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Jeremy Schalf

Basics of Investment Options

Stocks

We will touch on stocks first because they are the primary piece of many other investments. Stocks are, in essence, ownership in a company. When a company becomes publicly traded they release stock which represents a portion of the company.

Stocks will go up or down based on the demand for the stock. It is conceivable that a stock price could go up as a company does bad. However, this is not likely as many stocks produce income based on company profits. That being said, it is demand that creates a stocks price.

When looking at a stock we have to look at its overall features.

  • Risk – The first thing to be aware of with a stock is risk. Stocks have 100 percent risk, meaning you can lose all of your money. There are no inherit features that make a stock less risky, unless you buy other stocks or other options to hedge, or reduce, your stock risk.
  • Liquidity – Stocks are, for the most part, liquid. You can easily sell your stocks whenever you want, at least currently. Our stock market system means there is probably someone willing to buy if you are willing to sell. The price may not be what you want when you decide to sell, but for the most part stocks are a liquid asset.
  • Taxes – Stocks are taxed differently depending on how long you hold them. However, stocks are taxable and when you sell there will be a tax associated.

Bonds

Bonds, unlike stocks, are based on, basically, a massive loan. A company or government will need money so they will issue bonds that pay out over a period of time at a certain interest rate. This makes them less risky than stocks.

  • Risk – Because bonds are tied to an interest rate they are less risky. You are guaranteed, at least, that interest rate attached to the bond. However, because of fluctuating interest rates a bond could lose value, so there is still risk in buying bonds although not as much.
  • Liquidity – Bonds are, for the most part, liquid–in the sense that you can sell your bond on the market. However, if you are forced to sell a bond you could still lose money that you expected to gain. Bonds are pretty simple to liquidate so if you need money you can get it from your bonds.
  • Taxes – There are different types of bonds. Regular bonds are taxed, other types of bonds are tax advantaged, or are tax-free. There is a difference, however, most bonds, beside municipal bonds, are taxed at investment rates.

Mutual Funds

Mutual funds are their own beast. A mutual fund is run by an manager who buys and sells stocks. The manager will choose what to buy and sell based on what they think is best for the fund. Different funds operate on different principles.

  • Risk – Because mutual funds are just a conglomerate of stocks they are still 100 percent at risk. However, because they are diversified there is a less chance of having a major loss. If the entire market turns then the mutual fund will most likely drop, however, individual stock changes will have less of an overall effect on the mutual fund itself.
  • Liquidity – Mutual funds themselves are liquid. You can buy and sell them as you please.
  • Taxes – Mutual funds are taxed the same as stocks.

 

Hiring a Qualified Intermediary

When you set up an initial phone call or meeting with a qualified intermediary, you need to ask about the role they typically play in these transactions, their past experience, and the types of exchanges they usually help with. Checking out the person’s website should give you some sense of whether he or she does this as a permanent endeavor or not. Unfortunately, some people who call themselves a qualified intermediary have not been in the business for a long time nor have they accumulated the references from many people they have worked with. It is up to you to determine that your professional has serious intent to help you.

Ask for references for others who have used this individual in transactions. For a professional who has been working in this capacity for some time, it should be easy to provide several references. Most people who are pleased with their experience with a qualified intermediary will hire this person again and again to assist with 1031 exchanges in their real estate investment business. It behooves you to have confidence about this person’s ability and commitment to serve in this role for you not just now but also if you should need it in the future. Do not hesitate to get references before making a final hiring decision about a qualified intermediary.

Your qualified intermediary should also be easily reached and clear about the requirements of 1031 exchanges. Since the fallout of a mistake in this process could have such big implications for you, it is imperative that you speak with this individual ahead of time to determine how he or she plans to proceed in your case. Hiring a qualified intermediary requires that you feel confident about the person who will be receiving and applying funds on your behalf and it is not something that should be overlooked or approached too hurriedly.

Advantages IFSC Bank Codes

Saves Time & Money

Online banking’s biggest advantage over conventional banking is that it saves time. You can skip the traffic, the queues and the formalities of conventional banking and just outright complete your banking transaction within a span of minutes at your comfort and convenience. IFSC facilitates such online transactions and saves your time. Also, online banking enabled through IFSC helps make banking paperless and hence saves money. Such electronic banking is environmentally-friendly too apart from being simpler and quicker.

Shorter Transfer Time

Online banking enabled by IFSC also saves the time, effort and money, conventional services such as demand draft and bank cheques take for the fund transfer to be successful. Also the transaction is reflected in both the sender’s and the beneficiary’s accounts’ immediately as IFSC details are already confirmed. Moreover, other than the bank’s service charges (if applicable), there is no additional money spent to carry out such a quick transaction.

Secure and Transparent

For online banking, users need to submit key credentials including IFSC of the beneficiary which are subsequently verified by the bank. Only after the payer’s bank’s verification can a user make an IFSC-enabled fund transfer. This makes the process secure. Also, as online banking through the use of IFSC eliminates the human interference factor from the financial transaction process, such banking becomes more transparent and accountable and reduces the possibility of any kind of scam which can be carried out in the system. Moreover, in online banking since both the sender and the receiver account holders are informed of the transaction immediately through SMS or email, such banking is less susceptible to fraud or any loss.

Helps in Banks’ Reconciliation

IFS codes are unique to each participating bank branch which is how they help in a bank’s data’s reconciliation and validation. Without IFS codes, accuracy of electronic transactions will go down and banks stand the danger of carrying out inaccurate transactions. Also since all banks are now digitally-enabled, online fund transfers facilitated through IFSC help them in quick reconciliation. Also, IFSC being mandated for individual as well as corporate transactions helps banks in disbursing funds quickly and correctly. IFSC also makes it easy for banks to communicate and comprehend transactions across their branches and with the other banks too.

Save Money Like A Pro

Features And Benefits

  • Variety – You should look for a membership that can save you money on a wide list of things. You don’t want to invest in a membership that allows you to save money on just one thing unless you purchase that one thing religiously, such as gasoline! Look for a membership that will allow you to save on almost anything that you use on a daily basis.
  • Big Savings – Once again, you can’t save your way to the top. So look for a membership that has big savings! It’s very possible for you to save thousands of dollars each year, so don’t settle with a membership that only saves you hundreds each year!
  • Return – Any membership you get will likely cost money! You don’t want to invest money into a membership that will never reward you back what you had paid or are paying! Make sure to calculate the numbers and see if the membership you’re looking into will give you a return on your investment!

Awesome Memberships

  • Warehouse Memberships – Why would you buy a small package of toilet paper if you can get a large package of the same brand for the same price as the small? Buy in bulk with a warehouse membership! Yes, most of these memberships require an annual fee but that’s for you to decide if you’re saving enough money each year to balance it out! If you are single and live alone with no kids, you probably don’t need this membership. However, if you are married with 3 kids you most definitely should consider and look into getting one of these memberships!
  • Grocery Memberships – I can only assume that most people purchase groceries on a regular basis. Look for a membership that allows you to save a good portion of money on all of those groceries! This is probably one of the best memberships you can purchase! If you buy food, this membership is for you!
  • Fitness Memberships – This is a good membership for anybody! Even if you aren’t currently active physically, there’s a good chance someday that you will be! It’s never too late to start! You can look for a gym membership in which will save you money or even for one to do yoga or play basketball on a team. There’s a ton of possibilities when it comes to this type of membership so be sure to search around and find one that works for you!

 

Investment As Complex System

Investors can use this information to their advantage and, more than ever before, find themselves in a position to understand far more about the world, and thus, are able to make better investment decisions.

There are downsides. A relatively new paradigm, the 24-hour news cycle, not only requires that we keep glued to our computer or mobile device screens to stay updated (because that’s what everyone else is doing), it also plays heavily on the hearts and minds of investors, resulting in violent swings in the market that stem from the emotions of players in the money game. Ours is a particularly volatile market-for this and other reasons.

Also, this constant information feed keeps us distracted with details. And while details are certainly important, we investors might slowly find ourselves ignorant of the underlying concepts that drive our business from the ground up. We need to keep equally updated to the relatively slow movement of nations, ideologies, trends in central banking and even what may seem like abstractions, such as social conditions and sentiments, the mood of voters, the values of a populace and the mentality of politicians.

For example, the Occupy movement-founded and largely occurring in the United States, but with worldwide reverberations-empowered financial regulators and the politicians whose jobs depended on catering to now politicized-voters to increase enforcement efforts. Did this result in actual enforcement of laws toward institutions whose policies ushered in the financial crisis? No. But it did result in enforcement against high-profile people who had nothing to do with it, people like Mark Cuban.

What does this mean for investors? That’s up to every individual investor, but I certainly had my ideas about it.

Let’s take another example. China is now widely considered to be the world’s next top economic competitor-if it isn’t already. But considering that it is as of yet a relatively undeveloped nation in terms of infrastructure and the apparatus that enables foreign direct investment (FDI), there sits in waiting a lot of potential. The problem is, China is very secretive by nature. It takes a lot of hours of research to get anywhere. Luckily, we have some help.

Info of Gold and Retirement Investing

As a metal, gold has some very unique characteristics, the most notable being that it doesn’t get rusted or corroded. Of all the known natural metals, gold and silver are the best conductors of electricity. These are among the most important characteristics that make such metal precious.

Another quality that makes this metal so precious is its malleability and ductility. It may surprise many to learn that beating one ounce of gold can produce a sheet of three hundred square feet. The sheet becomes so thin that it gets transparent, more popularly known as a gold leaf.

Gold is not only a good conductor of electric current, but also of heat, capable of reflecting infrared radiation. Because of these inherent characteristics, gold is necessarily used in modern technology for the making of satellites and spacecrafts. This metal is also exploited for making many useful alloys of desired tensile strength and conductivity for many applications.

Professionals recommend the inclusion of gold as a part of your retirement investment portfolio. It is considered to be the most reliable hedge against inflation. Currencies may keep changing, but gold continues to remain a solid investment at all times. Though the price of this precious metal may drop at times, over an extended period of time its value is bound to go up. The metal has always remained in demand all over the world as governments, like common people, necessarily maintain large stocks of gold. Investment in gold is quite unlike Forex, stocks or other financial instruments, which are frequently exposed to extreme market fluctuations.

During 1971, the US moved away from following the gold standard. Though the reasons for such a move are debatable, the fact remains that now they can print any amount of money whenever needed, as the currency is no more backed by any physical assets. However, every time it prints additional currency, the value of dollar goes down.
The federal government also owns one of the biggest reserves of gold worldwide. It simply remains there as the government keeps acquiring additional stocks. Perhaps they believe that hyperinflation can’t be escaped forever, as it has historically been proven time and again. As per the census of 2012, the US has had 315,066,582 citizens, whereas its total debt was $16.3 trillion. It implies that the government owes US $142,749 to each of its citizens. Given that the current per ounce price of gold is around US $ 1660, the government will need to give you 85.8 ounces of gold! Well, don’t expect it to be delivered to you in the near future!

You can secure your retirement by making investments in precious metals, as physical assets offer more stability compared to financial markets. Though the price of precious metals may come down for short periods, it will not collapse like financial markets, which carry the risk of failure, depending on the state of economy and government policies.

Investment advisers frequently recommend investing in gold or other precious metals as a part of your retirement portfolio. Time has proven that the price of metals like gold goes up whenever the inflation rises, during wartime, or at times when the dollar or stock markets show a downward trend.

Guidelines Household Budget

First, List All of Your Income

Make sure that you cover all of the bases, not just your paycheck. If you receive a regular income from investments, alimony, child support, royalties, or retirement income, list the income you receive from those sources as well. If you have a permanent part-time job, add it to the list. With temporary jobs, sales, and freelance income, create a conservative estimate of what you can expect to make on a monthly basis. Realize, however, that you may have to change your budget if these sources of income dry up.

Next, List Your Monthly Bills

At the top of the list should come your housing payment, be it rent or mortgage. Utilities should come next. Since electricity and gas bills often fluctuate with the seasons, you need to average them to come up with a monthly estimate. Taxes, insurance payments, and other annual or semi-annual payments can be averaged on a cost-per-month basis. If you put aside the money for these expenses every month, those expenses will not cause you so much stress when it comes time to pay them.

Estimate Your Monthly Food Bills

Food prices often fluctuate with the seasons as well. Make your estimate is on the high side so you make sure you will have enough money to feed yourself and your family. If your estimate is high, you can reward yourself later. The money you save can go toward an item you are saving for, or toward a fun trip or other luxury item. Of course, the extra money saved can always go towards a savings account as well.

Factor in Transportation Costs

Whether you have your own vehicle or use public transportation, you will need to estimate your monthly cost. If you have a vehicle, list the monthly lease or loan payment, as well as insurance, maintenance expenses, repairs, and fuel costs.

Add Your Credit Card and Loan Payments

If you have credit card debt or other loans, list your monthly average payment. If you can squeeze a little more out of your budget, try to put it here, so you can work toward a goal of being 100 percent debt-free. Make sure, however, that you do allow enough money to pay these every month so your credit score will not drop. A low credit score may mean higher insurance payments or not getting a higher-paying job, so making sure your bases are covered here can save you money in other categories over the long run.

Don’t Forget Long-Term Savings and Fun

If you are saving for a home, a car, or a vacation, set something aside every month for these long-term goals. It is also important to include a little each month for something that will make you happy, so you will be encouraged to earn more. Rewarding yourself for your hard work keeps you from burnout, two factors that can kill the joy you get from a job well done. It will also keep you motivated to stick to the goals that you have listed in your budget.

About Simple Money Matters

We live in times and society where the pressures to buy and to show off the things we have bought (materialism) is enormous. Our inability to afford these things or put money aside for them has pushed us to the direction of buying on credit (getting things now and paying for them over time thereafter). Credit can, if approached with caution and discipline, greatly improve the quality of our lives. It can afford us things that we need now that we do not have cash to buy, for example, we may not afford to buy houses cash but may take a mortgage bond and pay affordable instalments over time, or take out a hire purchase for a car personal or business use. Credit can however become addictive resulting in impulsive buying habits (buying things that you do not need because you can afford them through credit limit). The fact that you can afford something does not necessarily mean that you can have it. If credit is not applied responsibly, it can have tremendous destructive consequences.

We live in a consumer society where people are judged by what they have, rather than who they are. This has developed a culture in which community members compete against each other regarding material possessions. This consumerism behaviour drives people to wear expensive label materials, expensive cars, and expensive houses with top of the notch furniture and equipment leaving them with very little or nothing to save. There is absolutely nothing wrong with acquiring these things if you can afford them. There is definitely everything wrong in acquiring these things at the expense of the provision for your children’s education and your retirement savings. While we may need credit and debt at some point in our lives, it should not be a way of life.

We need to plan now for the things we’ll need in the future. The starting point will be to understand the difference between needs and wants. Needs may be things that you may not live without or things that you must have or do, for example, provision for your children’s education, owning a house, life insurance, food, clothing, provision for your retirement, and transport for your business. Wants may be things that you desire to have and can live without, for example, label clothes, expensive furniture, expensive cell phones, luxury houses, etc. You need to take care of your needs first before looking at wants. Depending on credit is living on borrowed money which is a very expensive option. Try to save money for the things you may need that are not needed urgently or buy them on laybye. When you buy something on credit, you are actually borrowing someone else’s money. Borrowing money costs money. Do not overspend your income and do not over commit yourself with credit purchases. Whenever you are thinking about borrowing money, or buying something on credit, ask them to tell you how much you will be paying in total – including all the interest, administration charges, fees and any assurance premiums. Find ways of reducing your hire purchase debt by for example, paying a bigger deposit than required by the credit lender. The most effective helpful way is to look for ways of making extra money. This should be something that will not require much of your time and should not cost you an arm and a leg.

Financial institutions and credit providers make most of their profits from the interest they charge on the money they lend, for example, if the repo rate (the interest rate at which the Reserve/Federal Bank lends money to the financial institutions) is 5.5% and the prime rate (the interest rate at which banks lend money to customers) is 9% and the bank or furniture store charges you 17% interest, that institution is making 11.5% (3.5% + 8%) profit from you. This excludes the mark-up that the furniture/clothing store has already factored in the selling price of the merchandise. So, you are paying even more. This is not about paying less or more, it is about whether you can afford to repay without sacrificing your immediate needs.

Finding a balance between savings for the future and committing to debt has a lot to do with our need for security and harmony. No one likes to feel exposed and at risk, so we must make sure that we have some money saved for emergencies and irregular expenses. Committing to debt is spending our future income (money we have not earned as yet) now and this puts us in a disadvantaged position. Some people have committed themselves to so much debt that all their monthly income is spent as soon as they receive it. The only way to prevent this from happening is by using a budget and strictly following it.

There is a simple rule in life that many of us choose to ignore regarding future financial wellbeing. We have to sacrifice some things today so that we may live better tomorrow. The truth is that if we spend all our income today, we’ll have nothing left for tomorrow and this will force us to work extra hard just to survive. If we force ourselves to save some of our income today, we’ll have something tomorrow to enable us to relax and enjoy life. Putting money aside on a monthly basis for future benefits requires commitment and discipline. Try to save at least 10% of your income every month and see what difference it will make to your financial situation. However you cannot save what you do not have. Once money has been accumulated then strategies for saving and investing it can be sought. Getting your saved money to grow and work for you requires financial literacy and skills to navigate the maize field of investment options.

About the Author: Basi Malatji is the founder and president of Dinatla Business Development Consultants, a strategic training, development and marketing services firm that specializes in helping entrepreneurs, individuals and managers to realize their potential. With more than 15 years of senior management level experience in banking, business development, consulting and training, Basi offers valuable tips on self- development. His experience through interacting with junior managers, entrepreneurs and business owners has lead him to write books on financial literacy and entrepreneurial development. He has also written articles which are available at some of the major Ezine platforms. Some of his work can be viewed at:

Direct Deposit

To verify an account, an employee must send a statement or a blank cheque from his bank. By doing this, he will provide vital information that will enable the employer’s bank to get the individual’s bank account number and the routing number. The routing number is a coded string of numbers which identify the employee’s banking institution. Another prerequisite of certain pay roll processors is a pre-note. This is an electronic transaction from the payroll processor’s bank to the employee’s bank, and it authenticates the account’s information. After such an authentication, an employee can expect regular pay checks which come on time.

This method has various advantages. It saves time because cash is easily and conveniently deposited in an employee’s account thus saving the employee time which he would otherwise use standing in long queues at ATM’s. The employees also do not need to wait for cheque clearance since, funds clear promptly. This is a safe and secure process of transferring money, because an individual does not need to worry that his cheque might be stolen, and he avoids the risk which comes with carrying large amounts of money.

The process is also confidential. Since money is transferred electronically, fewer people come into contact with the money, thus reducing the risk of identity theft. This service also allows an employee to have complete control of his funds as he can divide his cash into different accounts easily. Most employees also give a paper stub in advance so that an employee may know the amount of money which will be deposited, and the deductions made from the salary.

How to Be Debt-Free

Do not think of access to debt as a status symbol. Change your frame of mind about debt. Credit cards are a sure way to financial worries. Throw them into the bin.

Spend within your means. Do not think of spending more than what you have. Credit cards are very tempting as they are convenient to use. However, its end result is headache and financial exhaustion. Oftentimes, people who patronize credit cards are tempted to have more credit cards than what they already have. Common sense tells us why these people are now working just to pay-off their debts.

Be guided by a financial record. Take note of your regular income and the monthly expenditures for basic needs. List the items that needed to be purchased regularly with an aim of making savings. Keeping a record allows you to track your expenditures and it is really nice reading these records once in a while. With financial records as your guide, it will make you feel you are a better person than the person sitting next to you.

Discard credit cards one by one. This is one of the best tips among the 7 clear tips on how to be debt-free. Start from the credit with the biggest balance. Make a schedule within which you will mark the dates each card is expected to be thrown away. The moment you have gotten rid of the first card, you will have the impetus to throw away some more.

Enlist the contribution of every family member. This is a nice opportunity to get everybody working toward a meaningful goal. Teach your children the value of money, wise spending and solving problems squarely. Working as a family can really be very exciting when everybody feels needed in family affairs.

Cut down on unnecessary spending. Perhaps, you may need to cancel a vacation or suspend your plan to buy another car. If you can do this, you will not have to have a long list in your financial records and finances will be easier to handle. Also, remember that these activities do not really mean a lot because they quickly disappear from memory into oblivion. Spend for things that will last forever.

Focus on saving for worthwhile causes. This is the last in the list of 7 clear tips on how to be debt-free. Purchasing your own house (or a dream house) in the future or preparing for your children’s university education is top priority that will help you to focus and eliminate unnecessary expenditures. Financial goals are a way of getting rid of temptations to buy and own less important goods and services. Make these goals realistic to help make you feel a sense of accomplishment.