Important Factors To Consider Before Investing In A Business

investment-wisdom

In a recent study, it was revealed that in America alone, over 500,000 small businesses are created every year. This offers entrepreneurs the ability to invest in many business startups, but of course, not without risk.

Investing in business is a risky venture that if done right, becomes quite fruitful, but if the wrong business is chosen, it could cost you a great deal. Before you open your wallet, here are some factors to consider when investing in business startups:

  • Do your research and understand why the opportunity became available to invest in a certain company. Many newly established businesses try to cut their losses by looking for investors as opposed to calling it quits. Of course, there’s always the exception of a diamond in the rough, but no one can ignore the futility of investing in a failing company.
  • Take the time to grasp the structure of the company and how it can financially impact your investment. The reality is that if a company goes out of business, you could be held liable for the money they owe. For this reason, investing in a limited liability corporation or LLC is the safest way to go.
  • You need to consider the very real possibility that you won’t see a return on your investment for many years if you will see repayment at all. This is something you will need to keep in mind when lending money to a newly established business. If you’re adamant about getting your money back no matter what, consider creating a contract and offering your money as a loan with a fixed interest rate for a certain number of years. Even in this case, you may not get your money back, but it offers you some recourse.
  • Do your homework and know what you’re getting yourself into. When speaking to the CEO of a company, they’re going to tell you that their business is the most successful company in the region, but then everyone feels that way about their own accomplishments. Before you invest in anything, run analytics and look at how much money a company makes, what they spend, and what you can expect as a return.

Investing in a business venture can be costly and dangerous if you’re not careful. With that being said, the right investment can also yield fantastic results and a good income.

Stock Investing Basics

Taking the First Steps into Stock Investing

 Individual investors in the stock market must be ready to face the odds that are stacked against them. If it sounds as a warning, then so be it! Investing in stocks is a risky business, and the opening statement is a ratification of this truth. This does not mean that individuals should not venture into it. You can do it with certain preparations and precautions so that you are not caught off guard. Indeed you need to have an appetite for taking risks because the system has an element of lopsidedness. Though the industry is not biased, but it is more inclined to benefit the system than the individual.

stock-investing

Get prepared

There are thousands of individual investors who have made profits by trading in corporate securities in regulated bourses. So, how do you prepare for taking the plunge? You stand to gain from investing in stocks not by luck but by sheer perseverance. Take time to understand the nuances of the operations, the style of the market, and learn your lessons. Apply some principles that are derived from what millions of investors have learned from their experience over the years. Be brave, but do not gamble. Use your intelligence to analyze situations, and evaluate the outcome to gain knowledge. This does not guarantee success, but it will take you very close to it. The rest depends on your ability to reach the summit. How you can take the first steps in stock investing has been discussed in this post.

 

Have patience

This market is a place where your perseverance is put to test.  You need to be a patient investor to reap the benefits of investing in equities.  The Stock market can give good returns over a period of time. However, it is not a place where you can expect booming yields in a few months or a year. Therefore, set your investment goals correctly before taking the plunge. The purpose of investment would decide when you want to get the returns. This, in turn, would tell you whether you should invest in stocks or not. How your money grows would depend on how long you keep it, what it earns annually and the investment amount.

 

Gauge the risk factor

After knowing about the risks of investing in stocks, you have to measure how much risk you are able to tolerate. It depends on your personal profile like age, education, wealth and income. It is true that it has a genetic influence, but these are more impacting factors. Gauge how much of losses you are ready to accept without being bothered. This would indicate the extent of exposure to the market that you can have.

 

Keep emotions in check

Keep emotions at bay and let logic drive your decisions. This helps to ward off bumps in the market that occur due to the constant tussle between bulls and bears. Since the short-term market reactions are more based on speculations, do not allow your emotions to help you decide.

 

Remember the dangers of keeping all eggs in one basket. Do not forget to spread your investment over varied portfolios

Economic Factors 2016

Factors That Have Contributed to the Global Economy In 2016

 

Now that we are halfway through the year, the picture of the global economy is getting much clearer.  As perceived at the beginning of the year, the economy has moved in the predicted direction. Experts had opined that the year was going to be the best in the last five years. This was in respect to the growth rate that had slumped near 3%.  In November 2015, the IMF had pegged the growth rate in 2016 to be around 3.6%. However, this is not very impressive when compared to the average of 3.5% recorded between 1980 and 2014. The mood was upbeat then but it changed in just two months.

The IMF had changed its growth figure to 2.9% in January 2016 that was based on its findings then. Once again after six months, there is bad news on the growth front. There has been further downgrading by IMF, and the latest estimate is 2.4%. This has been influenced by weak global trade, and commodity prices that have been steadily low have diminished capital flows significantly. Added to this is the concern for advanced economies that have recorded very slow growth. However, the major factors that were considered to drive the economy still remain relevant.

 

Falling prices of oil and commodities

The slide in oil prices that reached very low levels in 2015 had posed to push up growth, but it did not happen. The positivity was negated by the Chinese economic deceleration and slow U.S. growth in the first half of 2015. Now that we have left it behind, and oil prices still maintain its downward trend, things are looking up. Countries like India, Japan, the U.S. and the U.K. are likely to experience accelerated growth. However, the global economy slowed down in the period April to June 2016 with the Brexit referendum threatening financial markets. Larger economies are likely to benefit from falling commodity prices as these are big commodity importers.

 

Fiscal policies

Barring the U.S., other major economies of the world continue to pursue soft fiscal policies. While the U.S. has raised the interest rates, India, Japan, Europe, China and Canada are still extending lower interests to stimulate their economies. Easy money policies of these countries have evinced positive response from investors.

 

The state of currency

The impact of lower prices of commodities had hit hard in countries like Brazil, Canada, Russia and South Africa. Interestingly, the currencies of these countries have fared very badly against the American dollar. However, the depreciated currencies can benefit them as they stand to recover losses through huge exports of energy and commodity.  With increased exports and lower imports on the cards, these nations are likely to experience better GDP growth.

 

Detaching from the Chinese economy

The deceleration of Chinese economy that is continuing will have a minimal impact due to developments at other places. The U.S. is in a growth path supported by the greenback. Japan, India, and Europe are reaping the benefits of their fiscal policies. Russia, some Middle Eastern countries, Brazil and some Latin American countries are likely to fare better.

 

Advanced economies have fared better and the global economy is waiting to gather momentum. Stay tuned for more updates and news related to the economy!

 

 

Canadian Oil and Gas Investments

Investments Remain Bleak in Canadian Oil and Gas Sectors

The investment scene in the Canadian Oil and Gas sector seems quite bleak in 2016. The oil sands of Alberta are the worst hit by the falling prices of crude oil. For every barrel of oil produced, companies are losing heavily. They are taking measures to reduce losses by cutting production and putting on hold new facility developments. According to figures available, the decline in investments in the Canadian oil and gas sector is going to touch 48%. This is between 2014 and 2016 when the world decline in oil and gas investment is 40%. The Canadian Association of Petroleum Producers has confirmed that in 2016 alone the reduction will be 13%.

refuel-fuel-investments

There’s bad news all around

There has been more bad news for oil companies in the recent past, and that has discouraged investors. The BP oil spill in 2011 and the Kalamazoo river oil spill in 2010 are showstoppers for investors. More than six years down the line, they are yet to recover from the shocks. The oil sands of Alberta had also received some bad publicity that discouraged investors. Only a quarter of the Canadian population had expressed the intent to invest in oil and gas.

The woe continues

Alberta’s oil sands are finding it impossible to maintain its feasibility in the face of dwindling crude oil prices. Alberta is one of the most expensive oil sources in the world. For commercial viability, the minimum price of a barrel Brent crude has to be at least $80. Unfortunately, the average barrel price in July 2016 hovered around $44.16, thus giving no encouragement for investments at all. Although the trend is upward in August 2016, it is still below the $50 mark. This is however somewhat better than what it was at the beginning of the year. At that time, when Crude Brent was $31 per barrel, many oil sand projects could not recover the operations cost.

Costly production

If the low price of crude Brent is a concern, the other concern is about high production costs of sand oils. It is highly expensive to refine the products. In order to maintain parity of cost with crude Brent that comprises of lighter blends, oil sands are sold at high discounts. The minimum producing and distribution cost of a barrel of Western Canada Select is $15. However, there was a time in January 2016 when producers were compelled to sell it as low as $14.5. The situation is quite better now and one hopes the trend continues.

Why production shutdown is not workable

One might wonder why the oil companies are not stopping production. Shutting down production can be risky for the oilfield, and equipment might get damaged. Oil companies thus cannot think of a total shutdown. Instead, they are reducing the volumes while still keeping the plants running.  They could go for the maximum permissible reduction without damaging reservoirs.


The steady improvement in crude Brent prices in the recent months is indeed encouraging, but investors are not yet convinced. They want things to become steady at a level before changing their stance.