Archive for December, 2009

Take the Guesswork Out of Asset Allocation

Sunday, December 27th, 2009

If the Enron and WorldCom scandals have taught investors anything, it is that betting your future solely on one company’s stock is a huge mistake.

In fact, talk to any financial adviser and the mantra these days is diversify, diversify, diversify. But to average investors, that’s not so simple. What exactly does that mean and how do they go about doing it?

Asset allocation means spreading out your money across different asset classes (such as stocks, bonds and cash) and within each asset class (not buying just one type of stock, bond or mutual fund). The idea is that when one asset class falls, another may rise, which cushions the portfolio.

“At minimum, a moderate investor would probably want to hold five asset classes: large-capitalization stocks, small-capitalization stocks, international stocks, bonds and cash,” said Roger Ibbotson, chairman and founder of the asset allocation firm Ibbotson Associates and finance professor at the Yale School of Management.

But diversification is not always easy or cheap. About 75 percent of mutual funds have minimum investment requirements of $1,000 or more, according to the Investment Company Institute. For a moderate investor, building a diversified portfolio can mean a large initial investment.

“A reasonable allocation might be 38 percent large-cap, 7 percent small-cap, 15 percent international, 30 percent bonds and 10 percent cash,” Ibbotson said. “But if the minimum investment is $1,000 per mutual fund, you would need more than $14,000 to invest in those proportions.”

But fear not, there may be a simple solution: a fund of funds. Commonly called lifecycle funds, lifestyle funds, target maturity funds or balanced funds, these investment products are whole diversified portfolios. Investors can select a fund of funds based on time horizon (when you’re going to retire) or how much risk you can tolerate.

With one purchase, investors can get access to a diversified portfolio designed by professional money managers such as Old Mutual, Pioneer Investments and AIG SunAmerica, who have partnered with Ibbotson Associates to help create these fund offerings. Funds of funds can be thought of as one-stop shopping for your investment dollars. – NU

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Get unsecured business loans without risking your asset

Saturday, December 19th, 2009

Business the state of being busy resulting into something productive or profit in business terms. Finance is an important term in business and can be a matter of concern when it comes to running business smoothly. You can go for unsecured business loans if you need finance but dont want to risk your property as collateral.

Unsecured business loans provide you the financial assistance you are looking for the smooth functioning of your business. These loans carry a higher risk of default for the lender. Now you may think why is lender ready to take such risk and offer you his money as a loan. Yes, there is something which attracts lender also. These loans carry a slightly higher rate of interest. Still they are considered to be a good sourse for funding your business.

Credit score holds a great importance in case of unsecured business loans. Credit score is a three digit figure calculated by credit rating agencies like Equifax, Experian, and Transunion. Any score below 500 can create trouble for you in getting the loan. A bad credit score occurs due to various reasons like non-payment or late payment of debts, your unpaid credit card bills, bankruptcy, arrears everything adds to your bad credit score.

A bad credit unsecured business loan helps you recover from your bad credit. When you make proper payments for the loan amount it affects your credit score in a positive manner. So there is an advantage of recovering from bad credit history.

These loans can be taken either for
Starting a new business or
For the expansion of the existing one.
Purchase Real Estate
Refinance Business Debt
Purchase a Business
Working Capital

The loan amount which you can apply for under secured business loans ranges from ₤15000 to ₤250000. The repayment term can vary from one year to ten years depending on the loan amount, credit rating and the lender you have chosen.
Documentation related to following things is necessary to carry with you while approaching a lender.
Business profile
Name and length of business ownership
Incase of new business you need to discuss your business venture
You have also to mention how your business is successful enough to repay the loan amount.
You have to consider some important things before you apply for an unsecured business loan. Calculate the funds you have with you to invest and how much amount you want to take as an unsecured business loan. Your ability to repay the loan amount should also be taken in mind.

Applying for these loans through online option gives you an edge over the financial institutions and banks. It is also easy to get free quotes from the websites. Yes, it is always recommended to make a phone call to the lender in case you are facing any difficulty in understanding terms and conditions regarding the loan package.

Unsecured Business loans are becoming popular because of the reason that they get approved fast as the hassle of transfer of title of collateral in not there as in secured loans. There instant availability could be proved as a gift for you when you need fast money. So you should go for these loans to cater to your finance related problems.

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Business Credit Is One Of Its Key Assets When It

Wednesday, December 9th, 2009

Business Credit Is One Of Its Key Assets When It Comes To Its Success

New businesses are seldom profitable at first, and even a successful business can have dry periods where profits are not enough to cover necessary financial; obligations. Many businesses use a business credit card for their expense accounts. This is why it so important to have the business credit necessary to utilize financing options when the need arises.

Borrowing money is one of the most common sources of funding for a small business, but obtaining a loan is not always easy. Even getting a business credit card can have stringent requirements. Before approaching a lender for a loan, it is a good idea to understand as much as possible about the factors the lender will evaluate when considering your business credit loan application.

The lender will undoubtedly consider your businesss ability to repay the loan. After all, this is the biggest risk and source of profitability for the lender. They generally seek two sources of repayment: cash flow from the business, plus a secondary source such as collateral. Select lenders will also make approval decisions based on credit alone.

Credit history is therefore very important to business credit. One of the first thinks a lender will determine when a person or business requests a loan is whether their personal and business credit is positive or not. You should probably obtain a copy of your personal and/or business credit report and review the information yourself before submitting an application.

A business credit line can give a business the flexibility and adaptability it needs to remain viable. This is an excellent financial asset for any small business to have. The funds from a business line can be used for a variety of purchases, including growth, renovations, payroll, inventory or marketing. A business credit line gives your company the flexibility and stability it needs to be successful.

A business credit line offers a lump sum of pre approved money. This is essentially the same as applying for a large loan, even if you dont have a need for the funds. But thats the great part. You can utilize as much of the credit line as you need, leaving the rest in the account. Should the need for extra money occur, you already have the pre approved balance that you can withdraw from virtually instantaneously. With your business line of credit, you always have a pre approved balance waiting for you. This means you wont have to go through another loan process, or face the possibility of being denied should your credit change.

You are not charged interest on the unused portion of the credit line. You can write checks or withdraw cash out of your business credit line balance. Your business line of credit can be paid back at any time to increase your available credit.

A business credit line strengthens a small business with a great measure of security and protection. A business owner can relax about future unpredictable events by knowing he or she has the access to the finances to cover them. Furthermore, it is like having instant funding should the business choose to make innovations for its growth.

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Benefits of Financing Business Assets rather than Paying Cash

Wednesday, December 2nd, 2009

With interest rates so cheap these days, most small medium sized businesses are choosing to finance their business assets rather than paying cash. These assets include , trucks, plant and machinery.These assets are increasingly being turned over every 4 5 years as technology improves, general wear and tear increases from demanding work loads and the taxation life of assets shortens.

So why not just pay cash!! Its been a great year in business, we have plenty of cash and we may as well just pay for the asset outright.
Well this might be true, but what happens next year if sales slow and funds are not there to cover business overheads and expenses. This is where financing becomes a valuable part of any business and following are many of the benefits associated with doing so.

1. Lock in a fixed interest rate for up to 5 years depending on the asset being financed. These rates vary but at present are approximately 7.5% fixed depending on what asset is being financed and term of loan

2. Use a particular finance product such as , Hire Purchase, or Finance Lease. With a Chattel Mortgage customer owns the asset from the day one, can claim GST up front and interest / depreciation over the term of loan. Hire Purchase Hire it now with an option to own later. Claim interest / depreciation over the term of loan. Finance Lease Finance company purchases the asset; you enjoy full benefit of asset for regular repayments, with finance company disposing of asset at end of term. (always check these which product best suites with your accountant)

3. Structure your repayments to preserve cash flow in business. This is achieved by electing 1 5 year terms with or without balloon / residual payments. These final payments must fit within ATO guidelines and are available to the products as mentioned above.

4. Stay ahead of your competitors with the latest technology by upgrading your asset more frequently. This would be an enormous drain on your cash if you were drawing upon your cash reserves.

5. Establish excellent credit ratings with financiers that allow further lending in the future to grow and accelerate your business above other competitors

These are just some of the common benefits of financing rather than paying cash. As each business differs some of these may not relate to your business, but overall these points are certainly worth considering when acquiring your new business asset.

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