Owner: Personal Financier URL:http://personalfinancier.blogspot.com/ Join Date: Wed, 03 Oct 2007 17:32:33 -0500 Rating:0 Site Description: Articles on personal finance, economics, business and Investments: How-to's, opinons, commentaries and strategies
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What is offshore banking? 2007-10-02 17:37:00 Offshore banking
simplified is utilizing financial and legal advantages available in a country outside the beneficiary’s country of residence. These banks are located at countries with low tax jurisdiction and more discreet privacy laws. The most infamous of these countries is Switzerland. Other countries which fit the profile characterized are Luxemburg, Andorra and the Cayman Islands.The advantages sought after by clients of offshore banks are mainly:1) Privacy and bank secrecy2) Lenient tax regulations and zero tax rates3) Easy and discreet access to accountsThe term offshore is also used to describe sophisticated tax planning designed to lower tax liability of various companies by registering them in the countries with the most suitable tax regulations.Offshore banks provide other advantages such as stability for residents of unstable countries, lower costs base and higher interest rates, potential for combining offshore tax planning and banking, creating competition in the banki
How to put your money to work 2007-10-02 17:12:00 Your money working for you. Sounds wonderful, doesn't it? “How do we make our money work for us?” is a simple question with simple answers. Save early, save often and invest wisely.Saving early and often sounds simple enough but is it? Saving early and often are the hardest parts of getting your money to work for you. It's never too early to start saving. “The most powerful force in the universe is compound interest" Einstein is often quoted for saying. Every 100$ saved for 10 years with 10% yearly interest will be worth 2.5 times more. Save for 20 years and earn 6.7 times the amount.When we’re young consumption levels are naturally high as we are making our first steps in life. Making a habit of saving is a must in order to achieve the status discussed at this article. There are several ways of making a habit of saving: A fixed sum automatically saved at the beginning of each month is one, planning a monthly and yearly budget is another and more are available. The point is,
Peak Oil - How close are we? 2007-10-02 15:38:00 Peak oil, according to Wikipedia, is: "The point or time frame at which the maximum global petroleum production rate is reached. After this time frame, the rate of production will enter terminal decline. According to the Hubbert model, the production rate will follow a roughly symmetrical bell-shaped curve. This does not mean oil will suddenly "run out", but the supply of cheap conventional oil will drop and prices will rise, perhaps dramatically. The following is an illustration of Hubbert's model: According to the assumption of market efficiency these price increases will occur some timebefore the actual peak. Has peak oil production already happened? Are current price increases a part of the process? The following is an illustration of world crude oil production from 1960-2005:Hard, even impossible to tell. Hubbert originally estimated 1994 to be the year of peak oil production. Some economists and Geo-physicists estimate 2020-2030 as the years of peak oil production. Other economi Read more:Peak Oil
Transparency International - the global coalition against corruption 2007-09-29 10:59:00 Transparency International
is an organization is a global civil society organisation fighting against
corruption world wide. The importance of a worldwide coordinated effort to fight corruption is intuitive. Therefore I've chosen to add a link to the organisation's Homepage (also on my link list).The following map charts the organisation's corruption perceptions index (CPI) for 2007. The countries perceived as most corrupt are brightest red:The link between corruption and human rights, equal opportunities, democracy, higher living standards and everything we hold dear can easily be spotted.The organisation has set 5 defined global priorities in the fight against corruption:1. Corruption in politics2. Corruption in public contracting3. Corruption in the private sector4. International anti-corruption conventions5. Poverty and DevelopmentAmong the impacts of corruption the organisation lists the following:1. Direct impacts - Most obvious impact of corruption portraying itself by one's Read more:coalition
, Transparency
Managerial decision making and the decision process 2007-09-24 11:14:00 Decisions drive an organization. The theory on decisionmaking
is vast but can be summarized quite effectively by using Vroom and Yetton's normative model for decision making.The model characterizes several types of decision making, each suitable for varying situations. These types are:A1: Leader takes known information and then decides alone.A2: Leader gets for information from followers, and then decides alone.C1: Leader shares problem with followers individually, listens to ideas and then decides alone. C2: Leader shares problems with followers as a group, listens to ideas and then decides alone. G2: Leader shares problems with followers as a group and then seeks and accepts consensus agreement.According to Vroom and Yetton each decision is influenced by two major factors:1.Decision Quality - Is the quality of the decision measurable?a. Does the manager have the necessary skills and information to make the decision? Do employees possess that information?b. Does the issue at hand ha
How to double investments in a month 2007-09-20 07:46:00 The easiest way to double
your investment in a month is in a casino. This may sound simplified but it holds an important truth. To double your investment in one month you must be willing to lose it all in the same month. If this is the case then read on (although my main point should be clear by now).A well known rule of investment is that return is function of risk. 100% monthly return is equal to a whopping yearly return of 1300%. This sort of return on investment is available only in derivatives and derivatives based financial assets. Some examples are options, future contracts, convertible bonds and mutual funds trading options.Investing in derivatives can actually produce greater return then merely 100% a month (Up to 1,000% and more). What's the trick then? Trading in derivatives is highly complicated and requires a deep understanding of financial assets and markets. When trading in derivatives one is actually risking the initial investment required to purchase and option, for e
Should government subsidize renewable energy sources such as wind, solar and ethanol? 2007-09-16 15:26:00 In capitalistic societies government subsidies carry an unpleasant tone as the purpose of a government subsidy is to encourage the private sector to enter an otherwise unworthy investment. As economists often preach subsidies and government interventions in markets often lead to inefficiency. As a result capitalistic societies subsidize to promote goal and ideals other then profit.A brief view may lead us to think renewable energy is the same as any other business and should be pursued only if it economically feasible. A more careful look may convince us otherwise. I believe the case of renewable energy is different.According to basic finance we should evaluate the economic feasibility of a project by comparing the present value of future cash flows to the investment required. If cash flows outgrow investment in present value terms the project is worthwhile.My claim is that only a government is able to fully evaluate a project such as renewable energy and its future benefits (even in t Read more:ethanol
, sources
Writing at Helium - Can it be profitable ? 2007-09-16 11:30:00 I've actually stared writing at Helium for supplementary income. I've been writing at helium for some time now and I've published 8 articles (ranging from 450-800 words) mostly regarding personal finance issues.Helium is a site which enables everyone to write on almost any topic and be rated by community members. Helium pays writers according to article views which are obviously affected by quality and quantity. As your articles stay on Helium "forever" they continue to generate earnings for a long term, dependent on popularity of course.As much as money making goes Helium has not proven, as of yet, to be a profitable venture for myself. Minimum payout is at 25$ and I've made almost 33 cents so far. But the joys of writing are also a sort of compensation.I've been writing mostly on personal finance issues.My tips for writing on Helium:1) Write often - From my earning experience for a long term residual income from Helium you need to write often and by that I mean very often. I thi
How to improve morale and boost profitability in your organization 2007-09-16 11:25:00 Very few companies give proper attention to morale among workers in their organization. This is of course a mistake. High morale in the organization may not directly affect productivity but it has been shown high morale among workers improves work satisfaction greatly and thus increases the profitability of the organization.Morale can be regarded as team spirit or attitude. Improving morale in an organization should thus affect those concepts. In today's competitive and goal oriented environment companies are usually goal driven and managed and as a result workers are focused on increased efficiency, better procedures and keeping up with competitors. This behavior has its price in worker morale which needs to be balanced.The balance or improvement in morale can be achieved in many ways. Boosting morale is often done by concentrating on: employee appreciation, employee involvement, management concern and accountability and working environment. The following are some of the ways to impr
Diversifying your risk in the stock market 2007-09-12 09:00:00 Think about betting 10,000$ on one coin toss with the possibility of winning 25,000$ and loosing everything. Now think about betting 1$ on each of 10,000 coin tosses with the possibility of wining 2.5$ and loosing 1$ each time. That is diversification in a nutshell. While participating in both bets yield, on average, the same gain (7,500$) the second bet seems much more inviting. The appeal of the second bet is due to the fact each one of the 10,000 bets is a small version of the large one thus reducing risk of losing everything in one big bet.Same principal goes for investing in financial assets. Each financial asset has a risk factor that should be taken into account. If simplified each financial asset yields a certain return with certain odds. Think of biotech company which has a chance of 1/100 of succeeding and yielding 100,000% return on investment and 99/100 chance of loosing the initial investment. This is a risky investment although profitable on average. The problem is gettin
Adding Digg and Del.icio.us Hotlinks for your blog 2007-09-08 17:14:00 In order to increase traffic to my blog I've decided to add social bookmarks such as Digg
! and Del.icio.us as probloggers recommend.I've found an easy automated solution after having added each link by hand.Hopefuly these help:Del.icio.us and Digg hotlinks for your beta blogAdding Digg and del.icio.us links to your footer
Should you Rent or Buy a Home ? 2007-09-08 06:26:00 There are many psychological aspects to the question of rent or buy. While these may be debated in length it is important to get the financial part of the question right.In this article I will examine the financial aspects of the decisions in the form of the alternative 'loss' in each option (Rent Vs. Buy). We are not always aware of the entire financial picture. There is also one more very unique psychological motivation that I think should be discussed.When addressing a financial question we should isolate those variables which can be measured and compared. We should regard a house as every other asset and ask ourselves which way to purchase the asset is most desirable financially.In order to compare the two options we must first have a basis of comparison. Evaluating rent or buy, financially can only be made by considering the same asset, of course. Thus, we shall look at two alternative paths to own a house in a certain period of time":Option A: Buy the house today and live in it
Introduction to momentum stock investing 2007-09-08 06:24:00 The search for an investment strategy that will yield consistently high abnormal returns has long been sought for by academic researches and market professionals.While momentum
strategies are not intuitive (Why should a stock keep on rising just because it has done so far ?)these strategies are among such strategies as the January effect or week end effects that have proved over time to yield high abnormal returns (such that to contradict market efficiency assumptions).Using momentum strategies is quite simple and requires no use of judgment on the part of the investor. According to this strategy buying stocks which have performed well and selling short stocks which have performed poorly in the past would yield high abnormal returns. The underlying assumption being, of course, that these stocks would continue to perform as they have for a certain period of time in the future.An example of the use of a momentum strategy would be: Firstly to sort the returns of the 100 top NYSE stocks fo Read more:Introduction
Was Israel's decision to unilaterally withdraw from the Gaza Strip wise? 2007-09-08 06:23:00 As "Kasam" rockets continue to rain on the Israel
i city of Sderot and the kibutzim near by and as the radical Islamic Palestinian terror group "Hamas" and "Islamic Jihad" take control over Gaza asking whether the unilateral withdraw
from the Gaza Strip
was wise is ever more justified. To answer this question I believe we should look at the bigger long term picture.The Israeli settlements in the Gaza Strip housed over 1,400 families. These settlements were strategically located and enabled the Israeli army to maintain some control over the Gaza strip and the refugee camps within it which house terror infrastructure and are used a base for terror activities and terrorists.The Israeli public opinion regarding the settlements in the Gaza strip where mixed. Many objected to the heavy military presence required to defend these settlements, the price paid in human life, the suffering of the Palestinian civilian population and the enormous budgets that had to be invested in civilian and milita Read more:decision
7 Tips on Saving Money 2007-09-08 06:22:00 "How to save money" tips and guides often contain the same old advice. Most of these articles are focused on expenses generated by day to day activities and ways to minimize those expenses. While these do indeed help to save money and lower expenses the money saved is usually a small (though always meaningful) percent of our monthly income.In this article I will focus on a different part of "How to save money", a much more effective and meaningful one: The financial part. Simple budgeting, as mentioned above, does indeed help to lower expenses. But it is not an empowering tool. Using finance wisely in our lives can have a stronger and more meaningful effect then ever expected.The following are 7 tips for better personal finance understanding and management:1) Use the power of compounding interest - "The most powerful force in the universe is compound interest" Einstein is often quoted for saying. Every 100$ saved for 10 years with 10% yearly interest will be worth 2.5 times more. Save Read more:Money
, Saving
Comparing Bonds Vs. Stock as an investment 2007-09-08 04:46:00 Investing in stocks is owning a part of the company while investing in bonds is owning a part of the company's debt. This difference may sound intuitive and straight forward but it is far from it.Both stock and bond are means of corporations to raise capital in capital markets. A stock is a financial asset which a corporation issues in order to raise capital by giving up a certain percent of ownership over the corporation. A bond is a certificate of debt issued by a corporation or country which is required, usually, to pay a fixed sum annually until maturity and a fixed sum to repay the Principal.The basis for comparing both financial assets is derived from the aforementioned difference:1) Risk and return - The most notable difference between stock and bond is the risk involved in the investment
and, of course, the expected return. As a stock holder an investor is investing in the corporation's future worth expecting it to grow. The corporation has not assured the investor in any way Read more:Bonds
, Stock
Key psychological factors in stock market success 2007-10-14 15:52:00 Much has been written on the part of psychology in stock market success. This lesson is probably the easiest to learn and hardest to implement. Psychology is everywhere in the stock market and effects all from the novice to the most professional (aside for computers).Many investors make the same mistakes over and over again. Mistakes such as: selling profitable stocks too soon, holding on to losing stocks forever or lacking the discipline to stay in the market and avoid frequent buying and selling are all a result of poor understanding of key psychologicalfactors
required to succeed in the stock market. Common psychological factors at play in the stock market are:AnchoringAnchoring is a psychological phenomenon in which one judges data (a stock price or exchange rate) by comparing it to a certain anchored similar data. Is 1 euro for 1.4 $ expansive? Since it has been cheaper we tend to think it is more expansive now, but is it? Just because market prices are high it does not mean they
Some rules for speculating 2007-10-14 15:19:00 If you're afraid to lose a significant share of your investment do not read on. If you're tempted by the potential of speculative investment and have the money to back it up by all means, read on. In order to achieve highly abnormal returns we need to take highly abnormal risks.Please note speculative investing is very similar to gambling (if not the same). A speculator does just that: Speculates. This article should be read carefully and by no means be used a guide for investing soundly. If you are going for speculative investment following some of the following rules might help you along your dangerous journey.Invest in trendy sectorsCommodities of Ecology have proved very profitable these last few years. Try and locate the more trendy sectors earlier on and invest in leading companies in those sectors. It is difficult to locate these sectors but by keeping up to date and with a little luck you might just invest wisely.Buy OTM optionsWhile more often then not buying out of money op
Switching to CFL (compact fluorescent lamp) 2007-10-08 15:30:00 According to Wikipedia: "A compact fluorescent lamp (CFL), also known as a compact fluorescent light bulb is a type of fluorescent lamp designed to replace an incandescent lamp. Many CFLs can fit in the existing incandescent light fixtures."An interesting article I read today mentioned the following facts:1. CFL's take up to 70%-80% less electricity compared to incandescent lamps.2. CFL's living span is up to 6 to 10 times that of an incandescent lamp.3. 11w of CFL power is equal to 60w of incandescent lamp power.4. Changing 10 lamps to CFL's will result in a yearly saving of up to 150$.5. Most of the power in an incandescent lamp is wasted on heat not light.6. California will soon ban the use of incandescent lamps. In Europe a similar law is currently drafted and in Australia the use of these lamps will be banned by 2010.A classic win win situation in my opinion. Read more:Switching
How to tell if a mutual fund is well managed 2007-10-08 13:43:00 The only way to tell if a mutual fund is well managed is to benchmark its performance against the performance of similar mutual funds in the same time frame and against the return achieved by the index or financial asset in which it specializes. Similar mutual funds for this matter are funds invested in the same financial assets whether it's bonds, stocks or any other financial asset such as derivatives.If we wish to determine if a certain mutual funds which invests in NASDAQ stocks is well managed we should first and foremost compare it to other mutual funds invested in NASDAQ stocks.When trying to determine if a mutual fund is well managed we should ask the following questions:Did the fund beat the market? Mutual funds charge management fees. As a result we expect them to beat the return achieved by the specific index in which the fund specializes. Otherwise we should invest in the index directly by ETF's for example.What is the relation between market return (and other mutual fund
Investing mistakes to avoid 2007-10-07 16:13:00 Surprisingly, investors often make the same mistakes. It is even more surprising to find out even veteran investors often repeat the same mistakes over and over again. It is hard to resist our human nature but one must overcome one’s urges in order to become a successful investors. Here are the top 10 mistakes to avoid in my opinion:1) Investing
in stocks for terms shorter then 5 years – A thumb rule of investing is the relation between term of investment and the percentage of the portfolio invested in stocks. Usually, the share of your portfolio invested in stock should be around 100% minus your age (for long term only).2) Thinking you can outsmart the market – Look for long term return on investment.3) Acting on the latest fad – Do not take shortcuts. Check for fundamentals. If the talk of the day is the stock market, keep away.4) Frequent Trading – Constantly buying or selling does not improve returns and is costly in terms of commissions.5) Constantly checking portfolio p
Pros and cons of reverse mortgages 2007-10-04 06:33:00 The significant advantage of reverse mortgages is clear. This financial tool enables seniors to make use of their home equity in order to increase their standards of living in their senior years which are often characterized by a shortage of liquidated financial resources. This is especially valuable when other family members are unable or refuse to aid the senior with his financial situation.A reverse mortgage requires no guarantees on the side of the borrower aside from the property itself.Another advantage of reverse mortgages is that it enables seniors to support other family members today instead of as an heirloom. It enables seniors to decide how and when to aid the potential heirs and is especially valuable when seniors still support their families.A reverse mortgage might also assist financing required payments for health care or nursing and also help finance the move to a retirement home.Last but not least a reverse mortgage is a great solution to avoid taxes on payments made
Using Multiples for Valuations: Pros and Cons 2007-11-04 12:58:00 Using multiples for evaluations is convenient and straightforward but it can also be very misleading. And that is an understatement.Various multiples such as profit, capital, assets and sales multiples are used to compare various companies in terms of profitability, valuation, effectiveness and more. The most common use of profit multiples, for example, is in comparing valuations of similar companies in the same industry.The advantages of using multiples are obvious:1. Simplicity - Extrapolating data is easy and multiplying is very basic math.2. Informative - Using multiples often yield significant data in a short time.3. Does not require forecasts - Unlike other methods of valuations multiples use existing date (which is, of course, their Achilles heel).However, one must also pay careful attention to the shortfalls of using multiples:1. Sensitivity to various accounting choices and alternatives - A different method of revenue recognition adopted by a company might distort a profit mul Read more:Multiples
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