Investment Tips for Children

During this Holiday season I saw a commercial produced by a company that reminded me of how quickly life goes by. The scheme was a man pushing a small boy that looked to be about 7 years old on a swing in the back yard; he pushes the young boy and the boy and the swing go out of frame and when the swing comes back the boy now looks to be a 200 pound adolescent and knocks the wind out of the man pushing the swing. The tag line says “Life comes at you fast”.

The other day, I received a Christmas card from a good friend of mine in Virginia and inside the card was a picture of her two beautiful children ages 9 and 12. I have been residing in another state for 5 years now and I haven’t seen them for sometime and only remember the youngest as a baby lying in his bouncy chair. My friend wrote me a little note in the card to tell me that her oldest was in the 7th grade and the youngest in the 4th. I thought to myself “wow, where does the time go?”.

Since we are all aware that time is our greatest commodity, it’s time to prepare for the coming New Year and make some plans regarding finances. This month I am going to give you some investment tips for children, Parents and Empty Nesters in order to better prepare yourself for the future. Today, we will focus on the children and give you some investment ideas for them.

  1. Open a savings account for your children to begin putting all of the money they receive from Birthday’s, Holiday’s or chores and let them make a deposit each month. When you allow children to go to the bank and make deposits themselves, it will give them a sense of ownership as well as train them for the future in learning how to save on a consistent basis. (If you have issues with your credit or you have your own poor savings habits, please find a responsible, trustworthy relative that will take on this task and set up an account for them to begin saving).
  2. Have your children follow the 10-10-80 plan. (Some people refer to it as the 80-10-10 rule, but I believe that you have to give first, save second and live on the rest). Make sure that the first 10% of your gifts or earnings go to a charity or your local church for your tithes. The next 10% should be put into a savings account or invested and the remaining 80% can be used at your discretion (I.e. buy that toy or game you always wanted)
  3. Research the internet with your children to find out information on company’s where you can purchase stock for your children. When you get children involved in the process even when they aren’t making decisions, it makes them feel valuable. There are a lot of company’s that have been in business for years and have very stable stock that will slowing give you a return on your investment. If you start your child at the age of 5, by the time they turn 18, I dare to say you should have a nice little nest egg awaiting for them.
  4. Get your children involved in Collecting; by putting their money into things that will give them a return in the future (I.e. bonds, gold, coins) Collecting and investing will empower your children and when they are older they will learn to make sound decisions. I know tweens and teens are really into material things such as clothing and shoes, but try to get them to understand the power of the dollar and what it can do for them in the future.
  5. Let your children begin to think about investing in themselves by becoming entrepreneurs. Whether it’s opening up a lemonade stand outside the home and selling cool drinks in the summer or mowing the neighbors lawns or shoveling snow or maybe your child has musical talent, let them expound on that by selling their music at school or putting on a talent show in the neighborhood. It doesn’t matter what they do, it only matters that you encourage them to do something with the gift that they have been given.

Once you make children understand that money is something that can work against you if you spend it unwisely or it can work for you if you learn to invest wisely; they will have the information they need in order to succeed in life. I believe every child should invest in themselves first and then get involved in the market. Remember before you do anything, make sure that you research, research and research some more because there are a lot of scams out there waiting for the uninformed.

Since we are moving into a brand new year, 2007, I am believing that this year will bring perfection and completion in your lives. Pray first, Listen and then Act Accordingly. Have a fantastic New Year!

How Credit Card Companies Make Their Money

Everyone knows the banks can be quite profitable companies, and that one of their most profitable products that they create is the credit card. They know that consumers will leave balances on their cards and that they will make a great amount of money in interest. This is why they send out six billion credit card offers every year, and that number is rising! Credit card companies actually make their money in a number of different ways, continue reading to learn about fees and charges that some credit card companies charge to you and merchants.

The first and most widely known about expenses is finance charges. Whenever you do not pay your balance off at the end of the month and carry a balance over on a credit card from the previous month, you will be charged a fee approximately one twelfth that of your annual percentage rate in your card holder agreement. Sometimes credit card companies use the twelfth root of your annual percentage rate, depending on how they calculate the fee. Each month you carry over a balance you will be charged a finance charge.

Another major method for credit card companies to make money is with what is called an interchange fee. Whenever a merchant accepts a credit card or debit card as payment, they pay a small percentage, usually about 2% or 3%. Of this fee, the majority of it goes to the card issuers bank, some of it goes to transaction processing network, and some of it goes to the card association (such as Visa or Mastercard). As part of the credit card companies overall income from a customer, interchange fees generally make up about 15% of the money they make off a customer. This number can be much higher if a customer uses their credit card to make numerous day to day expenses such as lunch or snacks.

Credit card companies also charge a number of fees to customers besides that of the finance charge. Whenever you are late on a payment, also known as in default, you will be charged a fee for not making your payment on time. Whenever you charge more than your credit line allows, you will be charged an “over the limit” fee. If you make use of a convenience check or a cash advance, there will also be an additional fee for using one of them. Whenever you make a transaction in a foreign currency, there is usually a conversion fee, which can be up to 3% of the purchase. Finally, there are membership fees to actually have the card on some credit cards and if you are enrolled in some sort of rewards program, chances are you are paying an annual fee to participate in that as well.

How to Finance Your Franchise Investment

You have made the decision to purchase a new or existing franchise then quickly realize that basic question – How do you finance your franchise investment.

Money or funding as quickly becomes a top priority and your ability to successfully finance your investment in your new business will ultimately play a large part in your success or failure in your new role as a Canadian entrepreneur.

For non- financial people, those not trained or comfortable in finance that challenge suddenly looms large – at the same time you have read in the papers that business financing continues to be difficult as Canada comes out of the global financial meltdown of 2008-2009.

So how can you be successful then and finance your franchise investment in a manner that allows you to take advantage of your independent business opportunity. The reality is as follows – franchise financing is available in Canada today – it is some what of a custom made financing, and the three largest assets you can bring to the table to succeed are the ability to seek out a trusted and experienced franchise financing advisor, as well as your own business and credit experience, coupled with a relatively reasonable down payment.

The true secret to your overall franchise financing success is the ability to put together a solid, slick proposal that at a high level demonstrates your ability to run the business, the potential financial success of the business, and then presenting that information to sources of franchise financing in Canada.

A key ingredient in all of your planning should be a carefully tailored business plan that highlights the basics we have discussed – this would include a summary of your business experience (and why you will make the business successful), some key financial such as, at least, your sales and profit projections for one to perhaps 3 years. And equally as important in this data is carefull documentation of your costs and expenses.

So let’s assume you have that completed – you now have to present it to a franchise financing and funding source, and ensure you have properly describe the amount of equity of personal funds you will put into the business, as well as the debt component, or total borrowed funds. The magic relationship of the right amount of debt and equity in your business will leave you, as the financial textbooks describe, as ‘properly leveraged’. By that we mean simply that it is probably very wrong to purchase your business with all cash, and equally or moreso as wrong to assume you can or will borrow all the funds needed. Either of those strategies is not recommended!

How are franchises funded in Canada asking our clients? In our experience they are financed mostly by the government sponsored Small Business Loan. In addition that is supplemented by equipment financing where applicable, as well as your own personal investment in the business. Two other sources of financing sometimes come into play; they are a vendor take back on part of the financing, either by the franchisor or the franchisee you might be buying an existing franchise from. Also available in certain cases is the ability to negotiate a cash working capital term loan from the one institution we are aware of that provides that type of financing.

The proper mix of all of the above components of franchise financing will should in fact allow you to successful complete your acquisition. Things not seeming to work for franchises? Grab a Lincoln 210 MP welder and get to work!