How to Invest in the Stock Market and Beat 80% of All Investors

How to Invest in the Stock Market and Beat 80% of All Investors First of all we only allocate 25% to stocks to our Permanent Portfolio. The Permanent Portfolio uses four different asset classes and we initially limit our exposure to 25% in each asset class. Then we rebalance the whole portfolio when any asset … Continue reading “How to Invest in the Stock Market and Beat 80% of All Investors”

How to Invest in the Stock Market and Beat 80% of All Investors

First of all we only allocate 25% to stocks to our Permanent Portfolio. The Permanent Portfolio uses four different asset classes and we initially limit our exposure to 25% in each asset class. Then we rebalance the whole portfolio when any asset class hits a 35% or 15% rebalancing trigger. Stocks are our hedge for prosperity but we also have hedges for inflation, deflation and recession in our Permanent Portfolio. The different asset classes we use are stocks, bonds cash and gold and these asset classes respond differently depending on what is happening in the economy. So using a Permanent Portfolio we will always have at least one asset class that is doing well. The Permanent Portfolio has gained over 8% per year compounded over the last 40 years with low volatility.

Here are the specifications for investing in stocks for our Permanent Portfolio:

We avoid individual stocks due to their risks and the trading costs involved. Company stock is also an individual stock so we limit our risk exposure there as well. We also eliminated the need to do individual company research and stock selection which frees up a lot of our personal time to do the things we enjoy. The Permanent Portfolio is true low maintenance.

We also avoid actively managed mutual funds because over 80% of them can’t even beat their benchmark index like the S&P 500.

We want to use a market cap weighted total stock market index fund with low fees. Since there are so many companies represented in these funds, we get great diversification and lower risk than single company stocks. Since little trading is going on in the fund we also get great tax efficiency.

Any dividends received from our fund we allocate to our Cash allocation so we turn off any dividend reinvestment plans (DRIPs). This is consistent with our Permanent Portfolio strategy of buying assets low and selling high.

If you live in the U.S. you may want to explore using exchange traded funds which have low fees. Some of these exchange traded funds you can even buy and sell commission free at some of the discount brokers. I have listed a few exchange traded funds here but there are others available from Schwab and Fidelity for example. There are also regular total stock market mutual funds available if you prefer. If you live outside of the U.S. there is total stock market funds available in your country as well.

U.S. ETF Examples:

Vanguard Total Stock Market Index fund (VTI) with a management expense ratio (MER) of only 0.05%

iShares Russell 3000 Fund (IWV) with an MER of 0.20%

Everything You Need To Know About Types of Mutual Funds

Everything You Need To Know About Types of Mutual Funds

If you’re a first-time investor or simply want your portfolio to be professionally managed, then you should opt for mutual funds. They allow you to pool your money for a diversified selection of securities. Mutual funds provide you with expertise, diversification, liquidity and the ability to manage inflation. There are a wide variety of mutual funds available. However, they can be broadly divided into the following three main categories:

Equity funds

These funds invest in the stocks of a variety of industries or they may focus on a particular industrial sector. The objective of such funds is long-term capital growth. In effect, under such schemes, you become a part owner of every security in your portfolio. These funds carry high risks due to the volatility of the stock market but can also provide great returns over time.

Fixed- income funds

These funds invest in securities like bonds and gilts. The objective of these funds is to provide the investor with a current, stable income. Bonds can be considered as loans in which the investor is the lender and the organization is the debtor. Gilt funds invest in government securities and are thus, safer than bonds. Fixed-income funds are less volatile than equity funds and are lower on risk. They only provide moderate returns, but ensure safety of capital.

Dynamic bond funds invest solely in fixed-income instruments. The fund manager actively manages the portfolio duration of these funds, based on his interest rate predictions. This flexibility helps protect the investor from market volatility.

Money market funds

These funds invest in short-term debt instruments. The objectives of such funds are capital preservation and income. The returns are not sizeable compared to other types of mutual funds. However, they can earn about twice the amount as a regular savings account would. In addition, there is little risk involved and you won’t need to worry about losing your principal amount. They also have high liquidity. All in all, such funds are ideal for a cautious investor.
Balanced funds have a combined objective of providing a current income source as well as long-term capital growth. Such funds generally invest about 40% in fixed-income and 60% in equities. This added diversification helps to spread the risk further.

Unit Linked Insurance Plans are similar to mutual funds. However, they combine the benefits of both insurance and investments. Such plans are provided by insurance companies and allow you to invest a portion of your premiums into different types of funds. They also boast tax benefits under section 80C. ULIPs however, have limited liquidity as they require you to stay invested for the specified period of the policy.

Tips on Planning a Successful Conference

Tips on Planning a Successful Conference

A special event is a one-time event focused on a specific purpose such as a groundbreaking, grand opening or other significant occasion in the life of a particular organization. Special events may also be created for other targeted purposes such as jobs fair; awards banquet or logo contest. These one-time special events are different from “programs” offered on a continuing basis such as a lecture series, summer reading club or story hour. The following steps are proffered to help guide your event planning:

1. Develop strategies for success.

Make sure the purpose for the special event is important enough to merit the time and expense needed to properly stage, publicize and evaluate the event. Carefully match the type of event that is selected to the purpose that it serves. Do you want to reach out to new users or thank your supporters? Ensure that the staff of the organization fully supports the special event. Select a working committee with broad representation. Target groups that have a special stake in the event such as library users, sponsors, politicians, business leaders, senior citizens or parents. Start planning at least three months, and in many cases, a year ahead of time. Develop ways to evaluate the event’s success. Measurable event objectives may include attendance, the amount of money raised, and the number of library cards issued or increases in circulation. Talk to other Librarians who have successfully staged similar events.

2. Make a Checklist. A checklist provides a step-by-step guide to organizing and executing a special event.

3. Create a Budget: The objective is to provide event planners with a financial blueprint. The budget should be specific, realistic and should include revenue opportunities as well as expenses, printing, permits, insurance, speakers, food supplies, security

4. Consider Logistics: With many activities going on simultaneously, there are many details to be checked. Major areas to consider and plan for include: size of space or building used, setup, transportation and public services e.g. Police and fire dept.

5. Plan publicity: Promoting a special event takes creative thinking balanced with practicality. Are you trying to inform, educate, entertain,create awareness, or build a base support from a specific audience? maybe you want to facilitate a good community relations? Whatever your aim for planning the conference, you need to brainstorm all the available media including marques, schools, newsletters, Church announcements and cable and commercial stations. Make a detailed list with the names of whom to contact and when.

6. Evaluate the conference. take time to evaluate right after the event while the details are still fresh. You may want to consider having a questionnaire for participants to fill out.

How To Be A Master Planner

How To Be A Master Planner

I love planning things. I’ve always been a fan of creating “master plans”, plans that I can follow to keep my thoughts and goals organized.

The night before my first plane trip, I spent two hours planning what to do, and what to do in case something went wrong.

Planning is beneficial for any goal you have, because it forces you to decide on exactly what you want to accomplish, and it gives you time to think about how you will actually do it.

Now let’s break down the anatomy of a good planning process:

Understand What You Want – It’s good to want things, because this gives you a drive to achieve it. However, if you have a goal like “I want to be rich by next year”. Well, what does that mean? Does it mean you’ll have one million dollars? If it is, how will you get there? Will you start a business, or become a casino mastermind? So many questions from such a general desire…

This is why it’s important to know exactly what you want. When you know exactly what you want, it will become much more clearer on how to turn that desire into reality. So instead of wanting to “get rich by next year”, try wanting to “create a business that is profitable enough for me to live comfortably, by next year”. This specific goal tells you that you will start working on creating a business, making profits, and calculating how much you should make in order to live comfortably.

Plan Backwards – Planning backwards is an unorthodox method, but from my experience, it is a lot more efficient. Plans are all about the end-game, the end-game is the final position that you put yourself in, with only a few more moves to take for your victory. Staying focused on the end-game keeps you from making impulsive positions that could ruin everything that you’re working hard for. Planning backwards will look like this:

I want to create a profitable business –> I will dedicate hours in the day to keep my customers –> I will market my business with social media and word of mouth –> I will create a website to sell my product –> I will brainstorm an appealing product –> I will do some market research to see which niches are profitable

As you can see, the main objective is first, then the steps that follow. Now you can already be planning ahead for the future, and you won’t get stuck at an early stage, because you will already know what to do!

Many Small Steps – When laying out your plan, it’s best to have many small steps to take, instead of a few big ones. Having small plans to achieve at a relatively quick pace will inspire you, help you gauge your progress, and keep you going onto the next one. It’s good to think that no one obstacle is difficult, because it can always be broken down into many smaller ones. Remember to create small steps for your plan.

Have A Schedule – Even with a perfectly formatted plan, it’s useless if you don’t dedicate time to actually doing what you wrote down. Whenever I create a plan for achieving a goal, I like to dedicate at least 6 hours to it. I understand that not everyone has a lot of free time, so it’s not necessary to dedicate 6 hours to completing your plan. Even if you can only spare 30 minutes to it, that is still progress, and that is still taking action for something you desire.

These are the methods I use when planning anything. I used them for international plane trips, businesses, a wedding, and I will use them for many more objectives in the future.

3 Sure Ways to Trump Your Investing Fears

3 Sure Ways to Trump Your Investing Fears

Often times when people here the word “invest” they become
frightened. It is probably one of the most misunderstood
words on the planet. As a result, many employees as well
as other individuals refuse to invest their money in anything
other than a passbook savings or money market account. That
includes those who have retirement accounts available through
their employer.

So, what is stopping you from starting to invest? The following are three of the most common reasons are I found after taking a poll:

1. I don’t have enough money to invest.

2. I have to pay off my bills first.

3. I have money to invest, but I am afraid.

What can you do to alleviate your fear of investing? There
are many inexpensive ways to start investing. You can open
an investment account with a broker that sells shares or
partial shares of stocks, this type of broker is usually
found online. You can open a mutual fund account with a
mutual fund company, that will allow you to start with a
small amount of money. You can start investing with your
company employee retirement plan. And finally, you will
have to shed some old baggage about investing, for example,
“I will start investing when I get my bills paid off,” or “I am
afraid to invest.” The main questions being, how do you shed
this baggage and allay all fears?

1. The first most common reason the poll respondents don’t start investing is because they think it is too expensive. They feel a lot of money is needed to start investing in stocks or mutual funds.

There are mutual fund companies that will allow you to start
an investment account for as little as one hundred dollars,
and add as little as twenty-five dollars a month. You can
do a search for mutual funds in any internet search engine
or research them in your local library. There are many companies
that will allow you to invest in a few shares or partial shares
of stock, starting with as little as eight dollars a month, and
adding eight dollars a month to your account to purchase additional shares or partial shares. Using your company retirement account is another way to invest with ease. In most cases, you will have the option to pick among investments already chosen by your company. The money is taken out of your check, so you don’t miss the funds and you receive tax advantages.

2. The second most common reason the respondents gave is that they are told to pay off bills before they start to invest.

It is a good idea to have your debt well under control
before you start to invest. The interest rates on
outstanding debts are sometimes in excess of the interest
rates on investments, coupled with compounded interest, debt
payments can be excessive. There is an easy way to invest
after you have your bills under control, that is to treat
your investment savings as “just another bill,” before you
know it, you will have a significant amount of money in your
savings account, you can invest.

3. Fear was the third most common reason the respondents don’t
invest. This fear can be easily conquered with education and
detailed information about investing.

Do you have plenty of money to invest, but you are simply
afraid? I think the term for that is, “fear of the unknown”.
That is probably the easiest investment stop addressed in
this article. The Internet has brought learning to our
fingertips, there are thousands of websites that teach
investing from a consumers perspective. Brokerage sites and
web portals provide research with detailed information about
stocks, mutual funds and other investments to protect your
interest and your money. If you are not Internet savvy, take
a trip to your local library, the librarian will show you how to use investment research catalogs such as Value Line reports for stocks research, and Morningstar Mutual Fund Reports for
Mutual Funds research. Doing your own research will teach
you how to choose low risk, low cost investments. Investment
research will also teach you how to analyze the investments
that your advisor chooses for you

Best Practices for a Successful Acquisition or a Merger

Best Practices for a Successful Acquisition or a Merger

Pre-requisites For a Merger or an Acquisition:

Identify the Assets and Liabilities and have a clear definition of what an asset or a liability is. In the cased of shared assets and liabilities it is essential to arrive at the final dollar amounts so that there is no confusion when the final merger or acquisition happens.

Take into account future revenue generating events and have the figures consolidated into the as-of balance sheet.

Identify how the processes of the acquired company can be tweaked to fit into the overall business processes.

Identify specific roles of the acquired organizations personnel since there might be duplication of efforts.

Establish a reconciliation cut-off data for all business related transactions so that the income and liability statements are accurate.

Establish a consistent revenue recognition mechanism between the merged entities so that revenue leakage if any can be addressed as early as possible.

Business Process Strategy:

Form a team of experts to identify all the business processes and transactions which need modification with the organizational change.

Involve IT during the function point/s analysis so that the risks if any can be addressed and the business systems will be ready by the time an acquisition or a merger happens ex: System Readiness, Data Quality and Data accuracy etc.

Draw up a detailed plan as to how the in-flight or incomplete transactions are to be handled. Ex: Existing and Future supplier liabilities, Revenue from Sales etc.

Establish a meaningful change control so that any issues identified with respect to data are addressed through a proper mechanism ex: having designated personnel to obtain customer feedback and making changes to the process so that the transition is easy on all the stakeholders and most importantly on the customers.

Ensure there is a proper correlation between customer facing functions and back office functions with the organizational change Ex: Between a contract negotiator and Receivables supervisor.

Communicate to the customer who is one of the important stakeholders regarding the organizational change which can help alleviate the pain points if any.

One of the important considerations which need to be taken into account is the statutory and legal reporting of the new organization if the parent organization belongs to a different legal entity. Sufficient time should be allocated to test all the transactional data and the amounts which when reported to a statutory body are in conformance with the standards of the country in which the organization is based out of.

How Buying Investment Properties

How Buying Investment Properties

Investment may be counted on the gross or the net basis. Net investment is gross investment minus depreciation. Investment may be ex-ante or planned or anticipated or intended investment; or it may be ex-post, i.e., actually realized investment, or when investment is not merely planned or intended, but which has actually been invested or implemented. This is so true when Buying Investment Properties.

Another classification of investment may be private investment or public investment. Private investment is on private account, i.e., by private individuals, and public investment is by the government. Private investment is influenced by marginal efficiency of capital i.e., profit expectations and the rate of interest. It is profit-elastic. Public investment is by the state or local authorities, such as building of roads, public parks etc. In public investment, profit motive does not enter into consideration. It is undertaken for social good and not for private gain.

Investment which is independent of the level of income, is called autonomous investment. Such investment does not vary with the level of income. In other words, it is income-inelastic. Autonomous investment depends more on population growth and technical progress than on anything else. The influence of change in income is not altogether ruled out, because higher income would probably result in more investment. But the influence of income is negligible as compared with the influence of population growth and progress of technical knowledge.

Examples of autonomous investment are long-range investments in houses, roads, public buildings and other forms of public investment. Most of the investment is undertaken to promote planned economic development. It also includes long-range investment to bring about technical progress or innovations. Public investment means investment which occurs in direct response to invention, and much of the long-range investment, which is only expected to pay for itself over a long period, can be regarded as autonomous investments.

The Key Secrets of Success in the Export Business

The Key Secrets of Success in the Export Business

It is a discouraging reality that not every business that aspires to spread its dimensions internationally attains success. Some lack the quality standards, while many do not have sufficient resources to break the domestic boundaries. There is also a group of emerging businesses that longs to establish themselves as an export business, but they do not have ample understating about the rules and regulations at the international and domestic levels. If you are a transpiring entrepreneur, and have a keen aspiration for expanding and ascertaining your vertical as an export business, here are a few secrets, which you can consider following to meet your goals –

Discover the market

Business is a brilliant livelihood option, to get into which a brilliant market research is an elementary step. The term ‘discover the market’, prefigures a couple of significations. When you have chosen the entrepreneurial path, you, at first, need to discover: which, what and where exactly your target market is!

It is one of the fundamental exercises that you have to research out, before you step into the market. However, you should always be ready to explore and discover new sides of the market, where you are pitching your business. You should try to assimilate the changing trends of the market, along with interpreting the behavior of your competitors, and the culture and preferences of your target audiences. Researching the market will also involve exercises like your country’s export guidelines.

Hit Upon a Trustworthy Partner

The success of an export business largely relies upon the reliability and responsible nature of your agent, representative, and business partner in the respective country, where you are going to deliver your supplies. You should be very careful, when choosing a business partner, as their one wrong step may bar your business rights in that country. Employing an agent or partner is an initial stage exercise, which most exporters often finalize during the market research.

Settle Over the Prices and Currencies

USD, Euro, and Pound Sterling are universal currencies that most exporters, across the world, work with. For currency exchange, it would be wise to speak to your bank representatives. There are various terms and conditions related to currency exchange that you might not be aware of. Alongside choosing a preferred currency, you also have to settle on the prices of your export goods.

Have a clear payment policy

Due to technological advancements, the business processes have transformed significantly. Most exporters have their websites, where they display their products and prices. These websites work as a tool that facilitates dealing between the buyers and sellers. In export sector, instituting a clear business policy is vital. You should institute payment and order insurance and order tracking system on your website, to make your buyers feel safer while trading with you.