Make Goal Based Investing to Realize Your Financial Goals

Life is all about setting different goals and achieving them one after another. As Tony Robbins said setting goals is the first step in turning the invisible into the visible. When each rupee you invest has a definite purpose behind it, is called Goal based investing.

Goal based financial planning is done for long term, midterm and short term gains. Long term plans usually yield more wealth comparing the other two. A midterm plan could be buying a home where a short term plan may be having a car.

How it is Different from the Traditional Approach
Unlike the traditional approach of investing, goal based investing does not only focus on your risk profile, rather its focus remains on achieving the target. The investment plans should be designed by keeping the goal at the centre.

The focal point of the traditional approach remains in selecting areas that ensure safe returns. It finds a safe and sure path to grow money. Whereas, in Goal based investing, realization of the goals defines its ultimate success. Wealth generation is not the sole target.

Goal based investment plans get designed only after doing a detailed research of the investor’s net worth, level of risk-tolerance and financial goals. In case of traditional approach, first the risk quotient is calculated and according to that a pre-designed investment plane gets selected.

Benefits of Goal Based Investing

In life, each rupee you spend is a type investment that yields certain results for you. If your goal based investments are planned, well thought out and work for achieving specific goals then they do not affect each other. The benefits of making goal based investments are-
It engages you in making systematic approach toward a better money management.
It is nothing but a good habit that restricts you from making spur of the moment purchases.
Channelizes your money toward building value assets and wealth through proper financial planning.
Increases the achievability of the financial goals of your life.
You can continuously monitor and make changes to your plan in order to reach closer to your desired financial goals.

How to plan a Goal Based Investing

Planning a goal based investment requires-
You have to make a list of important life goals that you need to achieve. You should prioritize them according to their importance.
Analyze your money needs. It will help you in clustering your investments according to the upcoming life events.
Cluster your investments in three sections- 1) Short-term, 2) Mid-term and 3) Long-Term.
Now choose suitable investment plans and start investing.

Short Term Goal based investments are made to fulfill impending requirements that are going to arise in next 2 years. You have to choose less volatile and low risk areas to invest as you need to turn them into liquid soon.

Mid-term Goal based investments are those where you need the return in next 3-10 years. Long-term goals may include retirement and child’s higher education. To meet such kind of goals, you need to accumulate large corpus. For that, you have to give good effort to identify pre-determined asset class and make systematic investment over longer period of time. During the course of time, you should stay invested in your plan irrespective of the short-term market upheavals.

If you tie your financial investments around a time frame and specific life goals, it gets a lot easier to achieve.

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Auto Insurance Coverage Basics

Even a slight fender bender in a parking lot can ruin your day. Road accidents can turn a good day into a wild one, but you should not let it ruin your life. You pay auto insurance coverage not only to comply with the law, but you pay it to protect your assets. If you drive a car, you need to have auto insurance coverage. There are different types of auto coverage; the states require you to have some, but insurance companies suggest you to purchase more. The following passages explain key features of the most important auto coverage.

· Liability Coverage: this coverage comes in two different types including Bodily Injury and Property Damage. In the event of road accidents for which you are liable, the insurance company will pay for the damages and injuries that you cause. Liability coverage prevents you from spending too much on medical payments or repairs for someone else’s injuries and property damage.

· Personal Injury Protection (PIP): it covers medical payment and other expenses for your injuries regardless of who is at fault in an accident.

· Medical Payments: in case the PIP coverage reaches its limit for other expenses following an accident, separate medical payments coverage can be helpful. Sometimes you can use it in conjunction with your health insurance as well.

· Collision: it covers repair cost for any damage to your vehicles due to an accident. It may include paint job, replacement parts, broken windscreen, and engine repair.

· Comprehensive: this coverage covers damages to your vehicle due to non-accident causes. Some common causes are fire, theft, vandalism and falling objects.

· Underinsured and uninsured motorists: in case you are involved in an accident with another driver who does not have enough insurance or no insurance at all, this coverage requires your insurance company to remunerate for the damages to your vehicle.

Every state has different rules regarding auto insurance. Depending on where you live, you may need to purchase all the above coverage or only some of them. The limit of each coverage policy is subject to insurance laws too. This table lists the recommended limits for common types of coverage.

Deductibles & Limits

Bodily injury: $100,000 per person, $300,000 per accident

Property damage: $100,000 per accident

Personal Injury Protection: Either deductible or no deductible; it can be optional or mandatory depending on the state. Either deductible or no deductible; anyone with an existing health insurance may not need to purchase this coverage.

Collision: $500 to $1,000

Comprehensive: $500 to $1,000

Uninsured motorist: $100,000, but if this coverage is less

Underinsured motorists: $100,000

More Optional Coverage

Collision and Comprehensive are optional, but they are important. Even when the state does not list them as mandatory, they are still necessary and worth the money. Apart from those two, insurance companies also offer other optional coverage including:

· Rental Reimbursement: your insurer provides an amount of money as compensation for transportation expense during the period when your car is in the shop for repair after an accident. The amount depends on the company’s policy. The money should be enough to rent a car until your car is ready to go again.

· Roadside Assistance: it can be helpful in case your engine breaks down in the middle of nowhere that you need towing service to a repair shop. Some car manufacturers provide this service free of charge with the purchase of a car, so you may not need to buy this coverage.

Money-saving Tips

Auto insurance does not come cheap, but there are ways to save money on premium. One of the ways is to make use of insurance discounts available from most insurers. Even when you are not eligible, you can reduce the premium by increasing deductible or use a car that meets the insurer’s safety requirements.

A deductible is like reserve cash from you for the insurance company. You can consider this a down payment for the premium. If you pay more for down payment, your monthly installments for premium will be less. Increasing deductible from $250 to $500 can reduce up to 30% of the premium. If you can afford it, going for more deductible is a good decision. Many types of coverage allow for the deductible, but you should focus on Liability Coverage.

The financial impact of an accident for which you are liable can be devastating; total cost of car repair and medical payments can reach hundreds of thousands. By increasing the limit of liability coverage, you have better financial protection from the insurance company. However, higher limit means higher premium, and this is why you should consider increasing deductible.

Collisions and Comprehensive are optional.

The basic rule is that you should purchase both if your car is worth at least ten times the amount you pay for those two coverage types. For many older cars, Comprehensive and Collision coverage are not worth the money. Omitting them can save much money.

New cars are not always more expensive to insure than old ones.

New cars have better safety equipment and protective features to keep the driver and passengers save for examples airbag and restraint system. Alarm system and anti-theft equipment are good safety features as well.

Most auto insurance companies offer discounts for such features.

If your car does not have them, consider installing third-party safety equipment to be eligible for the discounts. A safer car is less risky, and insurance companies are grateful for that.

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Accounts Receivable Financing – The Weight

Cash flow is essential for every business. Cash flow is an accounting term that refers to the amount of money received and spent by a business during a specific period of time. Working capital is a similar but different financial term that is based on the daily operating liquidity available to a business. To calculate working capital, an accountant for the company takes current assets and subtracts current liabilities. A company may have substantial working capital but little liquidity because the working capital is either spent or owed in matters of accounts receivable, inventory or accounts payable.

Cash flow is necessary to a company’s survival, especially for those companies with limited access to financing. In particular, a company’s accounts receivable and inventory may be like a weight preventing growth and expansion. The Merriam-Webster Online dictionary has eleven different definitions of the word weight when used as a noun. As used in this article, the word “weight” pertains to four of these meanings:

“4 a: something heavy: load b: a heavy object to hold or press something down or to counterbalance;

5 a: burden, pressure b: the quality or state of being ponderous;

7 a: the relative importance or authority accorded something b: measurable influence especially on others ;

8: overpowering”

Inadequate cash flow is a heavy load and a heavy burden that holds down growth and productivity. Illiquidity creates a ponderous situation, such as whether or not to accept a new order, which bills to pay or is the survival of the business at stake? For instance, consider the example of a company that invented a weight training machine.

After years of research and development the company obtained a patent on a weight training machine that was designed for professional use at gyms. The machine includes a main frame, a lever carriage mechanism, an adjustment linkage and a stop mechanism. A lever carriage mechanism is pivotally connected to the main frame. The lever carriage mechanism includes a weight carrying portion adapted to carry at least one weight. An input mechanism is connected to the lever carriage mechanism. The adjustment linkage is connected between the lever carriage mechanism and the main frame and is configured to selectively adjust an arc of rotation of the weight carrying portion of the lever carriage mechanism about the main frame such that the weight carrying portion may selectively traverse each of a plurality of predefined strength curves in response to movement of the input mechanism by a user.

The machine has a catchy name; let’s call it the Flexigym. It works to burn calories, make muscle and it is very popular with users. Suddenly, orders are overwhelming the company/manufacturer. The irony is success is a weight on the business and if the invoices for the Flexigym are not paid promptly this wait period is a serious burden to liquidity and growth. What are the options for improving cash flow for Flexigym?

Payments for inventory, sales commissions and accounts payable may be delayed. Manufacturing plant maintenance may be deferred. Professional fees to attorneys or consultants may be deferred. Most of these options may have negative consequences.
There may be a positive solution. If the company sells its product or service to other businesses accounts receivable financing may be the solution.

Accounts receivable financing creates instant cash for working capital. If Flexigym cannot wait 30, 60 or 90 days to be paid, a commercial finance company will purchase the accounts receivable and the wait for cash will be over. The process is relatively simple.

Flexigym agrees to terms with a commercial finance company. The customers of Flexigym are notified of this arrangement and instructed to send their payments to the financing entity. After the Flexigyms are sold and delivered, the commercial finance company verifies that delivery was satisfactory. Many finance companies use an internet based system; some use fax. In either case, upon receipt of the invoice and verification of satisfactory delivery 80% to 90% of the accounts receivable monies due will be wired to Flexigym’s bank account. The weight is lifted, the wait is over, and cash flow is available for exponential growth. If accounts receivable financing is not sufficient for cash flow needs, purchase order financing may be employed to further increase cash flow.

“The Weight” is the title of a song by The Band which was very popular in 1968. The Band backed Bob Dylan on many occasions. The song is a good example of a silent title record where the title never appears in the lyrics. Accounts receivable financing is not obvious either unless you are educated regarding the merits and details of this financial technique. Here are the lyrics to The Weight:

“I pulled into Nazareth, was feelin’ about half past dead;

I just need some place where I can lay my head.

“Hey, mister, can you tell me where a man might find a bed?”

He just grinned and shook my hand, “No!” was all he said.

Take a load off Annie, take a load for free;

Take a load off Annie, And (and) (and) you can put the load right on me.

I picked up my bag, I went lookin’ for a place to hide;

When I saw Carmen and the Devil walkin’ side by side.

I said, “Hey, Carmen, come on, let’s go downtown.”

She said, “I gotta go, but m’friend can stick around.”

Take a load off Annie, take a load for free;

Take a load off Annie, And (and) (and) you can put the load right on me.

Go down, Miss Moses, there’s nothin’ you can say

It’s just ol’ Luke, and Luke’s waitin’ on the Judgment Day.

“Well, Luke, my friend, what about young Anna Lee?”

He said, “Do me a favor, son, woncha stay an’ keep Anna Lee company?”

Take a load off Annie, take a load for free;

Take a load off Annie, And (and) (and) you can put the load right on me.

Crazy Chester followed me, and he caught me in the fog.

He said, “I will fix your rack, if you’ll take Jack, my dog.”

I said, “Wait a minute, Chester, you know I’m a peaceful man.”

He said, “That’s okay, boy, won’t you feed him when you can.”

Take a load off Annie, take a load for free;

Take a load off Annie, And (and) (and) you can put the load right on me.

Catch a cannon ball now, t’take me down the line

My bag is sinkin’ low and I do believe it’s time.

To get back to Miss Fanny, you know she’s the only one.

Who sent me here with her regards for everyone.

Take a load off Annie, take a load for free;

Take a load off Annie, And (and) (and) you can put the load right on me.”

The bottom line: The Band was right. Take a load off yourself and be free from cash flow problems. Consider the weight, the cost to eliminate the wait, and whether accounts receivable financing is appropriate for your circumstances.

Copyright © 2007 Gregg Financial Services

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Individualism and Social Networks in Today’s Businesses

In the world of business and entrepreneurs, people have different views of how success is created, attained, and grown. The traditional individualistic view people trust is working hard will get what you want out of life and you can achieve success alone without council from others. While working hard in an individualistic view you must stand out and be seen as the best. The phrase of being able to “pick yourself up by your boot strap” is a common phrase used in term of reaching your success in the American society. In this phrase, it does not say that someone must pick you up from your bootstraps for you to succeed, which is another view that is more contemporary. In comparing both views it is either someone will pick you up or you can pick yourself up. Some entrepreneurs feel that you need social networks for success. It is believed that social networks can give you advice and contacts to get resources you wouldn’t be able to get alone. Business consultants, such as Jessica Swanson recommend you using your social networks on the internet to grow the business. For example, twitter and face book are highly recommended to attract clientele to grow your business. In my opinion, I believe that there is a need for both individualistic people and personalities with social networks attached in order for a business to grow successfully. In other words, successful business owners and entrepreneurs need counsel and resources through social network in order to get success while working hard.

I believe that working hard will enhance your success and help you achieve success. In addition to working hard there needs to be an individualistic personality within the business identity. In order to become successful in the small business and entrepreneur world, conformity is not an option. Entrepreneurs have to want to stand out. There needs to be a sense of self that wants to be the best, but there is no competitive foundation in the drive to grow the business. For example, it is not because the owner of a beauty salon only wants to go into business to beat an existing beauty salon. It is because the owner of the beauty salon wants to open up a shop and make a legacy for themselves and for their kid. Building a name for oneself in the business and creating wealth for themselves is the drive for the business. Maybe not for all, but for most there is a drive for individual success. Thus, a person must have an individualistic view or personality. Another example, it is easier for someone to work and get a check without putting much effort verses someone who wants to make their own money. Starting a business from scratch is not easy as it sounds because you have to work harder. It is rare for someone to break the conformity that people are use to. A fundamental individualistic perspective or idea needs to be present within an Entrepreneur. Thus, individualism is surfaced in characteristics of businesses in our society.

A business is better off with individualistic people in order for the business to be successful. According to Michael E. Gerber, the CEO of Gerber Business Development Corporation in California, believed that in order for a business to succeed there must three types of people in the business. There must be “The Entrepreneur, The Manager, and The Technician.” Within these three personalities, the “Technician” is the person within the group who has an individualistic personality and is needed within the group for the success of the business. Gerber states that, “the technician is a resolute individualist, standing his ground, producing today’s bread to eat tonight’s dinner.” In other words, the technician is the doer and he wants everything done his way. The technician, who is individualistic, would rather start their own business than work for someone else, but the technicians cannot grow a business alone, and will need the other two personalities. These three personalities are needed for the success of a business. Thus, individualistic personalities are needed, but for only a certain degree.

Individualism needs to be shaped into the task that the company needs an individualist to do, and be able to work with other personalities as well. Sociologists David Jacobs and Benjamin Cornwell believe that relationships are shaped between individual and organizational performances. According to Jabobs article, “If tasks are finely divided, the best efforts of the able cannot have much effect on the organization even if the entire task is vital to the collectivity. Yet if tasks are indivisible, so each incumbent must handle a large fraction of a critical job, the capacity of an individual to add to organizational success in such positions will be much greater.” In other words, if businesses gave people jobs that cannot be replicated and everyone has individual tasks rather than everyone doing the same thing, there will be more collective success overall. Jacob has similar views like Gerber where there needs to be separate task for a business in order for a better overall collective. Thus, in my opinion individualism needs to be present in forms of separate task in businesses. Businesses are not all depended of individualism, but they are present.

In contrast to the presence of individualism there is a need of networks and the counsel of others for the success of the business. Business workshops advise business owners to use networks to grow the business. The larger that your network of ties that you have the more likely you can get the resources you need. According to sociologist Mark S. Granovetter, “The analysis of processes in interpersonal networks provides the most fruitful micro-macro bridge. In one way or another, it is through these networks that small-scale interaction becomes translated into large-scale patterns, and that these, in turn, feed back into small groups.” In other words, a business owner may know one person that can give them information to resources that they need or can give them a contact of someone else who can help them. Thus, getting help from others is an important addition to the success of a business. Reaching out to others that you have close relationships or just acquaintances can grow the chances of a successful business.

In my own experience as a new business owner I have learned many things within one year. Social ties are a powerful way in getting the resources one needs in growing a business. I have a successful mentor/leader that has more experience and has a large professional network. Every time my mentor knows of something that I don’t, she will tell me. If she goes to a workshop, she will invite me. I have met people in these workshops and have made relationships from participating in these workshops. If I would not meet my mentor, then I wouldn’t have gotten as much get as I have. According to Susan R. Komives, Associate Professor and Director of the College Student Personnel Graduate program at the University of Maryland, claims that “Networks are important because they provide a chance to bring a wide range of individuals.” In other words, you know a variety of people with information that you do not have. Therefore, in my own experience I feel that networks are a powerful tool to make a business stronger.
Business needs help and guidance from outside sources, if they want to increase their chances for success.

Outside sources are good to teach a business the right path that it should follow to not fail. A business cannot depend on the knowledge that only the owner knows. The owner needs to go out and seek the advice of others. Even biblically it is recommended to seek council from others. In the bible, Proverbs 15:22, states “Where there is no counsel, purposes are frustrated, but with many they are accomplished.” In other words, even in the Christian based bible it recommends people to seek counsel. If you don’t seek help and try to network, you will get frustrated. Thus, in my opinion, the bible is the ultimate manual on life. Many people all over world read the bible and take its advice. Therefore, social networking and getting advice is a key to running a successful business.

In today’s society for someone to be able to be able to open a business and be able to grow it and become successful will need an individualistic mindset or will need employees that have individualistic thought. At the same time hold the drive to be different from everyone else in society and not work a regular hourly job that pays from 9 to 5. In addition, the owner will have to seek much counsel, learn, and get the resources that he or she might need in order to continue the business and learn how to make it grow. Thus, in the system of being an entrepreneur or business owner, there will be a need of both asking for help and wanting to be different.

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