Investment Tips & Info

So the old joke goes: if you lend your brother-in-law $50 and he never talks to you again, was it worth the investment?

The joke may be funny, but experiencing this in real life is anything but funny. Loaning money to a friend or family member is a bad decision.

Someone who lends money to a loved one has their heart - not their head - in the right place. It is okay to give money, but loaning money to someone with whom you have a relationship will lead to broken hearts and broken wallets. Check out the statistics from a recent money etiquette survey:

* 57% of people said they have seen a friendship or relationship ruined because one person didn't pay back the other.
* Almost 50% have loaned $100 or more to help out someone, but 55% don't get repaid.
* 71% lend money to immediate family members, 57% to relatives, and 54% to friends.

One fact not quoted in the survey is that Thanksgiving dinner tastes 100% better when friends or relatives don't owe one another money! Eating with your master is different than eating with your family.

Even some members of MyTotalMoneyMakeover.com feel the pinch. In a recent poll, 51% said they have loaned and never been repaid, 6% said they're in the situation right now, and the remaining 43% don't loan money in the first place.

Loaning money makes relationships awkward. Parents who lend their newly married daughter and her husband a down payment for a house think they are helping out the new family. Soon, however, they are giving the young couple disapproving looks when an upcoming vacation becomes more important than repaying the loan. This leads to nothing but resentment and pain on both sides.

Don't do this to people and relationships that means something to you. If someone is in genuine need, it's great to help. If you help with money, make it a gift instead of a loan. By not having an IOU having over your head, you will keep your relationships strong.

Source: Bankrate.com

This content is provided by Dave Ramsey's MyTotalMoneyMakeover.com. Dave Ramsey is changing the face of America by helping people beat debt and build wealth with his best-selling book, The Total Money Makeover, and nationally syndicated radio show, The Dave Ramsey Show. Read more of what Dave says about cosigning.

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Posted by N-A at 12:03 | Permalink | Comments

While there are a thousand and one investment opportunities you can choose from, there are just only three investment styles. And these investment styles depend largely on your risk tolerance and financial goals. The three investment styles are conservative, moderate, and aggressive.

Again, your risk tolerance and investment goals come into play, when choosing the right investment style. If for instance, you realize that you have a very low risk tolerance, naturally, your investment style will definitely be conservative, or at best, moderate. However, for those with a high risk tolerance, moderate or aggressive investment might be the best choice.

Also, your investment goals could determine your investment style, especially when you believe that risk tolerance does not constitute a determining factor. If for instance your investment is basically targeted at saving for retirement and you are still in your twenties. Obviously, there is nothing to rush about. Conservative or moderate investment could be the right choice. However, if you are concerned with raising money to buy a house in a year or two, you are definitely going to be an aggressive investor.

Let's look at these styles of investment. Conservative investment, just like the name implies basically involved gradually building profit over a long time. Here, the major concern is ensuring that the initial deposit is recovered. In other words, when a conservative investor invests $10,000, he wants to be sure that he will get his $10,000 back, no matter what happens. Conservative investment usually involves investing in common stocks and bonds, interest earning savings account and short term money market accounts.

A moderate investor has a higher tolerance for risk. While a moderate investor will more likely invest like a conservative investor, he is also more likely to reserve a portion of his investment funds for higher risk investments. So, let's say a moderate investor has $10,000 to invest, he is more likely to invest $5,000-$6,000 conservatively, and the remaining sum in higher risk investments.

An aggressive investor understands the rules of the game quite well. He is willing to stake his money to get back some quick profit or lose it all. So, he is capable of taking risks that the average investor won't dare take. Although, aggressive investors do invest conservatively too, however, they stake greater amounts of their money in riskier ventures, usually in the hope of achieving larger returns immediately or over a period of time.

As you can see, your investment patterns largely depend on your goals and tolerance for risk. But it is pertinent to state that whatever investment style or plan you choose, it is a good idea to get yourself acquainted with all the facts and risks involved with the investment. Knowledge makes for better and safer investment.

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Posted by N-A at 10:30 | Permalink | Comments

State laws have been relaxed to make it easier for small business to raise start-up and growth financing from the public. Many investors view this as an opportunity to “get in on the ground floor” of an emerging business and to “hit it big” as the small businesses grow into large ones.

Statistically, most small businesses fail within the first few years. Small business investments are among the most risky that investors can make. This guide suggests factors to consider for determining whether you should make a small business investment.

Risks and investment strategy
A basic principle of investing in a small business is: Never make small business investments that you cannot afford to lose! Never use funds that may be needed for other purposes, such as college education, retirement, loan repayment, or medical expenses.
Instead, use funds that would otherwise be used for a consumer purchase, such as a vacation or a down payment on a boat or a new car.

Above all, never let a commissioned securities salesperson or office or directors of a company convince you that the investment is not risky. Small business investments are generally hard to convert to cash (illiquid), even though the securities may technically be freely transferable. Thus, you will usually be unable to sell your securities if the company takes a turn for the worse.

In addition, just because the state has registered the offering does not mean that the particular investment will be successful. The state does not evaluate or endorse any investments. If anyone suggests otherwise, they are breaking the law.

If you plan to invest a large amount of money in a small business, you should consider investing smaller amounts in several small businesses. A few highly successful investments can offset the unsuccessful ones. However, even when using this strategy, only invest money you can afford to lose.

Analyzing the investment
Although there is no magic formula for making successful investment decisions, certain factors are considered important by professional venture investors. Some questions to consider are:

Ø How long has the company been in business? If it is a start-up or has only a brief operating history, are you being asked to pay more than the shares are worth?
Ø Consider whether management is dealing unfairly with investors by taking salaries or other benefits that are too large in view of the company’s stage of development, or by retaining an inordinate amount of equity stock of the company compared with the amount investors will receive. For example, is the public putting up 80 percent of the money but only receiving 10 percent of the company shares?
Ø How much experience does management have in the industry and in a small business? How successful were the managers in previous businesses?
Ø Do you know enough about the industry to be able to evaluate the company and to make a wise investment?
Ø Does the company have a realistic marketing plan and do they have the resources to market the product or service successfully?
Ø How or when will you get a return on your investment?

Making money on your investment
The two classic methods of making money on an investment in a small business are resale of stock in the public securities markets following a public offering, and receiving cash or marketable securities in a merger or other acquisition of the company.

If the company is not likely to go public or be sold out within a reasonable time (i.e., a family-owned or closely held corporation), it may not be a good investment for you – despite its prospects for success – because of the lack of opportunity to cash in on the investment. Management of a successful private company may receive a good return indefinitely through salaries and bonuses, but it is unlikely that there will be profits sufficient to pay dividends in proportion with the risk of the investment.

Other suggestions
Investors must be provided with a disclosure document – a prospectus – before making a final decision to invest. You need to read this material before investing.
Even the best small business venture offerings are highly risky. If you have a nagging sense of doubt, there is probably a good reason for it. Good investments are based on sound business criteria and not emotions. If you are not entirely comfortable, the best approach is usually not to invest. There will be many other opportunities. Do not let a securities salesperson pressure you into making a decision.

It is generally a good idea to see management of the company face-to-face to size them up. Focus on experience and record of accomplishment rather than a smooth sales presentation. If possible, take a sophisticated businessperson with you to help in your analysis. Beware of any information that differs from, or is not included in the disclosure document. All significant information is required by law to be in the disclosure document. Immediately report any problems to your state Office of the Commissioner of Securities.

Conclusion
Greater numbers of public investors are “getting on the ground floor” by investing in small businesses. When successful, these enterprises enhance the economy and provide jobs. They can also provide new investment opportunities, but the advantages must be balanced against the risky nature of small business investments.

by: Larry Westfall
About the author:
Larry Westfall is the owner of DIY Investing - http://www.pennystockebook.com

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Posted by N-A at 02:50 | Permalink | Comments