Jan 08

Important Traits to Look for Before Investing in a Business

If you have some extra money either because of careful savings or from an inheritance, you may be thinking about how you can make the money earn an income. You may be considering investing in a good start-up or other excellent business with the hope that it will become another billion dollar company. There are some traits you should look for in a business before you put your money there, and following the advice of financial veterans like Richard Schaden can help to give you the information needed to make these important decisions.

Value Investing
Value investing is buying stocks, bonds, mutual funds and other assets that are selling for much less that you determine they are really worth. To make this work, you must sell the investment when it reaches intrinsic value. The only reason not to sell at that time is if it is an excellent business that has potential for long-term high rate of return.

Durable Competitive Advantage
A durable competitive advantage is something a business has the other companies can’t reproduce. Companies like Coca-Cola offer products that are recognized all over the world. When you want to invest in a company, look for durable competitive advantages that won’t be compromised by outsourcing, attacks from competitors and other market forces such as globalization.

Look for a company that can reproduce their products or services very fast. These companies make it easy for franchises to open and be successful because their product is basically the same in Hong Kong or Seattle. Examples of this type of business are Microsoft, McDonald’s, Coca-Cola and Pepsi.

Price Matters
You may have found a company with brilliant management and excellent financials but this is not enough to ensure a good return on your investment. Even though these things are essential, the price you pay for your asset will determine how much you earn. This means you shouldn’t pay high prices for stock even in excellent businesses such as Microsoft or Gillette. If you can get a fair price, then they are good investments, but these companies often have inflated stock prices that will not give you a good return. You need to do research or get a good financial advisor.

How to Know?
When you research a business to see if it is worth investing your money, you need to look at its financial statements. Every business needs to spend, or invest, money to make money. This is its return on invested capital. If one company spends $50 for a return of $5 and another company spends $50 for a return of $25, the second company will generate more cash. There are exceptions to this rule. If a good company that has a small return on investment and is selling stock for a fraction of its intrinsic value, there is a good chance it will weather any financial storms and its share prices will dramatically go up. For this, you may need to have patience and wait for three to five years.

The bottom line on investing in existing businesses is knowledge. If you’re new to investing, you may need the help of someone who has the knowledge. Your first step will be to research financial advisors until you find someone who can explain everything you need to know in simple language. Once you have an idea about what’s going on, you can use your own judgment for investing your money.

This post was contributed by Derick Saunders

Jan 05

Why I’m making 30-day commitments instead of resolutions

Happy New YearHappy New Year! I don’t know about you, but 2014 was a pretty crappy year for us. We came home to a smoke filled house, lost my uncle Steve and lost our two sweet kitties to Kidney Disease. Eric tells me that the number 4 is generally considered bad luck in East Asian culture, so we’re both happy to welcome 2015.

The past few years I’ve made New Year’s Resolutions and not completely followed through OK, I failed miserably. Interestingly, but not surprisingly, I’m not alone. According to StatisticBrain.com:

48 Percent of Americans usually make a New Year’s Resolution and only 8 Percent of people are successful in achieving their resolution.

Top 10 Resolutions for 2014:

Lose Weight
Getting Organized
Spend Less, Save More
Enjoy Life to the Fullest
Staying Fit and Healthy
Learn Something Exciting
Quit Smoking
Help Others in Their Dreams
Fall in Love
Spend More Time with Family

So this year I’m making 30-Day Commitments instead of year long resolutions.

Why? Truthfully, I’ve never been that good at following through with a full year resolution and nobody likes to feel like they’re a, “failure”, right?

In past years, I’ve generally done one of two things when making resolutions:

  1. I make lofty resolutions that inevitably get pushed to the back burner when I get busy and, “life gets in the way”. Things like, “I’m going to read 5 books a month, lose 25 pounds, exercise 45 minutes everyday, make all homemade Christmas gifts for everyone in the family, etc.” They might be realistic for some people (if so you’re, awesome!), but for me, they weren’t and I quickly fell behind, got frustrated and gave up. OR
  2. I make resolutions that are too easily achieved and I don’t challenge myself. This usually means making vague goals that aren’t really measurable. Goals that can’t be measured = no chance for failure (or success!). In the past, I’ve made resolutions to, “eat better and exercise more.” Last year I made a resolution to, “focus more on family.” What the heck does that mean and how did I plan on achieving it?

Why 30-day commitments make more sense (to me at least):

When I make a full year resolution, life can (and will) get in the way. The things that are important to me in January, might not be important to me 2 or 11 months later. I don’t like feeling, “locked” into goals, so a 30-day commitment gives me enough time to figure out if it’s a goal that’s worth pursuing for another 30 days. If it’s not, I can move on to a new goal without feeling guilty that I made a commitment that I didn’t carry out.

 My 30-Day commitments for January 2015:

  • Personal- I will call my grandparents every week on Wednesday evening, I will knit this hat for myself.
  • Health- I will eat an apple daily, floss daily, and exercise (25 minutes or more) 3 times per week.
  • Blog- I will create and post content 2 times per week (I haven’t been writing/reading much lately and I miss it).
  • Money- I will save $1500, I will cancel 2 cell phone lines on my family plan, I will keep grocery spending under $400

Are you committing to 30 days instead of 365? Tell me about your resolutions for this month and/or this year.

Image: CoolHDWallpaper

Dec 23

If at first you don’t succeed, Frye, Frye again!

frye Almost everyone has heard of re-gifting, and probably many of us have received a, “re-gifted” gift (I know I have). But have you ever, “me gifted?” You know, the act of buying yourself a gift during the holiday season.

Here’s how I “justify”, me gifting ;-)

I’m pretty conservative with my clothing budget for most of the year. By the time Christmas rolls around, I usually have a good idea of the, “basics” that I need and want. So when good quality, classic pieces go on sale I buy myself a few.

I’m certainly no fashion maven, but I do have an appreciation (and love) for long lasting, high quality fashion pieces. The, “classics” so to speak, are less trendy, better made and more stylish over time. When I buy a good quality piece of clothing, or shoe, I can wear it for many seasons (and hopefully many years).

A few weeks ago Eric and I went out to dinner and I wore a pair of boat shoes. Don’t ask me what I was thinking (I clearly wasn’t), because my feet were freezing. When I complained about how cold my feet were, Eric basically told me I was nuts to wear boot shoes with no socks in December and asked why I didn’t just wear riding boots like, “all the other girls?”

“Why? because I don’t have any!” Fortunately, I’ve since solved that, “problem!”
That night found a pair of cute Lucky boots at Macy’s (above). After sales and additional discounts I paid $125. Yes, that’s a lot of money for a pair of boots, but they looked well constructed and had good reviews so I bought them. When they arrived they were cute, but weren’t nearly the quality I was hoping for. They probably would have last a winter or two, but I wasn’t super excited about them (and for $125 I wanted to be at least a little excited).

So I did a little more research about good quality boots and came across the Frye website. That’s where I fell in love (dramatic, right?) with a pair of Frye “Melissa button boots”. They were not only adorable, but well-made and seemingly comfortable (that’s what the reviews said).

The only problem? They were $348! Gulp! $348 for a pair of boots? I think not.

I love a high quality pair of shoes as much as the next gal, but I can’t justify spending $350 on a pair of shoes right now (even if they are adorable). So I checked eBay and the department stores and decided to wait it out to see if I could get a better deal.

Long story short, I bought two pair from Macy’s when they went on sale for $250 (one size 8 and one size 7.5, because I wasn’t sure which would fit better). Then I saw them go on sale at Nordstrom for $200. So I bought two  additional pairs and returned the first set to Macy’s. Then… I found them on sale on Amazon with an additional promo code for $158!! So I bought two more pair and called it quits.

My FedEx guy must have thought I was running an impromptu shoe store out of my apartment. By the time it was all over I’d purchased 9 pair of boots (I ended up purchasing an additional two pair on Amazon to sell on eBay).

I kept 3 pair and paid $246 out of pocket (total cost of the boots, minus the money I made selling the other 2 pair on eBay). Not too shabby for 3 pair of Frye boots (one black, one brown and one black bootie-the exact boots I wrote about wanting in this post over a year ago!) that retail for over $300 a pair and will last me (hopefully) a lifetime.

Did you do any, “me gifting” this year?

treeMerry Christmas, Happy Hanukkah, Happy Kwanzaa, Happy Boxing Day and a Joyous Festivus from my family to yours!



Dec 22

5 Ways to Get Better Car Insurance

Having auto insurance is the law. But what if your budget is a little too tight for your usual coverage? Or what if you’re looking to switch brands for a better deal? Here are just five ways to find a nicer and more affordable policy.

1. Compare and Contrast

Many people stick, “car insurance” into a search engine and pick from among the first results they see. This is, of course, a terrible way of making a decision. You need to be willing to put time and effort into your search for the perfect policy, and if that means going to page six of Google, so be it.

2. Ask About Deals Directly

In a study from the Pennsylvania Insurance Department, less than 30 percent of auto insurers willingly offered information on deals and discounts that could save their customers money. The customers had to bring up the subject themselves. Don’t be afraid to look your insurer right in the eye and say, “That’s too expensive for me. Is there anything you can do?”

3. Know Your Insurance Types

In most states, only liability coverage is required by law. Things like, “uninsured motorist insurance” are optional add-ons that insurance companies try to sneak into their service packages. If you already have auto insurance, pull out your policy and examine the details. Are you paying for extra or comprehensive coverage when just the basics would do?

4. Upgrade Your Car’s Safety Features

Auto insurance quotes tend to go down when the quality of your vehicular security goes up. Things like car alarms and wheel-locking mechanisms will tell the insurance company that you take safety seriously, and as a result, your car is less likely to get stolen and cost them. It’s a win-win for both of you.

5. Become A Better Driver

When’s the last time you took a driver’s ed course? Because they’ve been known to knock a few dollars off monthly premiums. In the same vein as the above, insurance companies are willing to reward you for being a safe, conscientious driver, so think about going back to school to save yourself hundreds per year.

If you’re serious about reducing your monthly expenses, these five tips will help you lower your auto insurance costs into something manageable. You may not have a choice about obtaining coverage, but you can decide who will protect you and for how much.

This post was contributed by Mike Jordache

Dec 06

How Do Consolidation Loans Hurt Your Credit

If you are trying to get out of debt, a consolidation loan appears to be a good option. Your term, interest rate, and what you do afterwards will determine if this loan will positively or negatively impact your credit.

Applying is a Hard-Inquiry Check

Since a consolidation loan is a personal loan or merging your loans into a new credit card, there will be a hard inquiry check. Your score will decrease by a few points and remain on your report for two years. This however would not be enough to warrant not applying if you do need this loan.

Your Credit Rating Could Decrease Due to Your Credit Worthiness

A credit report consists of a credit score and a credit rating. If you apply for credit elsewhere, the underwriter will take a look at your credit rating. Your credit rating includes your job stability, current income, and how you use your available credit lines.  If an underwriter believes that you can increase your debt because you now have no balances on your credit cards, this could make your rating decrease.

High Interest Rates

Consolidation loans are meant to help people get out of a financial bind. If your credit is not above average, you could have a hard time obtaining an average interest rate loan. Some lenders prey on that and offer you a high-interest rate when compared to others. A higher rate means a higher payment and longer terms to pay your loan off. Some online installment loan lenders may provide a loan but you may end up paying more in the fees.

Missing a Payment

If you are not careful, you could get a consolidation loan with a higher payment than you were paying for all your split debts. Late payments or missing payments make a huge impact on your score, causing negative effects that will stay on your report for a while. For this reason, be cautious when signing up for consolidation loans. Ensure you know the interest rate, monthly payments, and if your payments will increase should you miss one.

Closing Your Accounts

After receiving a loan consolidation, you may feel relieved to be rid of your credit cards. You may not trust yourself with your open accounts. Closing your accounts will negatively impact your credit score. The longer your account stays open you’ll show a long credit history. You’ll also decrease your available credit, which will appear as though you’ve maxed out your credit limit. You’ll be a high-risk consumer at that time.

This post was contributed by Kayla McDonahue

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