Capital Growth - Is it a Risk Or an Opportunity?

Capital Growth – Is it a Risk Or an Opportunity?

I love investing. Why do I love investing? Because from personal experience I can see it works. The source of our wealth is investing. Yes, the incomes we received from our jobs enabled us to invest, but we would not have become wealthy because of our jobs. Why? Because we always spend what we earn. Let me explain using one property as an example.

I purchased a property in 1997 for $165,000. By the end of 2007, the property was re-valued at $410,000. That is a capital increase of $245,000. In ten years, I would have found it impossible to save that amount: over $20,000 per year. Over those ten years, I was on an average salary of approximately $50,000 per annum. It would have been impossible to save an average of $20,000 per year.

To me, investing has been a form of forced savings.

As much as capital appreciation on an investment is very exciting, it also brings with it a level of risk.

The risk is the access you have to the capital appreciation. Loan products are available that allow you to re-finance your property to the current market value and you can access a portion of the capital growth for your purposes.

This access to the capital growth can either be a risk or an opportunity.

Let’s look firstly at the risk. Let’s say your Mortgage Broker tells you you can gain access to $100,000 on your property. You get very excited and buy a new car and a boat for your family. Let’s look at some of the downsides of this decision:

– Increased expenses: you now have to pay interest on the $100,000 loan. This is a personal expense you did not have before you purchased the car and boat.

– You purchased items that …

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Venture Capital - What Are They Looking For?

Venture Capital – What Are They Looking For?

The venture capital market gets a lot of publicity. Despite this, it is also clear that a certain amount of mystery surrounds the industry. In this article, we look at a very simple question – what are venture capital funds looking for in prospective businesses?

The first thing a fund manager looks for is a potential home run. They are willing to invest a lot of money, but only if the potential return on investment is huge. If you aren’t thinking big, don’t bother seeking out this type of funding.

Along this line of thinking, the fund managers are also looking for a product in a growing market. You might have the greatest idea for movie DVD technology in the world, but you are probably going to get little or no VC interest. Why? The market is moving past DVDs to direct streaming solutions, to wit, your idea is antiquated and in a slowing market.

The third element is the ability to quickly recover the capital investment. What does this mean? It simply means the ability to take the company public or sell it in a reasonable time of say no longer than 5 years. Fund managers are in the game to make as much money as possible. Any talk of “growing” a company should only be taken in reference to their desire to get it to the payoff stage as soon as possible.

The fourth characteristic looked for is experienced management. Would you give a couple million dollars to someone who has never done something before? Maybe, but you would feel a lot better giving it to a company with management that has a history of having successfully brought companies to market. If you don’t have strong management, an easy solution is to consider hiring it. It could be …

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Forex Trading Strategies: Threat Capital

Forex Trading Strategies: Threat Capital

Threat Capital would be the amount of cash that a enterprise or particular person is willing to shed. This is a usually used term in trading and forex markets. These are allocated funds for high threat investments because the maximum quantity that a person would be willing to entirely drop. The clear incentive to “put up” threat capital for yet another individual or entity is monetary get.

Investment specialists and forex brokers advise to only use risk capital for investments that happen to be extremely speculative with a big potential payoff. High danger investments usually involve a potentially catastrophic profit, so a fantastic example of risk capital would be an investor who makes their funds accessible to a startup organization which has powerful development potential. The funding is invested into the business, together with the hopes that the new firm tends to make tremendous profits, realizing there is a threat that it will not.

A small-time instance of threat capital is displayed by means of acquiring a lottery ticket. Although the payoff is potentially substantial, the odds of my investment into the lottery succeeding are subsequent to zero. So the volume of capital that I am personally prepared to place forth into this speculative investment, and potentially lose, is $1. When the odds for winning the lottery higher, I’d likely invest more of my capital in wanting to win.

In some circumstances, Risk Capital is equivalent to Venture Capital (VC).

When a start-up business enterprise is in search of danger capital or venture capital, they may be in search of revenue from an investor to help grow or commence their business enterprise. When the business presents a powerful business strategy and displays wonderful possible for good results, an investor might be willing to lend it begin up cash.

Likewise, if …

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Choose Your Sources of Working Capital Finance for Business Credit

Choose Your Sources of Working Capital Finance for Business Credit

You have choices in sources of working capital finance and in business credit solutions.

It is all about understanding the problem and knowing where to go for the solution, so let’s look at those two key issues. Understanding the problem is not something you have to read about, as a business owner and financial manager in Canada you live the capital ‘crunch’ or ‘challenge’ every day.

Working capital is best understood as your operating capital, and you have investments in receivables, inventory, that’s where your investment currently lies, and your goal is to monetize those assets in the best manner possible.

The textbook definition doesn’t really help us out – our accountants and analysts tell us to go to the balance sheet, subtract current liabilities from current assets, and, voila! That’s working capital!

One of the biggest contradictions that you need to understand is the issues of assets, profit, liquidity and turnover. Once you have a handle of those the concept of working capital and, more importantly, the solutions start making more sense.

We hate those textbook definitions we referred to, but we will agree that the calculation we shared needs to be positive – you do need more inventory and receivables combined as measured against payables and other short term liabilities. How you manage those short term assets of A/R and inventory is the challenge.

Many business owners quickly realize that one of their liabilities, i.e. payables, is actually a large asset in measuring capital and managing it. That is because if you can continue to convert inventory into A/R into cash, and slow down payables you are achieving working capital progress.

Is there a perfect way to measure your working capital needs and progress? One of those methods is to check into the ‘cash conversion cycle ‘- It’s …

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High Pay Still Found in Finance

High Pay Still Found in Finance

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Though the stock market remains wildly prone to fluctuations and the United States barely saved itself from veering off a fiscal cliff at the new year, the high pay of finance jobs has remained a steadfast thing. And the number of people seeking such jobs has, if anything, been on the rise-even as the amount of spots available moves the other direction on the number line.

“I’m looking to go into finance” is a common phrase among soon-to-graduate and recently graduated college students. But what exactly does “going into finance” look like? Finance is an industry, and the term blankets a lot of different positions. Finance jobs include everything from being an analyst to being a trader, from being a researcher to being a consultant. When most people think “finance,” investment banking, also called iBanking, is what first comes to mind. Specifically, bulge bracket banks like Goldman Sachs, J.P. Morgan Chase, and Morgan Stanley come to mind. But these firms only comprise a small (if highly profitable and reputable) piece of the finance pie. Job-seekers can also break into the finance career bubble through sales and trading divisions, corporate finance, hedge funds (a harder point of entry for fresh BAs), consulting firms, (McKinsey & Co., Boston Consulting Group’s HOLT associates division), private wealth (Charles Schwab, PNC Wealth Management) management firms, and even ratings agencies (Moody’s, Standard & Poor’s). And within iBanking alone, there is further job breakdown into three types of groups: capital market, product, and industry groups. Basically, “finance” is deceptively simple-there are dozens of ways to wriggle into the finance sector.

The pay, of course, differs from position to position and from company to company. At a big investment bank, first-year analysts will typically make around $70k base salary plus a $10k signing bonus and $50k …

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