Structured Settlements have been a part of our lives since the 1970s. There are some known advantages and the unfortunate disadvantages attached with them that are difficult to ignore. Over so many years of its inception and usage, one thing is clear that it is one of those funds that do benefit the claimant and help secure his family for a long time through periodic settlements or by making provisions for a lump sum amount should he choose to sell a part of it. The Government has made honest efforts all the way to help people gain from the scheme by making it tax free and by applying judicial watch over the sale of the same. However, there can be some definite cons of the Structured Settlements too that can be classified. Continue reading “Pros and cons of structured settlements – a refreshing overview”
Commodities Futures Broker (CFB) and Stock Brokers, both reside in the financial industry, but when you think of the quantity and possibly quality, Commodities Futures Broker are unique. CFB’s are – in a very specific niche of the futures, commodities and options world. There are close to a million stock brokers, and less than a one-hundred thousand CFB’s. Online trading, truly turned everyone into a “stock-broker”, in that, anyone can buy stock, and operate mutual funds. On the converse, when it comes to the actual trading of commodities, there is no general set rule, or a model with commodity trading. However, if you are looking to become a CFB, there are two key avenues to consider, before stepping into this arena of the financial market. Continue reading “How to Become a Commodity Broker”
A major pain point of the banking industry is the challenge of how to penetrate the Bottom of the Pyramid (BoP), a concept which was popularized by Prahlad . This indeed is a sizeable market, consisting of 2.5 billion people who live on less than US$2.50 per day. Technology is being heralded as a major enabler for the diffusion of banking solutions in this segment, and the same is being brought about by different types of electronic payment systems.
It is interesting to note how in emerging economies, diffusion of these technologies are creating benefits for this segment . No wonder technology vendors and service providers are rallying to get a big pie of this cake and research in this topic has increased significantly [1,2]. However, the risks of fraud and perceived usefulness of these technology are slowing down the diffusion of the same in these economies. Another major barrier is internet penetration, which is significantly low, in developing economies, especially in the rural segments.
However, the development of banking solutions which can be used through Mobile based technologies, can significantly eradicate these problems. The adoption and penetration of mobile phones is significantly larger than internet based technologies. Hence technology giants like IBM and Microsoft are investigating significantly on research, so that mobile payment solutions can be made available to this segment. Some of the major technological advancements which are attempting to address this gap are speech technologies like the spoken web. It would indeed be interesting to see how such technologies can bring about inclusive development in the banking and financial services industry. Indeed the adoption of these technologies can bring about financial inclusion for the general masses by enabling banking solutions for this segment.
- Kar, A. (2009). eBusiness Enablement: Implications for Business Strategy. Available at SSRN 1432433.
- Kar, A. (2009). The Past, Present and Future of Information Systems Research. Available at SSRN 1366962
- Prahalad, C. K., & Hart, S. L. (2002). The Fortune at the Bottom of the Pyramid. Strategy and Business, 54-54.
- Simpson, J. (2002). The impact of the Internet in banking: observations and evidence from developed and emerging markets. Telematics and Informatics, 19(4), 315-330.
Starting a business is a dream for which an owner plans and prepares. Market research is done to ensure there is a market for the product or service and that it is an area of need for potential customers. You check out a location for a storefront or office and plan all the different ways you’ll be able to promote your business.
What is a Business Credit Card?
A business credit card is much like a personal credit card. A business credit card extends the credit available to the business. When financing is tight, the business credit card can be used to pay bills and buy supplies to keep the business afloat.
Everything seems to be coming together until you start adding up the costs for starting the business and for keeping it going for a year until there is a regular income stream coming in. There may be costs for licenses or other government requirements, costs for space, internet access, equipment, supplies and employees.
A business plan is a must for making sure an owner covers all the bases and doesn’t lose the dream due to poor planning. A business plan includes listing all sources of potential financing. These may include personal savings, taking out a mortgage on a home or other property and loans from the banks, friends or family. These are all fairly fixed amounts, but business expenses ebb and flow.
Not a Personal Credit Card
Business credit cards often offer different terms than a personal credit card. They also have the larger credit limits required to efficiently run a business. Of course, like a personal credit card, anything spent has to be paid back.
Credit cards are loans and owners need to take care to use a business credit card account wisely. Paying back any funds spent needs to be part of the overall business plan. Like personal credit cards, there is the temptation to consider the credit free money and overuse the card. This can undermine the solid financial basis of the company. However, there are good reasons to use a business credit card.
Accounting can become a nightmare for the small business owner, especially when supplies and products are purchased with different accounts. Keeping receipts together can get frustrating and putting everything together difficult for an owner who already has way too much to do just keeping the business running.
If, however, everything is purchased on a business credit card account, the business will have all expenses listed in one place. The owner can quickly check when something was purchased, where it was purchased and for how much. This proof is invaluable should the government call into question, at tax time, whether something was purchased and whether one or more purchases qualifies as a deductible expense. A business credit card also keeps tabs on the purchases of employees.
Business credit cards, depending upon the card, offer a variety of perks that assist the business owner from discounts on supplies to free flying miles.
Author’s Bio: The articles of Ethan Grunt have been proving very useful for the customers who look forward to get information on business credit cards. He suggests them to visit Businesscreditcards.com for further information.
Avoid falling flat on your Facebook. The fall and fall of Facebook’s stock has been the stuff of investors’ nightmares. Starting with a stock price of $38, by 31st August the stock had lost approximately 52% value with no sign of a bounce. The real issue isn’t just Facebook’s shares so much as a lack of probity in investments these days and many businesses who choose to ‘float’ may find there’s a leak in their boat.
The average duration for a shareholding in the USA currently stands at an almost instantaneous 22 seconds!
Compared with an average holding of 8 years in the 1940’s, the stock market has become the ‘get rich quick’ scheme (substitute ‘dream’ for a more apt description) of the 00’s. Shareholders just aren’t in it for the long game any more and this creates a multitude of problems for businesses great and small.
The demand to create shareholder value overnight keeps many an Executive Suite buzzing into the ridiculous hours of the night; sees downsizing and corporate initiatives bluntly delivered across departments to deliver savings and greater profit margins and dissatisfaction in the stock market quickly translates into a knee jerk reaction kicking the HR department into action, moving from co-production to consultation as the company’s most “valuable assets” become “deadweight” creating drag merely as a result of bottom line cost.
Shareholder value, as a concept, is fine but it’s become very one directional in recent years and creates little benefit for the business, less a short term cash injection and longer term drain on your profits and profitability.
Before you launch your business into the choppy stock market seas, consider a few alternatives:
- Raise additional funds through other means:
Investment pots and pensions aren’t delivering growth in low interest economies just now.
Money in the bank is more of a tax liability than a cushion. Get family; friends and acquaintances to consider becoming a minority investor in your venture with the prospect (but no guarantee) of long-term returns;
Ask – “Do I really need to grow?” Many businesses chase growth like a dog chases it’s own tail. It’s the perpetual motion that creates the illusion of progress when, in reality, you’re just expending energy chasing an elusive, moving and often undesirable target. Growth’s not a bad thing; it’s just not the be all and end all of business. Sustainability and longevity are much more important.
Grow from within: Re-invest your profits. It’s the simplest and most economical way of growing any business; it doesn’t sell off any part of your holding and doesn’t expose it to the jitter of shareholders demanding short-term results.
Or consider selling shares to the employees and give them a stake in their own sweat and toil.
Consider the 3 C’s:
You don’t need to do it all on your own. Find other businesses or individuals that are either doing something similar and work together to increase market share or find complimentary products and services and share the costs of increasing your joint offer to the market. Cross selling could help you both.
All these options allow you to retain control of your business and keep your long-term goals in focus.
If you decide that you do want shareholders, make sure major shareholders you bring in possess more than just the financial wherewithal to invest.
Get investors that are passionate about what you’re trying to achieve; who have experience and expertise in an area that’s relevant for your business and that can actually add something to the business and the Boardroom (other than banging fists; a scary glare and the demand you make them rich instantly or they’ll withdraw their investment).
That way, when the storm hits the good ship (insert your company’s name) you can call all hands to deck rather than your shareholders racing to the lifeboats as the rest are left to bail out.
Bio: Colin Millar is an entrepreneur and Founding Director of Cloud Management Systems [Link: CloudManagementSystems (.) co( .)uk ], a consultancy with a difference. Colin is also the Chairman of a Scottish based charity. Colin blogs on leadership, management; business and enterprise. In 2011, he won the Chartered Management Institute’s ‘Top Blog” award.
A comprehensive research conducted by Goldman Sachs titled “The Olympics and Economics 2012” precisely attempts to answer this question. The researchers analyzed the Olympic Games which were conducted in Beijing and Sydney, few years ago, and thus made a few projections for London 2012. What is of significant interest is that a lot of these projections are destined to come true and revitalize the economies, which are somewhat in a sombre mood in early 2012. Even the Prime Minister of United Kingdom, David Cameron, thinks that the Olympics will roll in 13 Billion pounds for the nation (even though that may help little to douse the fire burning within the economy).
The British economy really needs a boost, thanks to a protracted double-dip recession that has pushed down GDP for three quarters without even an inkling of a break. The Olympic Games hosted in London 2012 (underway currently) have been projected to be extremely profitable for the “British Empire”, and the revenues have been forecasted to exceed the operating cost of hosting the major event. Tickets sales are expected to generate over 500 million pounds or 785 million dollars and generate direct revenue for the management. This itself is a huge amount for a nation trapped in a continent facing rampant economic slowdown at large.In addition, a short-term financial boost in the third quarter of 1.2–1.6 percent of GDP at an annualized rate has been forecasted. This will also generate a lot of employment to a nation strapped with excess workable hands with very little to do. In addition, the tourism industry will get a healthy dosage of fuel to the slumbering embers, and this may just be sufficient to the industry slowly lumbering to a dormant stage.
With such a concern over economic health revision, a public-private partnership to ensure the success of such grand fiestas could be a shot for success. While such boost is sure to affect many sections of the society both directly and indirectly, the long term boon of employing workers for digging a trench and employing another set of workers to fill it up, are also evident in this case, though the analogy may be less fitting. Considering Ireland, which is in dire straits, will the benefits of the Olympic games overflow to Britain’s closest neighbor?
What is more important at this stage that will Brazil also benefit in the same big way, in 2016? With so much focus on her economy, will the benefits boost Brazil’s stake in the cake as an economic superpower? Only time can tell more how this story unfolds itself.
Free financial calculators are one of the best tools for managing personal finances and saving money. These calculators enable you to stay on the right track with your finances. All you have to do is enter the details of your financial position in the free financial calculator. It will provide you an output consisting useful information on how to use your money in the most appropriate manner. Continue reading “How to Use Free Finance Calculators to Save Money”
The woes of the economic slowdown and financial crisis in 2011 is largely attributed to the debt crisis in Europe. This is not a recent happening and bubble started growing from as early as 2009. The 3 of the highest exposed countries; namely Greece, Ireland and Portugal, collectively account for six percent of Eurozone’s gross domestic product (GDP). Continue reading “Debt Crisis in Europe”
The financial crisis in late 2000, sometimes referred to as the Credit Crunch or the Global Financial Crisis, is generally considered by many economists to be the worst financial crisis since the Great Depression of the 1930s. The financial meltdown resulted in the collapse of super Financial institutions with power status, the bailout of mega-banks by the central governments, and plummeting stock markets around the world. However, in 2011, the world may be witnessing something which may be equally big, or maybe even bigger. The WWII economic crisis and conditions are still extremely fragile. Probably turning short-term debt into long-term loans was the biggest trigger for this economic recession in 2011.
Some may call me to be somewhat more pessimistic in my outlook than is required, but here are my reasons to believe so.
- The economy in US is in dire straits. The housing sector is yet to recover and high unemployment is troubling the super-power. The US is drowning in negative equity and job-less homes. Tax cuts may be short term evasive measure, medium and long term fiscal reforms may be necessary to pull US economy through this period. The recession in 2008-2009 is still making its presence felt in US, by depleting the reserves of the economic super-power. The tremble caused by BNP Paribas and Lehman Brothers is yet to subside full. Recently, US has been downgraded from its rating by Standard and Poor. The economists are suggesting long term reforms in banking, such as raising capital ratios and switching from wholesale to retail funding, while filling in short-term gaps in capital. However, the banking industry would be subjected to a slow recovery in this track.
- Japan has lost its AAA rating long back. The growth prospects for the once economic super-power is pretty poor. Currently Japan’s national debt actually in excess of 200% of its GDP but its bond yields remain extremely low, since the growth prospects are not looking bright. As an effect of this, Japanese production has declined by over 15% in recent times.
- The major debt that Greece is facing and the crisis thereof not cured by the massive Eurozone and IMF bailout. The current bailout support may expire by 2013, and there has been no major financial restructuring in Greece. While the Greece government is sold out to Germany, this is even a bigger cause of concern because now the government will not even be able to print bills to increase inflation to depreciate its own assets. With the huge debt on Greece, the rest of EURO-Nations are equally strapped in the rear to come out with policy changes that may liberate them from this dire straits.
- The crisis in the Irish national banking sector far from over. Even after receiving a staggering level of bailout assistance from the EU and IMF to cover the country’s insolvency, thanks to the Anglo Irish Bank and the other minor Irish banking institutions, the Dublin decision makers were forced to inject nearly $5 billion into Allied Irish Banks, another bankrupt institution. Ireland policy makers really need to figure out how to service this public debt, without triggering a shiver down its economy.
- Europe in general is under severe economic stress. Without a major restructuring of debt, progress seems almost impossible. Debt burdens may continue to spiral upwards, and in several EURO using nations a debt write-down is very likely. German, French, and British banks hold most of the national debts, and a shiver there may trigger a collapse of the balance which apparently is resting on a spindle.
- China, which seemed apparently less touched by the economic crisis in the west, is suddenly increasing its interest rates in an almost desperate effort to control price inflation. While China, the manufacturing super-power of recent times, strives to control the inflation within, this is almost an indicator of less attractive options to invest, outside the country, and even maybe within the country. Are we witnessing a scenario where the market demand has been saturated and the manufacturing sector is growing wary of the same?
- India, which is evolving as an open market economy is not free from the crisis. Although Agriculture is still India’s most engaging “career”, most of the recent economic growth has been fueled from the services sector (IT, ITeS, Banking, or even tourism in few states). The welfare of these industries thrive heavily on the welfare of the counterparts in USA and to an extent in Europe, whose needs the service. The IT and ITeS alone has an average exposure of exceeding 52% to US markets and 34% to European markets, as per a report in Financial Times. On an average the services sector enjoy an exposure exceeding 82% to European and US markets. The meltdown of the economy in the western powers may be sufficient to trigger one in India.
- With the advanced economies under such severe stress, emerging economies, may be slightly insulated from major impacts, which can cause a huge eruption of their regular life. Worldbank says that the financial stress for the emergent economies may be over. However, since the development in these economies are heavily dependent on foreign direct investments from the economic super-powers, the development is likely to hit a stagnation. Is this an indication that the next financial tremble will arise from the developing economies?
Who knows how deep we actually are in this mess? Commodity prices are coming down, but that is probably the only brighter news in this downcast. Do let us know what you feel.
Being a tax professional going through the budget changes is what we have to do as a part of our job. When the government presents a budget, the Finance Minister tries to convince that they keep the best interest of the common people in mind while imposing tax on the general public. This year through budget 2011, the Finance Minister of India has levied service tax on A/c hospitals having 25 or more beds.
The Federation of Indian Chambers of Commerce and Industry along with several prominent health care institutes throughout India has raised a voiced against this measure. In India it is impossible for a blood bank or operation theatre to function without proper air-conditioning. Further, the life of several patents would be at stake if they get admitted in a hospital without an A/C. The Government has proposed that they are levying such tax only on people who can afford it. But most importantly, i think the Hon’ble Finance Minister, however educated he might be has forgotten that nobody goes to hospital to relax. Most people who are admitted in hospitals are facing a life and death situation. Further, there are so many unprivileged people who put everything at stake, sale or mortgage their fixed assets to save their beloved ones.
The entire liability of service tax would be passed on by the clinics to their patients. What appears to the Government to be a mere tax collection , can make a lot of people beg on streets just to add a few more days to the life of their dearest one.
According to FICCI, India today is in dire need to expand its healthcare infrastructure which is extremely inadequate. The quantity of bed allocated is 0.9 for every 1,000 people in our country when compared to the global average of 2.7, or 3.0 in China and 2.4 in Brazil.
I really pray that the Government bows in front of the combined pressure from all areas and removed this clause from the Finance Bill. If they cant control inflation, they better not make sure to add more plight to the poor and ailing who are already being neglected by our so called “Prospering Country”.
Signing off for today
PS: The tax structure of the Union Budget 2011
People spend a third of their lives learning to earn money, a third to earn money and another third of their lives to save their money. It is a matter of debate which third of their lives is more important than the others. No risk no return is the fundamental law of money, if you have less qualifications to earn good money, chances of good income are still there but people will agree that probability is low and risks are high.
What we consider here is the government’s role in defining someone’s savings pattern? The government allows a person to hoard only a certain amount of cash or assets, the rest has to be either paid in taxes or locked into the free market or with the government. While this is a fundamental reason that keeps the economy running from an individual’s point of view, it is highly perplexing what to do with his money.
On one hand the government gives you the option of depositing your money with it and losing your money like slow poisoning thanks to higher inflation rate than deposit interest rate, or losing it altogether if you belong to one of those countries whose government is more unstable than a twig in a storm. On the other hand, the government encourages you to invest in the stock market and also incentivizes you by offering tax savings on long term capital gains, the catch being you can’t get out of the market without losing if you are caught in a downturn and anyways in the long term a balanced portfolio will give you an inflation-adjusted return of only around 10% on an annual basis. A lower than 10% return with the half dozen hedges so that you don’t get a heart attack when you are being hit left, right and centre makes a common man a most unlikely candidate to succeed in saving his money too much.
While GDP defines the spending power of a country’s population is it really good to have a population which spends all of its money for goods and services, or a population which saves and increases its asset base? The answer to the question is same as whether it is better to have a perfect process line producing output from input with zero inventory, or to have some inventory in place. A perfect system is only good as long as it lasts, in an imperfect world concessions have to be made, only time will tell if the concessions provided by the government to save our income can really boost the country to the status of most desirable place to live in or just a huge economy.
SME lending in India has been a neglected target market since the independence. Though, government tried to propagate SME lending using regulations and incentives, however, somehow beneficial impact was never visible and SME lending always remained a poor cousin to other activities of lending institutions.
It needs to be initially identified what the current constraints are existent for the SME lending. It is recognized that Government should take initiative to operationalize SFCs in big Scale, and professionally run rather than bureaucratically. Subsequent sections focus on how SFCs or financial institutions need to first evolve a strategic focus on the sector by understanding the client & his needs. The SFC needs to re-engineer the SME lending value chain with the intention to develop a long standing relationship with the SME clientele set. The modifications needs to be executed across the critical areas via marketing execution, product development , streamlining of operations through internet integrated delivery channels & application of advanced risk modeling techniques.
As the relationship evolves over time, the firm is able to indulge in relationship lending due to reduction of information asymmetry which lowers supervisory costs & increases account profitability for the firm. Through retrained & empathetic staff dealing with SME clients, the interaction level deepens. Finally the SFC by donning the role of a Financial Consultant transforms from a lending institution into a one stop solution for all the financial needs of the SME client.
At the end the concept of Fund Financing is also suggested as an approach. The focus in the further studies has been made on traditional sources of Financing as SIDBI, is coming out with processes to replicate and innovate the present schemes to suit SME needs.
This article is authored by Mukesh who is an alumni of Indian Institute of Management, Lucknow. He has been associated with Crisil and has been recognized as a young thought leader of India.