Category Archives for Finance

How Spot Investment Fraud

One of the best ways you can spot an investment fraud is if you hire a Fraud Lawyer. These types of lawyers have dedicated half of their life to learn how to recognize an investment fraud. If you have experienced investment fraud in the past, we strongly recommend that you hire a fraud lawyer because he will help you spot the fraud if there is one. It is the safest way to go, and most likely the smartest because you are probably investing large amounts of money into some idea or project.  If you don’t want to lose all the money to some guy who is trying to scam you, you should hire a fraud lawyer.

How They Work

It is very hard and complicated to understand how investment frauds work. it is obvious that if it was easy to recognize, it wouldn’t work and nobody would get scammed. For that reason, the fraud lawyers exist because they have dedicated a big part of their life just to study the many ways of investment fraud. However, we can talk about what is the idea behind a fraud and tell you the most common process.

First of all, the reason why people are doing these scams is to benefit themselves, these are very selfish people that will do anything in order to get their hands on the money. Not everyone can plan out a fraud because it is as we said a very complicated process. The person must have financial and economic knowledge in order to convince someone into a false investment. They have to sound and act like they are professionals that know what they are doing. That is a great deal behind it, that’s why it is so hard to recognize because you have to have better knowledge than they have.

They are people that are searching for their victim, they want to find someone that is acting confused and maybe scared about investment. They want to find inexperienced people because they are easier to fool. When they find the victim, they will try to get close to them offer them help and act as a professional broker or advisor. Sometimes they will even take money for their services that they offer to the victim. People that don’t have any experience will not recognize that it is a fraud, they will do exactly what the fake broker tells them because they don’t know better.

Living Within Your Means – As A Young Person

March 25, 2017

Living within your means is one of the better financial decisions young people who are in full time employment can make. This simply means not maxing out credit cards, taking out nunnery loans, using overdraft facilities and paying bills as they come in, while also saving away into your nest egg to cover any unforeseen circumstances down the line.

Budgeting – the pros and cons

The prospect of living below your means can be a challenge when you are young. If you have just graduated, then there’s a high possibility that your first job will be the lowest-paying job in your whole life.

It may be a touch challenge to make that first starting salary meet all living expenses, and even more so if you are carrying debt from university/college. And it is difficult to resist urges to spend your money and live the high life if some of your friends may be.

Conversely, when you are young, you also do have lower and fewer expenses as you are probably only looking after yourself. Typically, people in their thirties to forties are most likely to settle, purchase a home, and have children, all of which can rapidly absorb money.

On average, the annual costs of raising a child are in the region of $12,000 to $14,000. This would include child care costs, feeding them, housing and transportation costs also. These are all expenses that you, fortunately, wouldn’t have as a young person.

It is for this reason that many financial planners would recommend that the best time to start saving is in your youth. Sure, trying to live on low starting salaries without credit cards and loans isn’t the easiest of feats.

It might mean having to move home with family for a couple of years or having to share a small apartment with a stranger or indeed putting a limit on your entertainment and dining expenses. On a positive note, it could also mean that you enter your thirties with money banked, rather than the burden of card debt or loans.

Some tips to make saving a little easier

  • Set yourself goals so it is easier to stay motivated. Have something specific to work towards. When you keep that goal in mind it eases the pain of saying no to passing luxuries like $15 cocktails and designer clothes.
  • Automate your savings. Have a percentage of each paycheck sent directly to a savings account, separate from your main day-to-day account. Keeping your money less accessible, makes it much harder use on a whim.
  • Have a budget. Work out how much your monthly expenses are, food, rent etc. Then keep an eye on these expenses to ensure you are within their limits.
  • Keep those expenses low. After making your budget, be creative in ways to cut back in each category. For example, you could cut back on food by home-cooking and maybe start to shop in thrift stores to reduce your clothes budget. You don’t need to give up everything, just find ways to do them cheaper.

Financial Planning – What You Need To Know

Hiring a financial planner

The first step you would take when considering purchasing a home, extending your family or planning for your retirement would be the hiring of a financial planner.

Financial planners can offer you guidance and hep with strategic decisions for any important life choice that may involve your assets and the supporting legal paperwork.

Reaching retirement

They offer you direction as regards how much money you need to be saving and investing for you to achieve your retirement goals.

It’s easy to do a quick online calculation for retirement savings and projections but some of us might actually need help with certain things, such as tax-advantaged retirement accounts, help choosing the best investment vehicle and help us to understand the real cost and risk tolerance associated with each investment type.

Financial planners will also be able to help you with advice on purchasing and owning a home and various real estate issues may fit into your current financial plan.

They can also help you with budgeting for your children’s future. In addition to advising, a lot of financial planners can also act as the broker for investments and can help you to fulfill specific insurance needs.

Where to find a financial planner?

You can find a comprehensive list of nationwide CFPs (Certified Financial Planners) at CFP.net. There are a number of other credentials in this industry so do your research and pay attention to who you are going to deal with for the expertise you need.

What does it cost?

CFPs charge people in a number of ways. Charging a commission, seeking a % of the assets under management, or maybe using a fee-based structure are all typical options. If CFPs are charging on a per hour basis, they would typically seek between $125 and $350 per hour.

CFPs who charge using a % of assets under management will typically charge in the region of 1% to 2%.

Costs will vary greatly depending on the area of the country you are in and the services on offer. If you are somebody with a complicated financial situation, for example with a number of properties, different assets, and a large family to provide for, then it may cost you more to develop a financial plan to cater for your needs.

In this case, it could be up as far as several thousand dollars.

The next steps

Following up with your financial planner regularly is important – at least annually and if any adjustments are needed on your retirement accounts. As an example, if you started a new job that is paying you a salary higher than before, then you would usually check with your financial planner about a roll-over of your 401k and put a higher percentage of salary towards those retirement goals.

Routine check-ins are typical to ensure you are on the right track towards meeting your goals and not under pressure for your day to day spending.

Consume But Avoid The Bandwagon Effect

February 21, 2017

Bandwagon Effect

We have all heard of the phrase “jump on the bandwagon”. This simply means to agree and follow the crowd rather than making a conscious decision yourself. The fashion industry is a prime example.

For example, if a fashion trend changes and all of a sudden everybody starts wearing slim fit jeans instead of the baggy ones, then that is the bandwagon effect in action.

It’s human nature to do this. We like to feel like we are part of something. For example, if you’re a woman, you probably wear skirts instead of trousers, as this is what the majority of women wear.

If you, on the other hand, choose to start wearing jeans or trousers as a normal thing, you would be making a fashion statement to stand out from the crowd. It is a normal phenomenon throughout society to affect people’s dress, conversations, and actions.

Often, people follow the crowd regardless of if they need to or not. We see it every day where we will choose brands, listen to music, or even vote for political candidates because we see or know of other people behaving the same way! This is what we call a bias.

How the bandwagon effect bias will cost you money

The bandwagon effect bias could lead you to consume products that are not the best value for money but simply because they are popular or fashionable. Smartphones are good examples. If everybody you know buys the latest Samsung smartphone, you may feel pressured into thinking that you also need one.

But ignoring what everyone else is doing, you may realize that an alternative smartphone would be better suited to you. Perhaps you don’t even need one at all!

Maybe because you other people carrying the new Samsung, you assume that you also need one, to keep up and fit in. You may find that your smartphone and plan are a waste of money when you strip back what matters to your needs.

Unwise financial decisions

This bandwagon bias could also lure you to make unwise financial decisions. For example, you could just take out a car loan thinking “that is just what most people are doing, everyone is on credit!”.

Alternatively, you could save yourself lots of money by buying the car with cash when you have it or by going for an older car that is affordable right now. The bandwagon effect clouds our judgment, so all of your options might not appear obvious at first.

Beating the bandwagon bias

This may sound like a contradiction but following the crowd isn’t always necessarily the wrong move to make. The wrong move is to take action without thinking the decision through. Perhaps the new car or flashy smartphone is the correct decision for you. But the only way to know is if you actually think through the decision yourself.

Before making any financial decision, do your homework. This applies to small choices, like purchasing a pair of jeans, and bigger ones, like investing money into your retirement fund.

Look at all of your options, do the calculations, and make a decision based on your own judgement – get off that bandwagon!