Author: Elizabeth Collins Page 1 of 5

401k Rollover

401k Rollover

In the last thirty-six months, the United States unemployment rate has snowballed from a stable five percent to over nine percent in total. It’s a startling figure, and one that’s resulted in the loss of large amounts of income for thousands of US families. Hundreds of thousands of former success stories are in positions of limited long-term financial outlook, and thousands more are likely to join them.

In situations like this, it’s difficult to know how your long-term financial planning will pan out. The vast majority of professionals fail to plan for recessions and involuntary redundancies, leaving their retirement investments in employer-backed 401k accounts and other long-term funds. While it may seem like all hope is over for these investments, the reality is that it’s fairly easy to recover them.

The 401k account is one of the most popular forms of retirement financial planning for American professionals, having been opted into en masse since the early 1980s. Over the last thirty years it’s gone from a moderately popular retirement savings strategy into the most popular in the country – as of 2011, sixty percent of all American households with middle-aged parents had a 401k account.

401k Roll over

Despite some shortfalls, many of which have been reported on extensively during the last decade, a growing number of households still opt for a 401k plan for their retirements. But what happens if an employer lets you go? What happens if the economy forces you out of your job? What happens if it no longer becomes realistic to work due to a decrease in demand, an injury, or a workplace lawsuit?

The answer, for the vast majority of 401k account holders, is to perform a ‘401k rollover’ and use your existing 401k savings as the basis of a new retirement planning account, all without the ever-common burden of transfer expenses and fees. This allows account holders to access a collection of benefits that would be made unavailable should they withdraw from their 401k before transferring.

There are several options available for households and professionals looking to ‘roll over’ their 401k into a new account. These include the employer-based rollover, which involves transferring into the retirement account set up by a new employer, and the IRA-based rollover, which requires that your 401k is transferred into an individual IRA account. These options are both discussed in detail below.

In the event that you’re offered a job with an employer that uses 401k retirement plans, you might be able to roll your current 401k plan over to your new employer. This is a fairly simple process – your account is simply transferred to the new employer’s 401k plan, which is subsequently used as an operating basis for new investments. Generally speaking, there is no minimum balance for this.

Is this the best option for you? If you’re uninterested in managing your own 401k, then rolling it over into a new employer-based plan is an intelligent option. The fund will be managed for you, with your investment cared for under the guidelines of the plan itself. This offers low flexibility, although the simplicity of this investment option makes it popular amongst most employees.

The second option, of which there are two variations, is to roll your 401k over into an IRA, either a brokerage-backed IRA or a mutual fund-backed IRA account. This allows your retirement savings a great deal more flexibility, particularly in the type of investments that can be made with them. Most 401ks offer limited investments in stocks and index funds, while mutual funds offer greater variety.

This includes ETF investments – exchange traded funds – and individual stocks and bonds, all of which are considered ‘out of bonds’ under an employer-sponsored 401k. Using a brokerage-based account, you can select the exact type of investments that are made using your retirement savings. This allows you to effectively limit or extend the amount of investment risk you’re willing to take on.

The alternative, a mutual fund-based IRA, offers slightly less investment flexibility, albeit with a substantial decrease in costs. As a brokerage account is tied to an individual broker, every sale, no matter how small or significant, is charged and individual fee. When several small investments are made in close succession, this can result in hefty compounded fees and a limited return as a result.

Generally speaking, all of these rollover options are fairly simple to execute, with most able to be streamlined and prioritized through your current 401k provider. It’s generally a case of filing forms to begin the rollover process, and later authorize the retirement savings to transfer from your older 401k account – one that’s held with the terminated employer – into your newer 401k or IRA.

There’s a question on every former employee’s mind throughout this process, and it’s one that’s very difficult to answer. Which one is best for me? With three key options available, two of which use an individual IRA rather than a standard 401k, it can seem difficult to choose. If you feel uncertain, it’s best to speak with a financial advisor – they can assist you in planning well for your retirement.

However, all three of these options offer a relatively low-risk, potentially rewarding way to prepare effectively for your retirement years. From employer-sponsored 401ks to rewarding individual IRA accounts, there’s always an option out there to suit you. Finding that option, however, might take a great deal more thought, planning, and introspection than many ex-employers expect it to.

Tax Deductions

14 Easy Ways to Save Money on Tax Deductions

Taxpayers were all looking for ways to save money on taxes. While paying taxes is a duty of every responsible citizen, you don’t necessarily need to pay as much as you are right now. One thing that should keep you motivated while preparing your tax return is the allowable tax deductions. If you know about the items that can qualify for a deduction, you can actually save money by avoiding overpayment of your taxes. What many of the tax payers fail to recognize is the tax laws are really setup with ways to help you.

The National Internal Revenue Code of 1997 details certain items that may be deducted from your taxes, including business or professional expenses and premium payments on health and hospitalization insurance. The goal of tax planning is to increase the amount of these legitimate expenses for a given taxable year, within the bounds allowed by law.

Tax planning is a great way to start for availing tax benefits and savings. If you are looking to maximize your savings, then you need to keep an account of your incomes and expenditures and prepare all your saving plans in advance. To plan your savings, a key factor that is crucial to your tax saving plan is the income earned per annum as well as the income tax laws governing the country.

On November 2010, 10th anniversary issue of Entrepreneur magazine, writers Lyre Pore – Villafaña and Iris Cecilia Gonzales shared 14 Ways to Cut Your Taxes. Ways that most tax planner commonly do to legally increase allowable tax deductions. And I’m also sharing it with you here. Please CONTINUE READING…

business-tax

1. Book expenses that don’t have to be paid until the following year.
According to Tax lawyers Serafin Salvador Jr and Martin Mijares an enterprise on accrual basis may enter into contracts for various expenses such as gasoline, merchandise and security services, with its suppliers (or) contractors, so that it can already accrue an expense deductible in the current year although payments it to be made at a future period. This mean that you may deduct from your gross income for 2012 the purchase of goods and services you used this year, although, payment will not be made until 2013.

2. Accelerate tax deductions by reducing the depreciable life of building and other fixed assets.
According to Salvador and Mijares, the taxpayer is allowed to adopt a plan or method of apportionment of the cost of the fixed assets provided it is reasonable and has due regard to operating conditions during the taxable period.

3. Treat customs duties as an expense.
To increase the total deductible from the current year’s gross income, Salvador and Mijares suggested that instead of capitalizing custom duties and taxes paid on imported equipment, raw material, and other supplies, it’s better to consider treating these amounts as expenses in the period the duties and taxes are paid.

4. Treat interest paid for the purchase of fixed assets as outright expenses.
According to the tax code, a company my treat interest incurred on the purchase of property used in trade of business either as an expense or as capital expenditure. When an expense is capitalized, it forms part of the cost of the acquired property that will have to be taxable over several years. To lower the income of the current year, increase the amount of expenses by claiming the interest as an outright deductions from gross in the year the interest is paid or incurred.

5. To increase the amount of deductible losses, write off fixed assets that are no longer used.
There are instances when a company may be allowed to write off idle or obsolete assets that are not yet fully depreciated, and claim the amount as a deduction from gross income. Check with the Bureau of Internal Revenue or a tax planner to determine the requirements for writing off fixed assets.

6. Establish and contribute to a pension plan.
By establishing and maintaining a pension trust, the employer may actually be able to advance the deduction for retirement costs pertaining to employees who will be retiring in the future.

7. Carry over the net operating loss.
The tax code allows an enterprise to deduct from its gross income the net operating loss of the business over three years immediately following the year of such loss, provided that there hasn’t been a substantial change in the company’s ownership. For instance, if a company lost P1 million in 2011, it can claim this amount as a deduction in the years 2012, 2013, and 2014.

8. Choose the recipients of your charitable donations.
To receive a tax benefit when contributing to a particular cause, consider giving to organizations that are allowed by law to accept donations that can then be deducted from taxable income.

9. Consider legal structure of the business.
The organization of the business has a huge implication on taxes if the taxable income is P500,000 and below. At this level, an enterprise registered as a sole proprietorship will be slapped an income tax ranging from 5 to 30 percent. On the other hand, if it were set up as a corporation, it would have to pay a flat rate of 32 percent regardless of whether the taxable income is P100,000 of half a million.

10. Amortize pre-operating expenses.
Startup companies are allowed to amortize their pre-operating expenses over a period of five years. For example, if an entrepreneur spent P100,000 to set up his company in 2011, he can subtract P20,000 from his gross income in each of the five years from now until 2016.

11. Properly substantiate all deductions.
A major reason why taxpayers end up paying so much in taxes is poor substantiation for allowable deductions. For transportations and travel expenses, substantiate the claim for deductions with the documents containing information about the date of travel, its purpose, person who incurred the expenditure, places traveled, amount of expenses, and means of transportation used.

12. Withhold the necessary taxes.
Income payments such as salaries of employees, rental of office space, and payments to suppliers – are considered valid expenses only when withholding taxes have been properly deducted and remitted. An entrepreneur must be firm with supplier who request the taxes not be withheld from their collections. Companies that fail to withhold taxes from payments to suppliers will not only be required to pay the withholding tax themselves plus surcharge and interest; they will also be disallowed from claiming such payments to suppliers as deductions from their gross income.

13. Declare your input tax.
A businessman will enjoy a deduction if the declares the amount of merchandise he uses for his business. Let’s say the business is an office supply store. All you have to do is declared the total amount of VAT you paid when you purchased your supplies. This amount will be deducted from your own VAT.

14. Comply with all the requirements.
Aside from ensuring that proper withholding taxes have been collected and remitted, make sure that your company has complied with all other requisites for deductibility. When claiming deductions for bad debts, for example, be prepared to prove that the company has exerted all efforts to collect the debt. Be ready to support claims for bad debts with letters to the delinquent customers, reports from collection agencies, and ruling from the court.

You would want to retain as much of your hard-earned income, so you might as well take the time to know the factors that can give you more savings, such as certain deductions or expenses you have incurred throughout the year.

It will be a good practice if you keep good records and you understand what deductions to declare and save money during tax time.

The 14 tips mentioned above may not be the best ways to save money but certainly these are good ways to save money on taxes.

If you like this Best Ways to Invest Money post on ways to save money on taxes, please share with your friends on Twitter, Google+ and Facebook. THANKS!

SBA Loan

How to Get an SBA Loan from SmartBiz

An SBA loan is one of the least expensive ways to finance your business, but many small business owners hesitate to apply for one because of the time it can take.

SmartBiz is the fastest way we know of to get an SBA loan. Instead of the 2-3 months it normally takes, SmartBiz has shrunk the process down to less than 1 month for most borrowers. Not only that–SmartBiz also increases your odds of getting approved for an SBA loan. They work directly with preferred SBA lenders and will package your loan for you.

At Fit Small Business, we recommend SmartBiz to many of our readers. We also used SmartBiz ourselves to obtain an SBA loan so we could grow and hire more staff. In this article, we’ll tell you why we trust SmartBiz and how to get an SBA loan with SmartBiz.

SmartBiz Loans

Visit SmartBiz

Why to Use SmartBiz

There are two main reasons to go with SmartBiz if you’re on the market for an SBA loan:

SmarBiz is much faster than the competition.
SmartBiz may increase your odds of getting approved for an SBA loan, even if you’ve been rejected by one or more banks.

SmartBiz is not an SBA lender. They are an online platform that will work with preferred SBA lenders to get your loan funded as quickly as possible. They have a digitized application, underwriting, and document submission system, so the whole process is much faster and more convenient than getting a loan from a bank. No more folders stacked full of documents–everything can be done securely online.

At Fit Small Business, we were denied by several banks for an SBA loan, but SmartBiz was able to help us, and the same is true for many of our readers. How can this be so? SmartBiz understands the requirements of every lender they partner with, so they can help you put your best foot forward. In addition, lenders can use SmartBiz’s technology to get a clear picture of the business faster than they otherwise could. This eliminates the need for things like a business plan which a local bank may require.

How to Get an SBA Loan from SmartBiz: Walk-Through of the Application Process

The SmartBiz loan process is very simple compared to what it usually takes to apply for an SBA loan. For the most prepared applicants, they can complete the process and get their funds in as fast as 7 days after they complete the application. However, most borrowers, including us, take about 1 month to complete all the steps.

There’s a convenient progress bar at the top of your SmartBiz dashboard which will tell you what you’ve already completed and what the next step of the process is. Your application will be automatically saved at each step, so you can come back to the application if you can’t complete all the steps in one sitting.

Video Tutorial from SmartBiz:

SmartBiz:  SBA Loans Made Easy Overview from BetterFinance on Vimeo.

1. Determine How Much Money You Can Borrow.

The first thing you’ll want to do before you apply for a SmartBiz loan is figure out how much money you need to borrow. SmartBiz has a sliding scale on the application page where you can see estimated monthly payments and interest rate for different loan sizes.

Evan Singer, President of SmartBiz, suggests doing two things to make sure you can afford the loan:

Look at the cash in your business bank account at the beginning of the month and the end of the month – Is there enough left at the end to make the estimated monthly payments?
Now add in personal income and personal debt – Can you still afford the loan payment?

If your answer to one or both of these questions is no, then you probably will not get approved for the loan and should try decreasing the loan size.

2. Make Sure You Meet Minimum Eligibility Requirements.

The minimum requirements to qualify for a loan through SmartBiz are as follows:

At least two years in business
U.S. based business owned by US citizen or lawful permanent resident who is at least 21 years old
Personal credit score above 650
Cash flow positive and sufficient revenues to cover loan payments – most businesses that qualify for a SmartBiz loan make between $ 50K and $ 5 Million in annual revenues
No outstanding tax liens and no bankruptcies or foreclosures in the last 3 years
No criminal record other than minor vehicle violations

If you meet these initial requirements, you’re ready to prequalify.

3. Prequalify for a SmartBiz SBA Loan.

SBA

Click here to pre-qualify for an SBA loan on SmartBiz’s website. This should take no more than 5 minutes.

You’ll be asked a series of questions about the business and the business owners.

Questions about the business include:

Business name, address, and phone
Number of years in business
Number of employees
Employer Identification Number (EIN)
NAICS Industry Code

Questions about primary business owners (anyone who owns 20 % or more of the business) include:

Name, address, phone number, and email
Social Security Number (SSN)
Do you own or rent your home?
Citizenship status
Driver’s license or passport number

Once you provide this information, SmartBiz will check your personal credit and business credit. This initial credit check is a soft credit pull, which means there will be no decrease to your credit score just to pre-qualify.

If you pre-qualify, you will receive instant notification as well as an email from your dedicated SmartBiz rep who will be your point of contact throughout the rest of the process. Singer says, “Every business that pre-qualifies gets white glove service with a Relationship Manager who works here in the SmartBiz office in San Francisco.”

4. Answer SBA Eligibility Questions and Supply Financial Information to Get Conditionally Approved.

SmartBiz: SBA Eligibility from BetterFinance on Vimeo.

The next step is to answer some SBA-required questions and financial questions about your business. There are about 40 of these questions, but don’t let this intimidate you. This section shouldn’t take more than half an hour to complete.

The SBA eligibility questions are required by the SBA and include questions like the following:

Have you received an SBA loan in the past?
Do you have a criminal background?
What’s the level and scope of management experience for your business’ executives?
What does the business do?

After answering these questions, you will need to e-sign authorizing SmartBiz to get business and personal tax transcripts for the last 3 years. You will also need to input some financial information about your business. For this you will need:

Current year or interim P&L Statement or Income Statement
Most recent Balance Sheet
Personal finance statement detailing any real estate, stock, retirement accounts, or other personal assets that you own and their value.

Singer estimates that answering the SBA-required questions and financial questions might take about 30 minutes. This meshes with our own experience when we applied for an SBA loan. You just need to make sure that you have the financial records handy so it goes as quickly as possible. Once completing this step, you will be conditionally approved.

5. Upload Required Documents.

The SBA and the lender that funds your loan will require certain documentation from you, to verify the information that you’ve provided so far. These documents fall primarily into four categories:

Business-related docs: Certificate of good standing, articles of incorporation, articles of organization, etc.
Location-related docs: Commercial lease or mortgage statement
Insurance-related docs: Property, liability, flood, and other types of insurance
Financial docs: 3 years’ business and personal tax returns (even though you will e-sign for tax transcripts, not everything appears on a tax transcript, so you may be asked to submit complete tax returns)

These documents can be uploaded securely on your SmartBiz online account. You do not need to submit anything via email, snail mail, or fax.

If there are any questions along the way, your dedicated SmartBiz rep is available for help by email and phone.

6. SmartBiz Reviews Everything and Submits Application Package to Lender.

SmartBiz: Application Complete from BetterFinance on Vimeo.

After you upload all the documentation that’s needed, SmartBiz will review everything to make sure it checks out. If everything looks good, SmartBiz will at this point do a hard credit pull and send the application package off the lender. The lender may contact you directly with any additional requests for information and documents, but in general, SmartBiz will act as the intermediary between you and the lender.

7. Sign Loan Agreement.

You’re almost done, but before you receive the funds, you need to sign the official loan agreement. A notary may come to your place of business with the loan paperwork. The paperwork will specify the term of the loan (10 year), the interest rate (currently 6.25 % for loans over 50K and 7.25 % for loans under 50K), and any fees, such as the SBA guarantee fee (for details on loan cost, see the next section of this article). Spouses need to sign only if they are co-owners of the business or are guaranteeing the loan.

8. Money is Wired to Business Owner’s Checking Account.

Upon signing the loan agreement, the money will be wired to your checking account, which normally takes about 1-3 business days. Any fees that you have to pay will be deducted from the proceeds before they are transferred to your bank account.

Congratulations – you have now successfully completed the process of obtaining an SBA loan from SmartBiz!

If you have any questions or issues with the loan once the money is made available to you, you should contact the lender directly who funded your loan.

SmartBiz Loan Terms & Cost

If you are considering getting an SBA loan from SmartBiz, you probably know that SBA loans are one of the most economical ways to fund a small business. But exactly how much does it cost?

Four main things will affect the cost of your SBA loan from SmartBiz:

SBA loan interest rates – The interest rate on loans under $ 50K is currently 7.25 % (variable at Prime + 3.75 %). The interest rate on loans above $ 50K is currently 6.25 % (variable at Prime + 2.75 %). To learn more, click here.
SBA guarantee fee – The SBA charges a 2.25 % one-time guarantee fee on loans above $ 150K.
Closing costs – Average closing costs charged by the bank are $ 317.
Referral and packaging fee – SmartBiz charges a 2 % one-time referral fee and a 2 % one-time packaging fee. This compensates SmartBiz for helping you put together your loan application and sending it to the right lender.

Keep in mind that fees can be rolled into your loan and deducted from the proceeds before the loan funds are wired to your account.

SBA loans through SmartBiz are 10 year loans. You will need to sign a personal guarantee authorizing the lender to seize personal assets to satisfy the loan payments if the business cannot afford to pay back the loan. This is standard procedure and will be required for any SBA loan, even if you do not use SmartBiz.

Typically, additional collateral is not needed for your loan. However, SmartBiz’s lenders will place a lien on your business assets. The value of your assets need not equal the value of the loan, but if the business can’t afford to pay back the loan, the lender can seize any or all of your business assets.

How to Increase Your Odds of Getting Approved through SmartBiz

It probably won’t come as a surprise to you that improving your credit score or increasing your business profits can improve your chances of qualifying for a loan through SmartBiz (or any business loan for that matter).

However, to provide some deeper insight into what business owners can do to put their best foot forward with SmartBiz, we spoke to Evan Singer, President of SmartBiz. Here are some of his tips for small businesses that apply for an SBA loan with SmartBiz:

Apply for the right loan amount – On the apply now screen, before filling out the application, use the slider tool to estimate your monthly payment. Ability to repay is the primary thing that SmartBiz and the lender will be looking for in your application, so making sure you can afford the loan payment ahead of time will prevent your application from being slowed down or rejected.
Having your docs prepared and in order – Not only will this speed up the process, but it will show SmartBiz and the lender that you are an organized, serious loan applicant.
File taxes on time – Filing taxes late,especially if you’re applying for a loan around tax season, can delay your application. Complete your tax filings well before you apply for a loan.
Keep up personal and business credit – Most small business owners understand the importance of good personal credit. Fewer understand or even know that their business also has a credit score. SmartBiz and the lender will check your business credit as part of application and underwriting. To improve your business credit score, start by getting a free D-U-N-S number if you don’t have one already. Click here to learn more about improving business credit.

If you fail to pre-qualify with SmartBiz, they will suggest some ways for you to improve and come back. “This happens all the time,” says Singer. A business initially misses the mark but then makes the necessary changes and qualifies for an SBA loan at a later time.

Bottom Line

If you’re considering an SBA loan to grow your business, SmartBiz is your best bet for the fastest, most convenient process. Even if you have been turned down by other banks, SmartBiz may be able to get you an SBA loan.

Building your business

Building your business has never been as easy

The current state of the banking and financial services industries has made unsecured financing inaccessible to most consumers wishing to buy the things they want or need.

Businesses like yours are experiencing lower sales due to the lack of effective financing solutions available to your customers.

Banks and conventional lenders can only service the needs of highly prime borrowers which represents less than 20% of the total market.

Consumer Finance

My Consumer Finance is not a bank and does not represent banks. We are a national network of major, aggressive private lenders striving to make credit accessible to consumers under fair, understandable and simple terms.

Unlike banks or bank backed lenders, MCF can loan on an unsecured basis to consumers with a broad range of credit profiles from sub-prime, credit challenged individuals to high credit score borrowers.

This is possible since, with the MCF approach, businesses requiring financing for their customers and the lenders providing the financing share in the cost of the credit. With this unique approach, the business, consumer and lender all benefit equally from the process.

The MCF Consumer Financing Program is ideal for:

Home Products, Services or Home Improvements
General Merchandise selling for between $1,000 and $20,000
Jewelry
Motor Scooters, Cycles and Sports Vehicles
Auto Repair

Interest rates to the borrower vary between 14.5% and 17.9% based upon the borrower’s credit score. Rates are simple interest and fixed for the full term of the loan. There are no fluctuating or escalating rates and no hidden or additional fees.

Any loan can be paid off early at any time without penalty or additional cost.

There is absolutely no recourse liability to the business offering the financing.

The cost to the business offering the financing is a “Discount” or “Buy Down” factor which is a percentage of the loan amount.

This factor is based upon the credit profile of a specific applying consumer-borrower.

Loan applications can be submitted by phone, online or by fax. Approvals take approximately 20 minutes during normal operating hours.

Each participating business receives a private and secure online loan management system as well as online application form which can be posted on their website.

Mr Buffett

Buffetology

Now let us switch the gears and talk about the master investor, Warren Buffet.  A man of simple tastes, Buffet relies very heavily on fundamental analysis.  I cannot recall who told me this about Buffet, either a friend or a relative, that Buffet is confident about all the companies in his portfolio, so much so to the extent that he would not flinch if a stock lost 1/3 of its value overnight because its financials and fundamentals dictate it to be in fact a solid company.  I cannot say that the following information is absolutely verified by Buffet as I have not had a sit-down with him yet, but after reading a biography of his, I do believe it captures his investing philosophy.

warren-buffett

Buffet believes that when investing in a company, the ultimate goal of that investment is to completely own that company.  So under ideal conditions, you would have enough money to own 100% of that company and your money would be safe in this.

Following are some general guidelines and prudent factors to keep in mind, which Buffet follows with his investments:

1.) The company in mind must be able to reasonably predict its earnings

2.) A company with predictable earnings has good economics, which leads to lots of free cash flow, which can be used to by businesses or buying back shares.

3.) These good economics are shown by a combination of the following:

– Consistent improvements on the company

– High returns on shareholders’ equity

– Strong earnings

– A consumer monopoly (which will be discussed later in detail)

– Good management

4.) Always invest while the price is low in order to increase return

5.) First choose which company to invest in, and then let the price and the required rate of return determine when or if to buy.

6.) Investing at the right price in a good business should produce a minimum rate of return of 15%.

Along with these rules are some more specific codes Buffet follows:

Investing should always be approached with a business mentality – i.e. All emotion should be purged from investing.

Always attempt to learn and master one industry, and then do not stray from this industry.

Stocks do not represent so much a market price, as much as a distinct company with certain operational standards behind it.

Dividends are best utilized when reinvested into the company.  This is due to tax avoidance on these payouts.  Also, corporations can often reinvest this money at a higher rate than can an individual, although they must be reinvested prudently.

Holding a stock is better than withdrawing from it, for tax-avoidance reasons.

One topic Buffet especially cares about is the capability of a company to reasonably predict its earnings.  Encompassed in this area is the company’s EPS (earnings per share) and the EPS annual growth rate.

EPS

Buffet is a large advocate of deciding on what company to buy before it hits a favorably low price, that is, “don’t aisle shop!” This idea of knowing the company you will be investing supports the idea that one should be knowledgeable of the industry in which it operates.

According to Buffet, there are two types of businesses: commodity type businesses and consumer monopoly types.

In commodity type businesses, the price of the product is the single most important factor and as a result, significant cash is spent on manufacturing improvements.

Commodity type businesses are often recognized by:

– Low profit margins

– Low return on equity, often less than 15%

– Difficulty with sustaining name brand loyalty

– Many competitors in the industry

– Excess supply

– Erratic profits

Consumer monopoly type businesses on the other hand are stable with predictable earnings.  One key indicator of a consumer monopoly business is to ask whether another fictional company, with a huge amount of cash could compete with it.

These companies often have a high wealth in intangible assets, not in PPE (property, plant, and equipment) and   other fixed long-term assets.

These companies are also nearly debt-free most of the time.  This idea of NOT being leveraged is why Buffet is a large opponent of derivatives and why Buffet steered clear of the CDO and subprime market during the mortgage crisis.

Aside from many other guidelines and rules Buffet adheres when investing, there are 9 specific questions Buffet asks when investigating companies:

1.)    Does it have a strong consumer monopoly?

–       Does it have strong recognizable products?  Does it have to be carried by the distributor, lest he lose money in opportunity costs?

–       If involved in an acquisition, is the acquired company also a consumer monopoly?

2.)    Are the earnings strong and rising?

3.)    Is the company conservatively financed?

4.)    Does it have a high return on equity?

–       ROE should consistently be at least 15%

–       A healthy ROE indicates good management

5.)    Does the company reinvest its earnings?

6.)    How much money is spent maintaining current operations?

–       If a company must use its money to constantly update operations, this is a sign bad sign as that money could be going towards share buybacks or acquisitions

7.)    Does it reinvest money in new opportunities?

–       Good management will often use excess capital to buy back shares

–       One of the most important aspects of management is how profitably it employs its retained earnings

–       Warren prefers minor expenses into research and development

8.)    Can the company adjust prices for inflation?

9.)    Will the value added by retained earnings increase the market value of the firm?

–       Personally, this is the most important question for me.  I am interested in the relationship between the inherent value of a company and its effect on the stock price.

Buffet believes that one sometimes discovers these companies as “conceptual toll bridges.”

1.)    Businesses with products that are used up quickly and with brand-name appeal.  These are sorts of products that effectively lose money for the merchant because they are always bought.  Trademarks and copyrights have immense carrying power.  Some examples of companies that carry these sorts of products are:

Coca cola, Hershey’s, Wrigley’s gum, Advil, Gillette, Hanes, etc.
Pharmaceutical companies often have these characteristics
A good way to identify these products is to walk through a supermarket and identify popular products.

2.)    Communication businesses

Advertising has created conceptual toll bridges in today’s environment
Newspapers work similarly

3.)    Typically these conceptual toll bridges apply more to services than products

As I mentioned in my last post, I would like to thank ALL of you who have been reading and commenting on this blog.  Initially, I did not know where I would go this or who it would cater to but with your support and ideas, I know that we can cultivate a great atmosphere where we can exchange ideas and whatnot.  Keep posting your comments and let us stir our minds towards greatness!!

Money Making Activities

10 Money-Making Activities You can do in Your Spare Time

I started Money Hero because I love personal finance. Being financially disciplined, budgeting, saving, all of it. But the best part of personal finance has got to be making more money. Who doesn’t like to get paid?

So that’s why I put together this guide for you on easy ways to make some side money in your spare time.

Many of these tips can be done very easily, with little to no commitment from you. And some of them will take some serious time and effort, and maybe even a small financial investment. But hey, sometimes it takes money to make money.

Money

All of them will help you to bring in some spare cash.

Whether you’re looking to start a legitimate business or are just hustling on the side for some extra spending cash, each of these tips is guaranteed to put more money in your pocket. I don’t know about you, but one day I hope to escape my 9 to 5. And then I would like to work on Money Hero full time. That being said, I hope that this guide helps you to make some money.

If you work diligently, you can make hundreds or even thousands of dollars per month. Just stick with it.

Good Luck!

1. Start a blog.

Seriously. Blogs are an excellent way to make some extra money on the side. What better way to make money than to share something you’re passionate about with your readers? I’ve even put together a very handy guide on getting a blog up and running with Bluehost (the hosting provider I recommend) and WordPress.

The best part is, starting a blog requires very little investment. All you really need is a computer with an internet connection. There are so many ways to make money with a blog. You can:

Run ads on your page
Have people pay you to sponsor posts on your blog
Get commission checks while you sleep for referring others’ services, or
Sell your own products and services.

If you click this link, it will take you to Bluehost to sign up for web hosting at a discounted rate. You’ll even get a free domain name! Then head back to the guide that I posted above and I’ll show you how to get your site up and running.

2. Earn money online with Swagbucks

Swagbucks is one of the easiest ways to make money online, with minimal work. You get paid for doing things such as shopping, answering surveys, watching videos, searching the web, and playing games online. Even better, Swagbucks has a mobile app so you can earn money on the go!

When you do things through their website, you get rewarded with “SB points” which can be redeemed for gift cards to popular places such as Amazon or Walmart, or cash. Click here to sign up with Swagbucks for free. You’ll even get a free $5 bonus for signing up today!  

3. Get paid to take surveys with Survey Junkie

Another online fan favorite, Survey Junkie is an easy way to make some extra cash on the side in your spare time.

Much like Swagbucks, Survey Junkie is a free site that rewards you for completing tasks. In this case, taking surveys. Who wouldn’t want to get paid for giving their opinion? Join Survey Junkie for free and answer simple surveys in return for gift cards to popular retailers, as well as cash payouts via PayPal.

4. Sell your services on Fiverr

If you have a skill, such as writing, photography, video editing or graphic design, then I highly suggest you look into Fiverr.

Fiverr is a site where you can offer your services to anyone in the world, and make $5 or more per gig. As the creator, you set the terms of what services you can offer, and how much you want to get paid. There are tons of people and small businesses out there that are looking for quick, easy fixes for a problem that they have, and Fiverr gives you the avenue to serve those  customers and get paid to do it.

And the more jobs that you complete, the more you can charge in the future! You can sign up for a free account with Fiverr here.

5. Become an Uber driver

Uber is another way to make money in exchange for a little bit of your time. Simply sign up to become an Uber driver, and you can make decent side money driving people to and from their destinations.

Uber has peak hours, when they sometimes double or triple the payout that you get from making a trip. To get started with driving for Uber, all you need is a smartphone, and a newish four door car. Depending on your state, your car needs to be a 2006 or 2011 (or newer) model. After a mandatory car inspection at a local repair garage, you’ll be well on your way to making some spare cash!

You can try out Uber for free here.

6. Start an email list

If you hope to make money online, one of the absolute most important things that you can have is a mailing list.

An email list is your personal funnel to customers, who you can sell whatever you like to. Have an eBook that you want to sell? Pitch it to your email list. A new course that you created? Chances are, your email list will be interested. The best thing about an email list is that it’s yours. Which means that no matter where you go, they come with you.

I use a couple of platforms for my emailing needs, namely MailerLite and ConvertKit. MailerLite and ConvertKit are free email marketing platforms that help you to create landing pages, collect email subscribers, who you can in turn sell products and services to.

They are essentially the same, except that ConvertKit is a bit more premium. As such, it isn’t free. But I’ve found the premium features of ConvertKit to be well worth the $29 price tag.

You can sign up for MailerLite here or ConvertKit here.

Once you have your email list set up and have gotten some subscribers, you can then use it to…

7. Sell a digital product

The beauty of the internet is that you can reach thousands or millions of potential customers from the comfort of your own home.

And if you have something of value to offer them, they will pay.

Having a digital product is an easy way to quickly make sales online. There are plenty of digital products that you can offer your audience. These include:

eBooks
Online courses (see below)
Photography
Graphic design
Printables

Digital products are ideal because they usually require almost no financial investment. Anyone can create an eBook or an online course with little to no technical skill.

8. Sell stuff on Craigslist, Amazon, OfferUp or eBay

Selling my old stuff is one of my favorite ways to make extra money. If you’re anything like me, you have a home full of old items that you don’t need or use. Putting items up for sale can help to both clear up your home, as well as pad your bank account. eBay, Amazon, OfferUp and Craigslist are all good options for getting rid of your old stuff for cash.

eBay and Amazon are nice because they handle most of the transaction for you. You just post your item, and when someone buys it, drop it off at the post office. The money will be deposited right into your account (after eBay or Amazon takes a small cut, of course).

Craigslist and OfferUp, on the other hand, are a little more hands on. You post your item, but you have to meet up with the person to make the sale. I prefer to sell things this way, because it’s immediate, and I don’t have to deal with shipping or PayPal.

If you do decide to go this route, make sure to be very careful when meeting strangers in person. Always meet in a public place with a lot of people around, and avoid meeting anyone at night. You can never be too careful.

9. Start an online course

Online courses are becoming an increasingly popular way to make money online. Many people are making four or five figures per month with their own personalized courses on a variety of topics. Any skill that you have, you can teach to others for a price. And the best part is, you can set your own prices! I’ve seen courses range from $10 to the upper hundreds of dollars.

There are platforms that you can use to set up courses and begin selling. Two of them that I want to recommend are Teachable and Udemy. Both of these websites let you quickly and easily create online courses and begin selling to your users. These platforms are both also very robust and easy to use. Both also have super helpful support that will get your course up and running in no time.

Online course

Some people have been able to make hundreds of thousands of dollars in course sales. Yes, really. There’s really no limit to what you can profit with a good course and an audience eager to learn from you.

You can become a course instructor with Teachable here.

You can become a course instructor with Udemy here.

10. Invest your money

Learning how to invest money is always a good idea. There are no guarantees with investing, but it never hurts to learn how it works.

If you’re interested in learning how to invest and are looking for a good trading platform, then look no further than Ally Invest. Ally makes it easy to buy a diversified portfolio of ETFs, stocks, and bonds for less than $5 per trade.

Also, if you sign up through my link, you’ll get either a FREE 90 days of trades or $100 cash bonus.

I hope that you found this guide to be helpful! Have you tried any of these money-making ideas? Can you think of any others that I missed?

financial life

30 advices for a healthy financial life

A healthy financial life is the most important thing everyone is looking for these days.

We are going through a hard period to cope with, when all that matters is to survive each day. We can hardly think about investments, prosperity and wealth.

We are thinking about how to survive with what we have or how to increase our comfort, but never about how to make our financial life simpler, so that we can live a financially healthy life.

Simplifying your life from a financial perspective is the first step you need to do in order to reach prosperity.

Financial-Planning

Hereafter, I will show you 30 advices to follow for a healthy financial life:

30 advices for a healthy financial life

  1. Set financial objectives for yourself. This is of the most important financial actions you should take.

Without financial objectives, we do not know what we are working for. We do not know where we are going and what we want to achieve. Financial objectives are what keeps us and pushes us to want more from life.

Set financial objectives for yourself on long term, 5-7-10 years, and then break them into smaller objectives, with concrete actions for each of them.

  1. Try fulfilling one objective at a time. After you have set the financial objectives, you can start fulfilling them.

Achieve each objective at a time. If you start multiple objectives at once, you will get confused. You will never know which one is important and which is not.

Once you have set the objectives within the first step, it means they are all important.

Achieve them individually in order to achieve the highest result.

  1. Use a personal budget. Personal budget is the financial mirror of your life. Without a personal budget, you cannot keep track of what you have achieved so far, what you did wrong and what you did good.

I recommend the article 10 reasons you should use a personal budget, where you will find the most important reasons for which you should use a personal budget.

If you do not have a personal budget yet, you can download for free the model you find HERE, which is the personal budget model I use.

  1. Combine your budget with your loved one. If you are married, now is the time to combine yourself with the loved one also from the financial perspective.

Achieve together the family personal budget and set financial objectives for yourselves.

Money is an important factor in a life of a family and if this factor is seriously treated, you will have nothing but benefits and you will have a steady relation with your half.

  1. Get rid of debts! The first objective you should have is to get rid of debts.

Debts are the main bump you should take care of.

I recommend these 2 articles in order to help you get rid of debts in the shortest amount of time possible: 41 techniques that can help you get out of debts.

  1. Always analyse your last month budget. This is a necessary and mandatory activity.

Each month, you have to analyze your budget and see what happened in the previous month.

Where you have spent your money, if you have complied with the budget or where did most of the money come from. These are very important activities which will help you achieve your objectives.

  1. Get rid of credit cards. If you have credit cards, this is the moment to get rid of them.

Why spending money you do not have? It is the worst financial decision someone can make.

There is the risk of failing to pay your debt, plus the debt grows a lot due to the associated fees and interests.

  1. Monitor your expenses daily. With the help of the personal budget, you can monitor your budget every day.

Do you know where your money is going? Which are the highest invoices? Do you need all your shopping you make? Can you abstain yourself from shopping certain products? Do you know where you can make some cost reductions?

These are questions you need to answer each time you analyze your expenses.

  1. Get rid of instalments and credits. Stop buying products in instalments. Try saving money to buy a product, instead of taking a credit for it.

Approach a savings strategy instead of an instalments strategy. It is better to save each month 100 lei and buy the product you want when you have the money, than paying for it in instalments, paying fees, interests and getting the bankers rich.

  1. Constantly analyze your telephone, internet cable TV subscriptions. 

Are you watching TV daily? Do you need that number of minutes or messages? Are you using to the maximum your broadband internet connections?

Are there other packages that are more to your advantage?

I am sure that the answer to the last question is YES. Each time we can find better packages, we only have to look for them.

  1. Set up an emergency fund. This is the second measure you have to implement once you got rid o f the current debts.

You never know when an unforeseen situation can occur and you need money.

All I can say is that THERE WILL ALWAYS BE UNFORESEEN SITUATIONS. There is no “unforeseen situations cannot happen to me”.

Why not? Nothing has broken inside your house which needs repairs? Your car did not break? You never got sick?

For all these, there is the emergency fund.

Be careful! Go to the emergency fund only if you had no possibility to foresee the expenses in the budget. These are those moments you cannot be aware of beforehand.

Do not go to the emergency fund if there is a TV sale. Doing that is WRONG.

Money-and-stethascope
  1. Have at least 2 passive income sources.

Passive income is the income which you do not have to give time for in order to achieve it. It is obvious that you have to give it some time at first in order to achieve it, but, along the way, that time should bring you money.

If you reach a situation that the passive income supports you each month, it means you are on the right track towards a healthy financial life.

  1. See what you did well and try doing it again. Do you have a personal budget that works properly and that you follow constantly? See what worked. See what actions you took that increased your income and take them again.

Make a lifestyle out of it and your income sources will never stop growing.

  1. Reduce your expenses as much as possible. Never stop reducing your expenses in al possible environments.

A useful article which will help you reduce costs for electricity, natural gas, water and fuel for your house and car.

  1. Rent. Do you need a car only for a certain period of the year? Do you need a new house? Do you want to marry the bank for 30 years?

Then the answer is the verb “Rent”. It is not the right moment to buy houses, nor to bind ourselves an entire lifetime for a credit which, in 10 years, will not worth as much has it is worth now.

Try living with rent and investing. Make your money produce more money. After they make enough money so that your 2 years income covers the cost of a house, you are ready to have your own house.

Until then, think about how to make as much money as possible.

  1. Make a list of all your assets. This list will help you figure out what is the net value of your wealth.

Yu will see immediately what you have spent your money on and how many assets you really needed and which you did not.

  1. Get rid of things you do not need. Once you made the list and analyzed the things you own, try to get rid of those you do not really need.

Usually, 30% of the list should be eliminated in this step. If you think you have assets your really do not need, try selling them.

After this, you will definitely adopt the policy “I buy a product only if I really need it, not if I only like to have it”.

  1. Use cash payment. If you go shopping, leave your cards at home. Go with cash on you. Each transaction made with the card needs a fee. Each fee is an expense for which you were too comfortable to bring cash.

Ideas like “If I have cash, I may feel like spending them” or “I do not take cash on me because I might get robbed” should go away. Banks are a bigger thief and, what do you know?, they are totally legal.

  1. Get rid of all kinds of subscriptions to magazines, newspapers or other publications. All information you find in them, you can also find on the internet for free. Subscribe to online publications and read the news daily on the internet.
  2. Learn to negotiate. Yes! You heard me. We all need to know how to negotiate. At the market, at the store or AT BANK.

Bank is a good place where you can negotiate. If you know how a bank works, you can end up a millionaire, as Robert Kiyosaki did.

He used the bank in his favor. He negotiated credits for certain real estate investments, so that they would make money for him.

He did not use the bank to buy his own house, but to buy houses which he rented or sold for larger amounts of money.

  1. Learn to simplify your financial life. Try to do everything you did so far with less resource. Eat less, drive more economically, buy the same things for less money or consume less electricity as you did so far.

Analyze your habits and simplify them!

  1. Read more on how to correctly manage your own finances. Education is the most important. Unfortunately, the Romanian education system does not reach the financial environment and, due to this fact, more and more people have money problems.

All that is left in this respect is self-education. I recommend reading books, follow financial education blogs and always be informed on what is happening with the economy of the country.

Country economy is an important factor which affects our financial lives both directly, as well as indirectly.

  1. Use the car only when you need it. Stop going by car to work, except if the car belongs to the company. Mass transportation is cheaper and more advantageous.
  2. Only one family car. Now the trend is that a family should have at least 2 cars. Why? Get rid of one. Use mass transportation as much as possible. I am convinced that your job is not as far as it looks.

Calculate the fuel consumption for the two cars for a month and this will definitely make you eliminate a car and think about using mass transportation more.

  1. Buy a car with smaller fuel consumption. Why do you need a car which consumes 12-13 l of fuel per 100 km? Buy a car with smaller consumption.

You are saving money that you can use for other purposes, plus, a smaller car is easier to handle.

  1. Buy second hand goods. There are so many electronic and electric household appliances sold second hand.

If you need a car, a fridge or a washing machine, why buy them new?

Unfortunately, any fixed asset (car, computer, fridge) loses 30% of its value the moment you buy it.

Why lose 3000 euro for a 10,000 euro car in just one day?

Better buy more second hand cars for a much smaller cost.

  1. Stop thinking small. Try to think from the perspective of a month for each purchase. When you make a subscription, try analyzing it for a whole year.

Take a mobile phone subscription for example. If we have a 30 euro subscription and, for this subscription, the telephone company offers us a last generation Smartphone for a small price, we think we made a good purchase.

This is not true. If we calculate the 30 euro monthly for 2 years we end up with a price of approximately 700 euro. We are not consuming all minutes and the phone is not worth the amount we pay for the subscription.

All offers are made so that the seller has the advantage, but if we make a small calculation we can see that the advantage is on our side if we buy a phone with a subscription of 7-8 euro.

Think of such analysis each time you want to make a subscription, then make a decision.

  1. Make an investment plan. There are so many places where you can invest our money. Many people who have no investment plans think that the money they make are too little for potential investments.

Wrong. Save money. “Tighten the strap” in certain financial areas in your life and direct your money to an investment plan.

Investments are the best because they will bring money in the future. For you, they can be a passive income.

  1. Learn yourself to invest. Investing is quite hard. You must have patience, knowledge and read a lot.

It sounds difficult and sounds too much for you. Why? Who do you think will invest your money better than yourself?

In investments, everyone goes by the saying “No one will take care of your money better than yourself”. The best investments are made when you invest your own money.

If you have too much money, you can use a financial adviser to keep your investments portfolio, but the final decision is yours.

I advise you to start now reading more about investments. A first step you can make is to subscribe to this blog, after that you can start looking for all kinds of ideas and places to invest your money.

This can be a game for you. Investing is like playing a game. You only have to be focused and the decision you make at the beginning have to be made on as many and as concrete information as possible.

  1. Always analyse each advice. I gave you the advices above, but not all of them are working for everyone. For some, only the first ones work, for others only the last ones.

Try to analyse each advice from your life perspective. See how they can be applied in your life.

Give yourself each week or each month the necessary time to analyse your financial life and make decisions for this purpose.

Take your time when it comes to money, because nowadays money is one of the most important factors for our future.

What other advices would you add to this list?

What is your favourite advice and which one do you think is the best advice of this list?

Gold_Bar

Different Ways Of Investing In Gold Safely

For years, investors have known gold to possess intrinsic value and safe investing features. Since properties, currency and shares are prone to inflation as well as their prices may go up and down with the market, it is far better to invest in gold and silver like gold since the prices will always be expected to increase. Gold, as a commodity, not only has long-term store of value but also provides a hedge against inflation. In last one 10 years, the price of 1ounce gold has shown a dramatic increase from $300 to $1,500 and is likely to raise much more. This makes gold investments very profitable.

Are you interested in making safe investments in gold in gold but don’t know the tips for doing so? Simply check out the tips mentioned here.

Strategies for Investing In Gold Safely:

1) If you’re keen on possessions then you can certainly purchase physical gold in the form of bars, coins and bullion. Gold bullions are made from 100 percent pure gold and they are sold in increments of just one oz. hence they are popular type of investments with regards to purchasing physical gold. Various nations sell bullion coins that are denominated in local currencies. American Golden Eagle is the local bullion currency in the usa which is easily available at local outlets as well as on online websites.

gold-is-money

2) Women especially prefer to purchase gold jewelry. This is due to the fact most jewellery pieces are marked and priced based on the weight and quality (pureness) of metal used in it too as the cost of labor included in making it. You will get the rarest ornament pieces from jewelry auctions and online websites (they offer discounts top). However, purchasing ornaments online will need focus on your part because you will have to determine the purity and price of those items, think about the interest in brand and find out the shipping cost of gold. If you buy excellent quality jewelries, you can make profits by reselling it.

3) Exchange Traded Funds (ETFs) are second most popular types of investments after physical gold. In the event you can’t figure out what to know about gold investing, you are able to seek advice from an ETF expert and invest your hard earned money in it. Look for an online brokerage firm and open up an account there. Evaluate the current market prices of gold ETFs by making use of symbols like SGOL and FLD. They possess ETFs prices at 1/10th the price of an ounce of gold whereas PHYS and IAU have their ETFs costing 1/100th of the cost of an oz of gold.

Firstly, determine the amount of ETF shares you want to purchase and appropriately, divide neglect the amounts. You may make use of the online screen of your brokerage account to purchase ETF shares. The process of buying ETFs is just like purchasing stocks or shares. The broker may offer discounts of $5 to $10 on share trades. Here you must remember that gold ETFs don’t supply you interest amounts or dividends because the profits or losses incurred by investors depends upon the fluctuating selling price of 1 ounce of gold. Thus, you should use ETFs for either short term trading of gold belongings or for making long term savings.

4) If your luck is at peak, you can consider investing in stock exchange and mining companies. You can invest in shares of Barrick Gold (ABX) the largest gold mining company. One benefit of purchasing stocks is you can easily sell or buy them with little fuss.

5) Lastly, there are gold mutual funds which are ideal for group of businessmen. Mutual funds directly track the cost of gold and cost of shares of gold mining agencies and are collectively owned by some people. Look for company that offers lower investments and lets you invest in an automated monthly schedule. Put smaller amounts in gold investments for a long period of time to be able to gain maximum profits. If you are a first time investor, you should collaborate along with other experienced traders of the market to stop losses.

6) You can also buy possessions on monthly installments. You can set up an automatic investment scheme that deduces money from your banking account and directly transfers the profits incurred by you there. This will prevent you from going out of budget.

If you would like more information regarding shipping cost of gold, please check at well-known dealers or visit trusted websites to find opinion from the specialists.

If you want extra information on topic “payday loans“, then you are welcome to check out the author’s website Febs2010– in which you’ll find all types of specific information on the said topic.

Warren Buffett

10 Books On Investing That Billionaire Warren Buffett Recommends

Imitating successful people has its limits. As one brilliant writer on Business Insider once said “The idea that if you can find out how successful people live and then copy it, you’ll be able to emulate it.  Like it was Jack Dorsey’s early morning routine that made Twitter successful. This idea is just not true”. However there are certain instances where imitating successful people can be beneficial. That’s when you study what they know, not just what they do. And what better way to get into what they know than following which books they read right?

Best investing books

One popular avid reader is billionaire investor Warren Buffet. He was once recorded saying in an interview that he reads books to collate more and more and more facts and information, and occasionally seeing whether that leads to some action. He doesn’t read other people’s opinions, he wants to get the facts and information, and then think.  According to Business Insider these are 10 books  that he recommends every aspiring billionaire, like us, should read:

Number 10: ‘The Most Important Thing Illuminated’ by Howard Marks

In this book, Mark aims to help investors achieve success by putting more thought into their decisions, drawing heavily on his own mistakes and what he learned from them. The book lends insight into concepts as “second-level thinking,” the price/value relationship, patient opportunism, and defensive investing. And how did uncle Buffett describe the book? As a rarity!

Number 9: ‘Jack: Straight from the Gut’ by Jack Welch

The descriptions of Jack Welch have ranged from being the world’s (*cough* cough* America’s) toughest boss to the manager of the century. This is because of how he defied conventional wisdom during his twenty-year career at the helm of General Electric, turning an aging behemoth of a corporation into a lean, mean engine of growth and corporate innovation. Buffett’s advice regarding this book is “Get  copy!”

Number 8: ‘The Clash of the Cultures’ by John Bogle

This was one of the  books  recommended by Warren in his 2012 shareholder letter. Written by the founder of the Vanguard Group which now manages upward of $3 trillion in assets, the book argues that long-term investing has been crowded out by short-term speculation. Finishing tips in the book include insights like: what’s hot today isn’t likely to be hot tomorrow: the stock market reverts to fundamental returns over the long run; don’t follow the herd; time is your friend, impulse is your enemy and take advantage of compound interest and don’t be captivated by the siren song of the market.

Number 7: ‘Dream Big’ by Cristiane Correa 

The book is an autobiography telling the story of the three Brazilians who founded 3G Capital, an investment firm that joined Buffett in purchasing HJ Heinz in 2013. In the book Correa highlights the main principles of 3G’s management style which paved the way for their current success meritocracy, cost-cutting and trusting in people and allowing their teams work. Buffett liked the book so much that he recommended it at the 2014 Berkshire Hathaway shareholder meeting.

Number 6: ‘The Little Book of Common Sense Investing’ by Jack Bogle

This book is another hit by the founder of the Vanguard Group. This book highlights how investing is all about common sense and owning a diversified portfolio of stocks and holding it for the long. Based on his own experience working with Vanguard clients, Bogle attempts to help readers use index investing to build wealth. This book was another recommendation in Buffett’s 2014 shareholder letter. He further recommended that shareholders read this book over listening to the advice of most financial advisers.

Number 5: ‘Where Are the Customers’ Yachts?’ by Fred Schwed

Buffet described this book as “The funniest book ever written about investing,” since “it lightly delivers many truly important messages on the subject.” The book was first published in 1940, and takes its title from a story about a visitor to New York who saw the bankers’ and brokers’ yachts and asked where the customers’ were. Obviously, they couldn’t afford them — the people providing the financial advice were in a better position to splurge than the people who followed the advice. The book is said to be filled with scornful wisdom and colorful anecdotes about Wall Street, and remains compelling even today.

Number 4: ‘First a Dream’ by Jim Clayton and Bill Retherford

This is one of those books with a captivating “rags to riches” story. Within it, a young boy discovers during the Depression that hard work and sheer perseverance are the keys to living his dreams. It is filled with practical, easy-to-understand, no-nonsense business lessons that the entrepreneur can apply to his or her own life — describing the qualities an effective leader must possess, the key methods to inspiring team members, and the development of culture and values that are critical to the success of a small business as well as a multibillion dollar conglomerate. Buffet liked this autobiography of Clayton so much that he decided to invest in Clayton Homes in 2003.

Number 3: ‘The Essays of Warren Buffett’ by Warren Buffett

What better way is there to learn about how Buffett thinks than to go to the source himself? In this collection, he is said to keep it real — in his signature folksy-intellectual fashion. “What could be more advantageous in an intellectual contest — whether it be chess, bridge, or stock selection — than to have opponents who have been taught that thinking is a waste of energy?” he asks.

Number 2: ‘Security Analysis’ by Benjamin Graham and David L. Dodd

Buffett describes this book as a groundbreaking work of Graham’s that had given him “a road map for investing that I have now been following for 57 years.” The book’s core insight: If your analysis is thorough enough, you can figure out the value of a company — and if the market knows the same. Buffett has said that Graham was the second most influential figure in his life, after only his father. “Ben was this incredible teacher; I mean he was a natural,” he said.

The Intelligent Investor

Number 1: ‘The Intelligent Investor’ by Benjamin Graham

This is not only my favorite book by Graham, but the best book on investing that I’ve ever read. Apparently Buffett agrees since when was 19, he picked up a copy of this book and notes this as one of the luckiest moments of his life because it gave him the intellectual framework for investing. “To invest successfully over a lifetime does not require a stratospheric IQ, unusual business insights, or inside information,” Buffett said. “What’s needed is a sound intellectual framework for making decisions and the ability to keep emotions from corroding that framework. This book precisely and clearly prescribes the proper framework. You must provide the emotional discipline.” Buffett liked Graham so much that he named his son after him.

monthly-budget

10 reasons you should use a personal budget

Personal budget is the most important instrument when it comes to our financial life.

It is the instrument that helps us control our financial life when it comes to our income and expenses.

Living without a personal budget is like going through a very big city such as Bucharest without being from Bucharest and wanting to go to various places without map or GPS.

The personal use budget is made of a projected budget where you have to anticipate each expense and each income you make in a determined period of time and of an achieved budget, where you have to write all expenses and income you made.

The budget is useful both for persons in a difficult financial situation and who want to go over this period, as well as for people who want to plan their way to get rich.

monthly budget

Using this financial instrument can give you lots of benefits regarding your financial health, because the budget:

 10 reasons you should use a personal budget

1. Helps you be aware of where you are spending your money!

It is the place where you plan and write all your expenses. It helps you see what are your money spent on and where you can make adjustment.

It is one of the most important options of the budget, because next is the financial planning.

2. Helps you know what are your income sources and how can you increase them!

It helps you plan your income. Most of the times, income is constant and you can hardly adjust it.

Most of the times, the budget helps you analyze your financial status and see if your income is enough for your expenses and for the financial objectives you set for yourself.

3. Helps you plan the expenses!

How many times have you realized that you are going shopping with the idea of buying something and coming back home with much more than you would have wanted.

The budget has its role of necessity. All things you should buy are written here, not the things you would like to buy.

It helps you make a difference between WHAT IS NECESSARY and WHAT YOU WOULD LIKE to buy.

Always choose WHAT IS NECESSARY to buy.

4. It helps you get rid of debts!

Yes, it helps you get rid of debts. Once you know what the income is and on what you spend the most, it helps you narrow the expenses and, with the money you save, pay your debts in a short amount of time.

5. Helps you avoid debts and spend as much as you produce!

Once the budget is planned, it guarantees that you will spend only what you produce. Your entire income should be larger than the expenses.

The difference between income and expenses represents the profit. With the profit you can pay your debts, start arrangements to buy a house, a car or to plan a vacation.

6. Helps you plan the purchase of a house!

The personal budget is your financial mirror. It shows you how much you earn and how much you spend.

It shows you how much profit you have in a month. This profit can be invested in a house.

For a new couple, that wants to buy a house, it is very important to use an internal use budget.

The house you can afford is the house that does not cost more than 2.5 times your total income per year.

The house you can afford = 2.5 * your annual income

It the result is higher than that, problems will occur regarding payment.

You can start with a smaller house and go to a bigger one after a while. Go to a bigger house only after you become the owner of the first house.

The budget helps you keep under control your expenses, house instalments and income without having financial problems.

7. Helps you be more structured and more realistic!

The budget helps you be more structured. It is designed as structured and as detailed as possible, to help you anticipate each expense by various expense categories.

Once the monthly budget is made, at first you will have many frustration reasons. In the first three months, you will not be able to plan your budget due to the fact that you are not being realistic.

You are subjective when it comes to the financial planning and you still think you will spend less and earn more.

Not true! You will spend and you will earn as much. The budget will show you this and will help you be more realistic with your budget each month.

You will end up being more realistic and more structured, not only with your money, but also in your daily activity.

8. Helps you save more!

Yes, it is the instrument which helps you save money from various places, in order to buy a product or to go in a vacation.

The budget gives you a faithful and real image of your financial status, where you can draw some conclusions regarding the places you can cut some costs.

With the money you cut, you can plan various expenses or you can reduce your debts.

bookkeeping

9. Helps you have multiple income sources!

The budget is also an instrument for rich people, not only for those that have financial difficulties.

With the help of a budget, you can also plan some businesses you might want to make, invest in various mutual funds or in the stock exchange.

In order to get here, you must get rid of all other habits of yours that make you spend more than you produce.

10 .Helps you be more motivated.

The budget helps you be more motivated. It gives you the motivation to want more from your financial life.

It helps you get rid of debts, have our own house, go in certain vacations and buy different things you want.

It is the most important instrument for your financial life and gives you the financial motivation to want more from yourself.

While planning a personal budget can take few hours each month, the fact that you learn to use a personal budget can bring you back money you may have never imagined.

We are spending money on things we do not need and we are running into debts for things we do not need. Why are we doing this?

Because we do not know what happens with our personal money!

Planning a budget each month and strictly complying with it, you can reach peace and quiet in your financial life.

If I have convinced you that a personal budget is useful, you can start from now planning your income and expenses with the help of a personal budget model you can download for free HERE.

It is a model I have created and which I recommend to all readers of this blog.

If you still have doubts about its use, you can ask me anything related to the personal budget in a comment below.

I will answer to any of your questions.

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