Blog about finance

Car Finance Basics

2009-11-13T12:03:00.002-08:00

There happens to be a lot of different things that people do no understand when it comes to getting yourself a new vehicle whether it is through leasing it or buying it, it still requires some information to know how it really does work. The thing that you should keep in mind the most is that a car dealership does not typically finance a car lease or a loan but in turn they will most definitely have some sort of impact on how much you will end up paying on your car financing.

One good thing to keep in mind is that a car dealership will always sell you a vehicle for cash in hand. These people are third party businesses that have purchased a franchise from one or multiple different car makers in order to sell the vehicles. They do not work for these car makers and always work for themselves. It is important to realize that the dealers buy these cars themselves usually through the use of a very large loan through a bank or another type of financial institution and as a result they are also charged rates of interest on these car loans. They then need to sell the cars off in order to pay off their initial loans as well as all of the other associated costs that come with running a car dealership.

Dealers will always get cash for a vehicle that they sell to someone, it could either come from the consumer himself, or some other financial institution that has loaned out the finances to a consumer in order to purchase the vehicle of their choice through an auto loan. People are usually under the misconception that they will be able to get a discount or a better deal if they pay for a vehicle in cash but this is not the case because they in fact will make more from raised interest rates and commissions if you go about financing the vehicle itself.

When a car dealership sells a vehicle to a consumer he will usually push onto them the typical bank or financial institution that they have working with them in order to get their financing settled. A lot of these dealerships will use some of the more well known and major financial institutions that have special deals with the car makers if you do not already have one and you would be paying an additional premium for that luxury. As a consumer however, you have the ability to bring on your own auto financing company if you would like to. The point of stating this is to make it perfectly clear to you that a car dealership does not finance a loan to a consumer at all. They will not process the loans or even take payments on the loans themselves, all they will do is take the application papers that you fill out and will try to arrange some sort of financing with companies that they usually work with for a small fee.

Now a dealer could go about checking your credit history, but this is not for the purposes of getting you the consumer a car or vehicle loan, but is done in order to figure out quickly whether or not the consumer would even be capable of getting a vehicle or if they have any serious credit issues that are currently outstanding. The dealer is not the financial institution and is unable to approve you the consumer for a loan. The financial institution that the dealership forwards your filled out application to will do their own set of credit history checks as well as check out your past payment history and your overall debt to income ratio. This check is a lot better done then what a dealer could possibly do so if you happen to have a dealer check out your credit and tell you that you are alright, they really may not have any idea at all so keep this in mind as well.

When the financial institution is done checking out your credit worthiness you will be classified in one of three types which are prime, near prime, and sub prime. Prime means that you have a great credit profile and have a higher score usually above six hundred and eighty, as a result of this you will be offered the best possible interest rates on your loan. Near prime usually will fall around the six hundred and twenty to the six hundred eighty mark and will usually mean that you could pay as much as four or so percent more then someone that has a prime score. If you happen to be below that and are considered to be sub prime then you are going to have some issues with finding a lending institution that will be willing to give you a auto loan and when you do end up finding a good one the rate of interest you will be paying is going to be very high.

You should also be aware that a car dealership has the ability to change the rate of interest that you would be paying on your car loan. One of the types of hidden fees that some shady car dealerships will try to include to consumers when they purchase or lease a vehicle is to mark it up so that your interest rate is increased regardless of your good credit score. This sort of markup can go up as much as two percent on your overall rate of interest and this particular markup of your interest rate will never be mentioned on any document that you would ever be signing. The car dealership will say that this increase can be considered justifiable because it helps them cover the cost of getting the consumer the financing they need but it is just additional profit or is used to make up for something they may have given to you somewhere else in the car deal. The most a car dealership is legally allowed to mark up your interest rate is by two and a half percent.

Something that a lot of people will ask when they go about getting a new car or vehicle is whether or not they are able to negotiate for their own rate of interest. In a lot of these situations you will not be able to negotiate the base rate of interest that a lending institution gives to you but you will be able to try and haggle down the markup that a car dealership tries to give to you. You should know that though some car dealerships practice this shady act not all of them take part in it. You should also realize that the better credit profile that you have the better rate of interest you will receive over all from the financial institution. So knowing what your credit profile looks like and shopping around on the internet is of the best things you can do for yourself before even ever walking into a car dealership.

Even if a car dealership does check your credit it really does not matter and this is a mistake that most people think occurs. Just because they said it looks good on their end it does not mean it is a done deal for you. When a consumer buys or leases a new vehicle with a car finance they will usually sign papers that state that they agree to purchase the vehicle using funds that are provided to them through a financing company and if they are not approved by the company the deal itself is considered nulled and voided unless they are able to secure another way of financing. Once this is done the car dealership is in no way again involved in the monthly repayment of the loan itself and is no longer responsible for it.

If you happen to have poor credit and come across problems trying to get approved for a vehicle because of your past payment history or debt to income ratio there are still a couple of things that you can do in order to get yourself that car of your dreams. Often times a co signer will allow you to get a vehicle without much of a problem. Other times a financial institution will ask for a large down payment to off set the high amount of risk that you have shown to them through your credit history. This will usually allow you to keep the same monthly payments while having the overall cost of the vehicle to go up. Even if a dealer lets you drive away with the car if the bank or financial company comes back to them denying the loan application the vehicle still will legally belong to them and they will require you to return it regardless of anything that you could have signed originally.

So when it comes down to it you should always know what your personal credit profile and score is before even walking into a car dealership just to make sure that you will not be startled when something goes down later on. The next thing you should do is to shop around for a good car finance that is flexible for all situations online before going into a car dealership so that you are prepared with money in hand in order to make sure that the car you are buying is yours and not the dealers. There are many different places to do this online and getting multiple quotes from different companies will allow you to find the best possible deal regardless of your credit history and situation.

If you have credit problems, repossession, bankruptcy, slow pays or are a first time buyer and in need of Car Lenders in USA. The car finance company offers the opportunity to buy a car on credit when you have been refused credit in the past. So, whatever the reasons - bad credit or no credit or bankruptcy, there is a good chance we can help you!

Taking Control of Your Credit

2009-11-13T12:03:00.000-08:00

You're found the house of your dreams, made an offer and now it's time to head on down to the bank. What goes on in that visit will determine if you're able to make your dream become a reality. If so, at what price will it cost you?

Having a good credit history in today's economy is vital. Banks have made it harder than ever before to qualify and purchase a home. Ensuring your credit rating is on the right path will open numerous financial doors for you and your family.

The ideal situation would be to not wait until you are sitting in the banker's chair with your palms sweating. Get online and look at your credit score before hand. See if there is anything that needs your attention. Unpaid bills, late payments, high credit card balances can all contribute in dragging that credit score down. This can result in higher interest rates for your loan, or ultimately getting no loan at all. Make the calls necessary to get your score cleared up and back on track.

There are 3 major reporting agencies that financial institutions will pull from. Experian, TransUnion, and Equifax can all result in different readings. That's why it is crucial to check each one of them for discrepancies. You are entitled to a credit reading each year at no cost. Even so, shelling out for a credit reading is a small price to pay when it comes to buying a home. Do whatever it takes to make sure you are the driver behind the wheel of your credit.

After you're exhausted all your resources for bringing up your credit score, you can confidently walk into the bank. You now are fully aware of your financial situation and have done everything possible to secure good standing. Sure it may take a little work on your part, but keep in mind by doing so you are building a bridge that will lead to your new home.

Amazon's Best Investment Book Reviews: Have You Been Brainwashed?

2009-11-13T12:02:00.001-08:00

Most popular investment books are published for the already rich and famous, by an industry that has become just too good at the business of selling books. Rarely will a publisher take a chance with the work of an unknown author. Certainly, it's a no brainer to sell a Jim Cramer, Peter Lynch, Robert Kiyosaki, or Maria Bartiromo effort while a uniquely new approach to solving the puzzles of Wall Street, presented by an unknown writer or commentator, requires some major financial risk.

Big publishers want to sell already big names; discovering new ones is not in their wheelhouse. Are they responsible for the problems in the financial markets? Of course not, but they do have a perverse, if indirect, impact. By constantly publishing the same Wall Street friendly message, they contribute to the brainwashing.

Without a wider distribution of new ideas based on old wisdom, Wall Street as usual remains Wall Street as usual and the average investor remains uninformed and ill advised about the dangers of the financial markets. The biggest investment mistake generators are cleverly ignored by most of the books I've read about investing--- even compounded.

The new generation focus on calendar year instead of market cycle performance; the worship of portfolio market value alone, for all securities, even those purchased solely for income production; the use of gimmicks and products instead of securities for portfolio development; the acceptance of speculations as acceptable, "alternative" investments.

Appreciating the differences between investing and speculating, and learning what to expect from your securities in cyclical markets are things that investors must learn about. Have you been brainwashed? These 15 Amazon members are learning to think outside the Wall Street box, without any help (or investment) from publishers:

1) Super Investing Book: I've read a bunch of books on investing and money management, and this is the best, BY FAR!!!!! It's so good, and refreshing, that I've read it twice. (R. Q. A., Bryan, Texas)

2) Back to Basics: This is an eye-opening and intelligent book, which at once offers an analysis of the investment industry and a practical guide for non-professional investors--- a clear set of economic principles mixed with clear commonsensical advice. The author--- describes how to benefit from the ups and downs. Great book. (Professor P. W., Jerusalem, Israel)

3) The Best Investment Book I Have Ever Read: For skittish investors such as me, [the] unique Working Capital Model reduces the emotional factor by taking the emphasis off market value and focusing on growth of working capital. I implemented and followed the trading strategy myself. You would do well to buy this book and read it two or three times. It will save you [from] a lifetime of mistakes that come from following conventional wisdom. (D. J. F., Peoria, IL)

4) Easy to Understand, Even for Non-Investors: This book seems to be much easier to understand than the stock market trading systems advertised on TV. (P. L., Manchester, CT)

5) Happy User: You can take this system to heart--- and to the bank. It works for me. (L. J., Phoenix, AZ)

6) Unique Advice that Stands Out From the Crowd: This is one of two [books] that stand out. Besides being written in an entertaining and irreverent style, it has immensely practical advice. Focus on making money on the market's inherent volatility vs. trying to guess what's next. Saves a lot of time and appears to work. (C. M. Rakes, Annandale, VA)

7) An Enlightened Self-Managed Investor: Not only did I identify many many mistakes that I had made thru the years, but the logical approach outlined [in the book] has to make sense to anybody who has tried to get meaningful portfolio guidelines for future investments tailored to individual needs. Great Book! (A. C., West Palm Beach, FL)

8) Right on the Money: I didn't want to put the book down until I was through. [The] trading strategy is refreshing information that should make a lot of people a lot of money with less risk. (D. M., SC)

9) Investing Made Successful: I heard [the Author] on a talk-radio program and was intrigued by the premise of the book. After reading it, I'm convinced. I'm migrating from mutual funds to individual, high quality equities. [The book] was a slap in the face to make me stop my destructive investing habits. (G. P., Colorado Springs, CO)

10) What a Great Read: This is really an incredible book--- [it] has incorporated very creative insight with some highly original thinking to produce one of the best "investing manuals" ever written. I wholeheartedly endorse this book! ("Jointhefreedom", NM)

11) Courage To Go Against the Pack: The [book] is written in an exciting, enthusiastic, fast moving, style that reads like a novel. Should I ever venture into the stock market, it will be with this book. (S. M., Virginia Beach, VA)

12) L-O-N-G Overdue Investment Strategy Advice: I've long been skeptical of the generic advice handed down to me by advisors over the past--- I don't know any wealthy people who do this. Well now I have a frame of reference for my doubts about the system and a simple plan to take control of my investments. (B. S., Vancouver, BC, Canada)

13) A Must Read To Save Your Money From the Sharks: Written in a conversational style with plenty of humor, this book gives you the questions and answers you need to keep and increase monies that are being put away for retirement. I have purchased three books already and am purchasing five more to give to friends and relatives--- (R. M., San Jose, CA)

14) Brainwashing of the American Investor: Finally the truth! What an eye-opener to see how the markets, and the people behind the markets, have manipulated the average investor over the years. I highly recommend [this] book for your next financial read. (A. J. L., Ft. Pierce, FL)

15) Profit Like a Trader; Sleep Like an Investor: The technique or strategy presented is almost a "why didn't I think of that?" The idea is to run your portfolio the same way you would run a business---not a get-rich-quick kind of plan. You just focus on the essential measures of quality. The key is to maintain your plan during the slow times and reign in your greed during the boom times. (P. G., Moon Township, PA)

Today's publishing industry has a no-risk attitude, and those that are brave enough to deal with new authors are intimidated by the full-return guarantee demands of the bookstores. Stuck in the middle with no choice, most new authors must turn to self-publishing.

The reviews above describe a book that Wall Street wants to keep in the closet, an educational and strategic breakthrough that would have allowed most investors to avoid the bubbles and derivatives that caused our current financial woes. There are probably others--- below the 200-level in all Amazon's best categories.

Online Trading, an Option for World Trade

2009-11-13T11:59:00.001-08:00

International deal is substitute of capital, commodities, and services across world frames or soils. In the most of nations, it being a remarkable percentage of gross domestic product (GDP). While world deal has been represented throughout lots of story (see Silk Road, Amber Road) the economic, social, and political importance has been connected the raise in new centuries. Industrialization, manufacturers, advanced transportation system, globalisation, transnational corporations, and outsourcing are all having a major impact on the transnational trade system.

Trading globally opens consumers and nations the opportunity to be exposed to commodities and services that are not available in their individual nations. Almost each variety of product can be checked on the global market: food, clothes, spare parts, oil, jewelry, wine, stocks, currencies and water. Services are as well traded: tourism, banking, consulting and transportation. A product that is dealt to the worldwide market is an export, and a product that is bought from the worldwide market is an import. Imports and exports are described for in a country's ongoing account in the balance of payments.

According to the U.S. Department of Commerce, strong companies reach up about 4 % of U.S. Exports which signifies that 96% of exporters are smaller companies. Why is world trade so strategic to begin smaller businesses? In numerous examples, the products or services you may care to market are not available or made in your domicile nation. For illustration, consider about trading cashmere sweaters. You may want to become an importer in order to compete with established products dealt by your competitors.

Online business can oftentimes start trading internationally with very little effort. The cyberspace has metamorphosed things. Your web site can be your store window in some number of nations. You don't need a physical front in every territory to deal there.

A Paper by Georgios Papastamkos, MEP on Transnational Trade on the cyberspace emphasised that the online circumstances for smaller and medium-size enterprises are especially great since they receive more chances to get across conventional commercial systems instead than they had even a last decade. Enterprises are effective to set up their cyberspace sale targets easy, speedily and at little cost, thereby achieving a higher level of fight.

If your business is operating in a niche, with a relatively smaller domestic market, looking to another nations can help you expand your audience with surprisingly little effort. And if your commodities or services attract to a bigger audience, moving into international marketplaces makes you the probability to touch a wide number of potency recent customers. It could really boost your receipts and earnings.

However, in a larger market there will be more competition from local companies. It can be heavy to match up on cost or fulfilment when shipping internationally, so you might let to modify your proposition to have an impact.

It's not only for manufacturer but for consumers are also receiving benefits by online trading,. Since they enjoy a very bigger choice between commodities and services, competitive pricing, lower living costs and a better excellent of life, they as well don't demand to go out to browse all products and services even from wholesale providers. They are today better able to compare productions and services since they take access more selective information on online trading.

Online Trading, an Option for Transnational Trade

2009-11-13T11:58:00.005-08:00

Global deal is exchange of capital, trade goods, and services across transnational frames or territories. In the most of nations, it acts a significant percentage of gross domestic product (GDP). While transnational switch has been represented throughout lots of history (see Silk Road, Amber Road) the economic, cultural, and policy-making importance has been along the rise in last centuries. Industrialization, manufacturers, advanced transportation, globalization, international corporations, and outsourcing are completely having a major affect on the global trade scheme.

Trading globally makes consumers and nations the chance to be exposed to trade goods and services that are not available in their personal nations. Almost each form of product can be seen on the transnational market: food, dress, spare parts, oil, jewellery, wine, stocks, currencies and water. Services are as well traded: tourism, banking, consulting and transportation. A product that is sold to the transnational market is an export, and a product that is bought from the transnational market is an import. Exports and Imports are calculated for in a country's ongoing account in the balance of payments.

According to the U.S. Department of Commerce, big companies gain up approximately 4 % of U.S. Exports which signifies that 96% of exporters are small companies. Why is transnational trade so crucial to scratch small businesses? In several cases, the products or services you may care to market are not accessible or created in your domicile area. For good example, consider about selling cashmere sweaters. You may need to turn an importer in order to compete with imported products sold by your competitors.

Online business can frequently start trading internationally with very little effort. The internet has transformed things. Your site can be your shop window in some number of nations. You don't require a physical front in each territory to deal there.

A Study by Georgios Papastamkos, MEP on Worldwide Trade on the cyberspace emphasised that the online circumstances for small and medium-size enterprises are especially good since they give more opportunities to get across conventional commercial schemes rather than they had even a . Enterprises are effective to prepare their internet sale points easily, rapidly and at small cost, thereby reaching a higher stage of competitiveness.

If your business is running in a niche, with a relatively smaller internal market, looking to another nations can help you widen your audience with surprisingly little effort. And if your trade goods or services appeal to a larger audience, moving into outside marketplaces gives you the chance to reach a wide number of potency recent clients. It could actually rise your receipts and profits.

Still, in a bigger market there will be more competitor from local companies. It can be heavy to equal up on price or fulfilment when sending internationally, so you might let to modify your proposition to have an touch.

It's not only for producer but for consumers are also receiving profits by online trading,. Since they enjoy a very large option between commodities and services, competitive pricing, lower living costs and a improve excellent of life, they as well don't require to go out to surf all products and services even from wholesale suppliers. They are now better able to compare merchandises and services since they gain access more data on online trading.

Last Bank Standing - The Wall Street Mega-Crash

2009-11-13T11:58:00.003-08:00

Dateline Washington, October 19th (get it?) 2010: the Peoples Bank & Trust of America has now established itself as the only bank of any kind in the USA, totally owned and managed by the US House of Representatives. A 2/3 majority must now approve all investment banking transactions; your district representative's staff reviews individual mortgage applications; and all 401(k), IRA, and remaining employer pension assets have been rolled into the Social Security Slush Fund.

Only federal and state elected officials are exempt from the 45% all purpose Income Tax. The estimated time to bring new companies public is 4.5 years; all individual account dividends and interest are paid directly into your IRS "grabber" account; CEO's salaries are limited to 50% of the amount paid to a first year congressman, and any government budget shortfalls are withdrawn from corporate earnings before any corporate obligations can be dealt with.

All employees receive the federal mandated minimum wage, except senior executives who are limited as mentioned above. Scary? This is a scenario that could play out if Congress (or the SEC) does not come to the rescue of the credit markets. You missed your opportunity to help stop it, but chances are a fix is on its way.

How many more businesses, jobs, and hopes will be killed by this irresponsible Congress? When will the average blogger realize that when a corporation fails, we all suffer? One would think that the informed and enlightened could take time out from their texting for a little research and education. Instead, they show their power by influencing public opinion numbers and the marshmallow politicians who worship them. As economist Irwin Kellner and I have pointed out, this is no bailout and we are not nearly approaching a recession.

Kellner's September 28th Market Watch article points out ten major differences between now and then: (1) In 1929, the DJIA plunged 40% in two months vs. around 30% in about a year. (2) In 1933, the jobless rate was 33% vs. 6% today. (3) The GDP shrank 25% then, but has increased 6% now. (4) Consumer prices actually fell 30% then but haven't ever since.

(5) Home prices dropped 30% then, but only 16% from the recent bubbly highs. (6) 40% of all mortgages were in default then vs. only 4% now. (7) 9,000 banks failed in the 1930s compared with just 25 or so (bigger and broader based ones) recently. (8) The Federal Reserve reduced the money supply, (9) raised interest rates, and (10) raised taxes on foreign imports.

Further, Kellner points out, we now have automatic stabilizers, deposit insurances, and market trading restrictions as protective elements. Today's Congress however, has never been good at connecting dots, has accomplished nothing under an unpopular president, and is ignoring its role as the primary creative force in today's problems. This transfusion is needed because: bad laws have obscured the values on financial institution balance sheets, and have created a clot in the credit arteries that keep the economy alive.

Educate yourselves on the Accounting Rule's that require institutions to book paying assets at pennies on the dollar. Find out why institutions are afraid to loan money to one another--- over night, at any rate of interest--- strangling the credit markets.

Doing nothing is killing jobs, killing companies, and deferring retirements for those who were counting on 401(k) and IRA dollars to provide them with income. Congress, of course has an old-fashioned pension plan, so it is unaffected by such financial realities.

Investigate the relaxation of lending standards that Congress orchestrated over the past few administrations, before blaming the companies that then extended credit to many speculators and other buyers who falsified application papers. Learn how the SEC was prohibited from regulating the CDOs and other multiple-leveraged credit market speculations. There are as many culprits outside the corporate executive suite as in it.

Congress is bursting with pride over bringing some of the Rich and Famous to their knees, and capping some of their obscene compensation arrangements at still shareholder pillaging levels. I've spoken often about how these salaries need to be controlled. But the multi-level-mortgage-marketing schemes that Congress encouraged must be unbundled somehow, and a buy out is the proper vehicle.

Congress has punished the entire world with its attack on Wall Street, and both parties are to blame. Representatives of the states listed below voted "no" to the credit transfusion, causing death and destruction that, in many instances, cannot be recouped. We have to replace them with better decision makers, representatives who can think in economic terms when they have to.

The number and letter code after the state designation indicates the number of representatives and their party: AL-1R, AK-1R, AZ-4D4R, CA-15D9R, CO-2D2R, CT-1D, FL-1D13R, GA-4D7R, HI-2D, ID-1R, IL-4D5R, IN-3D3R, IA-1D2R, KS-1D2R, KY-2D2R, LA-2D3R, ME-1D, MD-2D1R, MA-3D, MI-3D6R, MN-2D2R, MS-3D, MO-2D3R, MT-1R, NE-3R, NV-1D1R, NH-2D, NJ-3D4R, NM-1D1R, NY-3D1R, NC-3D5R, OH-3D7R, OK-3R, OR-3D, PA-3D7R, SC-1R, SD-1D, TN-1D4R, TX-8D14R, UT-1D1R, VT-1D, VA-1D5R, WA-1D3R, WV-1R, WI-1D2R (Names withheld, but available from the author.)

On Friday evening, candidates Obama and McCain gave their support to the Capital infusion, but neither bothered to explain why--- a huge audience was ready to soak up the information. Over the weekend, both attended meetings to support the plan and to generate support from their respective parties.

Is there enough time left to find a hero?

Are Traditional Banks Better Than Internet Banking?

2009-11-13T11:58:00.001-08:00

With the ubiquitous internet as it is today, you have the convenience of doing a variety of banking transactions online from the comfort of your home, in your office or while traveling. This extraordinary technological creation has so made life easier for a lot of people including professionals, the business community, housewives and scholars even for banking purposes. Notwithstanding, this new communication phenomenon people have not stopped patronizing the usual off line banks . The orthodox banks will always be there for those people who still choose to interact in an real bank in where they see staff and call them by name.

The banks that have gone online and their offline counterpart have their advantages and disadvantages. It's up to you to consider and decide whether to transact your financial affairs with either an online bank or an off line one . What really count s is that you should know your financial demands so as to be able to actually be on the look out for the latest tendency in the banking industry and understudy them to see how it favors you. Even if you are loyal to your usual offline bank, you may also have the need to sometimes use the online banking service for an urgent transaction or when you are where the bank is not near by.

Accomplished banks continue to use pen and paper for organizing financial transactions off line while in their online virtual offices computer and internet and keyboard are the instruments for banking transactions . The fact is that a lot of people are now online with financial products that are internet-only services meant to compete with the normal off line banks . Though these conservative banks cater mainly to their old customers, people who should know are advising them to also open online offices to serve the internet-savvy young people and by so doing attract more customers

Security and person to person interactions are the main reasons people maintain the use of traditional banks. A lot of people feel that human contact is a necessity in any bank transaction; they want to hand their hard earned cash over to real teller.

Banking online is quite the same as when you do the same thing in an offline bank. The significant dissimilarity is that your computer replaces paper or phone for accessing your account information for payments and statements reconciliations . You don't really have to worry about going to your local bank branch when you can do all the things necessary to effect a bank transaction in the comfort of your home with a desktop computer or laptop and internet connection.

A principal advantage that internet banking offers people who go for online banking is cost effectiveness. Certain banks are known to charge their customers lower fees if the bank online banking services.

Blue chip stocks - not a poker game

2009-11-13T11:57:00.002-08:00

Investing in conservative blue chip stocks may not have the allure of a hot high-tech investment, but it can be highly rewarding nonetheless, as good quality stocks have outperformed other investment classes over the long term.

Historically, investing in stocks has generated a return, over time, of between 11 and 15 percent annually depending how aggressive you are. Stocks outperform other investments since they incur more risk. Stock investors are at the bottom of the corporate "food chain." First, companies have to pay their employees and suppliers. Then they pay their bondholders. After this come the preferred shareholders. Companies have an obligation to pay all these stakeholders first, and if there is money leftover it is paid to the stockholders through dividends or retained earnings. Sometimes there is a lot of money left over for stockholders, and in other cases there isn't. Thus, investing in stocks is risky because investors never know exactly what they are going to receive for their investment.

What are the attractions of blue chip stocks?

1. Great long-term rates of return.
2. Unlike mutual funds, another relatively safe, long term investment category, there are no ongoing fees.
3. You become a owner of a company.

So much for the benefits - what about the risks?

1. Some investors can't tolerate both the risk associated with investing in the stock market and the risk associated with investing in one company. Not all blue chips are created equal.
2. If you don't have the time and skill to identify a good quality company at a fair price don't invest directly. Rather, you should consider a good mutual fund.

Selecting a blue chip company is only part of the battle - determining the appropriate price is the other. Theoretically, the value of a stock is the present value of all future cash flows discounted at the appropriate discount rate. However, like most theoretical answers, this doesn't fully explain reality. In reality supply and demand for a stock sets the stock's daily price, and demand for a stock will increase or decrease depending of the outlook for a company. Thus, stock prices are driven by investor expectations for a company, the more favorable the expectations the better the stock price. In short, the stock market is a voting machine and much of the time it is voting based on investors' fear or greed, not on their rational assessments of value. Stock prices can swing widely in the short-term but they eventually converge to their intrinsic value over the long-term.

Investors should look at good companies with great expectations that are not yet imbedded in the price of a stock.

Investment - How To Start Investing

2009-11-13T11:57:00.000-08:00

When you're first getting into investing there are literally tens of thousand of investments to choose from. You can invest in stocks, bonds, mutual funds or some other type of investment.

For the newbie investor just knowing the name of the investment or company you're putting your money in is just the beginning. There are often a lot of minor but important details that you must learn about before you decide to invest. If you had the time and know how you could analyze financial statments, speak with company employees and the company suppliers and so on and so forth. However not many of us have the time necessary to put towards being a full time investor.

Just because you may not have the time to be a full time investor shouldn't scare you away from investing. You can still find quality companies to invest in and it doesn't have to take a lot of your time. The first thing you need to do is get quality information and then you can make purchases of quality investments, you can then leave the management of your investments to individuals who are qualified to manage them.

Having someone else manage your investments will allow you to do the things your good at and leave you with more free time to do the things you like to do. One of the most important parts of investing is knowing what you can do for yourself and knowing what you should hire an expert to do. For example, if you're considering investing in stock in the overseas market then it might make more sense to invest in a mutual fund. Overseas markets can be trickier to navigate than domestic markets, especially for a beginner, so a mutual fund manager would likely be the best place to turn. This would be easier than putting all of your time, energy and money into trying to pick foreign stocks on your own.

The best way to build your wealth would be to invest in businesses which make you an owner, be it a partial owner or a full owner. These types are investments are not always for the faint of heart due to the up and down nature these sorts of investments can have. Investments where you would become at least a part owner include stocks, some form of a small business or real estate vehicles.

For instance, many of the world's wealthiest people gained their fortunes by becoming an owner of a sucessful company, be it one they've built themselves or a company that someone else has already built and maintained sucess with. Take for instance someone like Warren Buffett owner of Berkshire Hathaway. Warren Buffett has become one of the richest men in the world by buying successful companies and keeping them under the management of Berkshire Hathaway for the long term. If you had invested just 10,000 dollars in Warren Buffet's company when he was first starting out you'd be a millionaire many times over by now.

Owning your own business is a great way to increase your wealth, along with business ownership many other wealth magnates have increased their money through the investing in real estate and the stock market. Investing the way other big players invest is a smart move as long as you understand the risk involved. If you have an understanding already about how to invest then you should be taking the necessary steps to invest wisely and diversify your portfolio.

If you have longterm financial goals, like retiring at an early age then your investment portforlio needs to grow quickly. Things like putting all of your money in the bank would likely not help you achieve your long term goals as the interest which banks pay would likely not outweigh the effects of inflation on your money.

Investing is not for everyone and may not even be necessary for some individuals. If you are the type that doesn't mind working your whole life and are happy maintaining the standard of life you're currently living then perhaps you need not jump into the investment game. You could also look for safer investments such as government backed bonds or money market funds.

In the end if you would like to start investing then you should go to your local Barnes and Noble store and pick up some sort of beginner's guide to investing. You'll be happy you did.

Aberdeen Group Survey Invitation

2009-11-03T11:34:00.001-08:00

Taking Lean Six Sigma Beyond Manufacturing
The Aberdeen Group invites you to participate in a survey to help uncover the strategies, capabilities, and technology solutions that enable best-in-class business improvement initiatives beyond manufacturing.

Each respondent who answers the survey will receive a complimentary full copy of the report containing this study's results (a $399 value), once it publishes. Individual responses will be kept strictly confidential and data will only be used in aggregate.

We greatly appreciate your participation in this research effort and look forward to sharing our findings with you.

Risk Management as Good Business

2009-11-03T11:33:00.000-08:00

Yale University behavioral economists professor Robert Shiller recently identified the cause of the financial crisis, stating: “The real problem is that we weren’t managing risk.” Standard and Poor’s has added enterprise risk management as a factor to consider in issuing credit ratings. These trends point to a growing emphasis on risk management across all industry sectors, not just finance. Companies that ignore this trend risk being at a competitive disadvantage when the global economy emerges from recession. Jeff Smith, chief risk officer of Consulting Services Support Corp, notes, "Once a number of companies begin to better manage and mitigate their own unique risks of loss, it only makes sense that other corporations that wish to retain competitive advantage and attractiveness to shareholders would follow suit.”

The need for risk management points to the need for widespread, scalable risk management tools. @RISK and DecisionTools Suite software add Monte Carlo simulation and other analytical techniques to Microsoft Excel — a platform everyone can understand. Using Palisade risk analysis tools, analysts and managers can make quantitative, data-driven, better-informed decisions.

Its my first post!

2009-11-03T10:38:00.000-08:00

Here i write about finance system and how to make money.