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.

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.

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.

When it comes to advertising placement and optimization there are two areas you need to look at – offline and online advertising. Most people put all of their focus on online advertising methods only but it’s important to know how to advertise offline too.

Both methods are equally important to the success of any networking marketing business and being familiar with optimisation of your advertising for both formats is important to your overall success.

Offline Advertising

That’s right. Advertising in good old-fashioned newspapers and magazines and it still works for networking marketing. Look at the number of business opportunity adverts listed in your local newspapers. They’re not put there for the good of their owner’s health or as some sort of experiment – they’re placed in those newspapers because they work and generate a profit.

If you want to know how to place and optimise an offline ad then look at how other people are advertising. Look at the size of their ad, the fonts and layout that’s used and then go about creating your own version of that without copying it wholesale.

Most people worry about the best ad placement on a page but all you need to do is think about how you read a newspaper or magazine. Still thinking? OK what happens is that you turn the page and your eyes automatically track to the top left corner of the next page – that is the Goldilocks zone of newspaper advertising and you need to be there.

If that slot isn’t available then the top right hand corner of the opposite page is your next best bet – you’ll notice that out of habit you automatically look there next if there’s nothing in the top left corner of the page in front of you that interests you.

Online Advertising

If you’re using PPC (Pay Per Click) or any other form of paid online advertising you need to make sure that your ads are as well placed as possible because you’re paying or every single click that you get. If you’re using Google AdWords then to make the most of your advertising spend you need to be in positions 1,2 or 3 on the first page of results.

Anywhere lower in the results and your chances of getting clicked drop dramatically. Always remember that your keywords will appear in bold when the viewer gets a search result so make sure that you make the most of that feature.

If you want to take things a step further with advertising optimisation you can look at using Facebook advertising to dig deeper into your target market. Because Facebook users are from such a diverse number of social and professional backgrounds you can advertise to the exact demographic you’re looking for e.g. males aged 25 – 35, with disposable income, living in the Darwin area. Your ads are then only ever displayed to Facebook users who meet your advertising criteria.

Regardless of what type of advertising you’re doing there is one single thing that can make the difference between success and total failure. What is this magic bullet? An enticing call to action that makes people respond almost instinctively. You need to speak directly to them in such a way that it feels natural for them to contact you.

Or as the old marketing and advertising guys will always tell you “Sell the steak and not the sizzle”.

Successful advertising optimisation comes with practice and time so make sure you get started as soon as you can.

If you have checked out debt consolidation option or debt settlement program and realize that filing bankruptcy is your only way to get out of debt, then the following 6 basic steps will show you how to minimize the pain of filing bankruptcy.

1. Hire a local attorney in your area. Most of the attorneys will give you a free first-time consultation. Pick up the phone and talk to several of them to find one that you feel comfortable to work with and the fee is affordable for your budget.

2. Ask as many questions as you can, just so you know what to expect next. Questions can be: “How long have you been practicing law?” “How many bankruptcy cases have you worked on?” “How much will my bankruptcy fee be?” “Besides court fees and your fees, will there be any other fees that I need to know about?” “Why should I file for Chapter 7, instead of Chapter 13?”"What’s the bankruptcy process?” “How long will the bankruptcy take?”

3. Evaluate your debts. When you first meet with your attorney, he will need to be familiar with your particular financial situation, such as your income, investments, asset and your debts. Try to provide him with the detail info. Keep in mind; debts like most student loans, taxes, criminal restitution obligations and child support are not dischargeable in Chapter 7 Bankruptcy.

Your attorney will make a decision on what property is exempt and tell you if you’re eligible for Chapter 13 bankruptcy or Chapter 7 bankruptcy.

4. Fill out the bankruptcy forms. To do so, you need to show your attorney your current financial document, such as tax returns, employment verification, bank statements and all the debts. He relies on you telling him the truth in order to help you fill out all the bankruptcy forms correctly.

5. Go to the court. Normally your attorney will appear on behalf of you. You might need to show up once to meet up the judge and the “Trustee”, your bankruptcy officer. Your attorney and the Trustee will work closely to assist you to go through the bankruptcy process. Your attorney will file all forms for you.

6. Discharge your debts. Usually the personal bankruptcy can take as long as 6 months. It really depends on the court calendar and your specific case. When it’s all done, the Judge will issue you an order, declaring your debts have been discharged. With that order, you no longer have to pay any of your debts and your creditors can not come back to collect debts from you.

Many hardships have occurred due to the down economy, but lucrative opportunities have risen from the rubble of the slump. If you’ve been displaced by job loss, or just feel your current position does not offer the flexibility and upward mobility you desire, consider entering into the commercial finance industry as your next step. The opportunities are endless, but be mindful of these ideas before making the leap.

1. Understand your lenders. Get to know each of your lenders and what they have to offer. What types of loans and transactions are they willing to engage in? By understanding what each lender can offer your customers, you can tailor your presentation and match needs with resources. Understanding a lender’s underwriting guidelines can not only help you close more deals, but it can dramatically increase the effect of your marketing campaign by helping you target your message to the appropriate audience. You’ll be more successful in fulfilling loans and increase the amount of transactions you partake in and ultimately close, increasing your personal income.

2. Act as a consultant..not a broker. The word “broker” tends to have a negative connotation in the financial industry. A recent survey that asked people what they thought of when hearing the word “broker” yielded results like “a person gaining financially at my expense”, or “sleazy salesmen”. These thoughts may be due to brokers, no matter what industry, approaching clients in the wrong manner. As a commercial finance broker, you are essentially a solution for a widespread problem for businesses: access to capital. So in essence, you are a gateway to capital for businesses. When talking to new clients in need of financing, it is best to act as a consultant to their problem rather than just giving them applications to complete and a 15 min conversation. You should speak with a client for at least an hour. Find out how their business works, what problems do they currently have, and outline a plan of how you can help them. By doing this, you will not only win the trust of your client or borrower, but also lay the ground work for repeat business for future financing needs that they may have.

3. Know how to market. There are a plethora of marketing tactics to use to “get the word out” about your commercial finance business. You need to find the right tools to spread your message. Think about what customers you are targeting – where do they spend most of their time? Use tactics that pinpoint your audience. Maintain sharp, easily read marketing collateral and websites that get right down to the message of your business. Regardless of what kind of marketing you use, always, always focus on the “benefits” of your products, not the features. How will your service or product help your target audience? What are the benefits that your target audience will receive by buying what you’re selling? This will help you create an effective marketing campaign.

4. Operating with the right agreements. Numerous legal documents are necessary for successfully operating a commercial finance business. This fact is often overlooked by most brokers today. One must have the proper fee agreement in place with a client that protects the broker and ensure he or she is properly paid for successfully closing a transaction. Poorly worded fee agreements only give rise to problems down the road when working on a transaction that can ultimately cost a broker their commission. It is also good to have Non Disclosure / Non Compete agreements for your business as certain situations might require these, such as a client needing capital for the development of a proprietary product or service. By having sound agreements in place to handle any given situation with a client, your finance business will always be protected from common issues that arise in this industry.

5. Stay on top of industry news. Finally, when considering being a commercial finance broker, be aware of new finance and lending updates. In the commercial finance industry, things change all the time so you have to be up to speed on what those changes are and how it affects your potential customers. For instance the world of SBA lending has changed dramatically in the last 2 years and is changing month by month these days. If you’re involved in brokering SBA loans you have to know what each of these changes are and how it affects your clients. You are responsible for learning new techniques and methods. Stay abreast of opportunities and be proactive in pursuing them. What you know is up to you. By staying informed, you will prove to your customers and lenders you are competent and able to meet their needs. Also by identifying changes in the economy you can go after niche markets that might need a particular financial product due to that change.