REPOST: The Secrets To Raising Money---For Any Endeavor

When it comes to business, capital goods make the bulk of the investment. However, the ability to secure funds on limited resources is still the most cost-effective way to generate good returns. This Forbes article provides three money-raising mantras that investors and entrepreneurs can use to streamline their investment decisions.

Think a sound plan and solid numbers are enough to attract investors? Prepare to starve.

The truth is that strong performance is only one pillar of an effective marketing strategy.

Bryan Johnson brought that point home for a roomful of hedge fund managers in Nashville, Tenn.—though he could have been speaking to any group of entrepreneurs or business-development types. Indeed, you needn’t know a thing about managing money to apply Johnson’s sage advice on raising capital.

A former global head of business development at Moody’s Investors Service, Johnson started Johnson & Co. in Austin, Texas to help aspiring hedge fund managers clear a daunting hurdle: According to The Journal Of Alternative Investments, 89% of hedge funds fail to reach $100 million in assets under management, a common threshold for attracting large institutional clients like pension funds and endowments.

The trick for entrepreneurs of all stripes is marshaling funds while generating nice returns with the resources they already have. For Johnson’s clients, “it’s not as simple as posting returns on hedgefund.net and watching the money roll in,” he said on Tuesday.

Drumming up capital isn’t just hard, it’s expensive—especially for small investment firms with less than $250 million in assets under management. According to a recent Citigroup study, small firms on average spend a heavy 2% of their assets covering various operating expenses, excluding salaries and payouts to their investment teams. That 2% chunk, which includes marketing and investor-relations activities, equals or exceeds the annual management fees that fund firms charge their clients. (Many funds also charge “performance fees”—typically 20 percent of the profits above a minimum return.)


Getting to this stage starts with making an emotional
connection with investors.
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Johnson offered three money-raising mantras that all entrepreneurs, not just hedgies, should remember:

1) People buy on emotion, and support the decision with logic.

This law of human nature is why merely crowing about your numbers doesn’t get the job done, says Johnson. Squishy as it sounds, if you want to raise money, you have to make an emotional connection with investors. Two proven ways:

— Make them feel smart. Tap into the satisfaction investors get when they feel they’re doing business with the right people—and never forget their bone-deep fear of embarrassment at losing their stash. “Currency of reputation is greater than financial returns,” says Johnson.

— Keep it simple. Complexity = headaches. That’s the governing equation for high-net-worth types (and everyone else, too). Whatever your pitch, Johnson says, always remember the “five C’s: “Be concise, clear, consistent, compelling and compliant.”

2) Effective marketing requires a replicable process.

There are myriad opportunities to lose prospects during the marketing process, Johnson warns. That’s why hunting for capital demands the same precision as your core business does. One hiccup and the tenuous trust you’ve built with prospects could evaporate.

3) People invest with people they know.

This one’s still true and always will be. Referrals are everything—and you never know which “intermediary” (Johnson’s term) will lead to pay dirt.

As for striking a balance between raising money and running an operation, Johnson shared these additional time-management tips:

— Profile investors before calling on them. Have a two-year track record but know your prospect prefers to invest with more established players? Skip a doomed courtship and troll for more adventurous souls instead. (The same logic applies when looking for investors in all varieties of startups.)

— Stick within a manageable geographic footprint. It saves time and money you don’t have.

— Avoid expensive conferences. “Unless you can get three to five face-to-face meetings [with potential clients], don’t go,” says Johnson.

— Easy on the special sauce. Prospects may be less interested in the technical nuances of an investment strategy than in your general view of the world. If they want more specifics, by all means serve them up. Until then, focus on forging those emotional connections rather than dazzling with details.

The more you follow Johnson’s advice, the better your chances of corralling that other crucial asset: luck!

Founded in 1982, New-York based investment adviser JSK Associates, Inc. applies a holistic approach to all its financial advisory services. Visit its website for more information.

How advisors manage financial products

Among the roles of financial advisors is to help people, especially those who lack knowledge and time of dealing with money matters, manage various financial products.

MoneySavingExpert.com lists the common financial products that financial advisors manage:

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Annuities
Annuities provide a steady cash flow for individuals during their retirement years. Financial advisors can help structure their clients' annuities and establish an annuity contract that best meet their clients’ needs.

Endowments
Endowments are a type of donation to a non-profit organization. They “provide ongoing benefits” to their recipients “by earning a market rate of interest while keeping the principal amount intact” for the funding of the efforts the donor wishes to fund. Financial advisors can help sort through various options for clients who want to surrender or sell endowments.

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Tax planning
Tax planning covers many aspects, “including the timing of both income and purchases and other expenditures, selection of investments and types of retirement plans, as well as filing status and common deductions.” Advisors can assist clients in the complexity of financial and tax planning and structuring.

Investments
Financial advisors can help clients by assessing the risk in a potential investment. They can also guide their clients through the complexities of planning investments for future events, like funding university fees.

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Mortgage
Individuals depend on mortgage to buy real estate without completely paying the entire value of the property upfront. Financial advisors, especially those who specialize in mortgage, can guide clients in choosing the best property with a good mortgage payment arrangement.

Financial services provider JSK Associates explains that when it comes to financial products, financial advisors develop the plan depending on the complexity of the client’s situation and the value of assets under management.

To learn more about financial products, refer to this webpage.

Equilibrium: Achieving balance in investments

It is easy to go wrong in investing, and while various trends and philosophies may point to different directions for sure profit, experts believe that the secret to a successful investment is creating a balanced portfolio. With risks aplenty in the investing arena, Forbes offers some advice on how to get to that sweet spot between risk and return.

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Avoid allocating too much for IRA or 401(k)
While an IRA or 401(k) plan offer investors a chance to place their money in stocks that are familiar to them—their own employer, most likely—allotting too much and concentrating one’s assets in one area can be risky, as decline can have a huge impact on the portfolio as a whole.

Try investing in small-cap stocks
The right number of stocks with small market capitalization in a portfolio can sufficiently amp up returns. However, it is best to avoid microcaps as these can be very risky.

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Don’t go all in on stocks
Stocks have very well defined advantages, such as higher long-term returns and dividends that can act as an excellent hedge against rising prices. In fact, stocks are a basic component of newly created portfolios. On the downside, their prices can shift dramatically every now and then.

Don’t go all in on bonds either
Bonds give return, but they can be problematic in an economy afflicted with inflation. It also gets harder to sell them when interest rates begin to rise.

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It takes time and experience to truly grasp the nuances of investing and be considered an expert in the field. It is impossible to create the perfect portfolio, but investors can definitely strive for a balanced one.

JSK Associates is composed of experts who provide valuable investing advice. This website offers more insight into the firm’s investment philosophy.

Impulsive investments and avoiding loss

In order to succeed in investing, investors have to put their money on the vehicle that offers the greatest returns. Ideally, they should conduct thorough research to plot the possible trajectory of any company’s growth and to predict which can turn to successful ventures and which can result to failures. An investment vehicle’s value can shift in a matter of time, which is why impulsive investing is hardly a practice for success.

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In some instances, companies experience a surge of growth for a certain period of time, presenting a very positive outlook for potential investors. In some cases, the growth continues and proves extremely profitable, while in others, the momentum just wanes and fades—a development that can prove financially disastrous. Many are captivated by the apparent growth of a company only to experience loss after some time.

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This kind of mistake is not limited to beginners in investing. Indeed, figures can be very deceptive. Moreover, due to the many factors affecting the performance of assets and companies, a change in one factor can cause significant effects to the company as a whole.


In order to avoid losses brought about by impulsive investing, experienced investors valuate companies, enabling them to determine the current worth of a company. By doing this, investors are able to confirm whether a company is a sound investment or not.

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Investors may also solicit the aid of investment advisors and wealth managers in identifying which company to place their money in. Investors may approach prominent names in the trade, like JP Morgan, or smaller firms, like JSK Associates.

Visit this website for more information on how investment advisors can help you.

Forbes: Three Things Angry Birds Can Teach You About Retirement

Angry Birds is not just a popular game about birds fighting green pigs.  According to this article from Forbes--a contribution by Robert Laura--the game offers some lessons any retiree should learn about retirement.  Interesting!  Read more below:

I’m not much of a computer game player but I have become slightly addicted to Angry Birds.  Initially I wasn’t interested, despite virtually thousands of Facebook invites to play.  Over time, though, I began to give in.  Now I’m a connoisseur of the game and find that it embodies some great lessons about retirement.  What’s shocking is that I’m not alone.  Angry Bird Gamers spend an estimated 200-300 million minutes playing the game each and every day … a number well beyond the approximately 16 million minutes a person has to manage  over a 30 year retirement.

What this computer game can teach people goes beyond clichés such as “retirement is just a game,” or “you have to take aim at it.”  There are actually some interesting parallels between the game and retirement that can help people improve their transition from work life to their golden years.

Game Maker vs. Game Player

You can play the original Angry Birds game free on Facebook; otherwise you pay $0.99 to download it to your phone, tablet, or other device.  The game requires very little practice up front but does call for some know-how and strategy to conquer each level.  Sounds like retirement already, as new retirees usually need very little practice in order to begin but strategy and know-how can advance the beginner toward a truly meaningful and happy retirement.

In the game there are a limited number of power-up options available, and that separates the game maker from the game player.  The game player simply wants to kill all the piggies, collect their stars, and brag about it to friends  The maker of this game, however, wants players to buy more power-ups and related merchandise such as stuffed animals and t-shirts … and let’s face it, who really needs more power-ups for an internet game, more stuffed animals, or another t-shirt?

It’s exactly the same when it comes to retirement products and services.  The financial services industry is great at giving away free reviews, seminars, or advice but, as with the computer game, it’s limited in its scope and application.  The new retiree simply wants to kick back and enjoy life while the financial services industry wants you to buy something. In many cases, something you don’t need or even understand.

So as you prepare to play the game of retirement, just remember, your goals and those of retirement services providers may be diametrically opposed, especially if your relationship starts with a freebie!

Be Prepared To Win

Retirement is one of life’s ultimate goals.  People spend 20, 30, or even 40 years working diligently toward being free of time constraints and the daily grind, but don’t be surprised if, like the song says, “you don’t know what you’ve got ‘til it’s gone.”  You may not love your job now, but Angry Birds isn’t my favorite thing to do either.  Like working towards retirement, I just got into the habit.  I played regularly, and then suddenly it happened:  I won! I completed every single level.  But what followed was an absolute disappointment. No trumpets sounded; no Publishers Clearing House-style giant check was handed to me; the President didn’t call to congratulate me.

I wasn’t prepared to win.  In an instant, with no more levels to conquer, I had a void on my hands and no real plans or ideas with what to do about it.  It’s not like I didn’t have a million other things to do, what with four kids and running my own business.  But there was a void nonetheless; and, in the case of retirees no longer working, 8-10 hours can be a pretty big void to fill every day.

I see it happen all the time with new retirees. They aren’t prepared to finally win and make the transition into retirement.  No trumpets, prize money, or presidential call, and all this extra time with no clued as to what to do with it.  Therefore, new retirees need to plan diligently how they will fill the days no longer booked up by their career responsibilities … and that includes social interaction, and physical activity.  If you don’t find fulfillment, you could end up like me:  aimlessly waiting for the next new weekly Angry Birds contest, which will invariably be well below the skill level I’ve already attained.  Not unlike some retirees who wind up going to the local senior center for free coffee and complaining because they don’t have anything to do.

The Game Doesn’t Change

My favorite angry bird is the black one that explodes like a bomb; my least favorite is the red bird that really doesn’t have a special effect.  I look forward to using the black bird at every level and stage, but remain less than enthusiastic about shooting the red bird.  Similarly, many people think retirement will be a different stage of life, but it’s not.  They enter it thinking they will all of a sudden be able to eat healthier, work out more, travel extensively, golf, or read on the beach.  But life happens in retirement, too, and it’s not all fun in the sun.  Many retirees find that, for the most part, the way you thought, and the habits you acquired before you retired will remain intact until you change them.

I’ve said it a million times:  there is no magical line that you cross the day you retire.  Just as I completed one phase of Angry Birds, there were always birds, a sling shot, and a task to complete before I could move to the next.  So, too, will be the case in retirement.  Family and friends, problems and issues will remain intact, and there will always be tasks to complete … you’ll just have more time to do them.  Therefore, don’t expect the game to change when you retire, you just have to be ready to play at a different level, with different challenges and rewards.

Going past the best: A strategy designed for the win

The ability to plan is said to be one of the marks of human intelligence. Over the years, humanity has devised strategies for practically any endeavor, polishing these principles to suit the need of the times. For an affair as hefty as investing, it is no wonder that people would go through the pains of designing an approach that assures a win. After all, investing is a game where the winner could take all.

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One of the most trusted strategies in investing today involves asset diversification, which entails placing investments in more than one vehicle. This minimizes the impact of any one loss on the whole investment portfolio. While this is popular even among experts in the field, it is not without its flaws, particularly in the hands of neophytes.

Indeed, diversification could pose certain difficulties, especially if particular sectors experience unusual and unexpected growths. It could also pose certain challenges during broad market declines in economic crises. Considering these drawbacks, a new and improved strategy has to be created.

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Many investment advisors are now designing their own approaches, taking the best qualities of the best, and supplementing them with their own to create a strategy that is better suited to a rapidly changing arena. JSK Associates suggests putting investments in a few carefully chosen vehicles. These areas must be proven to be flexible and must have a high propensity to succeed and persevere even in economic turmoil. This approach makes good use of research, and maximizes profit without allowing loss to make a very big dent on the portfolio.

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Considering the changes that the market and the economy go through at a regular basis, there is little doubt that this strategy will remain as is through time. To be considered truly successful, it must offer similar, if not better results for the same cost.

Visit investtowin.com to learn more about this investment approach.

Forbes: Are You Overlooking A Life And Death Factor In Your Retirement Planning?

You must take a lot of factors into consideration when planning for your retirement.  According to this article by Erik Carter, posted in Forbes.com, many people overlook one key factor in their preparations:

When making decisions about retirement, I often find that there’s a crucial factor that repeatedly comes up that people don’t generally think about when it comes to their planning. No, I’m not referring to their retirement age, retirement income needs, assets, contribution rate, expected portfolio rate of return, estimated Social Security and pension benefits, tax rates, or rates of inflation. What’s often overlooked is your life expectancy.

Why is this so important? First of all, your life expectancy may be more important in determining your investment time horizon than how close you are to retirement. Yet, the latter is what we tend to focus on.

After all, most people think about how many years they have until retirement when they’re deciding how aggressively or conservatively to invest their money. But unless you’re planning to use that money all at once to pay off a mortgage, purchase a vacation home, or buy an annuity (more on that later), your money will continue to be invested for at least as long as you live, and that could be quite a long time.  Although the average life expectancy for a 65-year old man is 85 and 88 for a woman, your life expectancy may not be average. You could end up living much longer or shorter than that. Consider that for a typical 65-year old couple, there’s a one-in-two chance that one of them will live to age 92. In fact, if you retire early, there’s a good chance that you’ll live longer in retirement than you did working. That’s your real investment time horizon.

Of course, no one knows exactly how long they’ll live in retirement (assuming we even live long enough to retire) but there are better ways of estimating than simply taking a guess based on how optimistic or pessimistic we feel about ourselves. In particular, a site called livingto100.com provides a personalized life expectancy calculation based on factors like your family history, gender, lifestyle, and current health. There’s no charge but you may need to dodge some advertising.

Once you have an idea of your life expectancy, here are some decisions where it could come into play:

How should your investments be allocated?Unless your life expectancy is less than 10 years, some of your retirement portfolio would fall into the long-term time horizon on our asset allocation worksheet. Of course, risk tolerance is another important factor and that tends to decrease with age for at least a portion of your assets.

Are you saving enough for retirement? This is a tricky one because you’ll want to use a longer life expectancy on our retirement calculator than your actual one. After all, these numbers obviously aren’t perfect. If you overestimate your life expectancy, you’ll leave your heirs with a little bit extra. Underestimate your life expectancy and you could end up running out of money and eating the proverbial cat food in your later years.

Should you take an annuity or a lump sum from your pension? If you’re fortunate enough to even have this choice, you’ll really want to think about your life expectancy. Since the annuity option provides a guaranteed income for as long as you live, the longer you live, the more money you get. If you live to 110, those checks will keep coming (assuming they still have paper checks by then), but if you get hit by a bus the day after you start collecting the money, the insurance company gets to keep the rest. (You can add a beneficiary, but your benefits will be reduced.) If your life expectancy is below average you may be better off taking the lump sum (or at least your heirs will be).  Just remember that when you take a lump sum you control what happens to that money, so if you spend too much too soon, you could eventually run out.

Should you annuitize part of your assets?For the rest of us that aren’t receiving a nice fat pension check (or checks) when we retire, we still get to make the same decision. That’s because you can always take part of your retirement account and purchase your own annuity from an insurance company that works the same way. If you live over 30 years in retirement, even the “sustainable” 4% withdrawal may start to look a little less sustainable.

Interestingly enough, when you buy most forms of life, health, disability, or long term care insurance, insurers usually require you to take a health exam so they can price it. However, this is not the case when it comes to annuities. This gives you the upper hand since the annuity payments aren’t priced according to your health (otherwise, healthier people would get lower benefits and vice versa). If your life expectancy is above average an annuity can be a good deal, but not so much if your life expectancy is below average. The only thing insurance companies tend to look at is your age and gender since women tend to live longer and thus get lower payments.

When should you start taking Social Security? Social Security takes it one step further and only looks at your age when calculating your payment so all things being equal, men might want to start collecting earlier and women might want to delay. That’s because for each year you delay, your benefit grows by about 8% per year until age 70. Delaying to get your maximum benefit at age 70 is great if you live until 100, but not if you live until 71.

As you can see, there are dangers in both underestimating and overestimatingyour life expectancy. After all, a big part of retirement planning is making sure your money lasts as long as you do, so you should probably have an estimate of how long that might be. Otherwise, you’re planning for a trip without any idea how long it might last.