50 Plus Finance

Wednesday, October 10, 2012

Free Online Business Courses Helping with Personal Finance

Finance (Photo credit: Tax Credits)

There are few things more daunting in our personal lives than the concepts of personal finance, financial responsibility, and preparing for retirement. Money matters are almost always a drag. Whether you're 20-something and just graduated from college or you're 55 and edging on retirement, a little guidance when it comes to finances can be extremely useful. Truly understanding personal finance and retirement planning will most likely take a bit more effort than just reading a few blog posts or "how to" books on the topic. Take the time to really invest in your financial future by educating yourself as carefully and thoroughly as possible on financial matters. As technology grows and expands, we have more and more access to useful information and resources. Use these three online business open courseware classes for free to learn more about personal finances and money management.

Fundamentals of Personal Financial Planning- University of California Irvine

This online class is offered by the University of California in Irvine and takes a careful look at financial planning. While this class certainly shouldn't replace a professional financial planner if you need one, it can be extremely useful in getting individuals started on the path of financial planning. Students can take the class for free online to gain an understanding of financial planning in the broadest sense. Students will learn to manage all aspects of a person and family's financial affairs. This starts with exploring family spending planning and extends to looking at risk management with insurance, taxes, wealth accumulation, investing, and wealth distribution in retirement and estate planning. This online course is a great stepping off point for beginners of any age to delve into the world of financial planning and management.

Introduction to Financial and Managerial Accounting- MIT

This course is presented by open courseware-great MIT and the Sloan School of Management. As an introductory course, this business class tackles the sometimes confusing topic of accounting. Students will study the basic concepts of financial and managerial reporting in this online course. You will explore topics like the accounting process, statement of cash flow, balancing and recording transactions, long-term assets/depreciation, and much more. While some of this material may be more advanced than is necessary for personal finance needs, the course can still be very worthwhile for the average individual.

Statistical Thinking and Data Analysis- MIT

Another course offered by the MIT Sloan School of Management, this course explores the topics of statistics and data analysis. Again, this course may look into several topics that are more advanced than the average person might need, there are many things to take away from the course. Students will look at topics on applied probability, sampling, estimation, hypothesis testing, linear regression, analysis of variance, and much more. Learning these areas of statistics and data analysis can help with understanding your money use and future prospects. Students have access to lecture notes, exams and solution, and assignments with solutions. Follow the class completely or pick and choose through the topics that you are truly interested in learning and you think can help your financial planning and personal finances.

Karen Smith is a devoted freelance writer and business blogger. Her primary goal as a blogger is to inform her readers about pursuing a business degree online. She also enjoys writing about small business trends, Internet marketing, personal development, and sustainable living. Karen welcomes your comments below!

Why You Need a Stop Loss (and the Proper Way to Place One)

The big debate in the financial industry among investors and traders is whether or not one should use a stop loss. Some say it is advisable to do so, because it will prevent your losses from growing and compounding into a more deadly problem. Others say you shouldn't - "you should just hang in there and wait for the market to return - if you use a stop loss, you might get stopped out at the worst time possible".

I believe that one MUST use a stop loss. However, my method of placing a stop loss is a little different from that of others.

Why You Need a Stop Loss

A stop loss has two very important purposes:

Using a stop loss properly is the ONLY way to manage risk. Some say that you can manage risk by diversifying - I do not believe that is true, because true diversification is no different than buying an index wide ETF (e.g. S&P 500 ETF). Thus, stop losses help you manage risk by only permitting your losses to go so far - once the losses exceed that limit, the stop loss will automatically trigger and stop your "blood loss".
When I invest, I like to wait for the fundamentals, technicals, and political policy to all line up in one direction (the market direction is easiest to predict when this happens). However, if I'm 99% sure that my market prediction is correct, there still is a 1% chance that your prediction was wrong. The first thing one learns from Risk Management in university/college is to never, never put yourself in a live or die situation, because you just might die. Thus, without a stop loss, your losses could potentially wipe you out - without any capital, you can't make a comeback in the markets.
It can validate whether the fundamentals you analyzed were correct or wrong (e.g. you believed the fundamentals of the market were strong, but if the market hits your stop loss, it invalidates that belief).

To summarize, the only way to properly manage risk after you've initiated a position is to use a stop loss. So how does one set up a stop loss correctly?

The Incorrect Way to Setup a Stop Loss

Most people make this mistake - they do 1 of 2 things:

Many investor and traders like to place their stop loss near or at whole numbers, such as 10's, 100's, 1000's, etc. Do not do this! nowadays, many big traders and fund managers can buy data that shows where the majority of stop losses are. They'll purposely (artificially) trigger that stop loss, forcing you to cover your position, which yields them handsome profits.
Many others like to place their stop losses at their maximum pain threshold. For example, if Tom is willing to lose a maximum of 10% on any single position, he will place his stop loss at 10% below the market price he opened his position at. This is wrong, which will become evident later.

In short, you cannot use the above conventional ways of using stop losses because nowadays, the market experiences such extreme swings (thanks to investment models, computer traders, and the consolidation of market capital) that the extreme swings often touch the stop loss, after which the market swings the opposite way.

The Correct Way to Setup a Stop Loss

When I invest, I create different scenarios. If this happens, then it validates Scenario A, and this should happen as as consequent. If the market then moves this way, then it validates Scenario B, and this should follow as a consequent. Etc. Many times, if something changes, the market will have switched from your Scenario A to Scenario B. So here's how you set up a stop loss:

Place the stop order at a market price that, should the market reach that price, your market prediction would be invalidated (eg Scenario A) and you must change your prediction to a different scenario (e.g. Scenario B).

Tony blogs about his financial thoughts at Intangible Investor, a site dedicated to analyzing the fundamentals of the biggest U.S. and international stocks.

Tuesday, October 9, 2012

Investment Crowdfunding The Future of Business Investing

This is a Sponsored post written by me on behalf of iCrowd for SocialSpark. All opinions are 100% mine.

The spirit of the American entrepreneur is alive and well. Even in a down economy

major private businesses were started last year. What these private businesses have in common with public companies is the need for capital to start up and sustain operations. In today’s investment world, 99% of Americans are prohibited from investing in these startups because they don't have the financial balance sheet required by law to invest in companies before they go public. These antiquated laws block investors willing to share the risks and allowing them to reap the rewards from providing capital to small enterprises.

To cure this roadblock for the common investor a relatively new form of investing called "Investment Crowdfunding" will be coming soon, once the SEC finalizes its regulations. Investment Crowdfunding will allow you to invest directly in early-stage companies, which not only includes startups but other small businesses as well.

Investment Crowdfunding: A Transformative Technology

For the average investor this means that you will be allowed to invest in startups. The JOBS Act has language that allows you to invest with entrepreneurs and help convert inspired ideas into reality. You will be able to invest in companies that have the potential to grow and meet your investment goals.

Once Investment Crowdfunding is allowed by the SEC, you will be able to invest in new businesses using iCrowd’s web-based portal. There you will discover companies with business plans that need investors like you to turn them into reality. iCrowd will help you find and uncover investments that match your goals and interests. On iCrowd you will find a network of fellow-investors who root for, patronize, or offer advice and ideas to help make your investment successful. iCrowd is different because you will not only be investing your money, you will also be interacting with the investment community by giving advice and networking with like minded investors. On iCrowd you will see a wide variety of businesses that Investment Crowdfunding can be used for: innovative new products, sustainable enterprises, businesses in your home town, potential medical breakthroughs.

What’s iCrowd?

But with any startup there are risks. Businesses do fail, investors need to recognize this. Investors will need to recognize the risks each of their investments pose before putting any money at stake and they will need to invest within their means. The JOBS Act sets limits on the amounts individuals may invest, but investors will need to assess their individual situations to assure they can bear the risks they take on.

iCrowd's goal is to assist investors to make informed investment choices. The iCrowd community is there to help: ask questions, discuss potential investments, talk to the entrepreneurs, give and take advice. Visit iCrowd today.

The Scoop on Buy To Let Mortgages

Property market (Photo credit: Alan Cleaver)

Many individuals today know property investment can be a very profitable proposition, and landlords all over the UK are making large sums of money, both in terms of rental income and rising equity value in their property.

For many interested in buying property to rent out there are special mortgage programs called “buy to let mortgages” available. When looking around for a buy to let mortgages keep in mind that you should thoroughly analyze these mortgages as you would any other mortgage, since you want locate a mortgage lender that is offering very competitive interest rates.

A good place to start comparing buy to let mortgages is the Internet. You can do your research from the comfort of your home and you have flexibility and convenience in your favor. Researching these mortgages through the Internet will give you the opportunity to familiarize yourself with the industry before making any financial commitments.

In doing your research you will see that the interest rates on these mortgages are slightly higher than on traditional mortgages, even though the difference in rates usually isn't that significant. You will probably have to put down a larger deposit on a buy to let mortgage, with some lenders requesting as much as 25% of the property value as down payment, so you may need to have quite of bit of money on hand to get your mortgage.

Remember, mortgage brokers are well qualified and trained professionally. Therefore, they are well-versed on the way buy to let mortgages function, and they have access to all kinds of mortgage programs in the UK. You will probably pay a fee to the broker for his services, but this may be a good deal if they can find for you a mortgage at a good interest rate.

Improve Your Credit Score - 4 Effective Ways (50plusfinance.com)

Just as in any type of mortgage, the requirements for eligibility will vary based on many factors including your financial status, your credit history and your rating. When lenders decide how much money you are eligible to borrow for this type of mortgage, some lenders will consider regular income, as well as any rental income expected from the property, while other lenders may only consider the potential rental income. From your perspective, be sure to confirm what your monthly repayments will be based on the mortgage amount and the amount of your down payment. Also, be sure to check the fine print for any details, any obscure fees or setup costs, so that you will know exactly what you are required to pay.

As part of your mortgage you will be required to purchase insurance for the building and its contents, particularly if you are offering a remodeled property. Just make sure your insurance will cover fire, vandalism, water damage, or any type of loss you can contemplate. You want to be sure the building is covered for any catastrophe.

Since buy to let mortgages have increased in popularity in recent years, numbers of individuals are getting on board. It has become a very competitive market with lenders offering a wide range of deals to tempt potential property owners, so it is essential not to go for the first buy to let mortgage that is presented to you because there might be a cheaper one around the corner.

5 Good Reasons Why You Should Play Poker

English: Shankar Pillai after winning the $3000 No Limit Hold 'Em event at the 2007 World Series of Poker (Photo credit: Wikipedia)

Many inexperienced poker players ask themselves 'why play poker?' The answer is simple: many play poker not only because it is fun, but also because of the challenge it offers intellectually. Poker is a game that provides mental stimulation and requires certain skills, where numerous competitions take place and where poker players can earn thousands of dollars. Above all, it is entertainment and a way to make money.

1) Make Money on Poker

The first answer to 'why play poker?' is money. Poker is a game with big money, and this is instrumental in getting many people to start playing poker. Although a poker player can fold many times in a single game, there will always be a patient player who goes home with the big win.

Poker is a gambling game, like most other games at a casino, and with enough practice and knowledge, any player can make money from poker. You can either spend a few hours each week to learn poker, play for fun or earn a few pennies, or you can make poker your full time job - be a pro and make poker your main income, it all depends on you, your determination and what you want.

Making money at poker is of course not quite simple and you need some time to learn the skills, techniques and game and a lot of patience, but it is achievable if you decide to learn the rules of poker and strategies that are the basis to make money in poker.

2) The Intellectual Challenge of Poker

The second reason to play poker is the intellectual challenge the game allows. As mentioned earlier - poker is not a gambling game, although an element of chance is present, it is more an intellectual challenge where a player has to use his full intelligence to win.

The intellectual challenge of poker varies from player to player: some are bluffing the real challenge, while for others it is the intellectual challenge it takes to read the opponents' hands. Successful poker players get a kick from learning how a system works and how the system can be broken.

3) The Social Aspects

Apart from the intellectual challenge and the money that can be earned by playing poker, this game has a different attribute, and it is the social aspect of it. Poker is a social game - players sitting around a card table can play and talk for hours, which can strengthen their friendship. Poker is offering you a chance to meet new people and make new friends while playing your favourite games.

In many TV shows you can watch the traditional 'boys' nights', where some guys sitting around a table and play poker into the wee hours of the night, it is a typical example of the social aspect of poker - playing, talking and enjoy at the same time.

4) No Limit on the Game

Another great reason to play poker is that there is no ceiling on what you can do with this game - there are always bigger tables with more money, another competition to participate in. There is no limit to poker, just the ones you decide.

You can choose to play 'home games' with little risk or you can go all the way and don’t stop until you've reached the biggest poker events like the World Series of Poker or the World Poker Tour, where millions of dollars are presented as first prize.

5) The Thrill of Competition

Every game that surrounds money is exciting in its own way, but poker is a greater excitement, as it not only is a game of chance, but a game where the most qualified and skilled player wins and not the lucky ones. Basically this game is a tense competition between the players and a thrilling event that brings out the best and worst in people.

Remember to be a responsible online gambler and poker player and play for no more than you are willing to lose. We wish you luck!

5 Top Tips for Those Thinking of Opening an Online Shop

Image representing THEM as depicted in CrunchBase

Image via CrunchBase

These days more and more people are deciding to open up their own online shops- and none more so than those over 50s. Setting up an online store is not only a great mean of making some extra cash; it can also be a really rewarding pastime for those that find themselves with a little extra time on their hands. Here are five tips for those looking to set up their first store.

It’s cheaper than you think

It is quite remarkable that these days it is possible for anyone to set up an online shop within a couple hours for next to no cost. There are a huge range of different e-commerce platforms out there and it is well worth having a look around and working out which one is for you. Many people waste thousands of pounds having a bespoke website created for them by a web design company when a much cheaper option could have worked just as well.

Think about marketing

It’s all well and good having a great looking site but how will anyone find it? Underestimating how difficult it can be to get people to a site is probably the most common mistake that new online business owners make. Think carefully about how you plan to acquire customers and have a good sense of how much this is likely to cost. There is nothing more frustrating than having a beautiful looking website that nobody ever visits.

Think about stock

If you are just setting up your business you do not want to be holding a lot of stock. One way around this is to work with a drop shipper. You market their products but they keep them all at their warehouse and fulfil the orders as you notify them. Although the margins are not as good, it removes any risk you might have of being stuck with products you cannot sell- and it also takes the headache of fulfilment! And believe me it can be a headache. There are many companies offering drop shipping services, covering a huge range of different products, from pet supplies to electronic equipment. If you do decide to work with one then make sure you do plenty of research to ensure they are reliable.

Do your homework

The more you understand about e-commerce then the more likely your shop is to succeed. You may not want to become an expert in user experience, organic search, pay-per-click, analytics or any other mysterious online phenomenon, but having a working understanding will be incredibly useful. There is a huge community of first time internet entrepreneurs and they are incredibly eager to help out newcomers. Sites such as Warrior Forums and SEOMoz are full of great information and support for newbies. Do not waste money on e-books or expensive courses which claim to explain how to set up a successful online shop- all the information you could ever need is available on the web for free.

Market research

It is amazing how attached you can become to your online shop and it is always good to try and get other people’s opinion. Market research does not have to be expensive- in fact it doesn’t have to cost anything at all. Simply construct a list of questions and email them to everyone in your address book and ask them to respond- before you know it you will have a useful sample size. Feedback is really important and the beauty of having an online shop is that it is relatively quick and easy to act upon it. It is important that you have a shop which you are happy with- but ultimately it’s more important that you have a shop which your customers will love.

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Wednesday, October 10, 2012

Free Online Business Courses Helping with Personal Finance