Find a Methodology and Minimize Investment Madness

There are many reasons to be investing these days, and too much opportunity to not have your money working for you.

However, I believe the majority of people dread having to deal with investment matters, and tend to jump into purchases and then hold their breath hoping for the best. After a long day at work and taking care of the family, it's hard to get excited about reading up on your 401(k) options, Morningstar ratings and fund performances.

If this sounds like you, there are basically 3 choices.

You can have your investments professionally managed, you can continue as you have in the past & keep your fingers crossed, or you can find a methodology that objectifies the investing process (that's buying and selling investments) and helps you maximize your long-term results.

To determine if you need help managing your investments(and this doesn't necessarily mean having to pay for advice) you might want to ask yourself these questions:

=> Do I really have the time and interest to follow the market closely on a daily basis?

=> Have I done well in the past managing my own investments?

=> Do I really want to add another layer of work and responsibility onto an already busy schedule?

If you're like most people, you would answer yes to some and no to others, so how do you decide? If you think you could have or should have done better with your investments, then you need some help. Don't feel bad. Having counseled hundreds of people over the past 15 years I can honestly say that everybody needs some help, whether they are aware of it or not.

Why? This could come as a surprise, but, in fact, your financial life is a lot shorter than your physical life?

Most people who end up investing don't really start working and making money until they are about 25 years old. Considering the average retirement age of 65, this gives you only 40 years to save and invest wisely.

If you make a poor investment decision, such as trying to stay fully invested during a bear market, you could lose big both in terms of diminished dollars and wasted time.

To drive home this important point, let me give you an actual example involving my own portfolio. For ease of illustration I have adjusted the beginning portfolio balance to $10,000.

During the period from 1/25/91 to 10/13/00 my $10,000 investment grew to $37,840, which is a 14.67% compounded annual return.

On 10/13/00, based on a methodology I was following, I liquidated all of my domestic mutual fund positions and moved 100% to the safety of my money market account. Thanks to this move, my portfolio retained 100% of its value on that date.

As we now know with hindsight, most people held on to their investment positions and have so far lost on average 50% to 60% of the value of their portfolios. For this example let us use 50%.

If I had held onto my position, my portfolio would be down to $18,920. Last time I hit that level on the way up was in 1995.

In other words, not only would I have lost 50% of my portfolio I would have lost even more by having used up 20% (8 years) of my total financial life.

How can you avoid mistakes like that in the future? Spend a little of your valuable research time looking for investment methodologies that allow you to side-step bear markets and let you move back in during bull markets. In other words, invest your time looking at methodologies instead of investments themselves. This will lay the foundation for more effective use of your money and time.

If you find a methodology that you like, and it matches your investment philosophy, stick with it for the long term. It should have the aspect of telling you when to get out of, as well as when to get into, an investment.

I suggest you follow these broad guidelines:

• Don't be afraid to take a small loss to avoid bigger disasters.
• Stay away from commissioned sales people (because they have incentives other than your best interests), and if you use an advisor, be sure he or she is fee based.
• Above all, don't get overwhelmed by news, rumors and predictions that are irrelevant to your strategy.

If you take this advice, I guarantee that pretty soon sleepless nights will be a thing of the past and you'll be on your way to more confidently and successfully (that means profitably) managing your investments. 

Financing Sources and Types to Ensure Successful

Money is of extreme importance nowadays. Almost everything that we do involves money. The same is true if one wants to venture into business or buy a home which is one of the basic needs for survival. Financing or supplying of funds in business is a must to make it grow and achieve the desired expected profit (together with the right planning and managing). Common mistakes encountered by new entrepreneurs are wrong financing sources, underestimated amount needed for capital and inflexible financing types. These problems however can be prevented by careful planning and analysis of the various factors involved in starting a business.

In general, business people can choose from the two types of financing, the debt and equity financing. Equity financing is the type commonly used by small or growth stage entrepreneurs. The sources for this type involves the center of influence that trusts the entrepreneur, such as friends, relatives, family members and other people interested in investing their money in the business. However there are also capitalists who are ready to take the risk of financing small businesses. These capitalists may include financial institutions, authorized government agencies or well-to-do individuals in society. There are also venture capitalists that finance new business in the industry to get equity. Businesses that have been in the industry from three to five years are preferred by venture capitalists. They have various methods to manage or deal with the businesses that use their financing or invested money. They can influence the decision making policies of the business in the event its performance does not come up with the expected result.

Another general type of financing is debt financing. This type has varied sources which include Small Business Administration Loans, commercial loans through banks and personal loans from family, relatives and friends. The government recognizes the importance of business in the economy of the country and that is why they offer programs that can encourage the growth of small enterprise by having their own financing agencies tp help a lot of young business people and entrepreneurs. Debt financing through banks is the traditional means to fund a business. The banks act as a short term lender for the business person to have the needed money to buy equipment and machineries necessary for the business to flourish. The SBA or Small Business Administration Loans are used in the case of local banks. The loan that can be acquired can be from $5,000 to $2,000,000.

From these two general types of financing branch the various kinds of financing involved - not just in business but in other fields as well. A few of which are piggyback financing, owner financing and creative financing. Piggyback financing is used by home buyers who want to avoid mortgage insurance which is required when the mortgage is more than 80 percent of the purchase price. Through piggyback financing, the borrower can have two mortgages with costs that may vary. Owner financing happens when the owner or seller of the property is the one financing the buyer so in this case the owner acts as the bank. The buyer in turn can pay the needed amount monthly or whatever may be the agreement instead of going to the bank for financing. Creative financing happens when the house buyer has a third party lending institution which can be a bank or a loan agency. 

Financial Tips for Trying Times

(ARA) - When life gets unpredictable, there's one thing Americans always want to hang onto: their money.

During times of national uncertainty, it's only natural to want to hunker down and hang on to your cash -- or at a minimum, squeeze as much as possible out of every paycheck (that is, if you're still getting one).

Many Americans are feeling less secure about their lives than ever. In fact, 63 percent feel they will have to make changes in their day-to-day lifestyle, according to a survey by Wirthlin Worldwide, a McLean, Va.-based research firm. Fears of the unknown, job loss or having less income are also on people's minds.

"If you hated financial planning to begin with, the thought of managing your money in trying times can be even more intimidating," says Randy Schuldt, vice president with 

 Three out of four Americans who hate financial planning. "Although it may seem impossible to predict what the future will bring, there are some simple steps you can take to give you more control of your money in a changing world."

To give you and your family something to hang onto during uncertain or changing times, 

Put it in perspective. If history is any indication, the economy may not suffer long-term ill effects from recent events. The Dow Jones industrial average -- the oldest U.S. market benchmark -- typically falls for a short time, but it has traditionally rebounded within six months. It happened after Pearl Harbor, the Gulf War, the World Trade Center bombing in 1993 and the Oklahoma City bombing in 1995. Past performance doesn't guarantee future results, but there's a possibility that history may repeat itself. Fearful reactions will only make the short-term last longer.

Reduce your deficit. The nation's economic outlook is nothing you can control, but you do have control over your own situation. If you've got credit card debt, take steps to pay it down. Start with the cards with the highest interest rate and pay more than the minimum on all your cards with balances. Instead of using a credit card for future purchases, get a debit card, which subtracts purchases directly from a bank account.

Protect future income. You owe it to yourself and family to protect your earning power with disability income insurance and/or life insurance. The lack of disability income insurance is the single biggest threat to the financial well-being of the American workforce, according to the Consumer Federation of America. It reports that 80 percent of U.S. workers either have no long-term disability income coverage or their coverage is inadequate.

Resist the urge to borrow from your 401(k). Many people are tempted to borrow from their 401(k) as a first resort, but it should be the last resort. Many people think because it's 'borrowing from themselves' that no harm is done, but actually, they lose the chance to benefit from the tax deferral and compound interest on potential growth of their 401(k). That means your account will be much smaller when you retire. Also, if you quit your job or are fired, you may be required to pay back the entire loan immediately. If you are unable to do so, be prepared to pay income taxes and a 10 percent early withdrawal penalty on the loan.

Balance your budget. Now is a good time to get in the habit of budgeting your money. Track your expenses and spending for a month or so. It could reveal some money habits that need changing. And it can help you shape future habits, such as saving, charitable giving or just paying your bills on time.

Save for emergencies. Many people put off saving for a rainy day. It may not be raining on the economy yet, but the storms are brewing. A good rule of thumb is to have at least three months' salary in the bank where you can access it for emergencies ranging from a leaky roof to layoffs at work.

Have a plan in case of layoff. During these tough times, more and more companies are cutting jobs, and yours could be next. If you haven't done so already, update your resume. Be sure you understand what you'll need to do to maintain health insurance coverage after a layoff. You might want to apply for a home equity line of credit. You don't have to use it, but it's hard to get approved after you've become unemployed.

Write a will. It was a good idea before the world changed, and it's a good idea now. As long as you're thinking about your family's financial future, this is also a good time to formally declare your wishes about who gets what, and how much, after you've passed away. It's also the only way you'll be sure your wishes are carried out. You can modify your will as often as you like, for as long as you live. You may also need a durable power of attorney (POA), which formalizes who will make decisions on your behalf, if you are unable to do so.

Invest in the future. Resist the urge to put future plans on hold. If you want to buy a small business, adopt a child or retire early, put those goals on paper and follow through with a savings plan. It's easier to stay on track if you have something to shoot for. Regardless of the condition of the world, keep improving the condition of your personal finances. An investment in your future is also an investment in America's future.

Financial Success secret

Financial Success-The Secrets Of Financial Success

After speaking with a gentleman this morning, hearing his excuses or so called reasons for his lack of financial success, I realized that the majority of our population is broke only because they lack the one key ingredient or secret. Financial success is as easy as one-two-three. Let me explain.

Many people believe that with a little more education, a little more experience, or even a little more hard work and dedication; they will break the barrier and soar into financial success, whatever that means for them. Could either of these be secret for reaching financial success? Analyze the following experience and decide for yourself.

This summer, Jet Blue, a growing airline, was looking to increase its call centers, and overall ticket sales. So, first things first, finding new operations managers. A group of interns, with college diplomas in hand, quickly answered the call. Eager to receive a college grad’s salary and begin their new career path, they overlooked the fact that the young man training them for the position was also enrolled at the nearby university. Having only completed 5 semesters himself, he held the position and received the salary they had studied and paid 8 semesters or more for. Does education really pay? Or is there something more?

What about experience? Does time on the job matter? Being young and inexperienced myself I am often asked who paid for your Mercedes, your home, your diamonds, etc. Some people actually believe that a rich person likes me, or likes to give me gifts. All I have to say to that is, when they find that rich person, let me know. Financial success is more than who you know. They just can’t seem to believe that a 24 year old, inexperienced female could have bought all that for herself. People tell me all the time, “as soon as I pay my dues,” “after a few more months, then I’ll ask for that raise,” “when I’m at the top then things will be different.” They actually believe that with more experience, more time on the job, they will earn their right to financial success and have what I have. Don’t they see it, I didn’t work my way to the top, I didn’t put in 10,15, or even 20 years to earn it, and they don’t have to either.

Are you ready for the secret? Look at McDonalds and see if you can find it. (Don’t worry I’ll help you out, you don’t even have to be smart to be financially successful.)

McDonalds advertises “billions served”, could that be true? Their food is distasteful, their prices middle of the road, their service fair, locations everywhere. How? Every time you, or better put, someone who actually eats at McDonalds, pulls up to the drive thru they know what to order, and they order what they know. It doesn’t matter if they’re in China, Argentina, or Wyoming, they’ll get the exact same hamburger. Same condiments, same taste, same price, in yen, pesos, or dollars. It doesn’t matter if the hamburger maker is Lee, Juan, or Tim, the hamburger is the same.

Have you figured it out? Take this tip! McDonalds follows the same system each and every time. They have built a machine and now they put the machine to work. Here’s the system. 

Step 1. Build the store equipped with stoves and employees. 

Step 2. Ship hamburgers and food supplies.

Step 3. Assemble hamburgers. 

Step 4. Exchange hamburgers for cash. It’s the same every time. 

Now Subway, Taco Bell, KFC, Arby’s, and Hardey’s have all adopted the same system to generate the same level of financial success. It will work for you just as easily as it has for them.

You see you don’t have to be a college grad, you don’t have to claim years of experience, or even work your way up the ladder. You don’t even have to work hard. Don’t buy into the false beliefs of the average broke American, generating 36k a year!! Find a system that works, stick to it, and get the results. The system works every time, humans error all the time. Once you find the system that works for you, putting money into your pocket; it‘s just a matter of duplicating it time and time again. Financial Success can be yours!

It’s no wonder system stands for Save Yourself Stress Time Energy and Money.

Financial Services Help Manage Money

When it comes to managing money many times it is best left up to the professionals and financial services that are knowledgeable and experienced. Financial services include a whole range of services, so if you need some form of financial services to help you with your money management, banking, assets, and the like you will certainly be able to find the assistance you need through financial services firms. The following financial services are just an overview of the different financial services you can choose from and that are offered.

Financial Services #1 Wealth Management

Frequently individuals who are wealthy need financial services in order to manage their money and stay wealthy. Many wealthy individuals who do not use financial services for wealth management see their money slipping out the window. However, those who use wealth management financial services not only maintain their wealth and enjoy it, but also see it increase.

Financial Services #2 Investment Banking

Investment banking is another offering of financial services that many individuals enjoy. This is because investment banking financial services focus on creating capital through client investments.

Financial Services #3 Asset Management

Financial services offer asset management for individuals who cannot or prefer not to manage their own assets in the form of cash, property, bonds, and stocks. Fortunately, financial services are able to handle asset management competently.

Financial Services #4 Business Banking Services

Business banking financial services are also an option for businesses that need help in managing accounts, income, payments, loans, and any other types of financial services needed. Business banking services are a very important part of the financial services sector.

If you are interested in financial services helping you manage your wealth, assets, make investments for you, or manage your business banking, and then you should contact several financial services providers in order to compare services and fees so you can find the one that is best for you. 

Financial Crises, Global Capital Flows and the International Financial Architecture

The recent upheavals in the world financial markets were quelled by the immediate intervention of both international financial institutions such as the IMF and of domestic ones in the developed countries, such as the Federal Reserve in the USA. The danger seems to have passed, though recent tremors in South Korea, Brazil and Taiwan do not augur well. We may face yet another crisis of the same or a larger magnitude momentarily.

What are the lessons that we can derive from the last crisis to avoid the next?

The first lesson, it would seem, is that short term and long term capital flows are two disparate phenomena with very little in common. The former is speculative and technical in nature and has very little to do with fundamental realities. The latter is investment oriented and committed to the increasing of the welfare and wealth of its new domicile. It is, therefore, wrong to talk about "global capital flows". There are investments (including even long term portfolio investments and venture capital) – and there is speculative, "hot" money. While "hot money" is very useful as a lubricant on the wheels of liquid capital markets in rich countries – it can be destructive in less liquid, immature economies or in economies in transition.

The two phenomena should be accorded a different treatment. While long term capital flows should be completely liberalized, encouraged and welcomed – the short term, "hot money" type should be controlled and even discouraged. The introduction of fiscally-oriented capital controls (as Chile has implemented) is one possibility. The less attractive Malaysian model springs to mind. It is less attractive because it penalizes both the short term and the long term financial players. But it is clear that an important and integral part of the new International Financial Architecture MUST be the control of speculative money in pursuit of ever higher yields. There is nothing inherently wrong with high yields – but the capital markets provide yields connected to economic depression and to price collapses through the mechanism of short selling and through the usage of certain derivatives. This aspect of things must be neutered or at least countered.

The second lesson is the important role that central banks and other financial authorities play in the precipitation of financial crises – or in their prolongation. Financial bubbles and asset price inflation are the result of euphoric and irrational exuberance – said the Chairman of the Federal Reserve Bank of the United States, the legendary Mr. Greenspun and who can dispute this? But the question that was delicately side-stepped was: WHO is responsible for financial bubbles? Expansive monetary policies, well timed signals in the interest rates markets, liquidity injections, currency interventions, international salvage operations – are all co-ordinated by central banks and by other central or international institutions. Official INACTION is as conducive to the inflation of financial bubbles as is official ACTION. By refusing to restructure the banking system, to introduce appropriate bankruptcy procedures, corporate transparency and good corporate governance, by engaging in protectionism and isolationism, by avoiding the implementation of anti competition legislation – many countries have fostered the vacuum within which financial crises breed.

The third lesson is that international financial institutions can be of some help – when not driven by political or geopolitical considerations and when not married to a dogma. Unfortunately, these are the rare cases. Most IFIs – notably the IMF and, to a lesser extent, the World Bank – are both politicized and doctrinaire. It is only lately and following the recent mega-crisis in Asia, that IFIs began to "reinvent" themselves, their doctrines and their recipes. This added conceptual and theoretical flexibility led to better results. It is always better to tailor a solution to the needs of the client. Perhaps this should be the biggest evolutionary step:

That IFIs will cease to regard the countries and governments within their remit as inefficient and corrupt beggars, in constant need of financial infusions. Rather they should regard these countries as CLIENTS, customers in need of service. After all, this, exactly, is the essence of the free market – and it is from IFIs that such countries should learn the ways of the free market.

In broad outline, there are two types of emerging solutions. One type is market oriented – and the other, interventionist. The first type calls for free markets, specially designed financial instruments (see the example of the Brady bonds) and a global "laissez faire" environment to solve the issue of financial crises. The second approach regards the free markets as the SOURCE of the problem, rather than its solution. It calls for domestic and where necessary international intervention and assistance in resolving financial crises.

Both approaches have their merits and both should be applied in varying combinations on a case by case basis.

Indeed, this is the greatest lesson of all:

There are NO magic bullets, final solutions, right ways and only recipes. This is a a trial and error process and in war one should not limit one's arsenal. Let us employ all the weapons at our disposal to achieve the best results for everyone involved. 

Facts of Day Trading

Are you thinking of entering the fast-paced world of day trading? Arm yourselves with the information from this fact sheet on day trading.

What is day trading?

Day trading is an investment tactic that does online daily stock trading with a relatively short investment. Those who do day trading usually buy and sell securities during the same market day and, as a general rule, do not hold stocks overnight. Many day traders make dozens of trades every market day hoping to capture profits that arise from small intraday price fluctuations.

How is day trading different from swing trading?

Day trading relatively holds the stock for only the day. After the stock market closes, a day trader has no stock in his hands. Swing trading holds a stock for at least a few days, waiting out for the best price before dumping it back to the market. Day trading is much more stressful and requires guts and a keen business sense. Once you get good at day trading, you can earn up to $50,000 from your initial investment.

How much capital would you need for day trading?

You need an investment equivalent to buy 1000 stocks. That is roughly around $20,000. Because the chances are small that you will find a marketable stock with a price of under $20, this is enough to get your day trading underway. However, you must remember that this is a 100% risk capital so do not worry too much if you lose this amount very early.

What are the general rules for day trading?

• Always trade with the trend.
• Cut losses short
• Never get emotionally involved in your trades.

What are the most suitable stocks to trade for day trading?

It is advisable to trade high volume stocks. Go with the trend with the popular stocks available. It'll be easier for you to sell those stocks at the end of the day trading.

How does a usual day trading transaction occur?

For example, at 10:00 AM a day trader might buy 1000 shares of stock XYZ just as the price begins to rise on good news, then sell it at 10:04 AM when it's up by 1/2 ($0.50). The day trader makes $500, minus commission. With today's cheap commissions of $29.95 or less per trade, that's a quick $440.10 or better, excluding taxes.

Most people who deal with day trading spend all of their time in front of the computer, watching the slightest change in the stock price. As the prices go up and down, the day trader must be alert as to when to sell his stock or wait for the moment to hold on it. This can be a very stressful lifestyle as a mere second could mean an increase of half the stock price and missing that moment for any person engaging in day trading could mean a loss on his investment.

Day trading is not a get rich scheme. It is serious business where you could lose everything within minutes because of wrong information. Before jumping into day trading, remember to do your homework first. Go to seminars on day trading, use simulations if possible and practice reading market indicators. To be a successful day trader, don't just need luck. Knowledge and experience counts. Welcome to the world of stock markets and investments