Sweet Amazonia

Archive for the ‘Finance’ Category

A good idea must be shared with the world, otherwise it remains just an idea regardless of how good it was. There are two ways to share an idea. The first and most noble way is to give it away for free. The person who got the idea gets the fame and the gratitude of the people that benefited from it but not much else. However, there are ideas that need to be given away, especially ideas that affect the health or future of people. The second way to share the idea is to build a business around it. There is no harm in earning something from an idea, especially when work was done to bring it about. The key is to serve more over earning more. The formula is that serving more with less earnings is the same or greater than serving less but earning more.

In any case, a business requires financing. To bring an idea to a usable product requires work and materials, both of which requires, at least, Small Business Financing. Without Business Finance, an idea remains an idea and is practically wasted and this is sometimes the case for bright but poor people. Fortunately, Small Business Finance is a good source of working funds to, at least, get the business started.

When I started to work at a company, I said to myself that availing of any kind of personal loans would be my last option. My plan was to make whatever money I had to cover all my expenses. The plan worked for me quite well, unfortunately, saving up for sudden emergencies was not part of that plan. And  when my car broke down suddenly, how I regret not saving up!

I was really worried, I need to have my car fixed as soon as possible! And since I had no available cash, I had no option, I had to make a personal loan! I wasn’t sure how to, so I asked an officemate of mine.  When she found out I needed a small amount of cash only, she told me that a payday loan, payday advance or cash advance is suitable for me. She referred me to a site offering payday loans,  payday advances or cash advances with easy requirements and qualifications, low interest rates, fees and charges! After applying and getting approved for a  personal loan, I was surprised the next day to find the cash loan deposited in my account! And thus, I was able to have my car fixed the same day! That personal loan really helped me a lot!

Still nervous about investing? Then you’ll be glad to learn that a very simple concept can help reduce risk in your portfolio. Diversification, as it’s known in the investment world, simply means not putting all your eggs in one basket. When you think about it, diversification makes complete sense. Since different investments respond differently to economic conditions, and because no one can consistently forecast which one will do best at any particular time, having a balanced mix of investments will help you stay your course.
In practical terms, this means that a smart investor doesn’t look for that one hot stock, one hot sector, or even one currently hot type of investment. If you’re still not convinced, just ask all the thousands of people who lost their nest eggs by investing vast portions of their stock portfolios in the skyrocketing high-tech sector that eventually lost its engines and came crashing back to earth. Had those investors been better diversified, their portfolios would have been much less volatile.
There are two equally important components to diversification. First, you need to invest in all three of the major asset classes: stocks, bonds, and cash-equivalents. Second, you need to be diversified within each class. This means that you need to own a mix of stocks of different size, in different sectors (such as health care and financials) and industries (such as biotechnology drugs, and insurance) as well as both domestic and international companies. It also means that you need to own different styles of investments—that is to say, growth and value. The key is having the appropriate blend of investments—or asset allocation—that fits your particular goals, time frame, and tolerance for risk.
Just as a mutual fund that focuses on a single industry isn’t going to help you with diversification, neither will owning fifty different stocks or mutual funds if they all cover the same thing. If you own shares in Coca-Cola, for example, as well as shares in a mutual fund that invests in Coca-Cola, you’ve duplicated your efforts and increased your vulnerability should Coca-Cola suddenly falter.
Therefore it’s important to take your time and do your homework when figuring out what investments best fit your goals. This is not the time to be quick, impulsive, or reactionary. Only careful consideration will help you to get where you want to go, when you want to get there.
I know that deciding which investments to buy can be difficult, if only because you have so many choices. But once you define your objectives, all those possibilities start to narrow. As you continue to discuss and analyze those investment choices, your decisions will become clearer.
The good news is that it’s never too late to start. You may have to get out of your comfort zone to grow financially, but you can do it. Lauren was forty-five when she first began to figure out how to invest in her future. If she could get a handle on all of that and make it happen, you can too.

When you’re ready to embark on an investment program, the first things you need to think and talk about are your time frame and your willingness to assume risk. These two issues are both crucial on their own—and are also inexorably linked. We all have our own individual tolerance for risk, one that changes over time and as family circumstances shift. I remember meeting a man who told me that when he was young, he’d ride his motorcycle cross-country, ski any hill he could find, and tackle any new adrenaline-pumping endeavor just for the thrill of it. But now that he has reached his forties and has three children, that has changed. “These days I think three, four times before I take on any kind of risk,” he says. That attitude didn’t confine itself to abandoning his former pastimes in favor of woodworking in his garage. It influenced how he dealt with his money as well.
Why is the concept of risk so crucial for an investor? Because as Figure 2.2 shows, the investments with the greatest potential for growth also carry the greatest potential for loss—at least in the short term.
This means that the more time you have, the more you can afford to place your money in investments—like stocks—that can be volatile in the short term but offer the best chance for your money to grow over the long term. Why? If you have ten or twenty years before you’ll need the money, you can likely ride out most market downturns. Perhaps you can even use the market dips as opportunities to invest more. But if you know that you’ll need your money in five years or less, all that changes. As many investors learned in the market decline of 2001—2002, if you assume too much risk, you may experience a significant and sudden loss. It’s wise to remember that, as your time horizon shrinks, so should the amount of risk you take on.
In practical terms, this means using different strategies for different goals. An investment that is appropriate for a long-range goal is simply not appropriate for money you may need next year. If you’re saving for your child’s college in three years as opposed to your retirement in twenty years, you’ll have to invest that money differently.
A friend recently learned this lesson the hard way: She left her son’s college funds invested in the stock market after he’d entered college. When the stock market crashed, so did her son’s tuition money. Unfortunately she didn’t have time to ride out the lows, and she was forced to sell when the tuition bill was due. “I took on too much risk considering his time frame,” she laments. She’s absolutely right.

History tells us that the very best way for your money to grow over the long term—and to capture the power of compounding—is to invest in the stock market. If  in January 1926 you had invested just one dollar in a mutual fund that tracks the S&P 500 Index (which includes five hundred of the country’s largest companies), that dollar would have grown to about $1,775 by the end of 2002. By contrast, if you had instead put your money into intermediate-term U.S. bonds, it would have grown to $59—or if you had invested in thirty-day Treasury bills (T-bills), only to $17. Clearly, over these seventy-seven years, stocks have outperformed both bonds and T-bills by a huge margin. In fact, going back to 1926, the worst forty-year period for stock returns was still better than the best forty-year period for U.S. Treasury bonds. So yes, the stock market certainly has its ups and downs day to day, month to month, and year to year. But the long-term historical trend has demonstrated that stocks offer the greatest upside potential.
If you still aren’t convinced that you should invest your money in the stock market, think about inflation. Again, the rate of inflation can vary widely from decade to decade—or even year to year— in the last fifty-three years it has averaged 3.9% per year
So let’s say you started with $100 in 1950. Based on average inflation rates, it would have had to grow to $765 to have the same purchasing power in December 2002. Groceries (or anything else) worth $100 in 1950 cost $765 in December 2002. By next year they may cost $800. Fifty years from now they may cost $3,500.
Looking to the future, let’s say you have $200,000 that you put in a can and bury in your backyard. When you dig it up in twenty years, that money will be worth far less, perhaps only $100,000 in purchasing power. That’s why stuffing your cash under the mattress is such a poor idea, even if it doesn’t get stolen!