Tuesday, April 30, 2013

Strategy and Due Diligence for Private Equity Investments

When considering an investment in private equity, investors need to consider a number of factors.
  • Can a small investor obtain the diversification needed
  • Does the investor have liquidity needs that would prohibit tying up funds for 7-10 years
  • Will the investor be able to fund promised commitments to the private equity fund when called for
  • What mix of sector, stage and geography is required to provide the best diversification
In addition, selecting managers requires special due diligence considerations:
  1. Can the investor and manager evaluate prospects for market success
    • Understanding of the markets, competition and sales prospects
    • Experience and capabilities of management team
    • Management’s commitment – ownership, compensation structure, etc
    • Opinion of customers
    • Identity of current investors – do they have particular expertise that lends confidence to outsiders
  2. Operational review
    • Have experts validated the technology
    • Consideration of employment contracts
    • What intellectual property rights have been established
  3. Financial and legal review
    • Potential dilution of interest
    • Financial statement (or tax returns, or investor-conducted audit)

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Monday, April 29, 2013

Dilutive and Antidilutive Securities

Dilutive securities are financial instruments like stock options, warrants, convertible bonds, etc. which increases the number of Common stock, if exercised. It reduces the Basic EPS (Earnings Per Share). Only if the Diluted EPS is less than the Basic EPS then it is called Dilutive Securities

Anti-Dilutive Securities are financial instruments which are used to describe a convertible security which could increase a company’s EPS, if exercised or converted into Common Stock. Such conversions are not considered  when calculated EPS.

When a company has issued securities that can be exchanged for common shares, converting the securities into common shares would potentially dilute the ownership stake of existing shareholders. When calculating earnings per share, companies must consider the potential dilution.

For securities that pay a dividend or periodic interest payment, the after-tax payments would be added back to earnings (since those payments would no longer be necessary if the securities were converted.) Then, the number of shares into which the securities are converted is added to the shares outstanding.

Diluted EPS = (Earnings + After tax payments on convertible securities)/(Shares outstanding plus shares issued on conversion)
In some cases, securities would be antidilutive, or increase earnings per share if they were assumed to be converted. Such securities are not included in the diluted EPS calculation, as it is intended to represent the maximum possible dilution.

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Position Sizing Like Warren Buffett

Investing as defined by Warren Buffett is laying out money now to get more money back in the future after taking into account inflation. Investing successfully requires an investor to make many decisions. The investor must determine where to put his money into, the general stock market prices and where it is expected to head. The investor then needs to determine the valuation of individual companies and construct an investment portfolio. To get a good return from the market, the allocation of portfolio to different stocks play a important role. Small allocations to prescient investments minimize their impact while large allocations to poorly performing investments leads to underperformance.

Position sizing Warren BuffetThere are many ways to allocate the portfolio. Some investors choose the method of equal weighting where a fixed proportion (e.g. 5%) is allocated to each stock regardless of how undervalued the stock is. The portfolio is then re-balanced on a regular basis to maintain the equal-weight allocation. Another approach is to allocate large proportion of the portfolio to the stocks with the highest potential returns. Portfolio constructed using this strategy will tend to be concentrated with most of the portfolio being invested in a few high conviction stocks. The advantage of this methodology is matching prospective return to investment size, We see such concentrated portfolio in investors such as Bruce Berkowitz and Warren Buffett where they could be using Kelly Criterion to determine the position sizing.

What is Kelly Criterion?
There is a mathematical formula called the Kelly criterion that tells one exactly how much of one's portfolio to bet on a given opportunity if the goal is to maximize the long-term compound rate of return. This was developed by John Larry Kelly Jr 50 years ago. The formula assumes a bimodal outcome of success ("base case") or failure ("stress case") over a single time period

The formula is given as such:
Kelly Criterion = Edge/Odds

The formula was initially developed to figure out the best ways to manage signal-noise issues in long-distance telephone communications The mathematician who developed this saw other applications in areas such as gambling. There is an outstanding book called Fortune's Formula, by William Poundstone which tells the story of how mathematician Edward O. Thorp used the Kelly criterion to win at blackjack, and then make a fortune in the stock market.

How to compute the amount to invest/bet on a stock?
Let's assume somebody offers you the following odds on a $1 bet and your bankroll is $10,000.
80% chance of winning $21
10% chance of winning $7.5
10% chance of losing it all
According to Kelly Criterion, the edge is equal to 80% x 21 + 10% x 7.5 + 10% x -1( because we have lost our money)=16.8+0.75-0.1=17.45
Odds= Maximum money that we can win= 21
So edge/odds=17.45/21 x10,000= 8309. So you can bet $8309 on the bet.

The Dhandho Investor written by Monish Pabrai documents evidence that Buffet thinks like a Kelly investor, citing Buffett bets of 25% to 40% of his net worth on single situation. He cited the example of the Salad Oil Scandal where Buffett invested 40% of his net worth into American Express. The book give insights into Mr Buffett's thinking and reasoning. The same thoughts and approach was shared by his partner, Charlie Munger. In a speech at the University of Southern California's Marshall School of Business, Charlie Munger said:
The wise ones bet heavily when the world offers them that opportunity. They bet big when they have the odds. And the rest of the time, they don't. It's just that simple. -Charlie Munger

In conclusion, the Kelly Criterion is one of the many methods that can be used for position sizing. This method is valuable to investors given the systematic, repeatable process and mathematically optimal portfolio structure. When used conservatively, the formula will maximize portfolio growth by allocating capital to the most advantageous investments given both prospective return and risk.

For more detail on how Kelly Criterion is by Buffet in investing in a stock, I recommend reading http://www.infobarrel.com/What_Warren_Buffett_Can_Teach_Us_About_Position_Sizing

Article Source: http://EzineArticles.com/7642519

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Saturday, April 27, 2013

Investing 101: A Beginners' Guide to Investing Safely

What is an investment? Why do some people find investing easy while you find it a bit complicated? How do investors come up with money to invest? These are just some of the common questions people ask when they start venturing into investments. How easy or difficult is investing anyway? Let's find out.

Your savings are the most basic form of investment. If you can't save money, then you cannot invest. Investing is complicated. Many people are hesitant to get started because there is so much (often conflicting) information about investments, so many choices and so many risks. But it doesn't have to be that way.
Here is a crash course to get you started.
A typical investor
A typical investor has credit card debt under control. It makes no sense investing in stocks, bonds, or mutual funds if you have a lot of credit card debt and an interest rate of more than 10%. You don't have to be debt free to invest but make sure to pay each debt each month. You also should be paying low interest rates on that debt. A typical investor also has an emergency fund of at least three months' worth of basic living expenses. And finally, a typical investor has a 401(k) plan so he can maximize his contributions and diversify his investments.
Where to find the money to invest?
Plenty of stock mutual funds allow you to invest with $500 or less. Take advantage of your next bonus, your income tax refund, or your extra cash in your investments. If you can't come up with at least $500, there are funds which let you skip your initial sum of investment if you sign up for automatic monthly withdrawals of $25 to $50 from your checking account.
How to choose an investment?
The first step is knowing your investment goals. Are you saving for a college fund? Are you saving for a house? Retirement? The type of investment you choose will depend upon the amount of time available before you need the money. Stocks, for example, are long-term investments. It is best to hold stocks or stock mutual funds for more than five years. If you need the money sooner, then reduce your return by cashing in when the value is down.
What is risk tolerance?
If you hide your money in your room because you don't trust the bank, you probably will not feel comfortable when investing in stocks.
Where do I put my investments?
Most experts recommend spreading your money over different types of investments to reduce risk. This is because investments can go down or up depending on numerous factors. For example, when stock mutual funds or returns on stock are high, chances are returns on bonds will be low. If you have your money in both types of funds, you are likely to get a decent combined return even if one fund takes a downturn.
As a beginner, choose stock mutual funds over stocks in individual companies. This is because stock mutual funds have less risk than an individual stock. If a company does poorly, you will still have a good return but if a stock in one company goes poorly, you'll lose money.
Author - Md Abdur
Article Source: http://EzineArticles.com/7591357

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Thursday, April 25, 2013

10 Things To consider Before Selecting An Online Broker

One of the most important investment decisions you'll make has nothing to do with stocks, bonds or mutual funds. This crucial decision is picking a broker. There are dozens of companies offering brokerage services on the internet. How do you decide which one is best for you?

Here are 10 critical factors you'll want to consider:
1. Discount is not always the answer- Consider starting out with a full-service broker. They are often best for novice investors who may still need to build confidence and knowledge of the markets. As you become a more sophisticated investor, you can graduate into investing more of your money yourself.
2. Availability - Try hitting the company's website at different times throughout the day, especially during peak trading hours. Watch how fast their site loads and check some of the links to ensure there are no technical difficulties.
3. Alternatives - Although we all love the net, we can't always be at our computers. Check to see what other options the firm offers for placing trades. Other alternatives may include touch-tone telephone trades, faxing ordering, or doing it the low-tech way - talking to a broker over the phone. Word to the wise: make sure you take note of the prices for these alternatives; they will often be more expensive than an online trade.
4. Research the broker - What are others saying about the brokerage? Just as you should do your research before buying a stock, you should find out as much as possible about your broker. Gomez.com is a great place to find unbiased evaluations.
5. Price - Remember the saying you get what you pay for. As with anything you buy, the price may be indicative of the quality. Don't open an account with a broker simply because they offer the lowest commission cost. Advertised rates for companies vary between zero and $40 per trade, with the average around $20. There may be fine print in the ad, specifying which services the advertised rate will actually entitle you to. In most cases there will be higher fees for limit orders, options and those trades over the phone with your broker. You might find that the advertised commission rate may not apply to the type of trade you want to execute.
6. Minimum Deposit - See how much of an initial deposit the firm requires for opening your account. Beware of high minimum balances: some companies require as much as $10,000 to start. This might be fine for some investors, but not others.
7. Product Selection - When choosing a brokerage, most people are probably thinking primarily about buying stocks. Remember there are also many investment alternatives that aren't necessarily offered by every company. This includes CDs, municipal bonds, futures, options and even gold/silver certificates. Many brokerages also offer other financial services, such as checking accounts and credit cards.
8. Customer Service - There is nothing more exasperating than sitting on hold for 20 minutes waiting to get help. Before you open an account, call the company's help desk with a fake question to test how long it takes to get a response.
9. Return on Cash - You are likely to always have some cash in your brokerage account. Some brokerages will offer 3-5% interest on this money, while others won't offer you a thing. Phone or email the brokerage to find out what they offer. In fact, this is a good question to ask while you're testing their customer service!
10. Extras - Be on the lookout for extra goodies offered by brokerages to people thinking of opening an account. Don't base your decision entirely on the $100 in free trades, but do keep this in mind.

With a click of the mouse, from just about anywhere in the world, you can buy and sell stocks using an online broker. The right tools for the trade are key to every successful venture. Finding success in the market begins with choosing the right broker.

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Monday, April 22, 2013

Which Bullion is Best? Exploring the Differences Between Gold and Silver Investments

Investors have always been interested in gold and silver bullion. Since the Great Recession, though, more people have turned to precious metals as a safer alternative to printed money. But which metal should you buy? That depends on your specific circumstances.

Buy Gold When: You Have a Lot of Capital to Spend

http://farm3.staticflickr.com/2042/2438941120_801ea4934e.jpgThe price of gold can fluctuate significantly from day to day, but the value remains high. That often makes it difficult for the average investor to buy large amounts of gold. On March 29th, for instance, an ounce of gold cost $1591.75. That's a lot of money to invest at once.
That makes gold most attractive to people who have a lot of capital to invest. Sure, you can buy a couple of coins here and there without spending a lot of money, but you won't see a big return on investments that small.

Buy Silver When: You Don't Have Much Capital

Silver has a much lower value per ounce. On March 28th, an ounce of silver cost $28.32. That makes it easier for the average person to buy.
If you don't have thousands of dollars to invest right now, then it makes sense to buy silver, which is more within your reach. It's essentially the same reason that someone buying stocks would avoid stocks in Berkshire Hathaway, which cost over $100,000.

Buy Gold When: You Want Higher Relative Value

At any given time, gold has a relatively higher value than silver. In fact, over the last 130 years, gold has been, on average, 16 times more valuable than silver. Today, the ratio is even more extreme. Gold is about 51 times more valuable.
If you want to purchase the more valuable bullion, then you have to go with gold. It has short-term and long-term advantages that consistently outpace silver in terms of relative value.

Buy Silver When: You Want a Metal With Real-World Uses

http://farm4.staticflickr.com/3096/4606872514_8ff6bde0a9.jpgGold's scarcity and beauty have always made it a high-value metal. When it comes to real-world uses, though, silver has more potential applications.
Silver is a great electrical conductor, so technology companies use it in everything from light switches to computer tablets. As technology advances, the demand for silver will increase. That could make it more valuable.  

Image via Flickr by sirqitous

Buy Gold or Silver When: You Want a Stable Investment Option

If you follow reports from US Money Reserve and other economic authorities, you already know that precious metals offer a safer alternative to cash and stocks. The value of gold and silver fluctuates over time. They have their dips and spikes just like other investments. But there has never been a gold or silver crash that left the world struggling in economic recession.
If you want your money to maintain or increase in value, bullion of any type is the right choice. It's one of the more secure ways of investing your money.
What are some reasons that you're interested in gold and silver bullion? What factors will influence your investment choices most?

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Friday, April 19, 2013

Learn How Beta And Volatility Impact Your Investment Portfolio

Beta and VolatalityIt goes without saying that investing in growth stocks can be “risky” or “volatile”, but how does one measure these terms? Such a measure would immensely help an investor quantify his risk to determine whether or not he could stomach the swings of a particular growth stock. Luckily for you, there is such a tool, and it is known as “beta”. It will allow you to sleep at night and still own aggressive growth stocks.

Beta expresses the volatility of a security in relation to the market as a whole.

The beta of any individual security is measured against the market and is therefore viewed in comparison to 1.

Essentially, it is a measure of sensitivity to market changes by a stock. This means that the stock can be assessed for risk in comparison to the market and therefore the national economy.

If a security has a beta of exactly 1, the moves of the market, both up and down, are reflected exactly by the security. By definition, this is a very rare occurrence. It is, however, most likely to occur amongst the very largest companies since any move in price that they have has the biggest impact on the index. Equally, the index moving can have a big impact on their quoted price.

Should a company have a beta of more than 1, the price of the security is more volatile than the market. The movements of the company price exaggerate those of the market. Therefore, if the market rises, the company share price will rise faster. If the market falls, the share price will fall faster.

Less than 1 tells us that the price of a security moves less than the market but in the same overall direction. The security is therefore more stable in price than the overall market.

All this means that beta can provide a relative measure of risk compared to an index, a sector or a benchmark. It is calculated using monthly price movements over the preceding 36 months.
Astute readers will recognize that this offers the potential - in theory at least if not always in practice - to balance a portfolio by holding companies that behave in opposing ways to those of the stock market as a whole.

Even more astute readers will recognize a further truth... Measurements such as beta enable the risk to be balanced in a portfolio, but that is a focus on capital preservation. For many investors - both private and professional - the aim is to do much more than preserve capital. Therefore, being able to select stocks with growth potential might be more important than risk mitigation.

As is rightly asked, if I manage your portfolio correctly and outperform our chosen index but the fund still loses money, is that acceptable?
This is, after all, one of the central precepts of the fund management industry - benchmarking against a relevant index. But, if the index falls by 20% in a calendar year and a fund that is compared against it only falls by 15% in the same time period, is that fund really a success? Losing money is still losing money, no matter how things compare when using beta to help analyse returns.

It is possibly for these reasons that the hedge fund industry has seen such rapid growth.Wealthy Clients that understood that they wanted to make an actual profit every year preferred the concept of alpha and an absolute return.

Another possibly interesting angle for readers to think about is the way in which terms such as volatility and risk impact their entire finances and net worth, rather than just their stock portfolio. This is a topic which has been explored in some depth by author Robert Frank in his book The High-Beta Rich, where he looks at the impact that borrowing has had on the finances of America's richest people.

He certainly finds some interesting correlations between a high value 'paper' net worth (probably held in stocks, or perhaps the ownership of one business) and the risks taken on when the owners of these assets borrow large amounts of money against these assets to live the lifestyle that they feel they deserve. The risk is obviously that the value of their asset could fall leaving them with large debts and minimal security. If nothing else, such a book makes the reader think carefully about the impact of borrowing to fund lifestyle needs.

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Thursday, April 18, 2013

How to Monitor and Manage Money on Your Tablet Device

Without a doubt, mobile banking is here to stay. From its humble beginnings years ago with just a simple banking app from Wells Fargo, today's mobile apps can do so much more than simple bill pay. Today, mobile apps can help scan and deposit checks, take credit cards for your business, locate ATMs, find travel deals, plan budgets, clip coupons track your investments and more. Here we'll look at some extremely useful apps, which work well with just about all computers and operating systems.

Personal Finance Apps: Allowing You to Take Control

money savings
Image via Flickr by 401(K)
No apps for finance articles would be complete without going over some great personal finance apps. Personal finance goes beyond simple online banking to budgeting, controlling credit scores, and more.
SpringCoin: Helps you create a plan to get out of debt while saving money.
Credit Karma: Keep track of your credit score and find out how making certain decisions will affect it in the future.
SmartyPig: Sets up incentives, encouragements and plans to save money for a specific goal. Mint.com: Monthly budgeting app that syncs up with your bank accounts and your credit cards automatically. This way, you'll know where every penny is going.
Expensify: Syncs your credit card accounts to track your money. Has advanced features making it perfect for small businesses.
Pageonce Bills: Sends you a reminder each month when a bill is due. This helps you avoid late fees and keeps your credit intact.

Investing Apps: Enabling You to Play the Market

stock market
Image via Flickr by Tax Credits
The rise of the Internet gave way to the type of investor: the day trader. This, in turn, gave rise to investment apps and programs accessible from notebooks and laptops such as a Lenovo Ultrabook. However, you don't have to be a day trader to take advantage of these great apps. These apps are perfect for monitoring your investments.
Yahoo Finance: Enables you to investigate stock quotes, market indexes, and up-to-the–minute headlines that could affect stock prices.
Wikinvest: Keep track of your portfolio on the go. It has relevant information on all public companies, ETFs and funds.
Morningstar: Check your mutual funds and see performance charts for ETFs, funds, stocks, and indexes.

Coupon Apps: Letting You Clip & Save in the 21st Century

Image via Flickr by 401(K)
Couponing used to be hard. You had to buy multiple papers, search through them, clip the coupons and carry them around with you. Few people thought the meager savings were worth it, still, they hated having to pay more for something. Fortunately, thanks to apps, there's no longer a need to clip or carry coupons. Here are some of the best coupon apps.
Yowza: Takes advantage of your geographic location to send you deals and alerts that you can take advantage of. If a coupon doesn't' work in your area, it won't show it.
Shopkick: Perfect for people who live in areas with lots of chain stores. This app delivers exclusive deals from major retailers like Macy's, Best Buy, Toys'R'Us and more Grocery Smart Coupon Shopper: Tracks and compares coupons from most major outlets so you can see who really has your item at the best price. However, you still have to print the coupon.
CardStar: Enables you to carry all your loyalty cards on your smart phone, freeing up space in your wallet or purse.

Money-Saving Apps: Offering Great Deals & Cool Functionality

Image via Flickr by 401 (K)
We all want to save money, especially on little things like bank fees, monthly bills and indulgences. Fortunately, there's an app for that. In fact, there are several.
ATM Hunter: Find your bank's closest ATM no matter where you are so you can avoid the ATM fee. Wi-Fi Finder: Instead of paying for a for a wireless card, use the free Wi-Fi available in your area. CheckingFinder: Find the lowest checking fees in your area.
BillShrink: Finds you the best deals on everything from cell phone plans to Internet to gas.
Groupon: Though not available in all areas, you can be sure of the best deal when using Groupon. It has everything from restaurants to services to vacations.

Travel Apps: For Managing & Saving Away From Home

Tablet Device
Image via Flickr by Mike Miley
Vacations are expensive, particularly if you're going by plane. However, thanks to the power of apps, they don't have to be. Here are some of the best vacation travel apps for saving money.
Last Minute: If last-minute traveling appeals to you or you just need to get away, then this app can help you find the best deals on last-minute travel.
Farecast: If buying plane tickets in advance is more your style, this app predicts prices and tells you the best time to buy airline tickets based on these predictions.
Yapta: Instead of predicting future prices, this app constantly scans airlines to discover refunds on already purchased tickets.

Allowance Apps: Teaching Your Little Ones How to Handle Money

Image via Flickr by 401(K)
If you have young children at home, then you know it's never too early to start teaching them how to master money. Just about any allowance app can keep track of the money you give them and allow you to add money on allowance day. However, there are many allowance apps that also include tracking chores with a dollar amount, setting up savings goals, charitable giving and loans that you make to your children.
My Job Chart: Great for assigning chores and tracking rewards; a favorite of Suze Orman
Money Trail app: Shows kids all possible income streams; allowances, cash gifts, IOUs, & gift cards Count My Beanz: Perfect for younger kids, who don't yet receive an allowance; they learn about money through 'beanz'
ThreeJars: With this 'parents-as-the-bank' system, kids are able to hone their banking skills long before adulthood. As apps become more integrated into our daily lives, they'll act as personal accountant, travel agent, financial investor and more. Thanks to apps, we are now able to take control of our money in a way we never could before. What's your favorite financial app?

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Tuesday, April 16, 2013

10 Commandments for Home Buyers

Home Buying1. Don't buy a house... buy a Home
Buying a house means that you are ready to give in to the fate life has given you and finally decide to settle down. When buying a house, don't just think of the aesthetics. Instead try to find the right place for you by thinking of the home you want to build. After all, a house will always only be a structural entity which any person can occupy. But a home is where your heart is and that is what you should keep in mind when looking for the perfect signage of a House for Sale.

2. Formulate a good financial plan and stick to it
Knowing your credit standing is only the tip of the iceberg. Actually owning and paying for the house is a totally different story; which is why you need a solid financial plan that you can realistically stick to. A house loan is probably the biggest financial commitment you will be in at one time.
Map out all the expenses that you are expecting when owning a house. This does not only include the monthly mortgage, of course. You have to put into strict consideration costs of repairs, furniture, property taxes and whatever it is that you will be shelling out cash for. 

3. Do not lose your income.
Owning a house is a solar system of a responsibility. Do not take it lightly. Losing your primary source of income can have devastating effects. You could lose your home! If you absolutely have to leave your job behind for what you believe is a greater opportunity at success then at least have one steady source of income in your household.

4. Do not apply for a mortgage that is more than what you can truly afford
Yes, the mansion was perfect for you wasn't it? Unfortunately, mansions come with a hefty price tag which sometimes is not exactly within the range of our budget. Stick to your financial plans. Stretching your mortgage budget by a little is fine only if you are absolutely sure that it will not affect your financial plans. Anything that will cause you to sacrifice furniture is... well... Not practical anymore.

5. Do not go into debt, especially with credit cards
 loan is a debt no matter the angle you look at it. And debts have a tendency to pile up on top of one another when not met on due dates. With the immensity of a house loan, believe me; you don't want to pile anything atop it. Try to keep the shopping sprees to a minimum, especially if you are on a strict budget. Whatever is not within your financial plan can bite you back in the future so be extremely careful with using your credit cards.

6. Do not overspend on cars, jewelry or other stuff not in the budget plan
Beware of car salesmen, most specially the silver tongued ones! They can sell 4 wheels on a stick if they wanted to! If a car is a needed, do not shoot over your financial plan budget. A house and car loan at one time is a really heavy burden and if you let yourself be swayed by that BMW convertible you are increasing the chances of losing both.

7. Ready yourself with a little cushion/emergency fund
This is actually mandatory for anyone planning purchase their own house. If you do not have emergency savings then you are definitely not ready for a housing loan. A good cushion should give you at least six months of survivability if ever you lose your job and have to find a new one.

8. Insurance is important- Life, disability and health
Accidents do happen. That is one fact of life that is hard to accept. It is best to always have the best life, disability and health insurance you can obtain. In the instance of temporary or permanent disability, a good insurance will be your financial back up. It will ensure that you do not lose your ability to pay for the monthly mortgage and maintenance costs.

9. Do not buy furniture...yet!
Your credit standing will be checked during pre-approval by lenders. However, it does not end there! They will check it again and again, over and over until the deal is finally closed. This is why your credit scores must not change for the worse before the papers are signed ad the house is yours. Put off buying furniture until after the deal to be safe. House comes first, then furniture.

10. Know your credit scores
The first step to take when buying a house is to know where you stand financially in the bank’s perspective. The days when you can loan a house without as much proof that you can actually pay for it is long gone. Banks have become a lot more scrupulous in determining whether or not you can actually afford to own your own piece of property.

Getting your credit scores are quite simple. You can get free reports on your credit from websites such as annualcreditreport.com. You can even file disputes if ever you see mistakes. Just make sure that all of you information is up to date. Remember that the higher your score is, the better off you are in getting lower interest rates on housing loans.

With a good credit score it is easier to go around canvassing for the house of your choice. If you don't have the best credit ratings out there, well it's not hopeless. You will just have to accept that banks will not be as lenient with you and expect higher interest rates. Now, that isn't really all that bad but you are going to have to be more careful in choosing the right house.

Author Bio:

+Lara Seers is a real estate agent for properties in Queensland. She presents buyers with several options and describes each property in full detail to make it easier for them to make the best choice.

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Thursday, April 11, 2013

Hedge Funds - Are These Lucrative Investment Options?

Hedge FundsThe point of a hedge is to make money for clients regardless of market direction. Hedge funds will buy and hold stocks, they will sell short, as well as buy and sell options. These particular funds differ from most traditional funds, which adhere to the buy and hold concept. In these particular funds, an investor will pay a performance fee along with management fee, when it performs well.

These investments, which include foundations, college endowments, and pension funds, are valued at billions of dollars. Over one percent assets of financial institutions consists of these funds, with total assets around $2 trillion. Many large funds choose this type of fund because of their potential upside during a bull market.

These funds can give smart returns dependent on how they are positioned in the market and how strong the market is performing. If investments of this sort are leveraged well, the investor will realize size able to returns as opposed to other funds. With this in mind, one should even be cautious of the potential losses that can occur  when the wrong investment vehicle is being leveraged. In short, take your time and do your research  and analysis before choosing any type of fund. 

The crash in 2008 seemed to inspire large pension funds into direct hedge fund investing. A lot of people were hurt by the 2008 crash, lending to more hedge fund investing to recuperate some losses. The rules of hedge fund investing have become stricter since 2008, limiting participation to accredited investors, weening out the small, private investor.

A hedge fund managers uses the same information available to all investors. For instance, you did not need to be a hedge fund manager to evaluate some opportunities in Japan after the tsunami. However, the sheer size of these type of funds lends to significant research and investment opportunities that an ordinary investor does not have. However, on the same note, these large funds can sometimes find it difficult to find a place to invest billions of dollars. When this kind of fund takes a position in an equity, it changes the direction of the market.

An individual investor can profit from studying a hedge fund, being aware of where the money is going. A lot of successful investors yield high returns by mirroring a successful hedge funds investment strategy. How available that information is depends on the individual investors savvy. Again, hedge funds move the market.

By Sean F Kitt

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Wednesday, April 10, 2013

Green Investing Tips

Green Investing TipsThe world of green investment is expansive and dynamic. Its landscape, while similar to more familiar investments, is growing and developing at a pace that mimics the advancement of worldwide sustainability. But even with all the forward movement in the industry, there are still a few pieces of advice any astute investor should take into consideration before committing to an earth friendly fund.

Here are five questions to ask:

  1. Who are you giving your money to? Unlike other forms of investment, green investing can actually be a fairly intimate process. Local farms, startups and other grassroots initiatives are perfectly acceptable, meaningful causes to put your money behind. Of course, you need to know a little bit about the investee before you do anything drastic. Take some time to learn about the background and overall profile of any given green project
  2. What do you define as a green investment? While many investors have an idea of what they consider to be green practices, not everyone feels the same way. You may picture a green investment as putting into your money into a startup that aims to revolutionize photovoltaic solar arrays, but your neighbor may picture a green investment as putting his or her money into the least environmentally draining business in its sector (even if that sector is oil production).
  3. Where will you set your limits? It’s easy to get caught up in the narrative surrounding the green movement. If you’re being courted as an investor, you’ll probably hear a lot of peppy buzzwords that aim to assure you of the impending success of the green economy. While the future is certainly moving onto a more sustainable model, it’s important not to get overzealous. As with any investing sector, it’s important to diversify your portfolio
  4. What subset of green investment interests you? Green transportation? Green building? Green tech? There are a multitude of areas where green investors can take their capital. A good jumping off point could be finding the one you’re most passionate about and starting your research there.
  5. How long are you willing to hang around? Buying shares in green-minded companies can be a waiting game. Green technology and innovation is progressing at a rapid, but unsure pace. It could be a while before you see a significant ROI, depending on how you allocate your funds. Make sure you know what you’re in for.

Deepening your understanding of the green investment space can be beneficial for both you and the greater good. Do your homework and get involved! A little more education never hurts.

Sandy Moore

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Tuesday, April 9, 2013

How to Become a CPA ( Certified Public Accountant)

Certified Public Accountants or CPAs, are licensed professionals who conduct audits and help businesses and other institutions manage their finances.

The Uniform Certified Public Accountant Examination is an exam administered by the US government for individuals who qualify with certain education and experience requirements. It is one of the top certifications that is recognized in the business world and allows you to be a partner in an accounting firm and sign audit reports on behalf of your firm. If you enjoy working with numbers and would like to pursue a career in accounting, read this article to learn where to get started.

Graduate from high school. Alternatively, you can take the General Education Development (GED) examination. You will need to do one of these things in order to apply to a four-year institution. Take the SATs, the standardized test that is required for college admission, your junior year and apply to more than one school in order to keep your options open.

Get a bachelor's degree. Most states, with a few exceptions, require that CPAs have at least a bachelor's degree in accounting or finance. These programs typically take four years to complete, and tuition and coursework will vary depending on the school. Students take courses in microeconomics, macroeconomics, business, auditing, and marketing.

Certain companies also require that a CPA have a master's degree. Increase your job prospects by getting a master's in either finance or accounting. These programs typically take one or two years to complete. Some states allow prospective candidates to substitute relevant work experience for a bachelor's degree.

Get certified in your state. You will need to take the four-part Uniform Certified Public Accountant Examination and meet additional certification requirements for your state in order to work as a public accountant. Some states also require prior accounting experience as a pre-requisite for licensure.
The Unified CPA examination is composed of the following four sections:

  1. Auditing and Attestation (AUD).  Subsections include internal controls and obtaining and documenting information.
  2. Business Environment and Concepts (BEC).  Subsections include business structure, economic concepts, financial management, and information technology.
  3. Financial Accounting and Reporting (FAR). Subsections include concepts and standards for financial statements, typical items in financial statements, and accounting and reporting for government entities.
  4. Regulation (REG). Subsections include ethics and professional responsibility, business law, and federal taxation.

Find a job as an accountant. CPAs can work in a variety of settings, including businesses, corporations, government institutions, and schools. Job opportunities for CPAs and other accountant/auditor occupations are expected to increase by 22% between 2008 and 2018 to meet increased demand due to new financial regulations.

Public accountants can choose to specialize in certain fields like forensic accounting, tax advising, and medical care compensation.

CPAs may be hired by businesses or government agencies, or can be self-employed through their own practice.

Certified CPAs must complete continuing education requirements in order to keep their license current.

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