Forkids Business Guidelines

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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Are you currently advertising but aren’t seeing a good return on your investment? If so, then I know how you feel. Most business owners would love to have a winning ad that they can run over and over again – but sadly, this isn’t the case for most business owners. If you would like to know some tips for writing ads that work, then you’ve come to the right place.

In today’s article, we’re going to take a look at some ways to improve upon your advertising efforts. The fastest and easiest way to gain more new leads and customers is by advertising, but if your advertising doesn’t work, you will have a hard time staying in business – and this is exactly what this article will try to resolve for you.

In fact, let’s take a look at the first step to creating an ad that doesn’t fail:

1. Don’t focus on building an image

Image or brand marketing is a form of marketing that I don’t condone. Most people when they start off advertising, they think they have to run ads that same way that big corporations do. You may be thinking that these small business owners are doing the right thing by following million dollar companies, but this couldn’t be further from the truth.

The fact of the matter is that if you want to have an ad that is mega successful, you shouldn’t follow the big corporations. They have millions to blow on advertising, while you probably only have a couple grand to spare. Do you see the chasm between these 2 numbers?

Plus, most big businesses don’t turn a profit until around the 3rd time that a prospect buys from them. You should know that you can totally avoid this. Instead of using brand or image advertising, focus on direct response. Direct response is all about getting a response from your ad right away. There’s no “waiting until you get exposure” – your ad works or it doesn’t. Here’s another tip for improving your advertising efforts:

2. Have a strong headline

Your headline is the 1 crucial factor that stands in your way of making tons of money in your business. The easiest way to analyze your headline is with the “so what” test. After you have written your headline, ask yourself, “So What?” If you can have a compelling answer for this question, then you stand a good chance of making your ad work.

Another way to do a good headline test is to run your headline as a classified ad in the newspaper. If you find that your current headline is pulling responses from your ad, then that should let you know immediately that you have a winning headline. This is a cheap test, and I encourage you to use it so that you know whether or not your headline is productive.

Use these tips in your business to have the roaring success that you dream of. They’ll be more than worth it to try.

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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.

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Renting shares can be defined as an effective modern day method of multiplying wealth through trading a positive potential in your own shares. Speaking more precisely it is an effective method of accumulating wealth by adopting a beneficial investment strategy for the stock market. Many investors are now adopting this fresh strategy to make huge bucks by renting out shares. Beyond the concept of dividends, you should also acknowledge the positive aspect of earning through stock shares. Renting out stocks works in the same manner, as we rent our house or any other building for different purposes but the basic aim is to earn money.

Covered call can be described as a particular type of transaction through which the vendor of financial contract, also known as “call options”, owns the equal amount of various securities or stock shares. When a particular trader purchases the specific instruments (security and stock share) at the time when he trades the call, the strategy applied is known as buy write strategy.

The main advantage one gets from renting out shares is that they are held for long duration and this ensures stability and earning money. One disadvantage or loss is the wastage of money through a difference between exercise price and real share price. This happens when the share price gets higher in vale than exercise price. Similarly If the share price starts decreasing the loss is automatically adjusted and there are chances of minimal money loss. Now this gives an opportunity to accumulate premium through the contract.

While renting shares to a potential buyer you get the premium and you also allow the party to make use of your shares. By allowing someone else to make use of personal shares, you are also providing them with an opportunity to purchase your shares but at a preplanned agreement in which the exact price is also determined.

By merging margin lending with covered calls you can expect impressive return of money. Margin lending provides a certain amount of lending. From this type of loan, a lender provides financial assistance to purchase additional shares. According to a prevailing risk the rates adjusted by margin lending vary greatly. Increasing profit through margin lending is about the technique which you apply in using leverage.

Technically speaking the value of personal stock shares can vary; it can go down, go up or can stay same. It is an advantage if the prices go up as at that moment you can rent out shares and if the price goes down the situation is clearly not in your control and according to that you have to make a wise step.

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You’ll need three kinds of funds to start your business: capital asset investment, working capital, and your personal money. Therefore, you should plan for both long- and short-term financing. Capital assets take long term money; while working capital and personal financing may be thought of as short-term. In all cases, you should do the planning yourself. This will give you the knowledge and skill you’ll need to guide the financial affairs of your company.

Before you start your business, your business planning will necessarily be based on assumptions. Make sure you have the list of sources of information you can draw upon to start with. As you do business, you’ll be able to replace what you’ve used up. It is best to redo your financial planning every month, projecting from the actual figures into the future. You’ll gain both speed and accuracy of prediction as you do this planning every month.

It is an advantage that you prepare the following plans each month: A balance sheet to see what the financial picture looks like; a sales forecast twenty-four months ahead by the month and perhaps a forecast for the third year by the quarter; a cash flow analysis in the same time frame as the sales forecast; an income statement, projected at least twelve months ahead; and, a break even analysis from time to time, to see how much you need to sell by the month just to break-even.

You should also learn to use ratio analysis as a check on different aspects of your financial condition. Of the many variations of ratio analyses, the following are significant for your management purposes:

Current ratio, which is your current assets divided by your current liabilities. Most businesses are considered to be financially healthy when this ratio is two or a bit above. For example, you’re a manager of a printing company and the bread-and-butter of the company is the online printing service, if it has a current ratio of 2:2, it means your online printing job is stable.

The acid test ratio, which is a refinement of the current ratio. You can get the acid ratio by dividing your quick assets by your current liabilities. Quick assets are those you can turn into cash immediately: collectible receivables, securities, and cash itself. Your acid ratio should be at least 1, which would show that you could pay your existing debts quickly in case there’s a need for it.

Proprietorship ratio, which is your total investment divided by the total assets of your company. This number should be at least 50 percent to show a healthy ownership position.

Net profit to net sales. This ratio is obtained by dividing your after-tax profits by the net sales for your fiscal year.

In conclusion, to practice the best kind of proactive management, you should compare your figures in these various plans on a regular basis, month by month, and year by year. This practice will alert you to potential difficulties so you can take the corrective steps immediately.

By knowing and practicing this analysis, you can do it yourself and at most, you have full hands-on experience in your business. You can monitor everything and not rely too much on your staff to do the analysis for you. It will also show what you’re doing well – and what you should be doing more of, and better.

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