Do You Get Your Money’s Worth From Buying An Annuity?

Coin Stacks And Chart Graphs On A Chessboard

Once upon a time, in the (somewhat mythical) past of traditional defined benefit pensions, your employer protected you from the risk of outliving your money in retirement, by acting, more or less, as an insurance company providing an annuity. With that benefit receding into the past, many experts have been hoping that Americans with 401(k) plans would avail themselves of annuities on their own, to give themselves the same sort of protection, and, indeed, the SECURE Act of 2019 made it easier for those plans to offer their participants an annuity choice, and, when surveyed, 73% of those participants said they would “consider” an annuity at retirement.

At the same time, though, Americans distrust annuities — in part because traditional deferred annuities had high fees and expenses and only made sense in an era predating IRAs and 401(k)s, when they were attractive solely due to the limited tax-advantaged options for retirement savings. But that’s not the only reason — annuities, quite frankly, aren’t cheap.

How do you quantify the value of an annuity? In one respect, it’s subjective and personal: do you judge yourself to be in good health, or does family history and your list of medications say that you’ll be one of those with the early deaths that longer-lived annuity-purchasers are counting on? Do you want to be sure you can maintain your standard of living throughout your retirement, or do you figure that you won’t really care one way or another if you have to cut down expenses once you’re among the “old-old”?

But measuring the value of annuities, generally speaking, does tell us whether consumers are getting a fair deal from their purchases, and here, a recent working paper by two economists, James Poterba and Adam Solomon, “Discount Rates, Mortality Projections, and Money’s Worth Calculations for US Individual Annuities,” lends some insight.

Here’s some good news: using the costs of actual annuities available for consumers to purchase in June 2020, and comparing them to bond rates which were similar to the investment portfolios those insurance companies hold, the authors calculated “money’s worth ratios” that show that, for annuities purchased immediately at retirement, the value of the annuities was between 92% – 94% (give-or-take, depending on type) of its cost. That means that the value of the insurance protection is a comparatively modest 6 – 8% of the total investment.

But there’s a catch — or, rather, two of them.

In the first place, the authors calculate their ratios based on a standard mortality table for annuity purchasers — which makes sense if the goal is to judge the “fairness” of an annuity for the healthy retirees most likely to purchase one. But this doesn’t tell us whether an annuity is a smart purchase for someone who thinks of themselves as being in comparatively poorer health, or with a spottier family health history, and folks in these categories would benefit considerably from analysis that’s targeted at them, that evaluates, realistically, whether annuities are the right call and whether their prediction of their life expectancy is likely to be right or wrong.

In the second place, the 92% – 94% money’s worth calculation is based on the typical investment portfolio of insurance companies, approximated by the returns of BBB-rated bonds. This measures whether the annuity is “fair” or not, in that “moral” sense of whether the perception that the company is “cheating” is customers is real (it’s not).

But these interest rates are very low. The authors, in addition to their calculations of “money’s worth,” back into the implied discount rate from the annuity costs themselves. For men aged 65, that interest rate is 2.16%; for women aged 65, 2.18%.

Now, imagine that you compare this annuity to an alternative plan of investing your money in the stock market, earning 7% annual returns, and believing you can predict your death date (or not really caring if you fall short or end up with leftover money for heirs).

The cost of the protection offered by the annuity, the guarantee that you will never run out of money, and that you will not suffer from a market crash, is very expensive indeed — when you compare apples to oranges in this manner, the money’s worth ratio is, according to my very rough estimates, more like 60%, meaning that about 40% of your cash is spent to purchase the “insurance protection” of the annuity.

And, again, that’s not because insurance companies are cheating anyone; that’s solely because of the wide gap between corporate bond rates and expected returns when investing in the stock market— a gap which was particularly wide in the summer of 2020 when this study was competed, but remains nearly as wide now.

As it stands, Moody’s Baa rates are in the 3% range; in the 2000s, they were in the 6% range, and in the 1990s, from 7% – 9%. Although this drop in bond rates is good news for American homebuyers because this marches in tandem with mortgage rates, it makes it far harder for retirees to manage their finances in ways that protect them from the risks that they face in their retirement.

Perhaps interest rates in general, and bond rates specifically, will increase as we leave our current economic challenges, but there’s no certainty, and as long as this gap between bond rates and expected stock market returns remains so substantial, retirees will be challenged to find any sort of safe investment that makes sense for them. Which means that what seems like a great benefit for Americans looking to borrow money — for mortgages, car loans, credit cards — can pit the elderly against the young in a generational “us vs. them” contest.

As always, you’re invited to comment at JaneTheActuary.com!

Follow me on Twitter. Check out my website.

Yes, I’m a nerd, and an actuary to boot. Armed with an M.A. in medieval history and the F.S.A. actuarial credential, with 20 years of experience at a major benefits consulting firm, and having blogged as “Jane the Actuary” since 2013, I enjoy reading and writing about retirement issues, including retirement income adequacy, reform proposals and international comparisons.

Source: Do You Get Your Money’s Worth From Buying An Annuity?

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Critics:

An annuity is a series of payments made at equal intervals.[1] Examples of annuities are regular deposits to a savings account, monthly home mortgage payments, monthly insurance payments and pension payments. Annuities can be classified by the frequency of payment dates. The payments (deposits) may be made weekly, monthly, quarterly, yearly, or at any other regular interval of time. Annuities may be calculated by mathematical functions known as “annuity functions”.

An annuity which provides for payments for the remainder of a person’s lifetime is a life annuity.

Variability of payments

  • Fixed annuities – These are annuities with fixed payments. If provided by an insurance company, the company guarantees a fixed return on the initial investment. Fixed annuities are not regulated by the Securities and Exchange Commission.
  • Variable annuities – Registered products that are regulated by the SEC in the United States of America. They allow direct investment into various funds that are specially created for Variable annuities. Typically, the insurance company guarantees a certain death benefit or lifetime withdrawal benefits.
  • Equity-indexed annuities – Annuities with payments linked to an index. Typically, the minimum payment will be 0% and the maximum will be predetermined. The performance of an index determines whether the minimum, the maximum or something in between is credited to the customer.

See also

References

  • Kellison, Stephen G. (1970). The Theory of Interest. Homewood, Illinois: Richard D. Irwin, Inc. p. 45
  • Lasher, William (2008). Practical financial management. Mason, Ohio: Thomson South-Western. p. 230. ISBN 0-324-42262-8..
  1. Jordan, Bradford D.; Ross, Stephen David; Westerfield, Randolph (2000). Fundamentals of corporate finance. Boston: Irwin/McGraw-Hill. p. 175. ISBN 0-07-231289-0.
  • Samuel A. Broverman (2010). Mathematics of Investment and Credit, 5th Edition. ACTEX Academic Series. ACTEX Publications. ISBN 978-1-56698-767-7.
  • Stephen Kellison (2008). Theory of Interest, 3rd Edition. McGraw-Hill/Irwin. ISBN 978-0-07-338244-9.

How to Buy Happiness (Responsibly)

The great reopening offers ample opportunity to lift your spirits if you have some money to spare. Here’s how to do it right. Bring on the nationwide spending binge. Half of all people over 18 in the United States are now fully vaccinated. Tens of millions of them are emerging, blinking in the springtime sunshine, and heading straight for restaurants, movie theaters or a flight to somewhere — or anywhere, really.

It is true that millions of people are still trying to get their hotel jobs or theater gigs back. But collectively, Americans are holding on to a larger share of their income than they have in decades.

That leftover money is a kind of kindling. We may look back on this moment as a once-in-a-lifetime period, when many millions of Americans felt that money was burning actual holes in their pockets.

It is an unfamiliar sensation for many of us. “There is a puritanical streak that runs through all aspects of money in America,” said Ramit Sethi, an author who focuses more attention than most on spending well in addition to saving intelligently. “And most of the conversations start with no.”

But we should consider the strong possibility that saying yes right now could bring a true improvement in happiness. So this column — and another one next week — will be about maximizing it through strategic spending.

The conversation begins with “Yes, and … — with perhaps with a side order of “Yes, but …” To help us all get there, I called on some of my most thoughtful contacts among people who talk, think or write about money. And I made sure to ask them this: What are you doing yourself?

Brian Thompson, a financial planner in Chicago, was prepared for this moment. He generally has two questions at the ready: What do you want to spend your money on? And why are you really spending it?

There are no wrong answers, Mr. Thompson said. “I always come from the approach that there is no judgment, and I try to come with empathy to help people clarify what the money means for them,” he said.

Paradoxically, the first thing to think about here is saving. Paulette Perhach said it better than I could here in her classic 2016 article exhorting everyone to build a freedom fund. (“Freedom” is my word — she uses an F-bomb, if you’re trying to find it via internet search.)

Savings aren’t just for when your car breaks down or you get sick. Having a freedom fund means you are not beholden to someone else — whether that’s a significant other who is treating you like garbage or a boss who is harassing you or otherwise making you miserable.

“This is about power, and power comes in a lot of different forms,” Ms. Perhach, an essayist and a writing coach, told me this week. “It comes from options. From looking at life and making sure one person does not have so much say over the outcome of your finances that you would have to tolerate behavior that goes against your own self-respect.”

Every few years, I reopen my well-worn copy of “Happy Money: The Science of Happier Spending,” a book from 2013 by Elizabeth Dunn and Michael Norton, for a review session. This time, I called Professor Dunn, a member of the psychology department at the University of British Columbia, to help me along.

A first principle of research in this area has generally been that buying an experience brings more satisfaction — and less buyer’s remorse — than buying stuff. In the years since the book was published, Professor Dunn said, this conclusion has largely held up for people with more money, though it can be less true for people farther down the socioeconomic ladder.

So what types of experiences should we be making a priority?

After a year marked by loss, I adopted a narrow approach focused on things that I might not have a chance to do again. I will never attend another John Prine concert or again eat food touched by the hands of Floyd Cardoz, both of whom were among the many we lost to the pandemic.

But there are things I can do instead that aren’t likely to recur, like attending my friend’s swearing-in ceremony as police chief in another state. And I’m prioritizing a trip with my daughters to the Great Barrier Reef (using approximately 9,000 years of frequent-flier mile savings) before it is no more.

Professor Dunn endorsed my plans, and the need to get out into the world again. “The only experiences I’ve been having are Netflix and DoorDash,” she said.

Professor Dunn lost her mother, Winifred Warren, to lung cancer in September and has a plan to celebrate her someplace other than a Zoom chat. Soon, she’ll get over the border to California and dine with her aunt and her mother’s best friend at the famed French Laundry — where Ms. Warren had been hoping to go herself, once she got better.

But just because so much fun seems available again all at once, it doesn’t mean you should pursue it all simultaneously. People who have reasonably high incomes — but the proclivity to go the immediate gratification route — can rack up quite a bit of debt,” Professor Dunn said.

Indeed, credit card issuers are licking their lips in anticipation of whatever orgy of spending ensues this year. Ms. Perhach found herself impulsively buying concert tickets recently and was inspired to pen a warning about the behavioral science of overspending for Vox.

The gratification doesn’t necessarily last long — and can even be wiped out by the dread of any new debt, she said. “I’ve done trips with an undercurrent of ‘I’m about to be in trouble,’” she told me this week. “And that’s not a great recipe for fun.”

If you are among the many lucky millions who are better off financially than you were at the beginning of 2020, consider how good it might feel to give something away.

Minnie Lau has spent much of the past year helping her accounting clients in the San Francisco Bay Area spend and save the windfalls from initial public offerings and other stock winnings in as tax savvy a manner as possible. Both they and she have done quite well. They did nothing wrong and have nothing to apologize for.

But amid so much death, fear and suffering, coming out ahead still leads to conflicted feelings. “My ill-gotten gains are going to the food bank,” Ms. Lau said of the money she has made investing this year. “People should not have to line up for food. Didn’t California just announce that it had a surplus? What kind of crazy world is this?”

Everyone else I talked to this week felt a similar urge. Professor Dunn recalled being overwhelmed with gratitude after receiving her coronavirus jab. Now, she’s a monthly donor to UNICEF’s vaccine equity initiative. Ms. Perhach is supporting VONA, which helps writers of color, while Mr. Sethi busted into his emergency fund to donate to Feeding America and match his readers’ donations.

Mr. Thompson, the financial planner, has given money to help people who are both Black and transgender — a segment of the population that he believes needs more help than most. And he’s redoubling his efforts at work to reduce the racial wealth gap.

“If I can help more people build more wealth to pass down, it is a way of serving my purpose and helping people in the process,” he said. “And I think that takes more than just giving. It means systemic change.”

Ron Lieber

 

 

Source: https://www.nytimes.com/

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Critics:

Money management is the process of expense tracking, investing, budgeting, banking and evaluating taxes of one’s money which is also called investment management. Money management is a strategic technique to make money yield the highest interest-output value for any amount spent. Spending money to satisfy cravings (regardless of whether they can justifiably be included in a budget) is a natural human phenomenon.

The idea of money management techniques has been developed to reduce the amount that individuals, firms, and institutions spend on items that add no significant value to their living standards, long-term portfolios, and assets. Warren Buffett, in one of his documentaries, admonished prospective investors to embrace his highly esteemed “frugality” ideology. This involves making every financial transaction worth the expense:

1. avoid any expense that appeals to vanity or snobbery
2. always go for the most cost-effective alternative (establishing small quality-variance benchmarks, if any)
3. favor expenditures on interest-bearing items over all others
4. establish the expected benefits of every desired expenditure using the canon of plus/minus/nil to the standard of living value system.

References

Tips For Moms To Take Better Care of Their Money

Tips for moms to take better care of their money

Mother’s month is approaching and the best way to celebrate them is by empowering them and helping them become more independent and financially successful.

Within personal finance there is a “common core”, to call it somehow, a body of knowledge that we should all have, however what works for one does not necessarily work for another.

There are differences in the management of finances between men and women, between a woman without children and a mother, and between a married mother and a single mother.

Let’s take a look at the data first.

Women live 10 years longer than men, increasingly contribute more resources to households, have more breaks in their working life, due to motherhood, and the responsibility of raising their children without leaving them unprotected in the event of an accident or death premature. So there is an urgent need to have a short, medium and long term financial plan.

According to data from the National Institute of Statistics and Geography (INEGI), 7 out of 10 women over 15 years of age are mothers, of those mothers 4 out of 10 contribute financial resources to the operation of the home, and of those who provide financial resources, 97% He combines his work with the burden of household chores, in addition, according to CONAPO, there are 880 thousand single mothers in Mexico, of which 90% have children under 18 years of age.

So the data and therefore here are some tips to improve your finances.

1. Make a personal budget

The budget is a tool that will help you keep your expenses under control, detect unnecessary leaks, pay attention to priorities and do not forget important items such as savings. It includes all the expenses related to the children such as tuition, school supplies, food, entertainment, medical expenses and even gifts.

2. Do you want successful children?

Educate yourself financially! It is very important so that you can teach that to your children and they grow up with good financial habits, you will avoid future headaches and you will too. Remember that there is no better inheritance than education and good habits.

3. Save for your retirement

You don’t want to be dependent on your children in the future, right? It is important that you regularly allocate within your budget a savings amount for your retirement, feed your AFORE or pension plan. That will give you financial certainty when the time comes.

4. Don’t hide financial problems

Keeping these types of situations secret adds problems instead of solving them, damages family ties and can be counterproductive.

5. Safe, safe?

If the father dies and is the breadwinner of the family, it can cause an economic gap that the mother would have to face, so insure the father, and if you are a single mother, be sure! You do not want to leave your children financially unprotected.

And to close I leave you some ideas of financial gifts for mom.

  • A course in personal finance.
  • An investment account (show him how to use it if he doesn’t know).
  • A few ounces of silver (it will start to rise in price).
  • A Tablet with internet access and teach him how to use it if he does not know. Access to information is a great ally of economic well-being.

Iván Vázquez Islas

By: Iván Vázquez Islas

Source: Tips for moms to take better care of their money

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Being a mom is the best job I have, but let’s be real—sometimes, it’s really hard. So, this episode of The Rachel Cruze Show is all about making your life a little easier. Today, you’ll learn: • 7 ways to save money on your morning routine • Things no one tells you about being a mom • How to give yourself grace as you navigate this crazy thing called “life balance” Sponsors pay the producer of this show, The Lampo Group, LLC, advertising fees for mentioning their services or products during programming.
Advertising fees are not based upon or otherwise tied to any product sale or business transacted between any consumer or sponsor. The following sponsors have paid for the programming you are viewing: — Zander Insurance Resources (everything mentioned in this episode): Zander Insurance: http://bit.ly/2Pd6Nss The Contentment Journal: https://www.rachelcruze.com/store/pro… Ramsey Solutions YouTube Channels (Subscribe Now!) • The Dave Ramsey Show (Highlights): https://www.youtube.com/c/TheDaveRams… • The Dave Ramsey Show (Live): https://www.youtube.com/thedaveramsey… • The Rachel Cruze Show: https://www.youtube.com/user/RachelCr… • The Ken Coleman Show: https://www.youtube.com/c/TheKenColem… • Christy Wright: https://www.youtube.com/c/ChristyWrig… • Anthony ONeal: https://www.youtube.com/user/aonealmi… • EntreLeadership: https://www.youtube.com/c/entreleader..
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Here’s How You Can Use Decentralized Finance To Draw Passive Income Streams

Here's How You Can Use Decentralized Finance to Draw Passive Income Streams

With the European and global crypto markets going mainstream in 2021, the term DeFi — short for Decentralized Finance —  seems to have seeped into the consciousness of the masses, at least those looking to invest in this yet nascent space. In this regard, it bears mentioning that the DeFi ecosystem has grown from strength to strength over the last 12 odd months, with the amount of money coming into this space increasing from $1 billion to $40 billion since Q2, 2020.

From a conceptual and operational standpoint, one can see that DeFi projects are designed to function in the same way as their centralized finance (CeFi) counterparts. This is to say that they enable users to lend and borrow funds, speculate on the price movements of various assets, earn interest rates and so on, much like traditional bank accounts except without a bank intermediating the transactions, thus removing the associated cost overhead and delays. Transaction rules, on the other hand, are enforced by the software, leaving no room for human error or oversight.

The onset of DeFi has been beneficial to both the crypto maximalists as well as the traditional investors looking for yield. The reason is that the so-called stablecoins are as eligible to participate as the traditional crypto. Stablecoins are the cryptocurrencies pegged 1:1 to conventional currencies and are backed by the respective reserves. Some of the most widely used ones are USDT and USDC, both of which are pegged to USD and can be acquired from most cryptocurrency exchange providers. Accessing DeFi through these eliminates price risk stemming from the volatile nature of cryptocurrencies.

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Start trading Bitcoin and cryptocurrency here: http://bit.ly/2NI4xtF DeFi applications – https://defipulse.com/defi-list/ DeFi is becoming more and more popular as the main use case for cryptocurrencies. This video explains in detail what DeFi is and what you should know about before getting involved. 0:38 Bitcoin and Our Financial System 1:24 Our Centralized Financial System 1:59 What is DeFi? 2:22 DeFi Components 4:16 – DAI explained 5:51 – DEXs explained 6:33 – Decentralized money markets 8:06 Money Legos 8:56 DeFi Advantages and Risks 10:02 Conclusion For the complete text guide visit: https://bit.ly/2R35g6Z Join our 7-day Bitcoin crash course absolutely free: http://bit.ly/2pB4X5B Learn ANYTHING about Bitcoin and cryptocurrencies on our YouTube channel: http://bit.ly/2BVbxeF Get the latest news and prices on your phone: iOS – https://apple.co/2yf02LJ Android – http://bit.ly/2NrMVw2

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The DeFi difference and how it can work to your advantage.

From the get-go, it is important to understand that before the advent of DeFi, crypto owners did not have access to any decentralized avenues for lending, farming, staking their assets. Centralized options were also few, far between and of questionable reliability. However, with this space continuing to grow, there are now a plethora of ways through which token holders can see their assets multiply.

The simplest and most convenient means of earning passive income through DeFi is by depositing one’s crypto into a platform that provides users with an APY (annual percentage yield). The core difference here is that while most banks provide users with interest rates ranging between 0.2 percent to 0.6 percent at max, DeFi returns can go as high as 15 percent.

Yield Farming.

As the name seems to quite clearly imply, the concept of “Yield Farming” entails the generation of a passive income stream via the use of a variety of different crypto assets. In its most basic sense, Yield farming can be compared with traditional finance offerings such as bank deposits, fixed-term deposits, and even government bonds wherein investors lock in their fiat assets with a financial institution, allowing for increased liquidity. This liquidity in turn generates growth for the institution, thus allowing for steady interests to be paid out to investors.

Similarly, yield farmers can make use of DeFi money markets, liquidity pools, etc to draw in steady returns for themselves. For example, an individual locks up 10,000 USDC (US dollar-pegged stablecoin) into a DeFi protocol, providing it with instant liquidity. In return for locking up these funds, the person is rewarded with fees generated by the underlying DeFi platform. These reward tokens can then once again be deposited in other liquidity pools, allowing users to constantly accrue a flow of income by continually switching between different protocols.

Popular platforms worth considering.

Uniswap: The name UniSwap has almost become synonymous with the term “passive income,” at least across the global crypto landscape. The protocol provides users with a tangible avenue through which they can earn returns on their assets by becoming liquidity providers (LPs).

In their most basic sense, LPs are those individuals that deposit an equal USD amount of two tokens, known as a pair, to a liquidity pool.  Whenever these tokens are moved — for example, borrowed by a third party —  the fee that is generated from such a transaction and is shared with the LP depending upon his/her stake in the pool.

UniSwap is perfect for those individuals who may be in possession of “idle crypto assets” and looking to invest their funds in a platform that is relatively risk-free and easy to make use of.

Aave: This is a platform to lend and borrow assets. You put assets in a pool — for example the USDC pool — and anyone who needs to get USDC can come and borrow some, by collateralizing the loan. Depending on demand they’ll pay roughly between 2 percent and 80 percent APR, while you’ll get between 0.5 percent and 75 percent APY for lending into the pool.

While providing to liquidity pools such as Uniswap involves some degree of risk (the “impermanent loss”) depending on the pair of assets you are dealing with, Aave is really the simplest product to understand: deposit 1 asset, get paid a certain interest percent in that asset.

The risks.

Though on paper, the concept surrounding yield farming looks extremely attractive, it is not free of its share of risks.

The very first risk — the thing which resulted in the most money lost in 2020 — is greed. “Rug pulls” and “exit scams” were the No. 1 risk in terms of money stolen last year. A good reminder to do your own research!

The second type of risk, tech risk, means that if there is a bug in the smart-contract you are using, you could lose all your money, and that’s why you want to make sure they have been independently audited. For the same reason, you are best advised to not “put all eggs in the same basket” and deposit across several protocols.

There have also been a lot of attacks associated with “price oracles.”  This is somewhere between a tech risk, a design risk and a financial risk. An “oracle” is the service through which a DeFi protocol obtains real-time price data. Those can potentially be manipulated or tampered with, especially since these instruments are totally automated and there is no way to audit or verify the accuracy of the data provided by these platforms. A lot of “attacks” in 2020 were executed through manipulating the price information of assets and getting a lot of tokens for cheaper than one ought to from a service.

Lastly it is no secret that the crypto market at large is the subject of daily price swings, causing the value of many assets to jump up and down wildly. In this regard, if the value of a cryptocurrency that is being farmed dips to extremely low levels, users could incur heavy losses compared to the currency they use to go shopping. Two hundred percent APY on something whose price is dropping by 300 percent a day isn’t going to make you rich any time soon. That’s a financial risk, and the conclusion is to choose your assets wisely.

Anton Altement

 

By: Anton Altement/ Entrepreneur Leadership Network VIP

Source: Here’s How You Can Use Decentralized Finance to Draw Passive Income Streams

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Artificial Intelligence Revolution: 3 Stocks to Automate Your Gains

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Crisis

How to continue operating in the midst of one of the biggest crises in history?

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Women Entrepreneurs

10 Stories That Will Revolutionize the Way You Lead Your Life

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Finance

Semiconductor Industry Set To Benefit From Global Chip Shortage

Semiconductor manufacturers such as Amkor Technology (NASDAQ: AMKR), ON Semiconductor (NASDAQ: ON) and United Microelectronics (NYSE: UMC) are benefiting from strong demand for electronics gear, combined with a global chip shortage..
Finance

Charles Schwab is Set for a Blowout Quarter

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Finance

United Airlines, Alaska Air Group Stock Get Upgrades

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Finance

Conagra Brands Will Sustain Growth This Year And Next

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Finance

Constellation Brands Down 5% On Better Than Expected Results

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Finance

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Stress Management

3 Ways to Prevent Stress from Taking Over Your Life

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Success Habits

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Marketing

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News and Trends

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Finance

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Finance

How To Throw A Virtual Party In 2021

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Finance

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Prepare to Succeed

12 Leadership Lessons from Mailchimp Co-Founder and CEO Ben Chestnut

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News and Trends

The Youngest Billionaire Is No Longer Kylie Jenner – It’s an 18-Year-Old From Germany

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Small Businesses

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In today’s world, improving your business’s cash flow-the lifeblood of any company-can mean the difference between being able to pay your employees or having to close up shop.
Trends

Has Dry January Really Lifted Non-Alcoholic Beverage Makers’ Spirits?

Entrepreneur spoke with several companies about their efforts to seize on the annual wellness trend.
Finance

8 Ways To Boost Property Value And Increase Kerb Appeal

When it comes to selling your home, first impressions certainly count. Properties with high kerb appeal are guaranteed to have better luck on the market, with potential buyer’s keen to conduct a viewing. Neat spaces induce greater kerb appeal and boost a home’s value – the best part is, you don’t necessarily need to spend […]
Developing an Agile Work Culture

Remote-Communication Tips from 7 World Champions of Public Speaking

Some of the best in the biz offer their insights on how to shine while delivering messages from a distance.
Finance

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When people everywhere suddenly found themselves unemployed thanks to the pandemic, many of us were taught a lesson about money the hard way. It turns out that not saving enough money for an emergency was a big mistake. Q1 2021 hedge fund letters, conferences and more The Money Mistakes People Regret Making While it’s usually […]
Starting a Business

How to Determine Which Product You Should Launch Your Brand With

Starting a business? Consider carefully what your first signature offering should be.
Finance

Warren Buffett’s Mistake Of Selling Of Bank Stocks

Whitney Tilson’s email to investors discussing Warren Buffett’s $10 Billion mistake and the importance of thinking independently; robotics; the first mobile phone call. Q1 2021 hedge fund letters, conferences and more Warren Buffett’s $10 Billion Mistake 1) Nobody is a greater admirer of Berkshire Hathaway (BRK-B) CEO Warren Buffett than I am… But that doesn’t […]
WhatsApp

Protect Yourself From This WhatsApp Scam

If you get this message from a friend, it is probably a trick to hack your WhatsApp.
Crisis Management

Long Beach Beer Lab Could Have Closed; Instead, They Became Essential

The story of how one small brewery and gastropub semi-pivoted on the fly and has been busier than ever.
Developing an Agile Work Culture

How to Build More Purpose Into Your Work

Don’t look for meaning in your work. Create it.
Finance

A Guide To Managing Your Money Better In 2021

When it comes to putting yourself in the best financial situation possible and having your personal finances under control, effective money management is vital. Are you aware of your outgoings? What about your credit score? Are you keeping track of your debt? These are all critical factors to be aware of to become a money […]
Finance

JPMorgan Chase CEO Jamie Dimon Has A Warning For The U.S.

JPMorgan Chase & Co. (NYSE:JPM) Chairman and CEO Jamie Dimon believes the economic recovery after the pandemic will last at least a few years. He also warned that “inept” public policy and government dysfunction are causing many serious symptoms. [soros] Q1 2021 hedge fund letters, conferences and more Further, he said there was “some froth […]
Finance

The Benefits Of PropTech For Property Managers

As the globe adopts further digitalisation, technological advances have benefitted many industries, including the world of real estate. For landlords, the implementation of PropTech can make a real difference and positive change to their business models. But how exactly has PropTech changed the face of real estate and property management? Q1 2021 hedge fund letters, […]
Leadership

Why ‘Messy’ Leaders are the Future

Research suggests that “messy” leaders will best navigate the new normal.
Billionaires

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While 22 million people were added to poverty in the region, Forbes reports that these men and women increased their wealth.
News and Trends

Here’s How to Check If Your Phone Number Was Leaked in the Massive Facebook Breach

Over the weekend, the personal data of more than 533 million Facebook users was published in a hacking forum.
Finance

Ebang: Yet Another Crypto “China Hustle” Absconding With U.S. Investor Cash

Ebang International Holdings Inc (NASDAQ:EBON) is a China-based crypto company that has raised ~$374 million from U.S. investors in 4 offerings since going public in June 2020. Q1 2021 hedge fund letters, conferences and more While the company represented that it would use the majority of its numerous capital proceeds to develop its business operations, […]
Press Coverage

3 Strategies to Land Big Press If You Are Not a Purple Cow

In today’s media world, no brands are unfit for coverage.
Finance

6 Time Management Methods For Small Business Owners

As a business owner, you have a lot on your plate. And sometimes it can feel like you’re constantly working to manage every aspect of your business to make sure it’s running smoothly. This can be dangerous for your mental health. One study found that 70% of people say that a heavy workload and poor […]
Business Growth

Business Investing for Business Growth

Business leaders can lead strategically by investing in both themselves and the business.,
Success Stories

This Craft-Beer Founder Gave Herself 6 Months to Succeed. Five Years Later, She’s Flourishing.

Sufferfest CEO Caitlin Landesberg left a comfortable job, took a risk, and it paid off. Here’s how she did it and what she learned.
News and Trends

Black Manager Sues Amazon Over Alleged Discrimination, Sexual Assault and Harassment

Charlotte Newman says her former director made unwanted sexual advances toward her, adding that Amazon had a widespread culture of ‘down-leveling’ Black employees.
Finance

What a new plan for GSE reform could mean for borrowers

There’s been a lot of talk about getting Fannie Mae and Freddie Mac out of conservatorship, although that could change now that President Joe Biden is in the White House. However, Biden’s presidency does not necessarily mean that reform for the government-sponsored enterprises is entirely out of the cards. Q1 2021 hedge fund letters, conferences […]
Entrepreneur Index

Amazon CEO Jeff Bezos Supports Corporate Tax Hike

Amazon Inc (NASDAQ:AMZN) CEO Jeff Bezos supports raising taxes on corporations, but it seems he might not support the entire infrastructure bill that includes the tax hike. In a statement, Bezos said Amazon supports “the Biden Administration’s focus on making bold investments in American infrastructure.” Q1 2021 hedge fund letters, conferences and more However, he […]
Branding

Automate and Enhance Your Brand Design With This Award-Winning Tool

RelayThat makes it easy to design your brand’s marketing materials effectively.
Growth Strategies

6 Strategies That Drive Business Growth

Women often lead their companies to success in a way that’s very different from male leaders. Use these six strategies to follow their lead.
Startups

5 Tips for Finding a Great Advisor for Your Startup

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Customer Relationship Management

Daylite Offers a Customized CRM for Small Businesses That Use Mac

Manage everything your professional services SMB needs from a single hub.
Cell phone

Your Cell Phone Expenses Don’t Have to Put You in the Red—Boost Mobile Can Help

Boost Mobile is offering a can’t miss deal.
Entrepreneurs

How One Woman Is Winning the Canned Wine Market

The founder and CEO of a mission-driven vino venture reveals how she creates “buzz” in every sense of the word.
Marketing

7 Effective Delivery Skills for Public Speaking

Discover smart delivery and strategy tactics and the exercises you can practice so you can improve your speaking skills.
Leadership

Why Vulnerability Is a Strong Business Leader’s Most Powerful Weapon

You don’t have to wear a suit of armor every day to inspire your workforce. Instead, show your weaknesses and you’ll have more people’s trust and loyalty.
Finance

Investors Should Get Comfortable with Comfort Systems USA

When it comes to investing in homegrown companies it doesn’t get much more patriotic than Comfort Systems USA (NYSE:FIX). The provider of building construction and maintenance services has been around for almost 25 years.
Artificial Intelligence

This Is the Most Powerful Artificial Intelligence Tool in the World

In June 2020, the Californian company OpenAI announced the GPT-2’s upgrade to GPT-3, a language model based on artificial intelligence and deep learning.
Ecommerce

Electronic commerce: 4 tips to boost your business on the internet

Although digitization is an advantage over businesses that only offer physical sales, various businesses face the challenge of making their e-commerce stand out and generate the expected results.
Finance

3 Market-Leading Stocks to Buy on Dips

We’ve put together a list of 3 market-leading stocks to buy on dips to help you get a better sense of what companies might fit into your long-term investing plans.
Finance

3 Big-Box Retail Stocks to Buy Now

We take a look at 3 big-box retail stocks that could be worth buying now.
Finance

Juniper Networks Stock is a Laggard Networking Play

Network communications company Juniper Networks (NYSE: JNPR) stock has been chopping in a trading range for nearly a decade.
Finance

The Moderna Pullback is Worth a Shot

A little over two years ago Moderna (NASDAQ:MRNA) was a relative unknown in the world of investing. The Massachusetts-based biotech company was making its public market debut hoping investors would take to its novel approach to drug and vaccine development. My how times have changed.
Enterprising women

How to become an Alpha Woman in business: when apart from being a collector you want to be an entrepreneur

This article is for the woman who is thinking about exploring entrepreneurship, who lacks a push to start or who does not feel sufficiently equipped to launch a business alone.
Finance

Smart Global Holdings Business Acceleration Is Underway 

Smart Global Holdings beat on the top and bottom line and provided blow-out guidance that points to rising share prices over teh short, mid and long-term.
Finance

3 Fintech Stocks With Good 2021 Prospects

Financial technologies are extending their reach into more aspects of life, all over the world, opening more doors for companies like NCR (NYSE: NCR), ACI Worldwide (NASDAQ: ACIW) and Fiserv (NASDAQ: FISV).
Finance

RPM International Is Geared For Growth

Shares of RPM International are down following the Q2 earnings report but we expect this high-quality dividend growth stock to begin moving higher very soon.
Finance

Sizing Up The Opportunity in Snap Stock

A 5% jump in yesterday’s session made shares of social media giant Snap (NASDAQ: SNAP) among the best performing of US equities.
Finance

SMBX – Small Business Bonds Marketplace Review

SMBX is an online marketplace that allows individual investors to buy small business financial securities. It can be difficult for some small businesses to get a business loan. With SMBX, a small business owner is taking a different route. In this case, they are raising capital from the public
Mentors

How to Approach and Attract a Potential Mentor

If you feel like you’re spinning your wheels at work, working with a mentor could get you back on track and moving full steam ahead. Use these tips to find one that’s a good fit for you.
Customer Engagement

How to Keep Your Business Open 24/7 Without Having Anyone Working All Those Hours

Customers expect access to you any time of day. These tips can help you pay attention at all times without burning the candle at both ends.
Stress Management

The 4-Step Process to Conquering Stress for the Rest of Your Life

Keep the stress monster at bay by committing to each of these four steps for the rest of your life.
Growth Strategies

How to Effectively Measure Strategic Initiatives

Follow this expert advice for laying out a game plan for any project or initiative that will help you evaluate it before, during and after the project is complete.
Financial Goals

10 Tips to Stay Focused on Your Financial Goals

Setting financial goals isn’t for the faint of heart.
Closing Sales

5 Ways to Master Sales

Learn to overcome the five biggest fears in sales and become a master salesperson.
Entrepreneurs

Magic Johnson Is Here To Teach You How To Use the Cultural Demographic Shift to Your Business’s Advantage

There’s a cultural demographic shift happening in the U.S. that could disrupt your business. Get ahead of it now by finding out how Magic Johnson is tapping into and profiting from it.
Prepare to Succeed

3 Marketing Tactics Entrepreneurs Should Implement to Improve Their Return on Investment

These marketing tenants are key to success for a forward-thinking company.
Prepare to Succeed

Your Buyer’s Journey is Now Online. Is Your Customer Experience Digital-First Too?

This is how you can build a tech suite for the digital-first customer.
Finance

These Are The Top Ten Convertible Mutual Funds

Investing in hybrid securities is one of the best ways to earn returns and lower the risk profile of a portfolio. Within hybrid securities, convertible funds are the most popular among investors. Such funds give investors the benefit of investing in stock with the safety of bonds. These convertible funds usually invest in convertible bonds […]
Inspiration

NASA names a mountain on Mars in tribute to Mexican scientist

Rafael Navarro González dedicated his life to science; Now the space agency pays tribute to him after he passed away from COVID-19.
Developing an Agile Work Culture

5 Small Business Strategies to Recover, Rebuild and Be Ready

Small business owners can adopt these recovery strategies to recover and thrive in unpredictable conditions.
Prepare to Succeed

Free On-Demand Webinar: How to Build a Disruptive Business Model That Scales

Watch our Leadership Lessons series host — Comparably co-founder/CEO Jason Nazar — as he chats with Sunrun co-founder/CEO Lynn Jurich. She’ll share the most important lessons of her career, from her time as a venture capitalist to becoming an entrepreneur herself.
News and Trends

Kim Kardashian West Joins Estranged Husband Kanye West on Billionaires List

The model and television personality’s net worth is largely attributed to the success of her two businesses.
News and Trends

The Race to Covid-19 Vaccine Passports, and Where You Can Get Yours

If you are a citizen of certain countries, you may be in luck.
Success

Which Do You Need: A Coach or a Consultant or a Trainer? Here’s How to Know.

The terms coaching, training, and consulting are thrown about by clients, believing they are interchangeable. In reality, each solution has a unique impact on you and your people.
Finance

Increased Trading Means It’s Time To Up Your Employee Trade Monitoring Game

Trading today is more accessible than ever before. The Robinhood trading app officially launched in March 2015, and headlines from 2020 indicate that it’s already handling more trading volume than rivals Charles Schwab and E-Trade combined. Robinhood also spurred the move toward commission-free trading, which has become industry standard as a result. [soros] Q1 2021 hedge fund […]
Finance

A Hypothesis For A Bitcoin ‘Triple Top’ In 2021

From sovereign wealth funds jumping in, to multiple Bitcoin ETFs in the works, there is a growing sense something important is going on and that perhaps mainstream adoption is just around the corner. Q1 2021 hedge fund letters, conferences and more There is so much to focus on out there but you only need to […]
Finance

7 Steps To Ensure Long-Term Business Success

Starting up your own business is a hard thing to do, and running it is even harder. There’s a lot you’ll have to get right in order to keep yourself going past the first twelve months. Q1 2021 hedge fund letters, conferences and more Thankfully, with these top tips, you can learn more about how […]
Finance

4 Reasons To Consider Fixed Income Investments

Fixed income investments are many investors’ bread and butter. More secure and stable than buying stocks (also known as “equity”), making a fixed income investment means buying a bond, which a company issues to raise debt. Q1 2021 hedge fund letters, conferences and more You make your profit through interest payments, which the company will […]
Finance

So You’re An Accredited Investor: Here’s What You Can Do Now

If you recently became an accredited investor, you may not be aware of all the strategies that have just been opened to you. An accredited investor is usually a high-net-worth individual or entity, although the U.S. has changed the definition to add another category to it. Q1 2021 hedge fund letters, conferences and more The new […]
News and Trends

Elon Musk Reveals What Caused a SpaceX Prototype to Mysteriously Explode

The SN11 launched from the company’s South Texas facilities last week but exploded upon landing.
Entrepreneurial Journey

How Fashion Design Rebecca Minkoff Pivoted In the Pandemic: “We Were Not Going to Go Down Without A Fight”

Rebecca Minkoff’s business was in trouble. Watch her explain how she redefined it for a digital era.
Franchise

Entrepreneur Franchise of the Day: Uptown Cheapskate

The resale store for young adults that buys and sells name-brand apparel, shoes and accessories takes the thrift store experience where it’s never been before.
Finance

Dividend Stocks Are An Excellent Way To Earn Passive Income

Passive income is a great way to set yourself up for success, both in retirement and before. There are several options for passive income, although some are more passive than others. For example, real estate can be a passive investment. However, it also requires property management, so you would need to hire a property manager […]
Starting a Business

How This Entrepreneur Turned His Passion Into a Business

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Tesla

Tesla Shares Skyrocket for Electric-Car Delivery Record; See How Much They’re Worth Now

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Marketing

5 Low-Cost Marketing Strategies for Your Self-Published Book

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Yahoo!

Yahoo Answers Announces Final Closure, and Users Relive It With Questions, Answers and Memes

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News and Trends

This NBA Team Will Soon Have the Option of Being Paid in Bitcoin

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Customer Engagement

People are Exhausted. Here’s How to Inspire Them to Buy Your Product.

The past year has resulted in a level of mental exhaustion that is unknown territory for modern companies – and selling in the face of that can be very challenging. Here are four strategies that can help.
Finance

These Were the Countries with Most Billionaires in 2020

The number of billionaires a country has is no accurate measurement of the overall growth, wealth or well-being of a nation. However, it does speak well for that country. Also, it has been seen that countries with more billionaires are usually big countries having massive economic clout. Detailed below are the countries with the most […]
Wall Street

The Investor Who Missed the Chance to Make Millions With Netflix

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Finance

You May Get Supplemental Payment to Your Stimulus Check

So far, millions of people have received their stimulus checks, but many got less than what they were eligible for on the basis of their 2020 tax return.
Entrepreneur Index

Small Businesses Push Back Against Amazon On Antitrust Issues

A national coalition of small businesses is calling for stronger antitrust measures in a pushback against Amazon Inc (NASDAQ:AMZN). If the group successfully pushes through the measures, they could force the company to spin off some of its businesses. [soros] Q1 2021 hedge fund letters, conferences and more Small businesses target Amazon According to The […]
Healthy Entrepreneur

The two syndromes that negatively impact our professional lives. Identify them!

The World Health Organization warns that 75% of workers suffer from burnout, but did you know that you could also suffer from Small Intestinal Bacterial Overgrowth, better known as SIBO?
News and Trends

Supreme Court Rules in Google’s Favor in Oracle Copyright Case

This might finally put an end to the year-long Oracle / Google slugfest.
Bill Gates

Bill Gates Explains Why He’s the Largest Farmland Owner in America

It’s the first time Gates has publicly commented on land purchases made by his associated entities.
Success Stories

‘So Many Lightbulbs Went Off’: How This Couple’s Stress-Soothing Invention Blew Up During the Pandemic

The Apollo Neuro is a new anxiety-reducing wearable backed by powerful research, and the powerhouse couple behind it has high hopes for combating the mental health crisis.
Franchises

These 5 Nontraditional Types of Franchisees Make Great Leaders

These franchisees exemplify the advantages of a nontraditional perspective.
Entrepreneurs

A year of pandemic: learning for entrepreneurs and SMEs

If the new normal is still a long way off, it is necessary for all of us to have an entrepreneurial attitude to create an environment of transformation of human and commercial relationships, protecting ourselves and others.
Remote Workers

The Company of the Future Doesn’t Have an Office

The pandemic’s almost over, and remote work has never been more popular.
Finance

Should You Buy A House Right Now Or Wait A While?

The housing market was off and running last year despite the pandemic as interest rates were cut close to zero. However, some of the conditions that made it such a great move to buy a house in 2020 have begun to change. So is it still a good time to buy a house? You might […]
Public Relations

Is PR Dead?

The pandemic has created disruption across many industries. Will it kill PR?
Content Strategy

The 1 Question New Content Creators Should Never Ask Themselves

Lauryn Bosstick and Michael Bosstick, hosts of ‘The Skinny Confidential Him and Her’ podcast, chat about how to combat the fears you experience, as well as their best strategies for building a community.
Inspiration

John’s Parable of the Secret Way to Success

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Technology

Why You Should Use WhatsApp Business in 2021

From customer engagement and brand awareness to commerce opportunities for products and services, there are many reasons to use WhatsApp Business in 2021.
Video Conferences

Livestorm Simplifies Video Communications for Today’s Remote Work Landscape

This simple but powerful video communication tool makes planning, conducting, and analyzing video calls, webinars, and more a breeze.
Success

3 Lessons I Learned Selling My Billion-Dollar Company

Here are three lessons I learned selling Byte by $1.04 billion dollars in three years.
Finance

Is Shiller Losing Confidence in His Own Research?

I believe that Robert Shiller is gradually losing confidence in his own research. He still has confidence in the findings. The findings are rock-solid and there is no reason to doubt them. But what really matters are the how-to implications of the research — what should investors be doing differently because of Shiller’s finding that […]
Finance

Time to Scale into Twitter Stock on These Pullbacks

Social media platform Twitter (NYSE: TWTR) stock has been in the center of much controversy fending off the scrutiny of the U.S. Congress along with peers Facebook (NYSE: FB) and Google (NASDAQ: GOOG) regarding censorship, data privacy and liability concerns.
Entrepreneurial Life

Zoom fatigue exists, and here are 4 ways to transform it

The overexposure to screens simultaneously, such as the computer, the cell phone, a television, a tablet, plus the succession of voice calls and deadlines that mark the top line of delivery dates, subject employees to an exhausting effort .
Finance

3 Under-the-Radar Growth Stocks to Buy Now

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Storytelling

This distinguishes ‘successful’ companies from legendary companies

Get to know the “hero’s journey” and learn to tell your own story.
telemedicine

Two alliances that seek to reduce your health expenses

Early and timely medical attention is key to prevent the diseases from progressing and becoming catastrophic for the population. In Mexico, 49 percent of the resources allocated to health services comes from personal pockets.
Digitization

The revolution of the Internet of Things, a world to discover

The business fabric in Latin America is strongly made up of traditional companies, but how to turn this reality around?
Apps

How to position your mobile application and have more downloads from the App Store and Google Play Store?

App Store Optimization is characterized by being a set of techniques that aim at organic positioning in app stores.
cryptocurrencies

What is bitcoin? Why the digital currency became popular

BITCOIN ($ BTC) was introduced by “Satoshi Nakamoto”, alias of a programmer or group of programmers whose motivation for its development was the economic crisis of 2008 – 2009.
Cryptocurrency

Here’s How You Can Use Decentralized Finance to Draw Passive Income Streams

Before the advent of DeFi, crypto owners did not have access to any decentralized avenues for lending, farming, staking their assets. Now, there are a plethora of ways through which token holders can see their assets multiply from passive income.

Death of Dividend: Here’s How to Recharge Your Passive Income Strategy

Death of Dividend: Here's How to Recharge Your Passive Income Strategy

The economic devastation caused by Covid-19 has been unprecedented, with most countries across the world only just starting to recover from the unforetold effects of the virus. One of the more prominent financial casualties of the pandemic has been the domain of “dividend-based income schemes,” often relied on by entrepreneurs as they seek to achieve the best of two worlds — capital appreciation of an equity investment with a regular cash flow customary for a fixed income instrument. This is a particularly convenient strategy for those heavily invested in their businesses while needing a regular income stream to fund their day-to-day expenses.

After a dire year for corporate payouts, where an increasing number of multinationals will have to cut or cancel their dividends altogether, a whopping 75 percent of all UK-based firms have already had to resort to such measures. To put things into perspective, this figure was only 40 percent during the last major dividend crises — i.e. the 2008 credit recession.

But dividends have been on the decline for decades, falling from grace since the 1990s when the average payout ratio for S&P 500 companies fell to 30 percent from a previous fluctuating average of 40 percent to 60 percent between 1950 and 1990. Additionally, as per data recently made available by global financial administrators Link Asset Services, one can see that during Q2 2020 alone, the total amount paid in dividends by UK companies fell by 57.2 percent to £16.1bn, signalling a cut of almost £22bn. Covid-19 has merely accelerated the inevitable: Cuts were coming anyway.

What’s causing this to happen? What lies ahead?

While there are many nuances to why dividends are going out of fashion, one of the main reasons at the moment is the need for companies to hoard cash due to today’s uncertain economic climate. Secondly, dividend receipts are incredibly inefficient and cumbersome when it is time for a person to file their taxes. Lastly, an over-reliance on dividend income tends to signify an absence of alternative attractive investment opportunities in the market.

The lock downs have also spurred on the aforementioned slew of dividend cutbacks, which  are likely to continue well into the future as companies start to pay off vast debts they may have gathered during the crisis. As a result, it is anyone’s guess as to how much more debt most companies will have to accrue, especially as lockdown restrictions continue to be implemented across the globe.

Alternative investment strategies worth considering. 

For entrepreneurs who rely heavily on dividend-based monetary streams, it may seem as though the ongoing pandemic has turned their world upside down. Since there is so much economic uncertainty across most markets today, individuals should maintain diversity across their portfolios, spreading their investments across a variety of different regions, sectors, and asset classes. For example, dividends emanating from companies affiliated with the defense, healthcare, and technology sectors have faced little to no pressure throughout the coronavirus crisis. They may, therefore, be potentially lucrative investment avenues.

Similarly, forward-looking entrepreneurs may choose to switch up and modernize their strategies by considering inflation-beating assets such as cryptocurrencies or even precious metals like gold. While neither Bitcoin nor gold pays any dividends, it’s always possible to sell some of your holdings during bull cycles in order to lock in profits, thus allowing owners to generate steady cash streams as and when required.

People might even want to consider different asset classes such as high yield and emerging market bonds that can routinely deliver gains ranging between 3 percent to 4 percent, which, in this low-interest-rate environment, could be quite an attractive option for many. Other options include ‘investment trusts’ since they can borrow from or use their ‘revenue reserves’ – which basically comprise of the dividends they receive any given year — allowing their backers to draw steady income streams even during leaner periods.

Lastly, micro-investing is another untapped domain that is fast gaining prominence. It affords entrepreneurs the ability to maximize their money’s growth potential while giving them a good shot at beating many common inflation-related woes. In fact, over the course of the last few years, a number of digital platforms such as OSOM Finance, Acorns, and Robinhood, have made the process of micro-investing extremely streamlined and hassle-free for those interested in exploring this space.

The new normal and the adverse effects of low-interest rates. 

With interest rates being cut by central banks globally, it has become easier for people to borrow money than ever before. For example, in the wake of the coronavirus pandemic, many Central Banks cut interest rates to essentially zero in 2020, primarily as a means to shelter their economies from the effects of the virus.

While on paper this may sound good because reduced interest rates can increase consumer/business expenditure, enhanced market investments, etc., it can also result in inflation and the creation of a liquidity trap which can severely devalue one’s local fiat currency.

For example, following the 2008 credit crisis, the Fed lowered rates and injected money into the economy to increase economic activity. However, the move created a liquidity trap — wherein people started to hoard cash in fear of another market crash — and as a result, the American economy failed to expand despite zero/very low-interest rates.

Low-interest rates can reduce one’s spending power and have an adverse impact on a country’s middle class because when interest rates are lowered, unemployment rates can increase since companies can lay off well-paid individuals in favor of contractors, temporary/part-time workers at much lower rates.

This, in turn, facilitates a wage decline across the board, creating a highly undesirable social environment wherein individuals have to reduce their standard of living since they can no longer afford to pay for even essential goods and services.

One final hurdle that entrepreneurs can face whether they are looking to make income off of dividends or not: Capital. The alternatives outlined above, whether cryptocurrencies, high-yield bonds or even micro-investing, are all far less lucrative if an individual doesn’t have a notable portion of money to stake in the first place.

This essentially creates a barrier to lower class citizens who may have little or no spare cash and are living paycheck to paycheck. While new services and technologies are certainly lowering the barrier for entry, realistically valuable returns are near impossible without sizable upfront investments, particularly for the instruments with a fixed income component.

Anton Altement

 

By: Anton Altement Entrepreneur Leadership Network VIP

Source: Death of Dividend: Here’s How to Recharge Your Passive Income Strategy

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I share a few warning signs that a dividend stock is going to get cut and how you can avoid losing thousands in dividend investing. Watch another Investing for Beginners video here: https://youtu.be/IGVfXwVP8Ws SUBSCRIBE to start the financial future you deserve: https://www.youtube.com/channel/UCbKd… #DividendStocks #Stocks #Investing
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6 Most Commonly Overlooked Cost Savings In Business

https://i1.wp.com/onlinemarketingscoops.com/wp-content/uploads/2021/02/cost-reduction-strategy-for-small-businesses.jpg?resize=924%2C461&ssl=1

In a quest to cut costs, many businesses inadvertently leave money on the table by overlooking legitimate savings or chasing false economies.

From paying more than necessary to cutting budgets on activities that bring home the bacon, here are some of the most commonly overlooked savings in business to look out for in 2021.

1. Marketing waste

Advisors warn against cutting marketing budgets at the risk of plunging into obscurity. However, that spend should deliver a decent return on investment (ROI).

Giving into Facebook’s prompts to boost a post might seem harmless, but it’s an easy way to burn through cash.

Not targeting ads effectively is akin to pouring good money down the drain. Determine who your ideal customer is, which media they consume and when they’re most likely to buy. Then tailor your ads accordingly.

Have a plan and a budget and stick to them.

2. In-house efficiencies

Efficiencies are the holy grail in business – doing the same thing (or better) for less money. Yet, some are less obvious than others.

Improving employee welfare and workplace culture can reduce staff turnover – saving on recruitment, training and exit payouts while stemming the loss of skills, experience and intellectual property.

Don’t confuse busyness with productivity: teams should work on revenue-driving activities, not administration. Look for ways to simplify operations, freeing staff to work on core tasks.

Avoid sacrificing existing clients for new ones. It’s more expensive to attract new customers than to give existing ones more attention and value.

Automate inventory control and staff rosters to reduce errors. Running out of stock or being short-staffed ultimately means lost sales.

Streamline business finances and develop strong financial foundations. Invoicing promptly means money coming in sooner, while paying bills and taxes on-time eliminates interest and penalties.

3. Risk mitigation

“Prevention is better than cure” typically applies to health, but the same goes in business.

Review your risk mitigation strategies and stress test them for weaknesses. Risk mitigation includes:

  • insurance against business interruption and loss/damage/theft
  • contingency plans for key staff absences
  • automatic back-ups of essential software and data
  • security protocols, password management and staff cyber training to avoid fraud and hacks
  • work-from-home capabilities should staff be unable to attend the business premises (as COVID-19 has demonstrated)

Insurances and staff hours spent on these are up-front costs, but they’ll save big bucks should disaster strike.

4. Misplaced cost-cutting

Why slash the stationery budget only to blow those savings elsewhere? It sounds silly, yet many businesses fall into this trap. It’s important to deliver real savings.

For instance, stop paying rent on unused space – downsize to smaller premises or sub-let surplus space to subsidise the cost.

Upskill employees in revenue-generating activities to boost income, rather than fire them and face hefty exit payouts.

Don’t overlook taxes when looking for cost savings. Claim legitimate depreciation of business fit-outs, office furniture, vehicles and equipment. Update vehicle logbooks to claim eligible mileage allowances. Apply for relevant tax concessions and COVID stimulus.

5. DIY

“It’s cheaper to do it myself”, many business leaders claim. But are you sacrificing your ability to earn more in the process?

Weigh up the cost of outsourcing against the additional revenues and cost-savings you could generate by spending your time elsewhere.

Outsourcing could involve delegating tasks to new or existing employees, hiring contractors or implementing new technologies.

6. Buying power

Consider how to get the best value for your money.

Interest rates are at record lows, making money cheaper to borrow to upgrade equipment or expand. Refinancing debts could also slash repayments. However, plan your finance needs ahead of time – cash flow quick-fixes like short-term loans typically cost more.

Could you buy the business premises in a self-managed super fund (SMSF)? That way, your retirement fund receives the rent rather than a third-party.

And avoid the “lazy tax”: annually reviewing subscriptions, utilities, loans and insurances can net substantial savings. Often, you don’t even need to change providers – just ask for a better rate or get them to price-match a competitor!


 

By: Helen Bakerhttps://onyourowntwofeet.com.au/

Helen Baker is a licensed Australian financial adviser and author of – On Your Own Two Feet Steady Steps to Women’s Financial Independence. Helen is among the 1% of financial planners who hold a master’s degree in the field.

Source: 6 most commonly overlooked cost savings in business – Dynamic Business

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14 ways to cut costs and save money in your small business. – http://selfmadesuccess.com Let’s Connect! Twitter – https://twitter.com/MrJustinBryant Facebook – https://www.facebook.com/justinbryant… Google+ – https://plus.google.com/+JustinBryant… In this video, you will learn how to cut costs and save money in your small business. I’ll talk about strategies that include making sure you use all the best tax deductions, use freelancers instead of hiring more employees for certain jobs, cutting out expensive software in favor of free online tools and much more. Enjoy the video! https://www.facebook.com/mrjustinbryant
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11 Ways To Save Fuel & Money In 2021

Following hefty fuel price increases this month – petrol by between 40c and 43c per litre, and diesel by between 54c and 55c a litre – cash-strapped and Covid-battered South African motorists have to find innovative ways to save fuel and money.

According to Bianca de Beer from Dialdirect Insurance: “An average increase of 48c per litre is steep on its own, but when coupled with the fact that a 60-litre tank already cost more than R800 to fill, this places a significant strain on motorists’ wallets.

 The good news is that with a few minor adjustments to your driving habits and with regular car maintenance, you can boost the fuel efficiency of your car by as much as 40%. If you fill up 48 times a year at roughly R900 per tank, a 40% reduction in fuel consumption could save you more than R17,000 a year.”

Dialdirect provides the following tips for better fuel economy:

1: Don’t skimp on servicing

A car can burn up to 30% more fuel if proper maintenance is not performed on a regular schedule.  With this in mind, make sure your car is serviced regularly. Things like worn spark plugs, worn rings, faulty injectors, sticky brakes, low coolant levels, dirty oil and dirty filters all add up to engine inefficiency which leads to increased fuel consumption.

2: Be wheel wise

Check your car’s wheel alignment. Bad wheel alignment causes more friction which takes more power to overcome and results in higher fuel consumption.

3: Keep tabs on tyre pressure: 

Check for underinflated tyres as these also increase resistance.

4: Use your AC sparingly

Use the air-conditioning only when necessary as it places additional load on the engine.

5: Remove unnecessary weight

Reduce the vehicle’s weight by removing unnecessary items and, if you mostly do city driving, consider driving with only half a tank of fuel.Five top motoring innovations of 2020From solar-powered cars to “see-through” bonnets, these clever ideas turned science fiction into realityGood Life1 week ago

6: Slow and steady wins the fuel economy race

Don’t speed. The gas-guzzling effects of “stepping on it” are well-known.

7: Avoid stop-start driving

Maintain momentum as far as possible by looking and planning ahead, flowing with traffic and timing your approaches to hills, traffic lights and crossings better.

8: Gear yourself for efficiency 

Drive at the lowest speed in the highest gear that the road and traffic conditions allow without laboring the engine.

9: Be tech-savvy

Many vehicles have economy settings to optimize performance, throttle response, ride height and so on for maximum fuel efficiency. Use them to your advantage.

10: Plan ahead

Do several tasks on one round trip as opposed to many shorter ones. This not only limits mileage and the amount of time it takes to get your chores done, but also keeps your vehicle’s engine running at optimal temperature.

11: Wait out the rush

Battling through traffic not only increases fuel consumption, but also wear and tear on your vehicle’s transmission and brakes.

De Beer said: “Saving on fuel by keeping your vehicle in shape and changing the way you drive may seem like a bit of a hassle, but if you increase your fuel economy by 40%, a tank that normally gets you 700km could get you close to 1,000 km. This translates to almost a tankful of savings for every two times you fill up.”

By : Motoring Staff

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Decentralized Finance Is on The Rise What You Need To Know in 2021

Few had heard much about decentralized finance (DeFi) in its early days in late 2017 and late 2019, beyond murmurs about Bitcoin and a mysterious new digital technology called blockchain

But a pandemic can change everything. 

Since May of this year, the total value locked (TVL)—the amount of any currency locked into tokens, the vehicle of holding and moving assets on blockchain, in smart contracts on a blockchain ecosystem—in decentralized finance projects rose a whopping 2,000 percent, according to DeFi Pulse. Many investors would be hard-pressed to find such an astronomical rise of any assets or expansion of any financial ecosystem, but DeFi app developers seemed to find success. So what’s the rage, and why does it matter going into the new year? 

What is DeFi?

DeFi, many fintech leaders argue, is the world’s answer to the 2008 financial crisis. Thanks to poor decision making and a lack of proper financial regulation, legacy financial institutions brought the world’s economy to its knees in the most major financial crisis since the Great Depression. The knee-jerk reaction was to create an ecosystem dependent on every link in the chain, rather than centralized authorities—hence the term “decentralized finance.”

The concept of blockchain, a decentralized ledger, was designed to ensure financial transactions would be transparent. Moreover, transaction approval would come from network individuals incentivized to approve them by solving complex mathematical equations or by network consensus voting. 

Later, the idea of operating a decentralized financial system on a decentralized ledger, independent of legacy institutions, grew into a thriving, albeit relatively small, ecosystem. Now, users can find financial services on the distributed ledger for loans, insurance, margin trading, exchanges, and yield farming (yielding rewards from staking digital assets on a network to help facilitate network liquidity).

But there is still a way to go. Not enough consumers are comfortable with DeFi quite yet, because platform accessibility and blockchain tribalism remain a problem. Nevertheless, now the world is experiencing another economic crisis brought on by the COVID-19 pandemic, and DeFi is finally getting its day in the sun.

Related: Getting Drawn Into DeFi? Here Are Three Major Considerations

E-wallets are leveling up

For companies and individuals already active in the space, navigating the ecosystem remains impeded by technical limitations. In order to access certain markets and execute transactions on the blockchain—whether it’s borrowing or lending, staking assets in liquidity pools, or trading on an exchange—users need to own an e-wallet that’s properly connected to the ecosystem. 

E-wallets are the backbone of transactions on blockchain. Just as the digital assets they help transact and store, these wallets are secure, transparent, and easily accessible to users. At least, that’s the idea behind them, though there are various degrees of security and transparency. For DeFi to attract more users, the wallets must be compatible with multiple blockchains running financial dApps (decentralized apps that operate on a blockchain system). One of the first wallets, created by Ethereum and called “MyEtherWallet” (MEW), lacked a user-friendly interface and was challenging to grasp for people outside the hardcore crypto crowd.

Since then, a number of blockchain developers have created alternative e-wallet solutions. Most recently, Spielworks, a blockchain gaming startup, reached an agreement with Equilibrium and DeFiBox to integrate its e-wallet “Wombat,” which is currently available on the Telos and EOS blockchain mainnet (a blockchain network that is fully developed, deployed, and operational).

The Wombat wallet provides users with access to several DeFi platforms that offer token exchanges, yield farming, borrowing, and lending. Wombat recently also integrated with Bitfinex’s new EOS exchange, Eosfinex, as well as 8 other DeFi networks. Rather impressively, the wallet also offers free and fast account creation, automatic key backup, and free blockchain resources. 

Related: Cryptocurrency Innovators Need to Simplify User Experience

Developments in blockchain wallets, such as Wombat’s, will be pivotal in the next few years in the growth of DeFi applications and the movement of users toward decentralized finance and away from traditional finance. While wallets are important, so are the underlying mechanisms to piece the entire ecosystem together, because one a DeFi ecosystem is not enough if confined to just one blockchain mainnet.

Piecing it all together

“A house divided against itself cannot stand.” President Lincoln’s famous quote referred to the Civil War that ravaged the United States at the time, but his historically renowned words can apply very well to the blockchain community today. 

For DeFi to reach its maximum potential, as a decentralized ecosystem that doesn’t answer to a central authority, blockchain platforms must stand united and interoperate. Could anyone imagine if payment transfers between regular banks were not possible? How could an economy function? This is the sort of technical problem plaguing the DeFi world: Each blockchain platform has its own benefits, but each remains largely separated from the others in its own silo. The root of the problem is attitude, the other part is technical limitations.

Related: 15 Crazy and Surprising Ways People Are Using Blockchain

Ethereum and EOS are primary examples of this sort of rivalry, both of which have their own technical benefits for dApp developers. If the two ecosystems could be connected to one another, EOS-based and Ethereum-based developers alike, for example, could benefit from each other’s platform’s strengths. Users could also benefit, via financial opportunities without having to sacrifice shifting their base from one blockchain to another.

This is precisely what LiquidApps’s latest development—its DAPP Network bridging—has solved. LiquidApps’s technology provides the technical mechanisms to connect separate blockchain mainnets and recently provided its tools to EOS-based developers to successfully deploy a bridge between EOS and Ethereum.

This was shortly followed by decentralized social media app Yup’s deployment that demonstrated the possibility of moving tokens easily between different once-separate blockchain mainnets. It still remains to be seen how long it will take before blockchain platforms themselves integrate built-in cross-chain technologies, but LiquidApps is starting the next crucial step to DeFi development.

Whether it’s cross-chain technology or the e-wallets that grant access to dApps, tech developments and attitudes in the DeFi space over the next few years will determine its success. The latest developments suggest the future of DeFi looks promising. Time to go decentralized.

By: Ariel Shapira Entrepreneur Leadership Network Contributor

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Paris Fintech Forum

by O. Bussmann, CEO, Bussmann Advisory (CH) Speakers *M. Froehler, CEO, Morpher (AT) *H. Gebbing, Managing Director, Finoa (DE) *U. Shtybel, Vice president, HighCastle (UK) *N. Filali, Head of Blockchain Program, Caisse des Dépôts (FR) more on http://www.parisfintechforum.com/videos2020

99Bitcoins

Start trading Bitcoin and cryptocurrency here: http://bit.ly/2Vptr2X DeFi applications – https://defipulse.com/defi-list/ DeFi is becoming more and more popular as the main use case for cryptocurrencies. This video explains in detail what DeFi is and what you should know about before getting involved. 0:38 Bitcoin and Our Financial System 1:24 Our Centralized Financial System 1:59 What is DeFi? 2:22 DeFi Components 4:16 – DAI explained 5:51 – DEXs explained 6:33 – Decentralized money markets 8:06 Money Legos 8:56 DeFi Advantages and Risks 10:02 Conclusion For the complete text guide visit: https://bit.ly/2R35g6Z Join our 7-day Bitcoin crash course absolutely free: http://bit.ly/2pB4X5B Learn ANYTHING about Bitcoin and cryptocurrencies on our YouTube channel: http://bit.ly/2BVbxeF Get the latest news and prices on your phone: iOS – https://apple.co/2yf02LJ Android – http://bit.ly/2NrMVw2

Your Financial Year-End Checklist

2020 is over, and for many of you, it can’t end soon enough. There will be plenty of time to celebrate the end of one year and to hope for better days in the one ahead. But before we get to that, take these steps to get financially ready for 2021.

1) Review your goals: The end of the year is a great time to review the goals you made at the beginning of the year and set new ones for 2021. How did you do this year? Is there anything you’re proud of accomplishing? I like to start with bright spots because they can guide you toward success as you set new goals. But let’s be realistic, too; 2020 threw us a lot of curveballs.

Was there anything you wish you could have done better? You can also learn from any potential stumbling blocks and figure out how to use them as stepping-stones next year. You may also want to take time now to review your net worth. That’s one way to gauge the progress you’ve made in your financial health this year.

2) Update your budget: Did you save the money that you wanted to? Pay off the debt that you needed to? The end of the year gives you a solid end point to assess whether met the goals you set at the outset of 2020. What if you didn’t have a budget or financial goals? You’ve got a blank slate ahead. Why not create a budget that works? 

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3) Create a holiday bucket: Holidays can be budget breakers, so why not incorporate them into your spending goals right from the start? Christmas may look a lot different this year. But you can still create a separate bucket for holiday spending and when that money is gone, stop spending. You’ll thank yourself in January when you don’t have an unusually large credit card bill.

4) Use it or lose it: Some of your benefits—like vacation days or a medical or dependent care flexible spending account (FSA)—expire at the end of the year. Take stock of what you have left and use these benefits to your advantage. MORE FOR YOUPPP Loan Forgiveness Application Guidance For The Self-Employed, Freelancers And ContractorsSBA Approving Economic Injury Disaster Loans (EIDLs): What You Need To KnowWhat You Can Do Now To Maximize Paycheck Protection Loan Forgiveness

5) Make any last charitable contributions: December 31st is the last day your charitable contributions can be deducted on your 2020 tax return. If giving to charity is a part of your spending plan, you can use these questions to help make the most of your charitable giving.

6) Pump up your 529: Just like charitable contributions, contributions to your 529 college savings plan must be made by December 31st to count for this tax year. Find out if your state is one of over 30 that allow you to deduct your contribution. You can find the specific deduction here. If your state is one of the four that allow an unlimited deduction, keep in mind the yearly gift-tax and super-funding rules.

7) Max out your 401k: While you have until April to make contributions to your traditional IRA, Roth IRA and HSA, you can only contribute to your 401k through December 31st. So, if you have extra cash and are looking to boost your savings, consider contributing your last couple of checks entirely to your 401k. Business owners can do the same with the employee portion of your Solo 401k contributions.

8) Find your tax return: You’ll be doing your taxes before you know it, so use this time to get prepared. Review last year’s return and make a mental list of records you’ll need to assemble. Year-end is also a good time to decide whether a Roth conversion makes sense for you.

9) Review your business structure: Evaluate your business structure and the QBI deduction to identify any changes you need to make to your business. You might want to set up a solo 401k, for instance, and if so, you’ll have to act before December 31st (although you can make employer/profit sharing contributions up to the business tax filing deadline).

10) Defer income and incur expenses: If you’re a business owner, you may also want to look at ways to defer income into 2021 or pay for business expenses you anticipate for early next year. This is any easy way to reduce your tax liability for 2020. However, remember not to spend money on business expenses that you wouldn’t otherwise incur just for a tax deduction. Spending a $1 to save 24 cents still costs you 76 cents.

 11) Will and trust review: The end of the year is a good time to take stock of changes in your life—like getting married or divorced, having children, starting a business or retiring.  Your estate plan should reflect these changes. Get out your will, documentation for trusts you’ve established and powers of attorney and make sure they match your current situation.

12) Insurance documents: Insurance documents also need to cover your current situation. Take a look at your life and disability insurance policies to make sure they protect your current income and those dependent on it. Your renters or homeowners insurance should cover any additional big purchases you made during the year. And lastly, you should review your health insurance policy for any upcoming changes for 2020. For those of you enrolling in the Market Place, you have until December 15th to pick your plan.

genesis-2-1

My last bonus task is to enjoy this holiday season. I love the holidays because you can reflect and appreciate what you have. We’ve been tested a lot this year, living our lives through a pandemic, racial unrest and a contentious election. I hope the end of the year brings you comfort and peace. Follow me on Twitter or LinkedIn. Check out my website

Brian Thompson

Brian Thompson

As both a tax attorney and a CERTIFIED FINANCIAL PLANNER™, I provide comprehensive financial planning to LGBTQ entrepreneurs who run mission-driven businesses. I hold a special place in my heart for small-business owners. I spent a decade defending them against the IRS as a tax attorney and have become one as a financial advisor. It’s a position filled with hope and opportunity. It gives you the most flexibility to create the life that you want. I also understand the added stresses of running a business while being a person of color and a part of the LGBTQ community. You may feel like you don’t have access to the knowledge that others do. I’m here to help lift some of that weight from your shoulders.

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Critics:

A personal budget or home budget is a finance plan that allocates future personal income towards expenses, savings and debt repayment. Past spending and personal debt are considered when creating a personal budget. There are several methods and tools available for creating, using and adjusting a personal budget. For example, jobs are an income source, while bills and rent payments are expenses.

Contents

How Spacs Became Wall Street Tree

If you want to see the future of so many of the special purpose acquisition companies currently flooding the market, look to the recent past. Nearly five years ago, Landry’s Seafood billionaire Tillman Fertitta took Landcadia Holdings public to the tune of $345 million. No matter that, true to the SPAC “blank check” model, there was not yet any operating business—dozens of hedge funds piled into its $10-per-unit IPO. 

In May 2018, Landcadia finally located its target: a budding online restaurant delivery service called Waitr that would merge with the SPAC in exchange for $252 million in cash. Fertitta touted the fact that the Louisiana startup, with $65 million in revenue, would now have access to 4 million loyalty members of his restaurant and casino businesses, and a new partnership with his Houston Rockets NBA franchise. Two years later, though, you very likely have never heard of Waitr. As such, its stock recently traded at $2.62, down more than 70% from its IPO price (the S&P 500 has climbed 76% over the same period).

Waitr was a disaster for pretty much anyone who bought the stock early. But the hedge funds that purchased Landcadia’s IPO units did just fine. Virtually all recouped their initial investment, with interest, and many profited by exercising warrants in the aftermarket. “SPACs are a phenomenal yield alternative,” says David Sultan, chief investment officer at Fir Tree Partners, a $3 billion hedge fund that bought into Fertitta’s Landcadia SPAC IPO—and pretty much any other it could get its hands on. 

The SPAC boom of 2020 is probably the biggest Wall Street story of the year, but almost no one has noticed the quiet force driving this speculative bubble: a couple dozen obscure hedge funds like Polar Asset Management and Davidson Kempner, known by insiders as the “SPAC Mafia.” It’s an offer they can’t refuse. Some 97 percent of these hedge funds redeem or sell their IPO stock before target mergers are consummated, according to a recent study of 47 SPACs by New York University Law School professor Michael Ohlrogge and Stanford Law professor Michael Klausner.

Though they’re loath to talk specifics, SPAC Mafia hedge funds say returns currently run around 20%. “The optionality to the upside is unlimited,” gushes Patrick Galley, a portfolio manager at Chicago-based RiverNorth, who manages a $200 million portfolio of SPAC investments. Adds Roy Behren of Westchester Capital Management, a fund with a $470 million portfolio of at least 40 SPACs, in clearer English: “We love the risk/reward of it.” 

What’s not to love when “risk” is all but risk-free? There’s only one loser in this equation. As always, it’s the retail investor, the Robinhood novice, the good-intentions fund company like Fidelity. They all bring their pickaxes to the SPAC gold rush, failing to understand that the opportunities were mined long before they got there—by the sponsors who see an easy score, the entrepreneurs who get fat exits when their companies are acquired and the SPAC Mafia hedge funds that lubricate it all. 

It’s about to get far worse for the little guy. Giant quant firms—Izzy Englander’s Millennium Management, Louis Bacon’s Moore Capital, Michael Platt’s BlueCrest Capital—have recently jumped in. Sure, they all raised billions based on algorithmic trading strategies, not by buying speculative IPOs in companies that don’t even have a product yet. But you don’t need AI to tell you the benefits of a sure thing. And that means torrents of easy cash for ever more specious acquisitions. Says NYU’s Ohlrogge: “It’s going to be a disaster for investors that hold through the merger.” 

In the first 10 months or so of 2020, 178 SPACs went public, to the tune of $65 billion, according to SPAC­Insider—more than the last ten years’ worth of such deals combined. That’s just one indication that the current wave of blank-check companies is different from previous generations. 

In the 1980s, SPACs were known as “blind pools” and were the domain of bucket-shop brokerage firms infamous for fleecing gullible investors under banners such as First Jersey Securities and The Wolf of Wall Street’s Stratton Oakmont. Blind pools circumvented regulatory scrutiny and tended to focus on seemingly promising operating companies—those whose prospects sounded amazing during a cold-calling broker’s telephone pitch. The stockbrokers, who typically owned big blocks of the shares and warrants, would “pump” prices up, trading shares among clients, and then “dump” their holdings at a profit before the stocks inevitably collapsed. Shares traded in the shadows of Wall Street for pennies, and the deal amounts were tiny, typically less than $10 million. 

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Former stockbroker and convicted felon Jordan Belfort was immortalized in The Wolf Of Wall Street. In the late 1980s and early 1990s, blank check companies, similar to today’s SPACs but known as blind pools, were his stock and trade. Getty Editorial

In 1992, a Long Island lawyer named David Nussbaum, CEO of brokerage GKN Securities, structured a new type of blank-check company, with greater investor protections including segregating IPO cash in an escrow account. He even came up with the gussied-up “special purpose acquisition company” moniker. 

The basics of the new SPACs were as follows: A sponsor would pay for the underwriting and legal costs of an initial public offering in a new shell company and have two years to use the proceeds to buy an acquisition target. To entice IPO investors to park their money in these new SPACs as the sponsors hunted for a deal, the units of the IPO, which are usually priced at $10 each, included one share of common stock plus warrants to buy more shares at $11.50. Sometimes unit holders would also receive free stock in the form of “rights” convertible into common stock. If a deal wasn’t identified within two years, or the IPO investor voted no, holders could redeem their initial investment—but often only 85% of it. 

GKN underwrote 13 blank-check deals in the 1990s, but ran into regulatory trouble with the National Association of Securities Dealers, which fined the brokerage $725,000 and forced it to return $1.4 million for overcharging 1,300 investors. GKN closed in 2001, but Nussbaum reemerged in 2003 running EarlyBirdCapital, which remains a big SPAC underwriter today. 

SPACs fell out of favor during the dot-com bubble years, when traditional IPO issuance was booming. In the early 2000s, interest in SPACs returned with the bull market, and the deals started getting bigger. Leading up to the 2008 crisis, dealmakers Nelson Peltz and Martin Franklin both turned to SPACs for financing, raising hundreds of millions of dollars each.

Around 2015, SPACs began to offer IPO investors 100% money-­back guarantees, with interest; the holder would also be entitled to keep any warrants or special rights, even if they voted against the merger and tendered their shares. Even more significantly, they could vote yes to the merger and still redeem their shares. In effect, this gave sponsors a green light on any merger partner they chose. It also made SPAC IPOs a no-lose proposition, effectively giving buyers a free call option on rising equity prices. As the Fed’s low-rate, easy-money policy propelled the stock market higher for over a decade, it was just a matter of time before SPACs came back into vogue. And so they have, with unprecedented force. 

Hedge funders may be the enablers of the SPAC boom, but they certainly aren’t the only ones getting rich. In September, a billionaire-sponsored SPAC called Gores Holdings IV said it would give Pontiac, Michigan–based entrepreneur Mat Ishbia, owner of mortgage lender United Wholesale Mortgage, a $925 million capital infusion, which would value his company at $16 billion. If the deal is completed, Ishbia’s net worth will rise to $11 billion, making him one of the 50 richest people in America. “I never knew what a SPAC was,” Ishbia admits. “I felt like it was a more efficient process.”

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SPAC MVP: United Wholesale Mortgage’s Mat Ishbia won a national basketball championship with Michigan State twenty years ago but missed his only shot in the finals. His first attempt at the SPAC game could be a slam dunk. Jacob Lewkow for Forbes

There are also the sponsors, underwriters and lawyers who create SPACs, each taking their pound of flesh from the deals. Sponsors, who pay underwriting and legal fees to set up and merge SPACs, normally wind up with a generous shareholder gift known as the “promote”—roughly 20% of the SPAC’s common equity after the IPO. 

Alec Gores, the private equity billionaire who helped take United Wholesale Mortgage public, has listed five SPACs and raised over $2 billion. In the United Wholesale Mortgage deal, Gores and his partners are entitled to purchase $106 million worth of “founder shares” for $25,000, or $0.002 a share. Gores’ private equity firm hasn’t raised a new fund since 2012. With easy scores like this, why would he? 

Among SPAC sponsors, few can match Chamath Palihapitiya’s frenetic pace. Palihapitiya, 44, is a former Facebook executive who founded Silicon Valley venture capital firm Social Capital in 2011. With his venture business slowing down, Palihapitiya has recently turned to the public markets. In the span of 37 months, he has raised $4.3 billion in six New York Stock Exchange–listed SPACs that go by the tickers IPOA, IPOB, IPOC, IPOD, IPOE and IPOF. The founder’s stock he has received for his “promote” will amount to no less than $1 billion, by Forbes estimates. In late 2019, Palihapitiya used one of his SPACs to take Virgin Galactic public. Two other deals have already been announced: mergers with home­buying platform Opendoor at a $5 billion valuation and with medical-insurance company Clover Health at $3.7 billion. Palihapitiya and Gores point out that they intend to invest hundreds of millions via private placements in their deals.  https://c4087b1b1645d1a0dc9c9c6154fc97c6.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html

Of the $65 billion raised in SPAC IPOs so far in 2020, Forbes estimates that all told, sponsors like Gores and Palihapitiya should net more than $10 billion in free equity. Great for them, but terrible for the rest of the shareholders. In fact, by the time the average SPAC enters into a merger agreement, warrants afforded to hedge funds, underwriting fees and the generous sponsor’s promote eat up more than 30% of IPO proceeds. According to the study of recent SPACs by Ohlrogge and Klausner, a typical SPAC holds just $6.67 a share in cash of its original $10 IPO price by the time it enters into a merger agreement with its target company. 

“The problem with the typical founder-shares arrangement is not just the outsized nature of the compensation or the inherent misalignment of incentives, but also the fact that the massively dilutive nature of founder stock makes it difficult to complete a deal on attractive terms,” says billionaire Bill Ackman. 

A handful of billionaires like Ackman are structuring fairer deals with their SPACs. In July, Ackman raised a record $4 billion SPAC called Pershing Square Tontine Holdings. He’s shopping for deals, but his shareholders will face much less dilution because his SPAC has no promote. 


“A handful of billionaires are structuring fairer deals with their SPACs. but most SPAC deals don’t come with benevolent billionaires attached.”


Billionaire hedge fund mogul Daniel Och, backer of unicorn startups Coinbase, Github and Stripe via his family office, recently raised $750 million in a SPAC IPO called Ajax I but reduced its promote to 10%. His investing partner in Ajax, Glenn Fuhrman, made billions in profits running Michael Dell’s family office; the SPAC’s board includes an all-star lineup of innovators: Kevin Systrom of Instagram, Anne Wojcicki of 23andMe, Jim McKelvey of Square and Steve Ells of Chipotle. The group has pledged their personal capital into Ajax’s future deal. 

“We’re lowering the sponsor economics to make clear that this is not about promoting someone’s capital,” Och says. “It’s about investing our own capital, and then finding a great company that we can hold for a long period of time.” 

Most SPAC deals don’t come with benevolent billionaires attached. In fact, if history is any guide, the average post-merger SPAC investor is in for a fleecing not unlike the ones dealt out in the shoddy blind-pool deals peddled by those bucket shops of the 1980s and ’90s. 



According to NYU’s Ohlrogge, six months after a deal is announced, median returns for SPACs amount to a loss of 12.3%. A year after the announcement, most SPACs are down 35%. The returns are likely to get worse as the hundreds of SPACs currently searching for viable merger partners become more desperate. 

Problems are already surfacing in the great SPAC gold rush of 2020. 

Health-care company MultiPlan, one of the most prominent recent deals, may already be in trouble. Acquired by a SPAC called Churchill Capital Corp. III in a $1.3 billion deal, its shares plunged 25% in November after a short seller published a report questioning whether its business was deteriorating more than it let on. 

The Churchill SPAC is one of five brought to market by former Citigroup banker Michael Klein, which have raised nearly $5 billion. Klein and his partners now sit on stock holdings worth hundreds of millions, thanks largely to the lucrative promotes. Klein’s investment bank, M. Klein & Co., has made tens of millions of dollars in fees advising his own SPACs on their deals. In the case of MultiPlan, Klein’s bank earned $30 million in fees to advise Churchill to inject SPAC capital into MultiPlan. IPO proceeds, however, are now worth only 70 cents on the dollar.  https://c4087b1b1645d1a0dc9c9c6154fc97c6.safeframe.googlesyndication.com/safeframe/1-0-37/html/container.html

“Coming out of the financial crisis there was all this talk about the expected outcomes when you have all these traders who have heads-they-win-tails-they-don’t-lose incentives, because it’s somebody else’s money,” says Carson Block, the short seller who called out MultiPlan. “Those incentive structures are alive and well on Wall Street in the form of SPACs.” 

Nikola Motor, the SPAC that broke the dam on electric-vehicle speculations, now faces probes from the Department of Justice over whether it misled investors when raising money. Its founder, Trevor Milton, is gone, and a much-hyped partnership with General Motors is in doubt. Shares have traded down 36% from where they stood when the SPAC merger was completed. 

Electric vehicles aren’t the only overhyped SPAC sector. So far 11 cannabis SPACs have either announced a deal or are searching for one. And in online gaming, there are no fewer than 10 SPACs in the works. 


Blank Checks For Billionaires 

SPACs were once shunned by savvy investors. Today they’re beloved by THE WEALTHIEST. 


It wasn’t long ago that fracking was all the rage on Wall Street, too, and SPAC IPOs provided quick and easy capital infusions. Energy private equity firm Riverstone Holdings issued three large SPACs—one in March 2016, for $450 million; then two more IPO’d in 2017, raising $1.7 billion—all intent on profiting from shale oil-and-gas investments. 

Riverstone’s Silver Run II SPAC acquired Alta Mesa Resources in 2018, but the company quickly went bankrupt, incinerating $3.8 billion of market capitalization on oil fields in Oklahoma. Its other two SPACs completed mergers, and now both are trading below $3 per share. 

Despite its dismal track record, Riverstone had no trouble raising $200 million in October for its fourth SPAC IPO, “Decarbonization Plus Acquisition.” Shale fracking is yesterday’s game, so Riverstone has moved on to clean tech. 

Hope springs eternal—especially when you can count on hedge fund money to back you up.

Antoine Gara

Antoine Gara

I’m a staff writer and associate editor at Forbes, where I cover finance and investing. My beat includes hedge funds, private equity, fintech, mutual funds, mergers, and banks. I’m a graduate of Middlebury College and the Columbia University Graduate School of Journalism, and I’ve worked at TheStreet and Businessweek. Before becoming a financial scribe, I was a member of the fateful 2008 analyst class at Lehman Brothers. Email thoughts and tips to agara@forbes.com. Follow me on Twitter at @antoinegara

Eliza Haverstock

Eliza Haverstock

I’m an assistant editor at Forbes covering money and markets. I graduated from the University of Virginia with degrees in history and economics. More importantly, I covered breaking news for its student paper The Cavalier Daily, while also writing for the school’s underground satire magazine. Since then, I’ve worked at Bloomberg and Pitchbook News, writing about everything from plastic straws to pizza robots.

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Bloomberg Markets and Finance

SPACs (special purpose acquisition companies, or “blank check” companies) have become all the rage on Wall Street in 2020. Sonali Basak explains how they work and why they have grown so popular.

What is a special purpose acquisition company (SPAC)? What is a blank check company? Should you invest in SPACs, and how do they work? Both a SPAC and blank check company are publicly-traded shell companies that raise collective investment funds through an initial public offering (IPO) in the form of a blind pool. The funds are placed into a trust until an acquisition is made or a predetermined period of time elapses and the fund is liquidated.

SPACs are increasingly being viewed as an alternative to the IPO process in particular for silicon valley companies since the failed WeWork IPO. Some recent SPAC mergers have been controversial such as Nikola Motors (NKLA) and Luckin Coffee (LKN). Many argue that these companies would not have made it through the traditional IPO process. We will also learn about Direct Listings, like the Spotify listing which is another alternative to the IPO process. Patricks’ Books: Statistics for Traders: https://amzn.to/3eerLA0 Financial Derivatives: https://amzn.to/3cjsyPF Corporate Finance: https://amzn.to/3fn3rvC Visit our website: http://www.onfinance.org Follow Patrick on Twitter Here: https://twitter.com/PatrickEBoyle Patreon Page: https://www.patreon.com/PatrickBoyleO…

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