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Investing Education

Alternative Investments

Alternative investments include private equity or venture capital, hedge funds, managed futures, art and antiques, commodities, and derivatives contracts and they do not include stocks, bonds, and cash.

Most alternative investment assets are held by institutional investors or high-net-worth individuals because of their complex nature, lack of regulation, and degree of risk.

Alternative Investments.

Many alternative investments have high minimum investments and fee structures, especially when compared to mutual funds and exchange-traded funds (ETFs).

These investments also have less opportunity to publish verifiable performance data and advertise to potential investors.

Although alternative assets may have high initial minimums and upfront investment fees, transaction costs are typically lower than those of conventional assets, due to lower levels of turnover.

Most alternative assets are fairly illiquid, especially compared to their conventional counterparts.

Investors may have difficulty even valuing alternative investments, since the assets, and transactions involving them, are often rare.1

Even when they don't involve unique items like coins or art, alternative investments are prone to investment scams and fraud due to their unregulated nature.

It is essential that investors conduct extensive due diligence when considering alternative investments.2

Alternative investments typically have a low correlation with those of standard asset classes. This low correlation means they often move counter to the stock and bond markets.

This feature makes them a suitable tool for portfolio diversification. Investments in hard assets, such as gold, oil, and real property, also provide an effective hedge against inflation, which hurts the purchasing power of paper money.

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10 Habits for Financial Freedom

Achieving financial freedom is a goal for many people.

Financial freedom generally means having enough savings, investments and cash on hand to afford the lifestyle you want and a growing nest egg that will allow you to retire.

You may fail to reach that goal because of increasing debt, financial emergencies, profligate spending and other issues that thwart you from reaching your goals.

10 Habits for Financial Freedom.

It happens to everyone, but these twelve habits can put you on the right path.

1. Set Life Goals

A general desire for "financial freedom" is too vague of a goal.

What does it mean to you?

Write down how much you should have in your bank account, what the lifestyle entails and at what age this should be achieved.

The more specific your goals, the higher the likelihood of achieving them.

Then, count backwards to the current age and establish financial mileposts at regular intervals.

Write it all down neatly, and put the goal sheet at the very beginning of your financial binder.

2. Make a Budget

Making a monthly household budget, and sticking to it, is the best way to guarantee all bills are paid and savings are on track.

It is also a monthly routine that reinforces your goals and bolsters resolve against the temptation to splurge.

3. Pay Off Credit Cards in Full

Credit cards and similar high-interest consumer loans are toxic to wealth-building.

Make it a point to pay off the full balance each month.

Loans and mortgages typically have much lower interest rates, making them less of an emergency to pay off.

4. Create Automatic Savings

Pay yourself first!

Ideally, the money should be pulled the same day you receive your paycheck so it never even touches your hands, avoiding temptation entirely.

5. Start Investing Now

There is no better or tried and true way to grow your money than through investing.

The magic of compound interest will help your money grow exponentially over time, but you need a lot of time to achieve meaningful growth.

Credit cards and similar high-interest consumer loans are toxic to wealth-building.

6. Negotiate

Many consumers are hesitant to negotiate for goods and services, worrying it makes them seem cheap.

Overcome this handicap and you could save thousands each year.

7. Proper Maintenance

Taking good care of property makes everything from cars to shoes and clothes last longer.

Since the cost of maintenance is a fraction of the cost of replacement, it is an investment not to be missed.

8. Live Below Your Means

Mastering a frugal lifestyle by having a mindset of living life to the fullest with less is not so hard.

In fact, many wealthy individuals developed a habit of living below their means before rising to affluence.

Making small adjustments by distinguishing between things you need rather than things you want is a financially helpful and healthy habit to put into practice.

9. Get a Financial Advisor

Once you've gotten to a point where you are able to discern if you've amassed a decent amount of wealth, be it liquid investments, or assets that are tangible but aren't as readily available to convert to cash, getting a financial advisor to educate and help you make decisions is highly suggested.

10. Take Care of Your Health

The principle of proper maintenance also applies to the body.

Ailments make insurance premiums skyrocket, and poor health may force earlier retirement with lower monthly income.

These 10 habits won't solve all your money problems, but they will help you develop helpful habits that can get you on the path to financial freedom - whatever that means for you!

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Your Start-Up Business Needs External Financing for Marketing Operations

You have to spend some money first to make more money.

This rule of thumb is so far a run-of-the-mill precept in every start-up business.

If you’re a smart business owner, you’re already way ahead from understanding that investments are the stepping stones for any business success.

If you’re a smart business owner, you’re already way ahead from understanding that investments are the stepping stones for any business success.

When launching a new entrepreneurial venture, getting the word out to the masses is one of your top priorities.

While there are various strategies to market your company or product without a sizable budget, they wouldn’t be enough at most times.

It’s in these instances when you, as a business owner, should consider debt financing for marketing purposes.

To that end, here are a few things to look into before bolstering into your marketing operations with external financing.

Why Financing is Needed Marketing Campaigns

Although the Internet can be accessed easily, there are no such things as free online marketing strategies.

Pay-per-click ads, content marketing, and social media campaigns, for example, need fundings.

Also, there are a few situations when business owners need to leverage talent fees for influencer collaborations or referral programs, depending on their business industry.

Some circumstances when owners are advised to incorporate both online and offline marketing strategies happen, as well.

For instance, marketing in local community events or health fairs for medical practitioners, while advertising or mail marketing in print media for wholesalers.

All of these marketing efforts require financial aid in achieving the desired results!

Another uphill task for startups is to invest available resources and time in conducting marketing research.

Basically, it’s a way to familiarize your audience and garner insights to ameliorate both present and future business conditions.

This doesn’t include hefty budgets, but external financing helps in accessing essential tools in finishing the project efficiently. 

What to Consider before Funding Marketing Campaigns.

As mentioned, as savvy business owners, we’re considering marketing as an investment rather than an expense.

We’re positive that debt-based financing for marketing has a higher probability of driving return on investment (ROI), so long as it’s a good one.

We’re positive that debt-based financing for marketing has a higher probability of driving return on investment (ROI), so long as it’s a good one.

To make sure you’re indulging in “effective” marketing investment, take the following as your guide.

Have a specific goal for your marketing campaign.

You should only take on debt for marketing operations after you decided what to achieve.

The chance is the longer you repay your loan, the higher the price you’re going to return.

If you aren’t clear about why you’re taking external financing, you’ll end up suffering from higher payments.

Be clear about how your marketing would convert sales.

You have to determine an effective conversion method as you’re taking on debt-based financing for marketing.

At the end of the campaign, both soft (e.g., word-of-mouth advertising) and hard (e.g., social media followers) ROIs should increase, as well as your overall profit even after paying off both of your principal and interest accrued.

Thus, perfect every kink before signing the dotted line.

Types of Marketing Financing

Once you identified your marketing campaign goals and determined specific measures to drive higher ROI, you’re more likely ready to finance your marketing plan.

The common types of marketing financing include unsecured loans and short term loans, like a line of credit and merchant cash advance.

1. Unsecured Loan

Having no collateral is not a problem.

Your creditworthiness is enough to get an unsecured loan.

A borrower’s strength of cash flow or business credit score can serve as an asset to get a loan.

What’s more, its process goes much quicker than the process of getting a secured loan.

Sounds too good to be true? Check CreditNinja.

They offer various personal loans, including unsecured ones.

It’s flexible enough to let you draw against a pre-approved amount of money.

2. Line of Credit

If you’re planning for a short marketing expense, then the line of credit is the one for you.

It’s flexible enough to let you draw against a pre-approved amount of money.

Not only that, it only put interest on the funds that have been withdrawn.

Above all, it’s lender-friendly. It allows you, the borrower, to set the size of the payment, amount of interest, and other rules yourself. 

3. Merchant Cash Advance (MCA)

MCA is an alternative route to stringent credit requirements and a tedious approval process of a conventional term loan. It’s not a loan but a cash advance.

You can quickly get advance deposited into your account through a provider.

But here’s the catch. The provider needs to check your daily/weekly credit card receipts to make sure whether your company can pay timely or not.

Takeaway

It’s a wrong move to apply when you’re already facing liquidity pitfalls.

The tendency is that providers would be reluctant to lend money for those companies that consider cash infusion as a last resort, regardless of profitable their businesses are.

Hence, the best time to apply for external funding is when you don’t need it!

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Investing in Microeconomics or in Macroeconomics?

Most economists, believe different methods are needed for studying individual markets versus the whole economy.

Even though most economists agree on the basics of microeconomic analysis, the field of macroeconomics grew out of dissatisfaction with perceived limitations in the predicted outcomes from microeconomics.

Investing in Microeconomics

There is no widespread agreement on the conclusions drawn from macroeconomic studies.

Therefore, it is not shorthand for microeconomic truths.

It is not clear if investors need macroeconomics to make good decisions.

An economy is an extremely complex and dynamic system therefore, it is very difficult to identify real signals in macroeconomics because the “data is noisy”.

Macroeconomists frequently disagree about how to measure effectiveness or how to make predictions and makes it easy for investors to draw incorrect conclusions or even adopt contradictory indicators.

Investors should study basic economics, though the limitations of the field present ample opportunities to be led astray.

Economists often present information in a definitive manner to sound authoritative or scientific, but most economists make poor predictions.

Investing in Macroeconomics

However, this does not prevent them from making more bold proclamations, each about topics with a lot of uncertainty.

Investors should demonstrate more humility, and this is where microeconomics can really help.

It is not useful to try to predict where the indexes will be in 12 months or what the inflation rate will be at that time.

But investors can try to find companies with products that demonstrate a low price elasticity of demand, or identify which industries are most reliant on i.e low oil prices or require high capital expenditures to survive.

Microeconomics can help identify, which companies are most likely to use their resources efficiently and generate higher returns, and the tools of analysis are easy to understand.

Macroeconomics may be more ambitious, but so far it has a much worse track record.

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5 Questions to Ask Before You Get Your Business Loan

The vague, awkward feeling that seizes once you find out that the bank has declined your loan application is not the only time that can trigger an upset.

There are plenty of concerns that might arise before the business is granted a loan, and these are just as valid as a business can expect some unexpected challenges.

Whether you're in a unique and rough stretch or have a viable, but long-needed idea, there are several questions you should ask yourself before you decide to roll out the red tape and go through the Grace Period.

5 Questions to Ask Before You Get Your Business Loan.

1. What are my short-term, medium-term and long-term goals?

A business should address the long term as well as the short-term goals that the business seeks to accomplish.

Forget about being first in the money or being first in something- any deal you're going to make should reflect on your vision of your company being used efficiently and effectively, and your thoughts as to where that vision fits within the market.

A key element of managing a business will be to determine your overall strategy, and the notion of strategy and vision are key characteristics of a good business.

Setting clear goals in each area can be a powerful way to gauge whether or not you have a chance of being successful.

While you may have an overwhelming desire to expand your business or try to make a technological breakthrough of some sort, there should always be an underlying strategy and implementation of that strategy.

2. What are the elements of my business that will make me feel the most proud?

As attached to your budget, your focus may be on the small, medium, and large picture of what your company needs for the long term.

For example, medium-term goals may be focusing on human resources, advertising, research and development, and sales.

Those elements of your company that have the chance of increasing in value over the next three, five, ten or twenty years should take priority.

If you're the owner of a small enterprise, long term vision may include expanding your product line and capital expenditures.

While it's important for your business to be focused on the moment, be sure to look at the larger picture as well.

And when you see abundant opportunities, make sure you take advantage of them.

If you're the owner of a small enterprise, long term vision may include expanding your product line and capital expenditures.

3. How did we do?

Now is the time to evaluate your business performance.

Where are you in terms of revenue growth and profits?

Too many businesses elect to focus only on the here and now, and that's a big mistake.

Establish the foundation of your performance growth and success by looking at your financial statements from the past three years.

What areas did you notice growth or diminished performance?

How have those trends affected your financial performance?

Have you improved your financials since then?

If so, take the opportunity to share that information with your board.

There's nothing more frustrating than to see your vision and goals go up in smoke because you didn't share your vision and your goals.

If your business still has the same “comfort level" as ten years ago, consider giving some attention to changing your marketing and sales techniques.

Think of what sales topics you can improve upon.

Did you know that certain types of sales are more profitable than others?

If you enjoy hot-rods, but rarely fly them, consider flying most of your annual events and convention attendance.

If you have an specialty house, consider sending more of your staff to it.

While you may employing certified public accountants and bookkeepers, hiring more qualified staff can create tremendous motivation for your business to improve.

That's time and money well spent!

Focus on discovering ways to decrease the cost of your goods and services without compromising the quality you provide.

4. What do I need to do now to make sure my company stays lean?

This is the time to contact your bank.

Banks want to provide you with the capital to grow your business but they will also want to make sure that you aren't going to walk away and take your bank with you.

Either way, it's important to make sure that every dollar is accounted for and put to use.

Focus on discovering ways to decrease the cost of your goods and services without compromising the quality you provide.

If you have seasonal inventory, consider buying additional inventory.

This way, you can offset your inventory costs at the beginning of the year while also offering deals and better pricing at the end of season.

5. What about financing tools?

Financing a business is not an easy task, so make sure you have all your questions answered before proceeding.

Review the requirements and make sure you have everything you need to provide a complete package.

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