The Golden Rules in the Game Of Personal Finance!


A Clint Eastwood dirty Harry movie from decades ago pretty much summed up the topic of personal finance: “A person has got to know their limitations.” So be it! How a person manages, spends, and invests their own money that has the pictures of dead presidents on the front, can have a profound impact on your personal life. And for your further clarification the schools that teach you the game of personal finance are few and far between. However, you should pay that statement no mind because the basics are usually quite simple and will never change. What your parents and grandparents did during their lifetime may not work for you because that was then and this is now, when most folks are at the steps where things are newer with better tools to manage your money and investing your money will always be better than doing nothing with it, and planning for the future will always be in style.

Golden Rules To Live By


If you decide to go-it-alone, one of your closest friends may suggest that managing your own finances is probable going to feel like you’re pinned down in nothing but reams of paperwork and numbers; most of which you may not understand. Then your Uncle Fred might put in his two cents with a comment that handling your own finance conundrum by telling you his simple formula is you make X amount of dollars, but you spend Y amount, or trying to make sure that Y is less than X – get it? Actually, the fact is that your personal finance is as much about habits, psychology and the values you are living by. That said, make sure to do these three things:


* Use the Clint Eastwood theory – know your limitations.

* Spend less money than you earn so you’ll be able to deal with the minefields that will surely come, sooner or later.

* Make the money you invest make more money by investing in things that will do just that, allowing you to make money while you’re sleeping.


An Honest Assessment!


What have you recently dreamed about when it came to your personal finance situation?

Certainly many people dream about having their own business, so to get the ball rolling, starting with an area where you have a high confidence level and then let others do the rest. You may be loaded with a wheelbarrow of confidence and feel you can act as your own “advisor” yet a dab from a professional money manager could be the ticket to success in the stock market, for example. In other words, go ahead and make your own selections but hire or partner with an outside manager to handle your fixed-income investments. Then as time passes and your abilities grow as well, you would be in a strong personal position to bring all or some of your investment back home to you.


Running And Managing Your Own Investment Portfolio Advantages!


You can save a few bucks by handling your own money. For starters, you can save that one percent asset management fee most brokers and money managements charge regardless of whether your portfolio goes up or down – they get paid. Well, sure, that one percent seems a piddling amount, but it means that, for example, you’re currently paying $10,000 for every one million you have under management, and you’re paying it every year to the person or firm who is managing your money, could turn out to be a huge OUCH! Remember, your personal finance will not be risky, if you keep your eye on the road.

Financial Statement Factors To Look Into When Considering A New Stock


New investors are often interested in choosing new stocks but are often overwhelmed by the sheer volume of different stocks out there to choose from. There are, after all, a wide range of different stocks and industries that you can choose from. Finding the right stocks can be difficult but can be made easier by understanding certain trends regarding stocks and doing some financial statement analysis on the stocks you are choosing between.


For many people, looking into financial statements can be a real challenge and there are many websites that accumulate ratios and other relevant data in a more digestible form. Here are certain factors that you should look into when choosing between different stocks.


1) Price to Earnings Ratio: A price to earnings (P/E) ratio will tell you how many times earnings a specific stock is trading for. This will show you, that if the company does not increase their earnings, how many years will it take for the stock to earn back the amount that you pay for it. While this can be a useful figure in a mature industry that is not changing significantly, it can be a bit distorted in newly developing industries that are growing significantly and when a company still has a loss. On an overall basis, it is commonly thought that a P/E ratio of above 15 is historically expensive while below 15 is relatively cheap.

2) Free Cash Flow: A free cash flow figure is on a company’s cash flow statement and basically shows the cash flow from operations plus and capital investments. The importance of a free cash flow figure is the cost that is required to sustain a business each year and the figure will show how much money is available to make investments by a company as well as the amount that is available for further investment or expansion, stock buybacks, or debt repayment. In other words, how much money is available for a company’s management to invest in other things or to give money back to shareholders.

3) Debt to Equity Ratio: A debt to equity ratio will show how much debt financing a company has in comparison to an equity investment by shareholders. Here, neither figure is particularly good or bad but needs to be taken into context with other factors. A high debt to equity ratio may show that a company is in deep debt and unable to sustain itself, or may show that they are taking into account low interest rates and using this cash flow to repay shareholders by buying back stock. If a company has a particularly high or low debt to equity ratio, you should learn what led to this as well as the prospects of the company in order to learn about whether it is a good idea to invest.


4) Net Income: Net income shows how profitable a business is in a given period. While this is an important figure to track in a stock, particularly over time, it can be distorted seasonally or in other contexts, and often needs to be taken in as part of a large context.


Despite all the aforementioned information, different industries have different factors that are important. Net income may be an important factor in most industries but it provides a distorted view in certain industries such as telephone utilities and real estate companies which may have a significant amount of depreciation that is not reflective of profitability and success.


Ultimately, individual care and learning the industries of the companies that you are investing in is the best way to first learn about, and then invest in, a new stock.

The Summarized Guide To Investing, Managing Money And Staying At The Top


Before you even start anything, you will need to have a plan that will involve the information that you need, the management of operations once you take the big leap into the market, how to invest, who to invest with and how to get the best out of it all.



So, lets us begin with the most important part which is planning for the start of everything. Here, we will detail on the things that you will need to have and then move on to the more tricky money management part.

The Investment Plan



  1. Know Your Financial Position



Look at the amount of finances that you have before you can start investing them in anything. First of all, they should be enough to cover what you are going to get into. You will have to set up what we call the emergency fund which will back you up if you run into a bad investment. You should know how much disposable income you have.



  1. How Old Are You



Yes, this is important because, the younger you are, the more risks you can take. This is because you have time to get back on your feet if things go sideways. If you are older, like retirement age old, you will have to know that the soft investments with fewer risks are the ones for you.



  1. Have A Risk Limit



Before you take the leap, know how much of it you can take before you ruin yourself up. That is why you need to have a risk limit that will help you know when to quit. Investing is like gambling, and you have to be careful not to aim higher than you should.



  1. Determine The Goals, Goals Timeline and Liquidity



The goals of your business should be well spelled out, and most importantly, you will need to have a timeline where you compartmentalize the steps so that you can be able to achieve all of it step by step with no hassle.



The liquidity means the amount of assets which can be converted to cash very quickly. You will need to know how much you have for quick access money.



Managing The Money



  1. Have A Record Of Income



Preferably, monthly incomes and where you will be getting them from. How reliable is the source of your investment money and how much you can get before the well dries up? Keep a record, and you’ll have an easy time with the disbursement.



  1. Budget And Monitor Expenses



Whenever you need to spend wisely, you will have to plan, and that means working with a strict budget that will I turn help you with process two which is the monitoring of the expenses. When you know what money was allocated where you can know how much you used.



  1. Keep Records



These will include books of business that entail the balance sheets, trading, profit and loss accounts and all bank statements. This help when you are determining your fixed expenditures, utility expenses and miscellany.


Information Before Formation



Before you start doing anything, you will need to have information about what you are getting into. That way, you will always know what to do and anticipate a problem is just cool if you want to solve that problem quickly.



So, places you can get information from include:



  • People in the field you are interested in
  • The internet
  • Agents e.g. the stock markets and forex markets
  • Book guides


These are but a few of the places you can go for information that will help you form something viable. Good luck.

The Investments Options And Tips For Beginners


As soon as people start earning, they think about various investment options. But, many people get confused on where to invest, how to invest, which investment option is suitable to their needs, etc. People should remember that there is always a first time for everyone. Even Warren Buffet has gone through a similar situation of a novice in his younger days. It is all about understandings one’s requirement, finding an investment option matching it, getting education and tips about it, and making a humble start depending on the complexity and risk factor of the investment.


Understanding the Requirement and Choosing the Option


If the investment is for some specific needs such as education, marriage, or to buy a property, it is better to keep away from market-based investment options. In such cases, fixed income options are a better choice. Certificate of Deposits, Bonds, Municipal Bonds, etc., offers fixed returns after its maturity period.


If someone is looking for recurring income, they can choose options like Peer-to-Peer lending as people can get better rates without too much investment of time and effort. However, people should be aware that there is a level of risk if the borrower is in financial trouble or in a situation he can’t pay the money back. Investing in large cap and consistent company stocks is another good option, to get regular dividends. Also, dividend stocks are found to be giving better returns year after year. Real estate investments can also give fixed income in the form of rent.


People who have time and energy to invest can choose stock trading. Spending two to three hours in a day and understanding the movements of the market, latest trends, hot selling industries, tracking stocks with great potential for growth, etc., are required for a potential trader to invest in the stock market. For people, who do not have time to spend on stock market education, can look for mutual funds. Again, a market-based instrument, but managed by fund managers. Look at the history of various mutual funds available in the market and find the one which provides steady returns and invests in it.


Tips for Investment


Always prioritize the requirements and plan in advance to meet the needs. Make a budget, analyze the income and calculate the daily expenditure, then arrive how much is left for the investment. A share of the amount should be kept aside for unplanned expenses in future. Also, some amount can be contributed for retirement. The leftover can be invested smartly to increase the wealth or for any requirements in future.


While choosing fixed low-income options such as Bonds or Certificate of Deposits, consider the inflation rate into account. Otherwise, when the amount gets maturity, it would have the same value before it was investing. In the case of real estate investments, choose localities where price is going up steadily. Apart from rent, the property would also get an appreciation over the years.


The beginners in the stock market should be restrained to invest small amounts. Multiple factors are deciding the stock price, and not everyone can learn it quickly. Try to listen to a number of expert investors and do a self-analysis before making investments. Do not invest in a single stock or stocks from a single industry. Diversify the investment to minimize the risk.


Look for Better Investment Options


The profitability on different investment options changes over a period. So, always look for better and reliable investment options that are available in the market. The latest investment options can be found in money magazines, financial websites, TV programs based on money and market, etc.


The Bottom Line


It is better to start the investments at the early ages. It helps people to learn how to manage money. Rather than textbooks or references, experience teach man better. Set some investment rules that are making the investors restricted and advanced, then start investing. Finally, try not jump into different investment options one after the other.

Is The Stock Market For You?

Warren Buffett, the second wealthiest person in the United States, purchases his first stock at the tender age of 11 and from there, went ahead to make a killing in the stock market. And he’s just one of the many people who has made a killing investing in public company stocks, the likes of which include Tim Grittani, who became a millionaire at 24 by investing smartly in penny stocks and Chandresh Nigam who made it big selling IT stocks. So how does this work and how would you go about it?

The stock market, also known as the equity market is a place where companies which open their shares to the public sell the same in the form of exchanges or the over-the-counter market. This is important to the free-market economy, as it provides businesses with the capital they need to grow while letting investors get a slice of the company ownership, sharing in both the profits and losses.


In older times, stock trading was a slower and tedious process, with physical share certificates being the only proof of ownership of a share, but today electronic shares allow for fast trading with a phone call or email.

There’s no harm in the quick short selling of stocks if that’s your goal, as is the case in day trading of shares for a quick profit. Doing your research on quick growth trends of companies will help you take an informed decision.


As for long term investments, many beginners make the mistake of blindly looking for the cheapest stock options to buy and wait for them to hit low price points. Long term investments can also pay off when you put down money on a company you believe will grow in the long run based on the nature of the industry and their performance over time, as the stock itself will have high selling and low selling points, but a well-performing company will tend to show an upward trend in growth and stock value over a long period.


Don’t let your ego get in the way. If you go into losses and your objective projections for the company aren’t good, cut your losses, accept the failure and move on. There is a trend of people who tend to sell stocks that have made profits while holding onto the ones that are in losses, and go on to look for more options. It’s important to appraise your stock realistically, rather than putting it aside in the hope that it will rise as this behavior could land you in serious losses over time.


You also need to constantly keep yourself updated with the political and economic environment and its consequences on the industry you’ve invested in. Technology changes rapidly as well, and sometimes there’s not as much market data available as is the case with businesses using more traditional means. Many silicon valley startups have become billion-dollar industries in the own right overnight, and there is much to be made in profit from investing in new tech, just make sure you do your homework regarding similar kinds of business models and make projections based on that data.


Don’t put money on hearsay and hype. Many companies will make big promises which they aren’t likely to be able to live up to, and it is up to you to identify such situations.


It’s also a good idea to stick with stocks that have a lot of trading activity like the ones that are illiquid tend to show relatively fewer upward trends as a whole. All the best!