Author Archive: Jerome Hardy

Pros And Cons Of Investing Funds In Investment Policies

If you’ve been following the financial markets in recent times, you know that things are not right and the market is extremely volatile. Perhaps this is a pretty scary situation and many investors are apparently feeling tired when they hear the buzz word investment.

Investors in these uncertain economic times are often looking for stability and predictability and prefer investing in the right arenas to avoid conflict and to enjoy a smooth life journey. However, unless there is a risk you cannot enjoy the greater gain.

Each and every investment has a certain amount of risk associated with it. They have their own pros and cons, nevertheless, you are aware of their advantages and drawbacks, you can move your investment vehicle wisely and turn into a successful investor accruing a substantial amount of wealth.

Let us see a few investment schemes under capital investment policies and understand their pros and cons before making the investment.

Dollar Cost Averaging

If you are an economist looking for an investment scheme that cuts down on your investment risk, then you should probably consider a dollar-cost averaging strategy. Dollar-cost averaging (DCA) is not a failsafe measure. Unlike other investment strategies, they have their own pros and cons. It is a strategy that works well for long-term wealth building by means of the stock market. But what is a dollar cost averaging?

Dollar-cost averaging is the strategy of distributing out your stock or fund procurements, trading at steady interims and in approximately equal amounts. They are majorly used with the goal of reducing the impact of volatility on large purchases of financial assets such as equities.

Pros Of Dollar Cost Averaging

The strategy works based on automated and discipline investments. One of the primary advantages of investing with dollar cost averaging is, you can remove the emotional component out of the decision making. This can certainly help you avoid buying assets at determined prices irrespective of the market inflation. So you will not bail out of your investment even when the price goes down.  Some of the other advantages are their affordability and convenience

Cons Of Dollar Cost Averaging

This type of strategy involves more transactions resulting in high brokerage fees.  This is regarded as the passive investment approach because here in this approach, you are nowhere responding to the changing environment

Investment In Bonds

Investing in bonds can reduce your investment risk and smooth the investment process however the volatility of bonds (especially short and medium-dated bonds) is lower than that of equities so they have a varying amount of advantages and disadvantages as well. Apparently, Fixed income investments bonds compensate for a fixed interest rate over a given time period and then yield the individual’s capital. Bonds are generally rated based on their creditworthiness. Higher the credits, higher the rates and vice versa. There are several advantages of investing in bonds

Pros Of Bond investment

Bonds generally have the characteristic of providing greater returns when compared with other types of investments over the long term. Bonds have a reduced amount of risks and you can make diversifications possible only with a few thousand dollars. Some of the typical advantages of investment in bonds are

  • When the bond matures, you can get a fixed amount of interest
  • They are less risky and less volatile
  • Since bonds are rated by Standard & Poor’s and Moody’s they can assure clearer ratings.

Cons Of Investing In Bonds

Bond funds typically have higher expense ratios than stocks or mutual funds and when there is aggressive management, bonds can take on leverage and can produce significant potential losses.

Life Settlement Investments

Life settlements are fantastic opportunities for many and you can also use the gains from a life settlement to give your investment portfolio a boost. Many hedge funds, pension funds, and major financial corporations purchase life settlement due to the several benefits it offers. Although it is not the right choice for everyone, however when you are in the position to invest, it is worth considering.

Pros Of Life Settlement Investments

People who are looking for alternatives with greater immunity to market volatility, then probably it is a wonderful option. You can pursue your lifelong goals with lapsing term insurance with life settlement investments. When your scheme is about to lapse, you can even sell your policies at a guaranteed rate and protect your family.  As a matter of fact, when the investor wants to weigh the benefits of life insurance then it is a more secure choice because it comprises only liquid assets which cannot be devastated both by inflation as well as global taxes.

Cons Of Life Settlement Investments

One of the major disadvantages of this policy is, the dependents must wait until your death to receive the complete benefits.

Debt Phobia And How To Deal With It

debt fobia

I was once asked if I minded debt. I suppose nobody who has read any of my frugality writings will be surprised by my answer, but yes. I do mind having debt. I mind it to the point that the idea of taking out a loan on a house scares me to death.

While I want a house, and while I know that there are few options besides taking out a loan, the idea of owing anybody that much money freaks me out. The only type of loans I use is unsecured payday loans without credit check. If you take them from trustworthy direct lender, there is literally no risk involved.

I can attribute this phobia to my parents. They drilled it into me that DEBT IS BAD. I now know that they were referring to consumer debt, like credit cards and the like, when they drilled me on this, but at the time they did not really specify. The debt was bad, and my parents lived (and live) a debt-free life.

On my dad’s salary as a military officer and my mother’s occasional part-time work, they paid off their 30-year mortgage in 12 years, they have never taken out a car loan, they don’t have credit card debt, and they paid for our educations without taking out a loan.

Like them, my husband and I are doing everything we possibly can to stay out of debt and pay down the debt we do have very quickly. Logically, we know that there is good debt and bad debt.

The student loans my husband took are going to be paid back in a reasonable amount of time, and he will earn far more than he ever took out. He is in a decently paid field, and now, on his salary alone, we have paid down about a third of it in five months. Not bad. Neither my husband nor I have ever carried credit card debt. Ever. Both my husband and I are still driving the cars we bought in cash in high school. So far *knock wood* they’re holding up, and if something did happen to one of them, I think we could buy a reasonably-priced used car in cash.

However, if we want a house, we’re going to have to do into (nonschool) debt sometime. And I know that a mortgage is “good debt” and we’ll get tax breaks and blah blah blah, but it still scares me! I worry that we will buy a house, and everything in it will break, and we’ll blow through our savings, and then we’ll start depending on credit cards, and the next thing I know we will have all the consumer debt that we so carefully avoided, and will be stuck in it because we have to pay the mortgage, and there’s hardly any money left over for the credit cards. Despite the fact I am credit card debt-free, I can see how people get stuck in it.

I don’t think it’s the specific debt of a mortgage that I fear. I think it’s the snowball effect; the what-ifs that may or may not happen. And I can snowball no matter what situation I am in- renting, owning a home, living in a box. I also think I need to become more comfortable with “good debt.” It seems a lot of people don’t count good debt with debt. I do, but maybe I need to relax a little. Perhaps it’s not a debt I fear, but lack of security.

Incidentally, though I wish my mom and dad would have clarified earlier about ‘good’ debt and ‘bad’ debt, I am eternally grateful for the financial lessons that they taught me. Not only for what they said, but for how they showed me that debt-free living was possible, and for showing me the sacrifices they made that made this possible.

Things An Investor Must Consider Before Investing In Capital Investment Schemes

As you are establishing your industry, there will come a point in time when you will require to commence investing in it. Although it is exciting to expand your facility and accrue the resources needed for the facility, yet it is crucial to level up the business at some point in time to enjoy its returns. Apparently, this cannot be achieved unless you make the right investment. Every business truly believes in investment and probably realize the importance of money management.

However, investing in private organizations are pretty tricky. These businesses are volatile and when you are looking for long term investments with these companies there are chances that you have fewer odds of success. Therefore there are few things to consider before investing funds with capital investment schemes.

Factors To Consider Before Attempting To Invest

When management runs into growth impediments they can easily find themselves faced with decisions that directly involve the possible procurement of long-term resources with a variation of funding preferences.

The resources can be of any form that typically ranges from equipment to technology. Generally main forms of investments like ownership investments (also called as contributed capital is the amount of resources the owner invests in the organization), lending investment (a low risk investment with lesser returns) and cash equivalents that have no impact on the cash flows.  Similarly, there are few other aspects you need to overlook to avoid failures and other common pitfalls

Analyze Working Capital-

Measuring human capital is very essential when you are intended to make an investment. An investment in human capital means that the investor is investing in education or some form of work guidance to enhance employee quality. This type of investments not only provide returns to the investors rather they are a great source of income for the economy as well. There are few benefits in investing in working capital

  • Enhance employee satisfaction- Workers satisfaction can be improved by adopting certain strategies such as providing positive working environment, appreciate the efforts with rewards and recognition, evaluate and measure job satisfaction
  • Improve retention rates- Workforce retention is the most challenging problem as companies compete for talent in a tight economy. This can be achieved in certain ways like hiring selectively, pay them with the right salary, provide flexible work hours and provide a career road map for their development.
  • Grow Workforce engagement- When you want to increase the workforce engagement strategy, you probably need to establish a positive emotional commotion with your organization.
  • Foster increased return on invested capital- This can be certainly attained by increasing profits margins and asset turnovers which can apparently reflect on the increased return on investment.

Working capital is very essential for the success of the business however unless you understand the buzzword correctly, it is difficult to implement

Determine The Calculating And Forecasting Payoff-

This is one of the most important aspects while consider investing funds with capital investment schemes because determining the payoff will help to come to a well-informed decision whether you can take a big step or consider reviewing the plan again.

The payback period will conclude how much time it will consume to recover the cost of the investment.  On the other hand, the rate of return can become productive to filter through investment opportunities and forecast the essential effects on the financial ratio that measure the extent of a company’s leverage. Calculating and forecasting the payoffs often impacts the business model in the positive sense and it sizes up the market opportunities.

Evaluate Your Comfort Zone While Taking Risk-

All forms of investments involves a certain amount of risk, especially when you have plans to buy securities like stocks or bonds, there are probabilities that either you can double your money or lose your complete investment.  Some of the prominent risks are interest rate risk when the interest rate rises; inflation risk when the stock or bond decrease/grow in value and doesn’t keep pace with inflation, market risk, and credit risk.

However, if you are comfortable in taking those risks then you can have a potential gain on return. Apparently, this is quite appropriate only for short term financial goals and you shouldn’t consider taking a risk that involves long term plans.

Have A Diversification Strategy-

Always don’t make an investment on one particular strategy that involves risk rather having a diversification principle, that is a mixture of investments to help protect yourself from significant losses. For instance, when you lost your investment in one strategy, a poor returns in stock, you can compensate for the gain in another asset category.

When you put these things into consideration, you can obviously realize how well your decision has paid off and provided a positive light for your investment.

Best Ways To Invest To Earn High Returns Under Capital Investments

If you are already annoyed about handling a budget and pay down debt, you are probably curious why you have to add another financial task to your to-do list. However, Investments are increasingly essential because in today’s world, just accruing money is not sufficient.

The growth of money is equally important to accomplish basic necessities in life and investing can help an individual to meet long-term life goals easily. But what is an investment and what are the ways you can earn high returns under capital investments and become a successful investor?

What Is An Investment?

Investing means pledging money or any other source with the prospect of future benefit. But when it comes to the economic sense, investment is often defined as an act of committing money or capital to an endeavor which is generally referred as a business, project, real estate, etc., with the anticipation or hope of attaining an extra revenue or return.

Investment has become very important and its significance has increased a lot in recent times. One of the major factors for the importance of investment is due to the rising cost of living. Every individual invests their hard earned money in order to get high investments with minimal risks.

In general, low-risk investments are fairly better when compared to high-risk investments. Although there are probable chances of your money getting doubled in a shorter interval yet there are equal possibilities of losing your investments as well.

For example, when you are investing or saving money for your child higher education, you don’t want to afford to lose your money and ruin their career instead you always look for a secure investment where you get steady growth of your funds. Here in this section let us look at the best ways to invest principles under the capital investment schemes.

The investment principles mentioned below are considered to be low-risk investments besides yielding high returns on investments

Dividend Paying Stocks-

They are nothing but general stocks that make regular cash or stock payments to shareholders in the form of dividends. The companies with which the investors invest, usually pay them dividends on a quarterly basis in the form of cash.

Many people invest in dividend-paying stocks to take advantage of the steady payments and the chance to reinvest the dividends to purchase additional shares of stock. The best time to buy dividend-paying stocks is anytime you find that the price is deflating.

Savings Account-

It is an interest-bearing account generally owned by a bank or financial institution providing the investors a modest interest. In a nutshell, a basic type of bank account that allows you to credit funds, keeping it secure, and withdraw money, besides earning steady interest. When your goal is to yield high returns probably online savings account is the best option for you. It is a small risk-free return on your investment.

Lending Clubs-

Gone were the days when individuals were making an investment in the traditional form which is usually financial institutions or banks, however as technology progressed, lending clubs has transformed the banking system with its peer to peer lending model and has become the world’s largest lending platform.

The highest possible rate is 35.89% APR and the best rates are applicable for the investors having the best credits. They not only provide the option of investment instead offer loans for small business, refinance vehicles and other health expenditures.

Fundrise-

It is the first online strategy to develop a modest, low-cost way for any individual to approach real estate returns. Perhaps, this is one of the best real estate services in the market today that lets not only the wealthy rather average read investors to buy properties by pooling their assets through a typical investment platform.

They are one of the best investment principles for investors who are looking for long-term outlook atleast a minimum of 5 year time period. You also could receive dividends from rental income earned by the company. However, when you are short of funds and require for an emergency, you can certainly make money in this platform by selling your stocks.

Money Market Funds-

It is a kind of mutual funds in which the money is invested in high liquid tools like cash and cash equivalents. Since the market is extremely volatile and when investors look for a secure form of investment then money market funds is indeed a safe haven option. They pay higher interest rates than other types of bank accounts that include passbook savings accounts and regular savings accounts.

The above-mentioned investment principles under capital investment schemes are useful vehicles that have a role to play in almost any investment portfolio to provide current income and preserve the value of your investment.

How The Commoners Across The World Are Benefitted With Capital Investments?

Capital investments often referred to as capital budgeting is basically very crucial to organizations since capital investment projects make up some of their most important financial investments. Generally these capital investments require large amount of funds therefore when you make poor capital investment decisions, it can certainly impact and produces negative side effects on the business.  At the same time, they are extremely important for the better functioning of the activity of the business.

Although the concept looks fairly simple and straightforward when you look from the exterior, yet when you analyze their mechanism, it requires deeper knowledge and understanding instead of just purchasing the things and items with money. It necessitates a substantial number of constituents and aspects that has to be taken into consideration before typical business owners should overlook before they get into those capitals and assets.

When it comes to business management, capital investment funds are generally dependent on both tangible and intangible assets. When you have to talk about tangible assets they are often referred to as vehicles, machinery, the workplace, workforce, inventories, equipment, and few others. However, intangible assets are basically stocks and bonds that play a significant role in certain business or project endeavors.

When a business person or an economist wants to invest his capital on some ventures, it is probably determined using the capital budgeting. Capital budgeting helps organizations choose whether to do things like acquisitions of new equipment, develop or enlarge their services, capitalize on new software, or pursue other strategies to enhance the business on an enduring basis.

The main potential objective of capital budgeting is to identify what kind of business and which projects can bring in more revenue for the capital invested. However, this cannot be attained easily, rather requires few aspects to be considered like the project cost, payback period, net present value, and internal rate of return. There are many benefits of capital investments with which the commoners around the world can make thoroughly informed decisions. Apparently, you need a structured project for evaluating these opportunities.

Let Us See How The Capital Investment Benefits The Commoners Around The World

Make Informed Decisions

The percentage of fear factor is very high for leaders especially when they have to take a decision on million dollar project decisions. The rate of stake is pretty higher therefore in order to avoid conflicts and to make their justification right, they usually prepare elaborate models describing and mitigating their decision.

Yet when it comes to a final decision, you require hard choices to be made when you are in the midst of multiple exciting opportunities. You cannot be more vigorous at that moment to take a decision, instead, you need to be composed determining the expected return on investment and make your judgment.

There are plenty of ways that involve more transparency to bring the assessments of risks to the investment decision. Some business makes their business based on data they have acquired whereas few other businesses solely depends on analytical tools to make decisions especially for short-term projects that depend on the economic cycle.

Both these ways yield informed results driven by data with a filtered range of possible outcomes. Although it may sound a bit hypothetical still they are considered to be the most structured approach in making a well-informed decision.  When the capital investment methods are put in the right place, it can obviously rationalize the decision-making process, which eventually saves firms both time and money.

Increased Capital Investment Permits For Significant Research And Development In The Capital Structure

Capital investments enables the businesses to improve their capital for paying off debt, launch new products and expand their facilities. However, when you view from the GDP perceptive, the capital investments has an immediate impact on GDP. Apparently, it is well-known fact that an economy cannot grow unless the business has an investment. Investments often improve the productive efficiency of labor.

The innovation and introduction of new medicines for the treatment of certain diseases is an important social benefit and a significant thriving tool of economic growth and prosperity. Because of the momentous growth and advancement in the pharmaceutical industry, most of the federal government and private organizations are more keen in promoting such investments. At the same time, the healthcare industry is equally accompanied by high-end risks and investments in Research and Development (R&D) are often very large and with highly uncertain payoffs.

However, when you understand the underlying economics behind these investments, you can certainly make an accurate and more productive decision. Therefore increased capital investments undoubtedly allow substantial research and development when it comes to capital structure.

When an economist can make well-informed decisions based on a structured approach and make the right investments, it certainly impacts the economic growth of the society.

How To Plan For Retirement

Living with your family during retirement can be very gratifying, but surely you don’t want to be a burden on them. If you feel confident you can handle retirement planning on your own. Learn how Social Security timing will affect your income. Make a plan to pay off your debt. Keep your plan on track. See these tips & strategies to help you start saving and investing for retirement at any age.

Financial Capital And Working Capital – For Better Capital Management

A company’s fundamental financial health and operational success purely depend on the proper management of working capital and its assets. Developing a good management team is a critical component of running a successful organization and a trademark of good business management is the potential to make proper use of the working capital management to sustain a streamlined and well-organized development, probability and controlled amount of assets.

But what is Capital Finance Investment?  Before you dig deeper into things you should know about the working capital, in the first place you must get familiarized with the definition of capital finance investment and how it is important to the economic growth the business operations.

What Is Capital Finance Investment? – Everything You Need To Know

Financial capital is any economic supply or reserve determined in relationship with funds used by industrialists and industries to purchase what they require to make their goods or to deliver their services to the segment of the budget upon which their process is established. The three important types of funding for a business usually comes from incomes from business processes, venture capitalists or angel investors such as owner’s, business partners, and loans from persons or financial institutions. Every business needs capital finance investment for its day to day operations to meet their essentials and to handle the expenses. Basically business expenditures include payroll payments, expanding their facilities, purchase of inventories and machinery, replacement of old and unused items that needs a change and few others.

For the better functionality of the business, every business is badly in need of working capital to run its daily operations. Perhaps, they serve as a measure of how competently an organization is working and how economically steady and secure it is in the short-term.

The Growing Importance Of Financial And Working Capital

United Nations senior officials emphasized the significance of developing a new model for the business progress that involves social inclusiveness (the process of improving the terms on which individuals and groups play a role in the society to enhance their opportunity and capability), job openings for everyone, and more responsibility from the business segment to handle the continuing international level economic catastrophe.  United States Secretary-General Ban Ki-moon in one of this statement expressed his agony towards the economic crisis happening on the global level and mentioned that human capital and natural capital are every bit as important as financial capital and it has been realized for better economy.

Similarly working capital is a daily essential for the business since it necessitates a substantial amount of funds to tackle the regular payments, cover surprising expenses and buy basic components which are typically needed for the manufacturing the commodities. Working capital is very much associated with the individual’s cost of living so it can be understood in a very simple fashion. In a nutshell, every individual has to save a certain amount of funds in order to manage or cover up the expenses for their daily routine such as food, energy bills, and other unvarying expenses.

The necessity and importance of working capital differ from industry to industry and even between companies to companies such as the difference in collection and payment policies, the need to buy sources or unexpected loss with the business process.  Many companies, apparently, find it difficult to handle expenditures on hundreds or even thousands of capital projects and therefore slip on the expected growth and profitability opportunities as a result. However the business person need not bother nor lose their confidence immediately, instead, investigate on ways to improve their overall performance and efficiency. This is often achieved by mastering and implementing a few practices.

Impact On Organization Values

Capital finance investments play a significant role in the organization growth and can increase the overall value of the business besides increasing the returns on invested capital. Building a winning portfolio is the commonly adopted strategy by most businesses to enhance their growth and productivity. When you have the right insight, they provide more importance to cash-generative priorities, such as increasing network reliability.

Brush The Business Item For Each And Every Project

When designing a project proposal, every project should streamline and explain the alternatives and a calculation on the expected returns, benefits and risks. A well-defined project lessens ambiguities, exclude rational prejudices and establish an empirical foundation for portfolio optimization.

Track Return On Investment In A Project Life-Cycle

Tracking investments especially when designing a portfolio help to identify the most valued projects, reevaluate priorities and understand the ranking of the projects as it unfolds. Appropriate return on investment analysis can drain resources as they generally needs funding from finance.

In addition to these aspects, you need to streamline your approvals to make it more attractive in order to make well informed decisions.