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Archives for December 2017

Is Bitcoin the next economic bubble?

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Is Bitcoin the next economic bubble? That seems like a valid question, as the price of the cryptocurrency has soared to unprecedented levels over the past few months.

Just this spring, Bitcoin traded around $5,000, and it has now gone past $15,000. Who wouldn’t like to triple their money in less than a year? But like any investment, the risks are correlated to potential rewards. And crypto is extremely risky. Many people have lost thousands just because they didn’t understand the concept of blockchain, how crypto works, or simply because they forgot to securely store their coins!

That is pretty frustrating, and you should really understand the basics of Bitcoin before you decide if this is an investment you should get into. Otherwise, you may lose money. As governments are trying to work on ways to regulate crypto currencies, right now, there are not guarantees for your money. No central bank to back it up, no recovery for your lost credentials. Still curious? Crypto has a lot of advantages, and can be a great way to diversify your portfolio.

As it is too early to tell whether we are experiencing a Bitcoin bubble or not, lets remember the previous bubbles of economic history. The Dotcom and US property bubbles are just a few years away. They hit pretty hard and many investors saw their savings reduced to nothing in a matter of months.

Want more information? Enjoy this infographic on economic bubbles, courtesy of ETX Capital

 

bubble

Filed Under: Money Tagged With: Bitcoin

Taking Baby Steps in Real Estate Investment

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REI

Real estate investment seems like a sure-fire way to get rich — after all, land will always be valuable. However, real estate is a dangerous game, and you stand to lose a great deal by jumping in without experience or education.

Real estate investment is more than buying and selling properties: It is buying and selling the right properties at the right time. To get a sense for the rights and wrongs of real estate, you need to take baby steps into this investment opportunity. You can also get some good advice by following real estate experts like Than Merrill on Twitter. This guide will show you how to put one foot in front of the other, and soon you’ll be walking into a successful real estate investment career.

Understand How Real Estate Makes Money

Real estate properties don’t magically provide you with bundles of cash. Rather, there are four discrete ways you can increase your wealth through real estate:

  • Cash flow income. You can buy real estate properties and use them to generate a steady stream of incoming cash. For example, you might buy or build apartment or office buildings to collect rent. As long as your tenants are trustworthy, you can usually enjoy a healthy income from this method.
  • Appreciation. Unlike most other items you own, your real estate properties will likely increase in value for a variety of reasons. Real estate appreciation is a risky game that requires experience with specific markets. Generally, it is riskier than buying properties for cash flow income.
  • Related income. “Specialists” in the real estate industry, such as brokers or management companies, make money by buying, selling, and managing properties. Typically, they make a commission of the total, meaning their income is less than investors and owners, but their risk is also lower.
  • Ancillary income. Ancillary investments include sources of revenue like vending machines or laundry facilities strategically placed around real estate properties. For some investors, these mini-businesses can generate significant profits.

Know About Different Types of Real Estate

REIs

Not all real estate operates on the same market, and not all properties offer identical rewards. There are five primary types of real estate as well as one investing option that is closely tied to real estate:

  • Residential. Houses, apartment buildings, townhouses, vacation houses — anywhere someone can live is considered residential. You determine the length of the tenant’s lease, but most residential rental properties operate on a 12-month basis.
  • Commercial. Office buildings and skyscrapers are leased to companies and small business owners for several years at a time. This offers you more stability in your cash flow, but might prevent you from capitalizing on a hot market.
  • Industrial. Warehouses, distribution centers, storage units, and other special-purpose properties can be leased by tenants for short periods.
  • Retail. Shopping and strip malls as well as other retail storefronts can be lucrative, especially if you request a percentage of your tenants’ sales in addition to base rent.
  • Mixed-use. Properties that combine any of the above two (or more) real estate types into a single project. These are becoming incredibly common in urban areas, where retail or office space combined with residential space provides higher quality of living and greater income potential.
  • REIT. You invest in real estate investment trusts (REITs) the way you would a stock or mutual fund. However, unlike stocks and mutual funds, REITs are composed entirely of real estate properties There are different types of REITs that work with specific types of real estate. In fact, investing with REITs before you buy your own properties is a safe way to become more familiar with different markets.

Find Someone Who Provides Targeted Advice

If you are attempting to begin investing in real estate with no experience whatsoever, you absolutely must find a mentor. Because real estate is so risky — and because it deals with such significant amounts of money — it is easy to make mistakes that financially cripple you for life. It isn’t difficult to find information on how to invest in real estate, but if you couple your research with advice from an ally or guide, you are sure to build a real estate investment foundation you can trust.

Determine How Much You Can Invest

Finally, it’s unlikely that you have unlimited cash to spend on your new real estate investment career. You don’t need to buy multi-million-dollar apartment complexes at the outset; if you are a successful investor, that will come in time. To begin, you should feel safe and sensible with a modest flip.

In fact, a smart way to begin investing is to assume you will lose everything you invest. If that occurs, you should still have enough money left to keep a roof over your head and food in your mouth. A smart investor knows their financial and emotional limits.

Filed Under: Money

6 Things About Small-Business Loans That Might Surprise You

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For most entrepreneurs, cash flow is a concern. Until your business starts turning a profit and growing, it can be tricky to manage all your expenses. Even when your business is doing well, there may be times when you need some additional funds to expand or take advantage of new opportunities.

When you need money for your business, your first instinct might be to head to the bank and apply for a loan. Although this has proven to be a smart move for many business owners, and there are programs in place for all types of businesses, there are some things that you need to know before you begin the process of applying for a loan. If you go in unprepared, you may be in for an unpleasant surprise.

1. Prepare to Provide a Lot of Paperwork

Since the Great Recession, banks have become a lot more selective when it comes to lending money. This doesn’t mean that you won’t get a loan if you’re financial background is less than perfect, but it does mean that you are going to have to supply a lot of information and paperwork to the lender in order to get approved. Not only will you need to provide a business plan that outlines how you will use and repay the money, but you can also expect to supply copies of cash flow statement, profit and loss reports, balance sheets, and other documentation to demonstrate your creditworthiness and ability to repay the loan. Because gathering and reviewing all this paperwork takes time, it might be several weeks before you have an answer on your application — and there will probably be times when you think you’ve turned everything in, only to receive another request for additional documents.

2. Your Personal Finances Matter

Because banks want to have a complete picture of your financial picture before they hand over the cash, you’re most likely going to have to supply information about your personal finances as well as your business finances. The bank is likely to run a credit check on you personally, as well as the business, and also request copies of your tax returns and information on all of your assets and liabilities. Again, a less than perfect personal financial history is not going to disqualify you from getting a loan, but it could affect how much you get and your interest rate.

3. You May Need to Make a Personal Guarantee

sb loans

Some banks will only grant you a loan if you provide a guarantee via collateral — such as your home. That way, if you default on the loan, the bank can seize your assets as repayment. Because there is some risk inherent in personal guarantees, you need to proceed carefully.

4. The Bank Will Tell You How You Can Use the Money

When you borrow money from a bank for your business, there are limits on how you can use that cash. You can only spend it for the purpose for which you applied. In other words, if you took out a loan to purchase equipment, you cannot use that money to pay staff salaries. You need to apply for the specific type of loan you need, whether that’s equipment, real estate, working capital, or other expenses.

5. The Rules Are Fluid

Unlike other types of financing, such as credit cards, that have hard and fast rules about credit history, debt-to-income ratio, and income that determine whether you qualify, business loans do not have those same rules. Banks have the ability to look at applications individually, and evaluate all of the factors before making a decision. Being strong in one area can offset a weakness in another; at the same time, several weaknesses can’t be overlooked because you have some strengths. Be prepared to explain your finances and make your case.

6. You Have Alternatives

Finally, the bank isn’t your only option for securing cash for your business. There are a number of alternative financing options that may be a better fit for your situation. Invoice factoring, for example, can solve short term cash flow problems quickly, and often more inexpensively than a bank loan. Before you jump through bank hoops or incur unnecessary costs and headaches, explore other options and weigh them against a traditional loan.

Securing financing for your business can be a stressful process, but if you’re armed with information and know what to expect, it doesn’t have to be. Do your homework, and get the money you need without surprises.

Filed Under: Money

5 Tips for Getting a College Degree Without Accumulating Lots of Debt

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To make more money over your lifetime, it usually helps to have a degree from an accredited university. This can not only make it easier to land your first job, but also to move up the ranks and earn more as the years go by.

However, while spending money on education is a worthwhile investment, you do need to avoid coming out of university with serious amounts of debt that you’ll never be able to pay off, or that will take you a large amount of your career to get on top of. To help you on your way, read on for five key tips you can follow today to get a college degree without lots of debt.

Study Online

For starters, it pays to think about choosing a degree offered via online study. There are lots of courses available this way nowadays, from online MBAs with no GMAT required, to degrees in marketing, arts, education, engineering, and most other areas of interest.

When you opt for an online course rather than one that requires you to go to a campus each week, you can save money, and reduce your debt, in multiple ways. For example, rather than having to move away from home to attend university, you can study from anywhere, which means you can stay at home for longer and save money on costs such as accommodation, food, laundry, and utilities.

Another benefit of online programs is that their flexibility means you can still work in a job while you study. You don’t have to be on campus on specific days or for set times, and can instead work your studies around your own, personal schedule. This, in turn, means you can earn an income as you learn, and avoid having to rack up so much debt.

Choose the Best Course and University for Your Needs

Next, keep in mind that different universities can charge very different levels of fees for attending their institutions. As such, it can be worthwhile choosing a more affordable college. Most will be accredited in just the same ways, and will all provide you with the same kinds of opportunities (although you do need to do your research on this front to make sure your choice is adequate).

While you might like the idea of attending a prestigious university that’s well-known around the world, it’s quite possible your job prospects won’t actually be any better from choosing a more costly one. This is something to weigh up when making your decision.

Furthermore, be as sure as you can about the particular type of course you’re choosing too. If you want to avoid racking up huge debt, try to pick the best course for your needs the first time around. Instead of enrolling in a program just because your family pressure you to do so, or because you think it’s a “safe” option, find something you’re actually interested in. This will help you complete the whole degree, rather than wasting time and money on classes in the wrong program, and then having to start all over again with a new one.

Try to Reduce the Total Amount of Time You Spend Studying

studentdebt

It’s also helpful if you look for ways to reduce your overall time spent studying. Each month you’re paying for courses, accommodation, books and other expenses, and not out in the workforce, adds up. Think about opting for a combined degree, rather than finishing one and then starting on a second one (this can often save at least a year); or choose an accelerated program. You can also apply to receive college credit for prior knowledge, or gain extra credits for taking additional classes outside of normal term hours.

Find Financial Support Options

To reduce the amount of debt you walk out of university with, you should investigate financial support options too. There are numerous national, state, and local government scholarships, grants and other funding which can be applied for, as well as programs run by private organizations and colleges to support local students. Most of these types of funds never have to be repaid, and they can cover various expenses like tuition, books, and board.

Be Frugal

Lastly, while you’re at college, look for ways to be frugal with your spending too. Try to find the most affordable accommodation possible (this might mean boarding with numerous roommates), and avoid spending hundreds of dollars on partying, new clothing, and other unnecessary expenses. Consider cooking for yourself rather than eating out all the time; and save money by purchasing second-hand textbooks, instead of new ones.

Filed Under: Make Money

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