a huge dose of regulatory uncertainty.

 

  1. Understand that most projects will fail.

 

Many observers believe the current frenzy in ICOs is similar to the internet bubble of the late ’90s (and it likely hasn’t even hit its most fevered pitch yet), which means the Pets.com, Webvan and Kozmo.com are currently among us or about to launch, but not identified. However, the Amazon and eBay of crypto could also be getting started right now.

 

Fred Ehrsam, cofounder of Coinbase who left this past winter, says blockchain companies and protocols can form more quickly than C-corps, just as internet startups could form more quickly than pre-internet companies. He also believes these these protocols could be more valuable someday than any C-corp. However, he says, “For every one massive hit and three base hits, there are 100 failures. I don’t think the market is pricing that in at all. Right now all valuations are high. I think there’s going to be a serious shakeout, where there will be a few key and critical infrastructure tokens that are clear winners. There are also some tokens out there that are highly unlikely to succeed and those are wildly overpriced.”

 

  1. If you’re still determined to invest in crypto, only do so if the rest of your financial life is in order.

 

If, despite all these risks, you still decide to put your money in a highly speculative investment, Ford recommends you be living below your means, be debt-free, have an appropriate amount of emergency savings (usually, anywhere from three to 12 months’ worth of essential expenses depending on your personal circumstances), and be on track with big financial goals such as saving for retirement and your children’s college tuitions. "You have to be comfortable losing everything," she says.

 

  1. Only put in as much as or less than you can afford to lose.

 

The bulk of your investments should be in a “lockbox” — a “set it and forget it” diversified portfolio that acts as a piggy bank and that requires several steps from you before you can withdraw, says Kirsch. With this amount, you should be able to meet all your financial goals, such as amassing an adequate retirement nest egg, saving for your children’s college education or coming up with a down payment on a house. After that, depending on your net worth and how likely it is you will reach your goals, you could put anywhere from 1-10% of your net worth (only an amount you could lose but still meet your financial goals) into what he calls a “sandbox” — a diversified portfolio of riskier investments. In this case, he wouldn’t even recommend an investor put their full sandbox into crypto, even if it was invested in multiple tokens.

 

Similarly, Naval Ravikant, cofounder and CEO of AngelList and venture partner of crypto hedge fund Metastable Capital, advises would-be speculators treat it like the speculative investment it is, while paying attention to fundamentals and trying to diversify. “The scammers are smarter than you,” he says. (In the cover story, he recounted that a token creator offered him a deal that would be considered illegal if it were for a security and that would give him a lower price than what was offered in the token sale.)

 

“Take a very small amount of money, your throwaway money, treat it as if it’s already gone, you’ve mentally set it on fire, and put it in some distribution of a few truly legit layer 1 blockchains.” By that, he means tokens that fit into what Chris Burniske, the first buy-side analyst to focus exclusively on cryptoassets and author of the forthcoming book "Cryptoassets: The Innovative Investor’s Guide to Bitcoin and Beyond,” described in the cover story as crypto currencies and crypto commodities. For instance, some leading cryptocurrencies and commodities are Bitcoin (digital cash), Ether (gasoline for smart contracts), Zcash (privacy coin) and Monero (privacy coin). Another one that many experts believe has potential to become a foundational token is Tezos (smart contracts platform), but because the network isn't live yet and there's so much hype -- it raised the most of any crowdsale ever, plus got investment from VC Tim Draper -- this is the riskiest among this group of seeming safe bets.

 

  1. Do your research so you understand what you’re buying.

 

Read the white paper, join the Slack community, and research the development team. If you can’t find much information on them, then it’s not easy to hold someone accountable, whereas developers with strong reputations will want to deliver. It’s also best to choose projects that have a minimum viable product, to lessen the risk the token will be considered a security. Get a sense of the network’s game theory, and learn to evaluate the token separately from the business model, so you’re not stuck holding a token that won’t appreciate no matter how popular its platform gets. “Do your due diligence. Don’t buy because your neighbor is buying,” says Burniske.

 

  1. Evaluate the crypto-economics.

 

To find real value, look for a token that is integral to the function of the network and whose value should rise if the platform catches on. Stan Miroshnik, managing director of The Element Group, an investment bank for the cryptocurrency and token-based capital markets, who gets queries from Russia, Kazakhstan, Indonesia, Malaysia, countries in Latin America and all over the world, says he asks founders who come to him, “What purpose does a token have for your company’s ecosystem? Or is it something exogenous you’re creating just to access this funding environment?” You should be asking yourself the same — and avoiding any investments in the latter category.

 

  1. Unless you’ve decided to day trade, don’t watch the price.

 

Presuming that because of your research, you believe in your investment, and presuming that you could lose all the money you invested and still reach all your financial goals, you don’t need to watch the price of your investments every day. If you made a rational investment decision, then don’t let your emotions negate your hard work during a price swing.

 

Kirsch recommends that his clients who have “sandbox” investments look only quarterly or semiannually and not make any immediate changes but give themselves a few days to think about it and then either leave their investments be or switch things up. “I’m not against checking your portfolio and making changes as long as it’s a process and not emotionally driven,” he says.

 

This weekend, all cryptocurrencies suffered a blood bath. Now, this Monday morning, they’re all up. If you’ve decided to put your money in, make sure you have the stomach for what is certain to be a wild ride.

The stock market doesn’t know you’re a woman

 

 

Do you consider yourself an investor? If you’re a woman, the answer is probably “no.”

 

Even women who easily manage their budget often are reluctant to embrace the idea of investing in the financial markets. But it’s probably even more important for women than men that they harness their money to the power of those markets.

 

Here’s why: A confluence of factors is leading to a chasm in the amount of retirement income women have compared with men. Thanks in part to the gender wage gap and lower average Social Security benefits, plus smaller retirement-account balances, the median annual income of women 65 and older is 42% lower than men’s, according to a study by financial-services firm Prudential Financial Inc. The study is based on several data sources, including the U.S. Census and the Social Security Administration.

 

The retirement-income gap is compounded, at least partly, because women often hesitate to embrace investing. And one reason for that is generally women want to feel completely knowledgeable before deciding on anything, whereas men tend to feel more comfortable winging it, according to an analysis of over 30 studies, cited by Prudential.

 

Thus, for a lot of women, if they don’t feel they really know about investing, they’ll stay on the sidelines. Combine that desire for more knowledge with a lack of time—women spend an average of 28 hours a week on unpaid work, which is 65% higher than men’s average, according to Prudential— and the result is women failing to invest.

 

“When it comes to investing, women’s shortage of time, combined with their desire for more information in decision-making, may fuel procrastination, lower engagement, and reduced confidence,” according to the Prudential study.

 

Perhaps it’s no surprise, then, that even though the vast majority of married couples surveyed said they share financial decision-making, fully half of those couples also said that investing is the husband’s province, according to a survey by financial-services firm UBS, cited by financial adviser Alice Finn in her new book, “Smart Women Love Money.” Finn is founder and chief executive of PowerHouse Assets, in Concord, Mass.

 

Yet there is no sexism or gender bias preventing women from investing, Finn notes.

 

“It might be a long time before we close the gender wage gap or pass legislation to guarantee paid maternity leave,” Finn writes, “But you don’t need to wait for anyone else’s consent before you get more engaged in your financial future.”

 

Finn also cites a Stash Invest survey that found that 60% of millennial women don’t see themselves as investors. “In actuality, an investor is anyone who puts money to work hoping to get a financial return,” she writes.

 

Who among us doesn’t want our money to work for us? Too often I’ve heard women say that “personal finance is boring” or “investing is too complicated.” But having the money to reach our goals in life is not boring, and investing is definitely not complicated. So why not let the financial markets help us build our wealth, even as we spend most of our time enjoying our lives, careers, families, and adventures?

 

Whether you’re trying to save through a 401(k) or other retirement plan at work, have a lump sum that you want to invest for the long-term, or are thinking that you’ve got $100 you could spare every month to invest for retirement, now’s the time to embrace the power of investing.

 

Below is a brief rundown of how to start investing, culled from Finn’s book as well as a free investing guide produced by Ellevest, an online financial adviser (look for the guide on Ellevest’s website, under the Resources tab).

 

  1. Start now

 

What are you waiting for? “The sooner you get your money into the stock market, the sooner it can start working for you, year after year after year,” Finn writes.

 

Finn is referring to the magic of compounding, which you should take advantage of immediately. Say you invest $10,000 and earn 10% on it in the first year. That gives you an extra $1,000. If you repeat that process the next year, you’ll earn another $1,000—plus $100 on the $1,000 you earned in the first year. That extra $100: that’s the magic. Your money builds on itself, and all you have to do is stay invested.

 

If you have a retirement account at work, start diverting money from your paycheck. If not, go to a low-cost brokerage such as the Vanguard Group and open an account. Then put regular contributions on autopilot. If you qualify, you can open an IRA or Roth IRA to save for retirement, or you can open a regular (read: taxable) brokerage account. Or check out one of the so-called robo advisers: online advisers such as Ellevest (which has no minimum account balance and charges 0.5% of the money you invest, as a management fee).

 

  1. Embrace stocks for the long haul

 

Yes, the stock market is volatile and you may lose money on a short-term basis. That’s why you need to have a long-term outlook for any money you invest in the stock market. Staying in for the long haul lets you ride out the small bumps and even the larger market corrections. Consider that all the people who ran away from stocks during the most recent financial crisis: After the market hit bottom in March 2009, it then proceeded to boom. The S&P 500 SPX, +1.00% one measure of the stock market, is up about 258% since then. And what about the long-term outlook for the market overall? If you believe that companies in general will continue to innovate and grow, then you believe in the stock market’s ongoing success.

 

Women might have a slight edge on men when it comes to investing for the long haul. “It’s about putting the money away and letting it grow,” says Sallie Krawcheck, co-founder and chief executive of Ellevest. “Women bring to the workplace and life in general certain characteristics that, on average, are different from men. One of them is they take a long-term perspective—and that is a real positive when it comes to investments.”

 

  1. Make investing a habit

 

As noted in Ellevest’s “5 Rules to Invest By,” it’s a smart idea to invest a small amount out of every paycheck. Investing on a regular, periodic basis helps you avoid the problem of market timing—that is, trying to figure out the best time to buy and sell stocks. With a regular investing habit, you buy throughout all market environments, whether the market is up or down, and you don’t sell until you’re just a few years out from needing the money.

 

  1. Ask about fees

 

When you invest, there’s more than one fee to watch for. First, if you hire an adviser, you’ll be paying that person in one form or another, so ask about management fees. Ellevest recommends not paying more than 1% of your total assets under management. Second, the investments you buy will charge a fee. Generally, mutual funds that track an index (both traditional mutual funds and exchange-traded funds) will be the cheapest way to invest. Third, ask about trading fees and any other charges. You want to shop around for low fees. Finn offers this example in her book: A $100,000 investment earning 6.5% a year over 30 years will become almost $500,000 if the investor pays a 1% annual fee. But if the fee is 2% a year, the end result is $375,000.

 

  1. Diversify

 

Investing doesn’t have to be complicated, and one reason is that you can pick index mutual funds, rather than getting distracted by all the various individual stocks. “Should I buy Apple AAPL, +0.13%? Should I buy Google GOOG, +0.03%? You can spend your whole life trying to figure out which individual stocks to buy, but you’re missing the big picture,” Finn says. She recommends investing in a low-cost portfolio of index mutual funds.

 

Your next question is which mutual funds. “Asset allocation—how you divide up your assets—is your most important decision, not what individual stocks you’re going to buy,” Finn says. That is, what portions of your money will you put in stocks versus fixed-income assets such as bonds and cash. Within stocks alone, of course, there are many different categories, including mutual funds that focus on U.S. small-, mid- and large-capitalization stocks, international companies and many more.

 

You don’t need a dozen mutual funds to invest for your future. For some ideas on which mutual funds to use for your long-term investing goals, check out MarketWatch’s Lazy Portfolios. And Finn’s book has a detailed guide to how to think about asset allocation. Finn also offers insights into any of what she calls the five fundamentals of investing: 1) investing in stocks for the long haul, 2) allocating assets, 3) using index funds, 4) rebalancing regularly, and 5) keeping fees low.

Source: http://devinconsultants.jigsy.com/entries/financial-consultant/the-stock-market-doesn%E2%80%99t-know-you%E2%80%99re-a-woman

When a high debt can result to high returns

Picture

 

You must have taken a peek at this year’s billionaires who made it to the top of the list of those who added fortunes to their wealth. How many billions did they gain over the previous year’s figures?

 

Most investors think that having a high debt is undesirable and must be avoided. Naturally, they tend to see it as adding more risks to a company’s present exposures. And once that company defaults on its debts because of underperformance, it could fold up.

 

Nevertheless, high debt can lead to positive consequences. It can bring in greater returns, even offsetting the greater risks involved in the process.

 

Enhancing yields

 

The major reason why debt can improve overall returns is because it costs much less than equity. A firm can raise capital either through equity or debt, with debt generally offering a less expensive option. Hence, maximizing a company’s debt levels in order to generate higher returns on equity is more logical. It can lead to greater profitability, stronger share-price performance and increased dividend growth.

 

The proper circumstances

 

Admittedly, maxing out a company’s debt levels is not a wise move at all times. Businesses with highly seasonal performance and dependent upon the conditions of the general economic environment might encounter great difficulties if their balance sheets are heavily leveraged. During times of low returns, they may not be able to undertake debt-servicing steps, aggravating the company’s situation.

 

On the other hand, companies performing in sectors that offer strong, consistent and viable revenues should increase debt to comparatively higher levels to enhance the gains for their equity-holders. For instance, it is to the advantage of utility and tobacco firms to raise their debt levels because of their high level of earnings visibility and the relatively strong demand for their products.

 

Economic periods

 

During periods of low interest rates, it certainly makes sense for businesses to borrow as much as possible. The previous ten years provided such an opportune time to borrow, rather than to lend. Global interest rates have experienced such record lows, thus, leading many companies in various sectors to decrease their overall borrowing rates.

 

In the future, a higher rate of inflation is expected, portending higher interest rates. Although it could lead to increases in the cost of servicing debt, it should be compensated somehow by higher prices passed on to the end consumer. Moreover, a higher inflation rate will serve to diminish the real-terms value of debt. This can lead to increased levels of borrowing in the future.

 

Conclusion

 

Although increasing debt levels can also increase overall risk, it can be a viable step under the proper conditions. During periods of low interest rates, businesses with strong business models may enhance overall revenues by raising debt levels. And while higher interest rates may entail rising costs of servicing debt in the future, higher inflation may reduce the real-terms value of debts. Hence, investors can opt to buy stocks with a modest degree of debt exposure to optimize their overall gains over the long-term.

Source: http://devinconsultants.greatwebsitebuilder.com/blog/when-a-high-debt-can-result-to-high-returns

Why value investing could be the riskiest investment strategy

Why value investing could be the riskiest investment strategy

For many years, value investing has grown to become a very popular and profitable investment strategy. Among those who consider value investing as a viable choice are Benjamin Graham and Warren Buffett – two of the most successful value investors with spectacular gains over a long period of time.

 

The expected returns from value investing are comparatively high, although the risks are oftentimes much higher than most investors can handle. This is because value investing can result in an investor being subject to value traps, which occurs when a stock’s price is low for a very valid reason. What are value traps?

 

Value traps

 

Surprisingly, value traps are more common than most investors realize. In spite of global share prices having increased from the beginning of the year, many other shares will still actively trade at significantly low prices in comparison to the broader index.

 

Although some might catch up and recover, others will not. Nevertheless, low-priced shares commonly appeal to value investors since the capital gain potentials are attractive. In short, for a good number of conservative investors, value investing may provide a high-risk option which could bring a substantial loss.

 

Beyond prices

 

Value traps may indeed provide a trading risk for value investors who do not realize that “value” goes beyond merely having a low share price. According to Warren Buffett, “It is better to buy a great company at a fair price than to buy a fair company at a great price.” Ultimately, the viability of a company must be measured along with its share value.

 

Hence, if a firm’s shares are selling at a lower price than their net asset value, a potential risk in the future might keep them from recovering the valuation deficit. Likewise, a stock which is valued according to the wider index may in reality provide significant value for money if there is a positive expectation of a rapid increase in returns over a medium-range period. In short, value investing can be a great strategy when you consider certain essential factors, such as price, prior to acquiring the shares of a company.

 

Periodic changes

 

Obviously, with rising stock prices, value investing loses its appeal. As investors all over are buying, value investors are selling and choosing to invest in other assets, such as cash. Conversely, when market prices are down, value investors will be buying stocks instead of selling them, contrary to the overall market consensus.

 

Being a value investor then can be a challenging occupation; and, on the short-term basis, it is quite easy to suffer paper losses as past trends continue to prevail. However, on the long-term basis, it has proven to be a viable strategy for investors of a certain level of experience and capability. It is not totally risk-free. So, by not merely focusing on price, this approach can serve as a highly-dependable road to financial success in the long run.

Source: http://blogs.rediff.com/devinconsultants/2004/03/05/why-value-investing-could-be-the-riskiest-investment-strategy

Building Wealth through Passive Income Ideas (Part 2)

Passive Income Sources that Require an Initial Time Investment

 

Most of these sources will involve setting up a personal website or blog; but that is not actually an expensive proposition. You may utilize the services of Bluehost for this purpose. They will provide a free domain name and will host your blog at an initial price of only $3.95 monthly, a really cheap outlay for the opportunity to create a passive income source.

 

Publish and Sell an eBook Online – Self Publishing has become a profitable source of income for many individuals. More often now, any eBook you buy from Amazon could be a self-published work. This is because self-publishing has become significantly easy; you should try it to find out how easy it really is. It simply involves writing and editing a book yourself, designing a nice cover for it and then submitting to a platform, such as Amazon’s Kindle Direct Publishing. Although there is no guaranteed success, that should not stop anyone from accomplishing one of the three proverbial things any person must do in life before passing on, besides having a child and planting a tree. And before that time does come, utilizing this passive income source requires plenty of marketing upfront before you can benefit from your investment.

 

Offer an Online Course on Udemy – Udemy provides an online platform for people to take video courses on various subjects. You can be a producer instead of being a consumer on Udemy by offering your self-made video course and selling it online. This passive income source is a great option for those who have the skills or talents in any particular artistic or academic field. Moreover, it multiplies your efforts several times over, compared to the conventional one-on-one or classroom tutoring mode – indeed a potentially lucrative passive income source!

 

Selling Your Photographs – Did you know that many websites, blogs and even magazines acquire their photos from websites featuring stock photos? So, if you are into photography, you can turn in your favorite shots to stock-photo sites and earn a fee each time someone buys one of your photos.

 

License Your Music – In the same way, you can have your music licensed to bring you a stream of income through royalties paid by those who use your music. The usual venue for licensing music is through YouTube Videos, through ads and other means.

 

Design an App – If you are a smartphone or tablet user, you are probably very familiar with apps downloaded into them. Perhaps, you yourself have a great idea for an app. In that case, get the help of a programmer to make that app for you. That should provide you some residual revenue.

 

Affiliate Marketing – Affiliate marketing involves collaborating with a firm (becoming an affiliate) to receive a fee or commission on a product. This approach of creating income works well if you have a blog or a website. It might take a long period before you can build up the idea in order to gain passive income from it. Check out affiliate marketing programs available online to find out which suits your needs best.

 

Network Marketing – Network marketing, also referred to as multi-level marketing, has been drawing people for many decades now and providing many of them with above-average income. You have probably heard of such firms as Avon, Young Living Oils, Pampered Chef and AdvoCare -- all engaged in multi-level marketing. This can be a great source of passive income. You can build a team to work under your banner (what is called your down-line people) who will provide you commissions from the sales they make, even if you do not make any sales at all or just make a token sales output based on your required quota as one team.

 

Design and Produce T-Shirts – Cafe Press provides online users to make their own T-shirt designs or other items requiring some designing work. You can earn royalties from the designs you make, especially the ones that become hits.

 

Sell Digital Files on Etsy – You can also sell your own artwork through Etsy which provides digital files of artwork people can print out for decorating purposes. Other popular digital files on Etsy are available for download. Who knows? Your collection of graphic designs might provide you a steady stream of passive income if you join the site.

 

Ideas for Semi-Passive Small Business Ventures

 

Vending Machines – Vending machines can be a fantastic low-maintenance small-enterprise venture. Any individual can maintain several vending machines in a string of nearby towns. Every two weeks, you can collect and refill them, bringing revenue for your future retirement life.

 

Car Wash – There are still many places that do not have car washes. It is a good semi-passive income source. A weekly regular maintenance job can provide a very comfortable schedule for a business idea that you can either personally manage or hire out to someone else.

 

Storage Rentals – You can also rent out to customers storage space for a monthly income. The main job involved is when opening any of the storage units for new customers.

 

Laundry Services – This is a rather debatable option for a semi-passive income source since it can actually involve a lot of continuing maintenance work. You can decide whether it is worth all the expected work.

 

Easy Passive Income Sources

 

Finally, here are a couple of easy passive income sources which demand no cash and no initial work. Although the returns are very minimal, nothing beats getting easy passive earnings.

 

Cashback Rewards Cards – Using a credit card to pay bills can provide you cash-back rewards. Allowing your rewards to accumulate for a certain period and later putting the easy money you saved into a passive income venture will do the trick for you. (Check if the card you use does not charge a yearly fee; or else you end up with zero revenue in the end.)

 

Cashback Sites – Similar to the previous one, you can choose to use a cashback site when shopping online. Why should you not get a hold of that free money for so little or for no work at all? You may decide between eBates and TopCashBack, the two most popular sites available.

 

Get Started Now

 

The best strategy for a beginner is to have only one passive income source instead of having 4 or 5 right away. This allows you to learn slowly the ropes first and to focus on building a passive income venture. Once you have mastered one, add another until you are fully content with the income stream you have built up.

 

At the start, a significant amount of money and time will be involved; however, in time you will realize that earning passive income is a cinch! Choose the most suitable idea, plan your venture and commit yourself to that income source until you start benefitting from it.

Source: http://devinconsultants.wordpress.com/2004/02/27/building-wealth-through-passive-income-ideas-part-2

Building Wealth through Passive Income Ideas (Part 1)

 

Do you want to earn some passive income? We give you twenty practical ideas to help you enhance your financial situation. You may need to invest some money or time to pursue your goals. Before you do choose which one will suit your needs and situation, take time to appreciate the meaning and value of passive income.

 

Proceeds from passive income streams demand an initial investment and plenty of careful attention at the start. But once you put in the time and the diligent work, the payoff starts to grow and can sustain themselves, providing regular monetary rewards with much-reduced effort in managing the investment.

 

From the actual personal experience of many people, augmenting to your portfolio the income from passive income sources can serve to enhance your earnings and fast-track your financial objectives in remarkable ways.

 

And so, if you want to begin cashing in on passive income ideas, arm yourself with these fundamental principles:

 

What Passive Income Requires

 

Firstly, let us do away with some misconceptions about passive income. The word “passive” does not mean you merely wait, doing nothing for the income to come. Every passive income source demands at least one of these two requirements:

 

1) An initial monetary investment, or

2) An initial time investment     

 

Without at least one of these two, you cannot hope to acquire residual income. There are numerous passive income ideas you can apply no matter what your area of interest or involvement may be.

 

Passive Income Sources that Require an Initial Monetary Investment

 

Dividend Stocks – These are proven and reliable sources of passive income. Nevertheless, you need to do a lot of study to determine which stocks are worth investing a substantial amount of money into in order to obtain sizeable dividend returns. Investing consistently into dividend stocks can help you accumulate a significantly large residual income in the long-term.

 

Investing into the following investment ventures requires opening an account at the most reputable online brokerage in order to reap the rewards you expect:

 

Peer-to-Peer Lending – P2P lending involves providing loan money to borrowers who normally do not qualify for conventional loans. You, as the lender, have the power to select the borrowers and can also spread your financial exposure to minimize your risk. Two of the most common peer-to-peer lending platforms are Prosper and Lending Club.

 

Properties for Lease – A great way of gaining monthly income is through leasing out property. To maximize your income potential, outsource the handling of the properties to a competent management firm.

 

Crowd-funding has become a common way of starting out in rental properties. You can begin investing in real estate for as low as $5,000.

 

The advantage of utilizing a platform over a DIY approach is that you spend less time and effort in managing the investment.

 

Money Market Funds or CD Ladders – Creating a CD Ladder demands acquiring CDs (certificates of deposits) from banks in particular increments in order to earn bigger revenue on your money. Banks offer CDs as a low-risk investment but with also a low yield, providing an alternative investment choice for people who avoid high risk levels.

 

You may consider these popular market funds to gain high yield returns:

 

Annuities – As a form of insurance product, annuities can offer monthly passive income payments for life. However, before buying an annuity, consult a dependable financial counselor regarding the terms involved, since annuities may vary and do not always provide good returns.

Source: http://devinconsultants.edublogs.org/2004/02/20/building-wealth-through-passive-income-ideas-part-1

Personal Finance According to Billionaires

It may seem rather inappropriate to receive personal finance advice from wealthy people, considering they deal with tons of money whereas the ordinary person can hardly scratch a decent living. What use can you get from such advice as “Invest in gold rather than in silver” and others of that sort? Nevertheless, they can offer some sound advice for any kind of financial situation. After all, they have an uncommonly wide exposure to many money matters. Get these free tips from some friendly billionaires:

 

Begin as soon as you can

 

For a few years, a Mexican businessman named Carlos Slim Helú held the distinction of being the world’s richest person, until Bill Gates reclaimed the title recently. Slim offers personal finance tips shared by most finance experts; and beginning early is one of them. This may not apply to people of more advanced age as they need to begin now to “redeem the time”, so to speak. For the earlier you start getting serious about handling, saving and investing your money, the greater your chances of avoiding making mistakes that will impact on your future financial security. Slim, for instance, bought shares in a Mexican bank when he was only 12 and worked for his earning father’s business for 200 pesos weekly before he turned 20.

 

Discover Your Passion

 

It costs nothing to start believing in your own abilities and potentials. Oprah Winfrey, another billionaire we all know, said that we are what we believe and that what we are now is a product of everything we have believed. You can change any situation you are in now; and the first step is to believe in yourself.

 

Once a person believes in his or her own self-worth, discovering one’s passion – whether it is music, sports or photography – will only require a healthy dose of diligence and perseverance to achieve success.

 

Christopher Paul Gardner, although a "mere" millionaire, was a homeless single-father once. Asked what his secret was, Gardner said, "Find something you are so passionate about, you can hardly go to sleep to do it again." If your passion is to make space-saving furniture, educate yourself on that subject through online articles or books now and become as good in it as you can be.

 

No Need to Become Sophisticated

 

Do you know how Warren Buffett made his billions? He accumulated his investment fortune by focusing on the fundamentals, that is, by choosing firms with strong yearly cash flows and those firms not in the danger of losing technical relevance in the fast-changing world of technology. He also spent his early years in investing on insurance firms. For many, it is not a fancy way to earn; but it worked out well for him. No matter how small or big your money is, the right way to invest is by sticking with the fundamentals.

 

Live a Simple Life

 

Just like the previous tip, Warren Buffet lived this motto – he still lives in a house he bought in 1957 for $31,500. Likewise, Carlos Slim also lives in the same house for over 40 years. Many people, however, continually seek things that bring on financial disaster instead of those things that bring on financial security.

 

Walking and Riding on Public Transport is Cool

 

Three billionaires we do not often hear of -- John Caudwell, David Cheriton, and Chuck Feeney -- either walk, ride bikes or take public transport to move about. Nothing beats these three means as far as saving money is concerned, aside from taking care of one’s health and the environment. There is no shame in riding public transport – only trolls think negatively of good things.

 

A Car is only a Tool, not a Luxury Item

 

Walmart owner Jim Walton uses a 15-year-old pickup truck while Ingvar Kamprad of Ikea uses a 10-year-old Volvo. Cars do not establish any real social or financial status. If you are into restoring or buying fancy or classic car models, go ahead as long as you have the money to spare or to invest. In general, however, even wealthy people only need to get from Point A to Point B safely and comfortably. A car is nothing more than a tool as useful for doing a task as a computer or a hammer. Diamond-studded Benzes or gold-plated Porsches are toys only Saudi princes can afford.

 

Some of us ordinary mortals get wide-eyed listening to billionaires dispense financial advice; others cannot take it at all, especially if they are going through financial straits. Yet many rich people began with as much money as the man behind the theater ticketing booth, or even less. These tips can serve you well in any financial situation, as long as you have the desire to improve your lot. Buy at the lowest possible price, earn as much as you can in any decent way and do not splurge your money on needless things. Pursue your passion and nurture it, no matter how much you earn from your job. The important thing is that you find fulfillment daily in the things you do.

 

Money itself is merely a tool for achieving genuine success and happiness. Being a billionaire does not guarantee happiness – or even success -- in life. Some billionaires, in fact, can learn a thing or two about true happiness from poor people.

Source: http://devinconsultants.over-blog.com/2004/02/personal-finance-according-to-billionaires.html

Cleaning Out Your Documents: What to Keep and What to Discard

Picture

 

Are you doing a financial spring-cleaning this year? Scan your papers to keep an electronic bank of valuable documents. There are certain steps to observe according to the kind of expense, asset or transaction; but, in general, make sure that your digital files of your records are as legible and accurate as your hard copies and also as easily accessible when you need them.

 

So, what documents do you need to save or discard? Here is a rundown:

 

Taxes – You may need to keep your tax documents while the statute of limitations applies. These will include the following: W-2 and 1099 forms, invoices, receipts, cancelled checks, mileage logs, proofs of payment and other records pertaining to deductions, income or credits claimed on your return.

 

Student loans – Never ever discard your student-loan master promissory note because it the legal support for your loans. Keep it until the time you have repaid the debt.

 

Credit cards – It is wise to keep credit card statements for as long as 7 years.

 

In case you are already paperless, determine how long to obtain your statements online. This is easier than eventually having to request them via snail mail in the future.

 

Real estate - Your FICO score measures your qualification for a mortgage and the interest rate you need to pay. You have to reach a score of about 620 to be considered by any lender in order to qualify. If you are not qualified for an affordable rate, you may have to wait before buying a home for the time when your credit improves – it will take more than 7 years to have negative activity on your report.

 

Insurance – Many do not easily warm up to the need for life insurance for obvious reasons, one of which is the uncomfortable feeling of knowing how temporary life really is. However, accepting the inevitability of our own mortality should convince us of the importance of keeping our original documents, such as assignment of beneficiaries, always available on hand.

 

Banks/brokers – Regarding documents for brokerage accounts and banks, you probably already hold an edge: majority of financial institutions provide a completely digital alternative, facilitating ease of storage.

 

Bitcoin – If you have bitcoin or some kind of cryptocurrency, download the most recent records without discarding any. Incidentally, IRS has started cracking down on cryptocurrency holders; and there is still no specific rule or stand regarding how to treat these tokens. Moreover, cryptocurrency transaction logs are most probably likely electronic-based. Knowing the uncertainty, there is no sense in discarding any record of such transactions?

 

Employee benefits – Employees accumulate so much paperwork from company-sponsored benefits, such as a 401(k), HSK and medical insurance policies. Keep these papers for a minimum of 3 years. As for EoB junk, you can discard them; but papers with tax or legal implications should be safely stored.

 

Retirement –The most important document is the beneficiary form, which is what you fill out when opening a retirement account and assigns your account to a beneficiary upon your death. It is not your will or living trust. Keep your forms are updated and inform your executor and beneficiaries where you store your papers.

Source: http://devinconsultants.weebly.com/blog/cleaning-out-your-documents-what-to-keep-and-what-to-discard

Determining What Kind of Investor You Are (Part 2)

Determining What Kind of Investor You Are (Part 2)

A Professional’s suggestions on How to invest for your character

 

How does an investor balance his or her portfolio with the risks?

 

Richard Flax, chief investment officer at Moneyfarm, suggests: ‘We will adjust the contents of the portfolio according to the investor profile. That essentially requires adjusting the values of higher risk assets (such as, equities and commodities) and lower risk assets (including, government bonds and cash).

 

The risk exposure in an asset changes according to how a client responds to risk, allowing a target level suitable for every profile.

 

Any investment approach must look forward and backward, considering various risk metrics, such as volatility and drawdown, and creating portfolios founded on projected gains and past risk parameters.

 

Why diversification and time are important

 

Investors need to diversify but must avoid being overly diversified. Many people in the UK invest in a single stock or just a few stocks, depending only on a few firms and experiencing great volatility.

 

On the other hand, one can shift to the other extreme and have plenty of funds that provide the same objective, adding complexity, increasing costs and, in the end, not giving the desired gains.

 

You have no other choice than to take greater risks. No free rides in the process. Your money can rise or fall; determine where you are in the picture where you are comfortable. Go for the long-term duration.

 

Which type of investor are you really?

 

Consider these professional suggestions:

 

First, the right time frame -- with more time you have the potential to build more wealth through compounding and the lower the risk of short-term loss.

 

Determine also how you respond to loss, or volatility. Although volatility means nothing to an ordinary client – since performance is the main concern – how do you respond when the portfolio value drops?

 

Also, find out whether you are a nervous investor by asking yourself how often you check your portfolio.

 

A very important task is to educate yourself about the financial markets, as this determines how much you comprehend investing.

 

Lastly, how much do you possess? If you own several properties and have no mortgages, your capacity for risk is much greater as your will only lose a small amount in comparison to your wealth.

 

Looking forward and backward at the same time provides an advantage to the investor. As professionals, we aim for various degrees of risk based on what a client reveals to us and in what category of investor they fall into.

Source: http://blogs.rediff.com/devinconsultants/2004/01/27/determining-what-kind-of-investor-you-are-part-2

Determining What Kind of Investor You Are (Part 1)

Picture

 

Many investors have no idea of what kind of investor they are. Instead of dealing with the question early on, they plod along with no idea what they are and what they are doing wrong.

 

This question is vital in finding out what your goals are, how you handle risk and how you respond to gaining or losing money – factors that greatly impact your investments.

 

Understanding these factors will help you avoid errors in choosing your investments. This will not only spare you from going through restless nights due to taking so much risk but also from losing bright opportunities to gain significant wealth.

 

Let us look at five various kinds of investor to help you appreciate the importance of this matter.

 

The conservative investor

 

The conservative investor is one who takes great effort in charting his or her course and safeguarding his money. Such type is a safe player, always concerned about gaining a better gain compared to merely holding on to cash; although this individual is content with being able to sleep soundly instead of tossing and turning at night in the hopes of achieving the biggest possible gains possible.

 

For various reasons these individuals could include senior investors nurturing their pension plans while making use of them, as well as younger investors who play it safe within shallow waters with their meager and hard-earned savings.

 

The focused investor

 

This type of investor is open to greater risk compared to the conservative version; although safeguarding their wealth is a primary consideration as well. And while they may be open to fresh ideas for investments, they tread cautiously and remain alert against anything that may endanger their investments.

 

The focused investors are always mindful of everything they do and remain steady on course with their investing strategy without being diverted or distracted by any mishaps. The have the tenacity to build their wealth through meticulous and prudent moves.

 

The driven investor

 

This type is the no-nonsense, business-only investor. They stay fixed on their goals and chart out a clear road map for those goals. He or she knows exactly the purpose for investing and what benefits to aim for. The next move is to choose the best investments to keep in a portfolio in order to attain the set goals.

 

The driven investor is open to taking on higher risk for greater gains, although this kind will make sure the rationale for doing something and what it will entail.

 

The exploring investor

 

This type of investor is obviously looking for a challenging discovery along the path of long-term investing. This individual has a deeply inquisitive mind. Investing has become a challenge for this investor and provides opportunities to test new ways of building wealth. Nevertheless, the exploring investor is not reckless but is open to experimenting to discover the most advantageous approach.

 

The exploring investor realizes that investing provides great wealth on the long-term basis and the chance to choose many directions goes well with this type. As a competent explorer, he or she keeps an emergency plan along with a broad mind for assessing the risks along the way.

 

The adventurous investor

 

The adventurous type of investor is one most open to taking steps that demand taking a leap of faith. This investor optimistically sees the glass as half-full, allowing for great possibilities in what others would see as dismal or risky.

 

This investor type has set up a contingency cash fund somewhere secure which allows him or her to handle investment risks.

 

As such, this individual goes for the unappreciated asset type or sector that is low-priced while others stay away from it, or could be picking more on the low market times – hoping that the long-term view favors such a strategy. 

 

Nevertheless, the adventurous investor does not gamble; on the contrary, each move is strictly weighed for its consequences.

Source: http://devinconsultants.greatwebsitebuilder.com/blog/determining-what-kind-of-investor-you-are-part-1

Six Tips on Effective Long-term Investment

Keeping your money in bank savings accounts at present will produce negligible interest rates. Hence, leaving all your money in banks may give you considerable safety but not much growth. On the other hand, investing your money in stocks may bring higher returns; but the risks are much higher. And you could actually lose part or all your money at times.

 

Try these few easy rules to help you remain strong in the market and gain big returns through a large long-term stock portfolio:

 

  1. Spread your investment. Diversification distributes your risks through a number of stocks in various markets as well as in bonds, mutual funds and other instruments. Follow a rule of thumb such that each instrument or stock should not be more than 10% of your entire portfolio. Likewise, try to invest in diverse national regions, Asia, Europe, US and rising new markets areas. Also invest into hedge funds, commodity funds and property funds. This strategy provides a safeguard against any failure in any specific sector.

 

  1. Investigate. Do your research in various industries and from diverse sources. Opt for firms with products and strategies you are familiar with. Browse or visit as many online resources that provide tips on evaluating and comparing investments. Although historical performance does not assure future performance -- in general, choosing a mutual fund or unit trust that showed a strong record in the last couple of years and which requires low management fees is a good move.

 

  1. Invest back dividend payouts. A significantly big percentage of the entire gains in majority of portfolios is a result of reinvesting dividends and not from stock price increase. For instance, a 3% yield may seem paltry; however, in the long run, it will produce a huge profit. Opt for investments that have a sound record of dividend payouts and retain them as your long-term leverage.

 

  1. Keep the performers and sell the nonperformers. Constantly check how your investments perform in relation to the market index. You will be tempted to sell when some of your holdings are doing well for a quick profit; however, hold on to them on a long-term basis to maximize gains. As for market nonperformers, get rid of them even if you have the urge to keep them for a possible upsurge or an increase of your holding at basement prices. That is not the best investment approach, as suffering a low setback early in the process is better than a big loss in the future. Never allow you emotions to convince you to hold on to your stocks.

 

  1. Avoid mob rule. Although difficult to pull since most people rush headlong, buy whenever the stock market is down, sell when the stock market up your least performing stocks and invest into other instruments, such as bonds and property.

 

  1. Look far into the future. Avoid making trades so often, as agents’ fees will diminish your gains. Remember, be patient and aim for the long-term results. Trends and fashions do not last long. Be prudent in diversifying your portfolio. Never lose your equanimity at times when markets collapse – take them as open seasons for buying courageously.

 

Lastly, when you do need money, be ready to sell. Your investment is meant to support your personal and family financial needs; hence, make use of it instead of belt-tightening or living like Spartans in order to accumulate wealth until that time when you are too old to enjoy it – or worse, too dead.

Source: http://devinconsultants.blog.fc2.com/blog-entry-10.html

Three Investment Tips from Warren Buffett

We all know who Warren Buffett is and what he has achieved as a phenomenal investor. More than that, however, he is also a good story-teller and an effective teacher. For fifty years, he has essentially painted his company, Berkshire Hathaway, to become a gigantic mural showcasing the numerous investment styles and management strategies he has implemented.

 

Every year, Buffett writes to Berkshire Hathaway shareholders in his capacity as chairman and chief executive, continually strengthening his reputation as a leading investor. Let us consider three valuable tips contained in his latest letter:

 

  1. Fees can do you in

 

Less than a decade ago, Buffett wagered that passive index fund would surpass several hedge funds. He is way ahead by a wide margin on that bet, even as early as a couple of years ago, that the bet was effectively settled before the ten-year deadline. Buffett explains it this way in his letter:

 

"Although most managers at both levels were honest and smart people, the results for their investors were quite dismal. Unfortunately, the large fixed fees paid to the concerned funds and funds-of-funds, which were absolutely unjustified by performance, meant that their managers received huge compensations for the past nine years. Gordon Gekko would have said: 'Fees never sleep'."

 

  1. Use their fear as your weapon

 

Mr. Buffett retells the parable of Mr. Market this way:

 

"When times are troubled, you have two choices: First, as an investor, use people’s fear as an opportunity to buy at low prices. Second, your own fear will work against you, as it is also needless. Investors who wait patiently on the long-term and avoid huge fees and unwanted expenses will surely do well in the end."

 

The better choice is to let others panic and stay calm; likewise, remain on course for the long haul.

 

  1. At times, share buybacks is the way to go

 

They have various titles: repurchases, buybacks or capital returns; and companies love offering them. If you have surplus cash hidden and you wish to enhance your return on equity and to improve per-share earnings, as well as to satisfy investors without being tied yearly, go for the Share Buyback.

 

Buffett put it so plainly; every investor will not need an interpreter or mentor to get it.

 

"Here is a simple analogy: With three equal partners in a business valued at $3000 and one is bought out by the other two for $900, each one makes $50 out of the deal. However, if the two paid $1100 in the buy-out, the remaining partners lose $50 each. This holds true for corporations and their shareholders.”

 

Buffett, therefore, suggests: "Before considering any repurchases, a CEO and the board should unite and say, 'What is good at a certain price is bad at another'."

 

If you are the kind of shareholder who delights in a company repurchasing shares, let this be a lesson to cure that impulse. Just make certain the decision is good.

 

A lot of investors stayed away from Berkshire Hathaway shares, thinking the firm was big, its shares pricey and its chairman old. But within the past year, those shares went up 29%.

 

Trump’s entry and other factors helped raise the share price. But as Buffett keeps telling people, short-term predictions are unreliable and they need to buy quality shares on long-term investments.

Source: http://devinconsultants.blogspot.co.id/2003/12/three-investment-tips-from-warren.html