Forkids Business Guidelines

There are two types of income to fully understand if you want to start your way to becoming financially healthy. No matter what your job is, whether you are a bookkeeper or a company director, everybody gets at least one of the two types of income so it is equally important to understand them.

Active Income

Active income is the reward from participating in an endeavor that used your time, skills and effort. Usually seen in a form of paychecks, incentives, and commissions, it means actively involving oneself to be able to earn money. An example is a person selling pancakes. If he sells today, he gets paid. If he doesn’t, it means there would be no income for him.

Residual Income

Residual Income is the reward one gets from passively participating in an endeavor. It is the income from capitals and assets or money-generating activities. It is also called passive income. A person with this type of income still receives money even while he is asleep. A good example is an online marketer that has a 24/7 website where he gets clients from all over the world to sign up for his services. He gets paid for being passively involved in the process of earning money.

Why do we need to have residual income?

If you will ask people if they want more money, most of the time the answer is a big “Yes”. One of the motivations nowadays is wealth. We want more cash. To be wealthy, we have to know what the word means. Is being wealthy having a million-dollar bank account, owning the hottest cars and travelling around the globe? In fact, wealth is simpler that what we think: Wealth is simply being able to pay for your chosen lifestyle without the need to ever earn an active income again.

Wealth is absolutely not about the dollars in the bank. If a person has a million dollars, travels the world endlessly, buys expensive cars without enough residual income to sustain his lifestyle, his millionaire life can be gone too soon.

So why do we need to focus on our a passive income source instead of just having more cash? It’s because passive income can take care of our needs and wants for a long period of time under our chosen lifestyle. If you want to live a life like the filthy rich, then you have to find residual income streams that will give you dividends and cash rewards which are enough for your new-found luxuries. Keeping a good cash flow of passive income is the key to wealth.

In short, the first thing to do is to be clear in what kind of lifestyle you would like to achieve. This is actually what most financial advisors would ask a client during the first sessions of working with them. What kind of lifestyle would suit you? What exactly are you aiming for?

Once that question is clearly answered, the next step it to search for opportunities to be able to get that lifestyle and sustain it. Look for information around you about tried-and-tested residual income sources that you can use to get you where you want to go, which is true wealth.

With the proper marketing system in place you can create Residual Income.

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Fixed income unit trust is touted as the safest asset class in unit trust investment. But is it as safe as fixed deposit? The answer is NO. Fixed deposit is a risk-free investment vehicle which guarantees you the return. Fixed income fund does not. So what is the financial workings behind a fixed income unit trust?

Fixed income fund invests in bonds. In this article, the terms fixed income fund and bond fund will used interchangeably.

Bond

Bond is a fixed income securities. If issued by private sector, it is known as corporate bond. It is considered a debt instruments to raise capital to finance expenditure or working capital, without diluting the ownership rights (unlike shares).

From investor perspective, they will lend an amount of money to the bond issuer, and in return they will get a predetermined rate of return (coupon payment, usually within 5 to 10 percent) from their capital annually/semi-annually/quarterly. In addition to this, the capital will be repaid to the investor when the bond ‘matures’, normally within 1 year for short-term bond (aka Treasury Bills) and 10 years for long-term bond. The initial committed principal may be less or more than the final capital repayment, the former known as discount bond and the latter as premium bond. In short, investor is guaranteed to be compensated in periodical coupon payment in addition to the value of discount of the bond ‘price’.

Systematic risk

Systematic risk refers to the investment risk associated with the local and global economic conditions. This, more often than not, is the primary risk for government bonds.

The net asset value (NAV) of a bond fund which largely consists of a portfolio of government bonds fluctuates according to the economy. This type of risk is something no one can control, but perhaps more predictable. You will know an economic recession is looming in the horizon by keeping up to date with a lot of economic indicators such as interest rate, purchasing manager index and business condition index.

Government bonds are almost similar to risk free investment, unless you are living in nation like Greece where government could default on its nation’s debt. United States, for example, has a sterling bond rating of triple As until it is downgraded this year.

Unsystematic risk

The more unpredictable risk inherent in a bond fund is unsystematic risk. This type of risk relates to an organization or corporation which issues the bond. It is more likely for a company regardless of its size, if the company is being mismanaged. The analogy of it is this. I accumulate a sum of money from my family members and purchases bond from you. You are the corporation which issues me the bond and I am the mutual fund itself, while my family members are the bond unit holders (investors). You take the money to gamble, and in the end losing all of it. As a consequence, you can neither repay me the principle nor the periodic coupon payment. The fund goes down the drain along with the investors’ money when the bond issuer defaults on its financial obligations.

How to mitigate the risk

Whichever bond fund you choose to invest in, take time to read their financial reports twice a year. One is annual report, issued after the end of the fund’s fiscal year, and another one is interim report. This may sound tedious if you are not a finance guy; but trust me, this is something you can do in 30 minutes. You probably spend more time planning for your vacation, what is the rationale of not spending a fraction of that time flipping through the annual reports when your money is at stake here?

Focus on the bond holdings of the fund. See if the objectives and mandates of the fund has changed. The mandate can mean the lowest grade bond category a fund manager can hold or buy for the fund. Any bond has its own rating which reflects the credit worthiness of the bond issuer. In layman terms, the higher the rating, the least likely bond issue is to default. The rating is evaluated independently by agency such as Standard & Poor’s. Ensure that all bonds held in the fund are of investment grade (BBB and above). Any bond holdings below this grade are considered junk bonds and should be a red flag. Redeem your cash and look for some other funds instead. It is not worth to risk your money in junk bonds which may promise higher yield.

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According to a recent study, the human life span is currently at 65 years on average. This means that by the age 60, death is nearly saying hello to you. If we will really think about it, our stay on earth is too short. Now the question is, how would you like to spend your life? Wouldn’t it be a miserable situation to be working still on your last days? Or, until your hair is already gray and while everyone else is enjoying a holiday in some tropical island?

Certainly, you want the best for yourself and for your family. But the problem is you don’t know how you are going to save for your future with all the expenses and the current economic crisis. Another thing is you’re not sure if you can still handle another part-time job because you’re already way too busy with your full-time job plus you also need to spend some quality time with your loved ones.

Here is the good news. You can work less and earn more cash. Yes, it’s possible and it’s called passive income. If other people are able to do it then how hard can it be? First off, passive income means earning from an investment that does not require you to be involved directly with the process. How do you that?

Here is a quick list of online activities that online marketers use to earn passive income from the web:

Affiliate programs. Choose a product that sells like hot pan cakes in the internet marketplaces. Set up a website and use SEO techniques to drive highly targeted traffic. Make sure to install a shopping cart and a payment method to encourage buyers to shop through your affiliate links.

Create your own digital products. You can write an eBook, you can make an informational video or audio, you can invent a special plugin or software, you may develop a mobile app, etc. The best thing about doing these things is that you will only have to spend a few hours or days to accomplish the task but the license and distribution fees that you are going to receive will be lifetime.

Referrals. Make-money sites like Hits4pay and Odesk pay users for referring new advertisers to the system. In Odesk, for example, once your referred contractor has reached an income of $1000, you will receive a commission of $50.

These three methods are just a few examples on how you can earn passive earnings from the internet. There are other ways to make a living without doing much and without spending lots of time. Be a multi-tasker and explore the different techniques to earn online. Most importantly, enjoy your youth and plan for an early retirement.

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Payday advance loans are becoming increasingly popular for a number of reasons. One of these reasons is that the internet has helped to reduce the costs of borrowing money quite considerably. Where before finance companies would have to incur significantly more overheads from their brick and mortar operations, now these have been slashed with the introduction of their web-based businesses.

Despite this, payday loans and cash advances are not suitable for everyone. An example would be if you were looking to buy a car for example. In that instance financing the purchase through a bank loan would be a far more suitable arrangement. Payday cash advances are also not suitable for those that do not expect to have the money in place to finance a purchase within a short period of time. An example would be if a person was not expecting to have the liquidity to finance a purchase within the next few months: in that instance a bank loan would be a more advisable financing option.

Payday cash advances are becoming increasingly popular for a number of reasons, not just the relatively low cost of borrowing that is now in place. One of these reasons is the speed at which money can get in the hands of the borrower. Should a person have the essential paper work and information to prove their validity for a loan; then a person can expect to have the money in place within a time frame of significantly less than a week. This is much faster than other financing options and can help the borrower to get ready cash at the time that they need it the most. In most cases all a person will need is evidence of employment in the form of a wage slip, and then they will be in a position to get their money straight away.

The friendly approach adopted by employees of cash advance companies is also an important reason why people are opting to approach payday loan services when they are in need of money. From a survey conducted in early 2005, people felt that they were being unfairly judged when they approached their bank for money; however felt that employees of cash advance companies were less judgmental and far more appreciative of their situation. This, along with other reasons can be a real advantage of choosing a payday loan provider.

Payday cash advances are also becoming increasingly popular as a result of credit card companies charging very unreasonable fees for cash advances, feeling that they had the opportunity to do so being the only major resource in the marketplace. Today credit card companies charge around 3% with a minimum fee of $15. Many borrowers feel that this rate is unfair and is merely a means of taking advantage of people who are in a desperate situation. For this reason many are now finding that they are able to get a far more competitive rate from a cash advance provider.

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In general, you will find 3 different types of investments. It will be stocks, shares, bonds as well as money. Sounds simple, correct? Fine, unluckily, it’s very much difficult from there. You look each type of investments has different types of investments it holds.

There is more to study regarding the different types of investments. The stock market is usually a big scary place for people that know little or nothing about investment. Fortunately, the quantity of information you need to study has an instantaneous relationship with the type of investor you are. Additionally, you will discover 3 different types of investments: conservative, moderate, and aggressive. Different types of investments also offer two amounts of risk tolerance which is high risk and low risk.

Conservative: This is one of the different types of investments. In this type of investment, the investors normally invest in cash. This suggests that they leave their money in interest-bearing savings accounts, money market accounts, mutual funds, United States Treasury bills, & Certificates of the Deposit. They are very much safe investments which grow over the long period of time. They are as well low risk investments.

Moderate: This is one of different types of investments. In this sort of investment, the investors often invest in the cash as well as bonds, & might play in the market. Moderate investing can be less or moderate risks. In a moderate investment, investor frequently also invests in the real estate property, providing that it is low risk real estate.

Aggressive: This is one of different types of investments. In this type of investment, the investors usually do most of these investments in the market, that’s higher risk. They often invest in the firm enterprise as well as more risk real-estate. As an example, in an aggressive investment, the investor puts their money in to an older apartment building, then invests more cash to modernize the property, they’re at risk. They presume to be able to rent the apartments for more cash than the apartments are currently worth – or sell the whole property for a benefit from their first investments. In few cases, it works very well, and other cases, it doesn’t. It’s a risk.

Prior to you start investing; it’s very vital that you should be familiar with the different types of investments, and what those investments will do for you. Understand the risks concerned and take note of past trends too. The past will definitely repeat by itself, & investors knew first hand!

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Many people consider their lives as not normal if they don’t own credit cards. The plastic is a must for them mainly because of its convenience. With the card on hand, consumers need not bring any cash as they can pay for almost anything they need with it. Whatever they need to pay for whether groceries, petrol, household bills, appliances, clothes and other personal accessories, they can easily present the card, have it swiped at the cashier’s counter and they’re done.

People today, however, are more meticulous than in the past when it comes to getting a credit card. If only possible, they want to get value for their money. It is not surprising then that many consumers aspiring to own credit cards prefer to get those that offer rewards. They don’t mind at all using the card for their major purchases as long as they can earn rewards at the same time.

If you’re among the numerous consumers aiming for the best credit cards, indeed applying for a plastic with rewards is a good choice. The rewards are meant to provide incentives to users who are loyal to the credit card company. Most companies today implement a rewards program as a way to attract more customers even those who already own credit cards.

For people who have not yet chosen a specific type of rewards credit card, the crucial step to take is to compare credit cards. It’s similar to when you’re shopping for your favorite item. Impulsive buying is not ideal but comparing items is.

Some people may think that using rewards credit cards would somehow lower their expenses. The truth is, it will not enable you to spend less than usual notably if you don’t pay your bills in full on the due date and on time. But what you can gain from using the card could be worth it.

With a rewards program, you earn points or credits every time you make a purchase using the card. So while using the card, you naturally get more points which when accumulated through time, can let you earn certain rewards depending on the type of card you have chosen.

Rewards could be in the form of mileage credits such as in the case of airline-sponsored cards which can enable you to earn a free plane ticket to your desired destination, points which you can eventually redeem to claim items from the company such as personal gadgets, appliances, certificates and rebates or the so-called cash back.

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