Financial Safety Advice

Gradually the international financial crisis is being on the road, because the United States and some European and Asian powers have begun to show positive indicators that venture a possible financial recovery by the end of this year and early next. It is clear that the global crisis will persist for several months but do not discard a positive outlet.

Given this possible scenario, and although the Spanish economy is experiencing a good situation, we will recall the main investment options for the next few days, but always depend on whether we have any previous savings or get money for it.

On the property side, the buildings at present are maintained in unstable, since the outbreak of the financial crisis have suffered price cuts and now begin to try to recover value.If we have sufficient capital to buy a property and sell to more value in the future could be an option.

In the property sector, one option is the public debt. On this segment, will try with treasury bills and bonds, for the benefit of this investment is that earnings are paid in advance. On the banking side, deposits are a good option for those who do not want to suffer too many risks, quite the contrary with the Stock Exchange, although not impossible, to demand some knowledge and time to a good decision that will translate into money.

None of these revenue-generating secure. The key, as we always say, is diversification.

Since the international financial crisis has exploded worldwide, the first reaction of the market is the stay, but it is for people who face a global crisis, the first thing to do is decide to protect their funds at home and leave there until the end of the crisis.

These reactions are very common in much of the population, but nothing is worse than making that decision. Why? Simply because as the crisis progresses, prices increase and inflation rises, the money that we keep under the mattress will lose value purchase. If before, EUR 10 bought two milks, tomorrow will buy one-thirty, due to the rise in prices.

Then it is clear that cash, paralyzed, does not work. Here the best approach is to invest the money, however little it is, in several different assets together. Although it is very common, you should not invest all savings in a single asset, because if it does not work lose all the money.

Here, it is best to invest, for example, in a fixed time in a mutual fund, stock or perhaps advised by someone you trust. It could also be one of these financial assets plus the capital contribution to another project, in exchange for future profits. The options may be several, some of our country and others with specialist advice. The truth is that nothing will save it under our mattress.

A start-up is usually more slowly than expected. Revenues tend to lag while expenses are always greater than previously estimated. Do your calculations with a large room to spare you any unpleasant surprises.

A growing company can have a great hunger for liquidity to finance growth. WalMart was for years a growing company with negative cash flows (to finance growth). Do not let you leave without liquidity growth by surprise. No matter how well you can not go running out of cash on hand.

If you need external funding to provide capital, looking for professional investors and investment funds. Far better to have outside investors professional individuals.

Hire an auditor and audit your company every year. No matter how small your business, the discipline of the annual audit discipline throughout the accounting team.

There is nothing wrong with having the money earned in the company box. Microsoft spent decades accumulating unpaid dividends and liquidity for expansion. The money in the box gives you capacity for growth.

Controls the time limit for payment of your customers and do not hesitate to call the deadline as many times as necessary. Many companies pay the most persistent first.

Customers are paying. If someone uses your services and does not pay, not a client, is a burden to your business. Get rid of the ballast as soon as possible. Read the rest of this entry →

Business cycles are relatively short wave growth and decay that affect the economy. This means that the trend of long-term growth of developed economies is not a smooth linear line. This trend of growth is accelerating moments and moments of slowdown in growth.These movements are called cycles and all economies go through these cycles. The danger faced by the investor at this stage is to invest in stocks at a time when the cycle is at its maximum and have the need to sell your investment when the cycle is at its floor, with the loss that this entails. To avoid this situation, as investors will have to learn to try to detect when they start and when they complete the cycle. Easy task, but that is the main objective of the economy.

But problems do not end here. As companies in their quest for growth through innovation and increased productivity are able to grow, but the process left in the way companies less innovative, less competitive, with products and services more expensive and of lowerquality that the winning company. The company, the winner, out of the market to the company losing. This process has the name of the process of creative destruction, the new company creates a new process or system and destroys another company. As investors, we will not only be analyzed when there are positive economic cycles, but also in this series the winners of this process of creative destruction.

The same can be applied to real estate investment. First, the cycles have much influence on the real estate cycle. That is, when the economic cycle is positive, the real estate cycle is very positive and vice versa. Therefore, it is vitally important to predict the cycles when it comes to predicting the real estate cycles. Second, the process of creative destruction also occurs in real estate investment. The most innovative and creative investors move to more rustic investors. Let’s see an example to better understand this point. Five years ago began construction in Buenos Aires buildings with what was called amenities, this meant buildings Read the rest of this entry →

Invest our savings is a process that involves taking risks. The investor enemies lurk and threaten to destroy our investments if we are not vigilant.

We know that investing in stocks or real estate is a very profitable investment alternative for medium and long term. As discussed in previous notes, on average you can expect an annual return of 11% average if I invest in a basket of the largest stocks in the United States. And the real estate returns are very close to this level.

But as we know, these returns are not a straight line, stable and calm, are very variable.The volatility of the markets, which currently is very high, causes the returns are variable from year to year. Some positive and some negative years, giving the average mentioned, but with many variations.

Why is this?
The answer is implicit in the logic of capitalism. Two events that exist in capitalist economies get a little complicated the picture:

* Business cycles
*The Process of Creative Destruction

Understand how these two phenomena will give me peace of mind knowing the context in which we operate. And I will make investment decisions more effective.

Type of investor: This advice is important for active investors and long-term investing in stocks and real estate

Risks: It is very difficult to predict the movements of the cycles and anticipate the winners of the process of creative destruction

Potentiality: I am a general framework that explains many movements, therefore, prevents me from making irrational decisions