Tuesday, February 28, 2012

The Madness of Money in March

Consortium grad Rob Wilson
There's March Madness, and then there's Rob Wilson's March Money Madness.  Once again Consortium graduate Wilson will stage his contest that runs parallel to the college-basketball national tournament. This year, the prizes are bigger. In its third year, his contest helps promotes awareness in investing and stock selections.

Just like the NCAA tournament, there are brackets and rounds of competition. Participants will not project basketball winners; they must predict investment performance by choosing the stocks of companies they expect will generate the highest return during the month of March.  From week to week, just as March Madness brackets are about choosing a winner between two teams in a 64-team tournament, Money Madness also embraces "bracketology." Participants decide which of two stocks will out-perform the other. As with NCAA brackets, participants try to project the winner of several pairs of stocks in several industries.

For example, in week 1, a participant may be required to decide between Apple and Dell or Citi and Wells Fargo.  The stock with the higher percentage return in that period is the winner within the bracket. In basketball, participants tap their knowledge of the game, teams and players. In Wilson's tournament, participants must tap their knowledge of markets, stock trends, specific companies and industries.

This year, Wilson says, the contest has an entry fee of $5. That means the grand prize will be larger than before. Wilson hopes to attract up to 100,000 participants, including MBA students across the country, Consortium students and alumni, and anybody interested in projecting the outcome of stocks over a short-term horizon.  If he reaches that goal, the grand prize could total $250,000. Wilson says students could use prize money to pay for business school or invest in a start-up.

Wilson, a Consortium MBA graduate from Carnegie Mellon, is a financial adviser based in Pittsburgh. He appears often in local media to provide insight, updates and advice in investing.

To learn more about Wilson's activities, market viewpoints and financial advice, go to Rob Wilson TV.  To register for Money Madness tournament, go to March Money Madness

Tracy Williams

Five Tips to Choosing the Best Home Loan

Buying a house is a major decision, and obtaining a home loan can be a complicated and stressful process. Because the housing industry has expanded so much over time, the lending services offered to home buyers have grown increasingly complex. To avoid being left in the dark or otherwise feeling like you’ve lost control of the process, check out these five tips that will help ease the stress of choosing the right home loan for you and your family.

1. Understand your finances – Before going into any lending situation, it’s extremely important to know how much you can pay for a home. Purchasing a house you cannot afford runs the risk of foreclosure so choose the house you can afford now rather than the one you think you can afford later and borrow accordingly.

Know your credit score, reduce your debt – Knowing your credit score is crucial to this process because the score indicates how much you’ll be lent and the interest rate. There are plenty of free credit report offers and it’s in your best interest to take advantage of them. Similarly, the way to increase your credit score is to reduce your debt. You want to go into this process as close to debt-free as you can to receive the lowest interest rate possible.

3. Research different types of loans – Go in confident by understanding the different types of loans that a particular lender offers. Similarly, be aware of the different fees and penalties that different lenders charge, such as late fees and closing costs.

4. Be wary of the cheapest option – This concerns fixed versus adjustable rate mortgages. A fixed rate may not the be cheapest option at the time, but it’s fixed meaning that it won’t change. An adjustable rate mortgage is only fixed for a certain period of time and then is ‘adjusted’ sometimes as often as monthly.

5. Utilize online comparison websites –There are several mortgage lending sites online that ask basic questions about your yearly income, the size of the home you want, and so forth. These sites will provide a realistic idea of the type of home you can afford and what your payments will be like if you decide on this home or that. Choose a rate and payment schedule you’re comfortable with.

Generally speaking, choosing the home loan that suits you best comes down to understanding your finances as thoroughly as possible. And like any other product you purchase, researching ahead of time is always a smart move. Know your finances, know your lender, and go into this process confident and as worry-free as possible.

Northwest Georgia Bank is a leading Chattanooga bank that offers Chattanooga loans and Chattanooga mortgages with an unbeatable level of customer service.

Steps To Take To Develop Money-Saving Habits

People aren't born from birth to be savers. It takes time to develop money-saving habits. Follow these tips and you'll be saving hundreds of dollars a month in no time.


The first thing you need to do before you can develop your money-saving habits is to decide realistically how much you can save. To accomplish this, you must first devise a budget that lays out all the money you earn and your essential spending. This tells you how much discretionary income you have that you could be saving.

Don't Pay Too Much

The first money-saving habit you should develop is a paranoia about prices. Assume you are paying too much for everything from groceries to car insurance. Then test that assumption. Go to online price comparison sites to see if you can get lower prices on insurance, loan rates, rates for TV, Internet and phone service, and many other services and products. If you can get a lower rate, don't be shy about switching, as long as the new product or service meets your needs. Make sure to take advantage of any chance to lower your prices. This includes bundling insurance policies and cable, TV and Internet services to get discounts.

Spend Money to Save Money

Making impulse purchases is not a good thing, but that doesn't mean its always bad to buy more than you need. If your local supermarket is having a huge sale on products you need and use regularly, buy large amounts and stock them away for future use. If you have a freezer or extra refrigerator, you can buy large amounts of meat and vegetables when they are on sale and freeze them for later use. You can compound your savings by using
supermarket coupons or vouchers during these sales. When buying clothes and shoes for your kids, take advantage of really good sales by buying extra items in larger sizes for use a year or two down the road.

Don't Be Brand Conscious

The best savers out there don't get hung up on the names on their labels. To save money, buy the store brand for food and household purchases. And stay away from designer clothes and shoes. Most of the time they are not better quality than off-brands, they simply cost more because of their name.

Don't Pay for Something You Can Get for Free

If you like to read books, get them from your public library instead of buying them. Read newspapers and magazines online instead of paying for subscriptions. Trade services with friends and neighbors.

These are just a few of the ways you can get started on your way to becoming a saver. There are many more. Follow as many steps as you can and you'll be a much richer person.

Wednesday, February 15, 2012

MBA Job-Hunting: No Need to Panic Yet

On campus, the hiring process is not quite over.
For some MBA students, including those in Consortium schools, whether in their first year or about to graduate, February's arrival could cause panic:  Do I have significant job offers on the table?  Will I spend the summer at my first choice--proving myself in a formal internship program that will lead to a full-time offer in August?  Or must I resort to the only choice I have? Must I return to an old job I wanted to leave in the first place?  If graduation looms, do I settle for the first offer available, or do I wait for my dream post?

When February comes, some students beam and boast of offers from top-tier financial institutions, consulting firms, or big corporations. Some have already accepted offers. Others, without the offers or opportunities they covet, grow worried and try to figure out what to do with composure and a new strategy in mind. 

There's no need to panic just yet.  Buckle down. This is the time many gripe about campus career and placement services. These departments try to provide pathways from the classroom to corporate cubicles and conference rooms. They suffer, however, much criticism at schools everywhere. 

They operate under pressure to be all things to all students.  Deans watch them and push them to show the highest percentages possible of graduates finding jobs that pay the highest salaries possible.  In February, when they wish they could provide candid, thoughtful guidance on next steps for overworked, pressured students, they get mired in hiring statistics.  Take the first job offered at the highest compensation, they might advise unwittingly and without much thought.

For students still planning a summer or a first year beyond school, buckle down, and work with networks and alumni ties.  Reach out to alumni, professor and/or social contacts--at all levels. Most top firms, funds, banks and companies, where MBAs want to work, have already concluded the hiring cycle for 2012.  Students learn it is probably too late to seek employment at those places.  

But don't give up just yet.  Alumni and network contacts can alert you to what the real story is.  The hiring cycle has just ended, but there could be alternative ways to find an entrance through the backdoor.  

At the notable financial institutions, MBAs are hired for formal programs. But sometimes specific business groups with the larger company have sudden, special business needs. Human Resources may have under-counted the number of interns or first-year associates needed in the coming year. They misinterpreted the incremental work for new presentations, deals, clients, and finance models.  Business units will not want to wait for the next hiring cycle a year later; they seek to fill hiring gaps as soon as possible. 

In such scenarios, the institution will encourage the business unit to hire from within or look for someone willing to transfer into the unit.  Sometimes, however, the unit will head to campus to seek help or tap the MBA student who persevered and came through the backdoor. 

In the meantime, if the ideal offer hasn't come yet, now might be one more chance to review, refine and polish the story you are presenting to prospective employees. Make sure you convey a unique or intriguing story that shows how the finance MBA and past accomplishments translate smoothly into what you want to do, how a polished resume' will lead to immediate contributions in an entry position. 

The story you told before might indeed have been near perfect in your view; prospective employees might even agree.  But it may not have been for what they needed for the moment. Sometimes revising or re-engineering the story is an effective way of proving not just competence, but fit. 

Reach out to alumni at the places on your wish list, especially alumni who were in the same programs or management tracks you are pursuing. Touch bases even with first- or second-year alumni,  those who have recently gone through the process. They won't be involved in hiring strategies and decisions, but they are the ones who can share intelligence of hiring trends, hiring practices and strategies. They know which units are hiring, cutting back, or expanding abroad. Having been through the process, many don't mind sharing details of how they got through it or how they slipped through back, if that was necessary. 

Now is also the time to peek at Plan B and realize that Plan B may not be as bad as you initially thought.  Approach Plan B as if it were a stepping stone back to Plan A. You might find, in the process, that Plan A was wrapped in the wrong reasons to pursue a position (prestige, incentive compensation, amenities, e.g.).  Plan B might actually encompass the rational reasons (experience, exposure, skills refinement, immediate contributions, e.g.).

Explore carefully opportunities you might have dismissed early in the process. They may be at smaller companies, boutiques, or funds.  They could be in regions outside of the usual finance centers. They may be in industries (manufacturing, technology, communications, or energy) you hadn't discovered before, but where roles in finance, strategy, capital markets and M&A are still critical. 

If you pursue opportunities off the beaten path and are successful, negotiate an experience or role that will emphasize financial analysis, corporate finance, modeling, finance strategy, and/or markets. A profound summer experience at a global company or a first assignment in strategy, treasury or markets can still become gems on a resume' down the road. 

Everywhere in recent weeks, we detect hints, signs and trends that the environment has improved. The known banks and institutions are tip-toeing through this hopeful, but fragile scenario--still hesitant to hire in large numbers, still not sure what they should do for the long-term. Yet in pockets or office corners in scattered places, an alumnus contact might let you know that in her group, they desperately need a smart MBA intern from, say, Cornell, Virginia, Rochester, or Emory to help on a current deal, portfolio review, or strategy presentation.

Tracy Williams

Wednesday, February 8, 2012

How to get a 100% home loan

How to get a 100 % home loan? This a question that many would like to here the answer to. Is there really such a thing? Is there even just a small percentage of a possibility that the answer to this mythical question could be a positive one? To understand more on how to get a 100% home loan we must first understand the facts behind this so-called witches brew for the new families of tomorrow.

Banks, this is the first word that would also play the most important role in your quest of finding the holy grail to a 100% percent home loan. Banks offer a lot of different plans to help you achieve that house that you always wanted. Most often than not if you have a stable income you will be granted a housing loan applicable to your monthly salary capability. Interest, accrued payments and monthly amortizations are all part of the formula. But is getting a 100% home loan part of the banks plan in pursuing your hard earned salary. Hate to burst your bubble but almost 90% of the world’s banks in different counties would say it is impossible. There is no such loan nowadays in the U.S. and neighboring countries by banks alike that would give you a 100% home loan, with no down payment and collateral required.

Banks have reviewed the possibility of giving 100% home loans to their clients time and time again, and as the ball goes around the answer always came to same old conclusion. The banks would be at a loss if ever they implement such a risky deal on their part. There are a few banks that practice the 80-90% rule when it comes to home loans. This means that they are willing to lend you 80-90 % of the loan to value ratio (LVR) provided that you have a stable flow of income. Still this means that the client will be needing to shoulder the remaining 20 or 10 percent from his own savings.

Now you would ask me I mentioned only 90% percent of banks worldwide will not allow you this kind of loan, what about the remaining 10 percent? The best answer to this question is Australia. Why Australia you ask? There are still some banks and real estate lenders down there that would offer you 90 – 95% loan able value in regards to LVR. Still not the 100% value that we all are looking for, but it is surely the closest you can get to acquisition of the reality. You just have to look really hard for legitimate banks and real estate lenders.

The next time you ask the question of “How to get a 100% home loan?” with no strings attached, you might as well kiss your dreams goodbye. The banks don’t see this as a possibility unless you have tons of collateral which will still end up as down payment to that home you always wanted. There is no such thing as 100% free nowadays, but there is something called hard work and savings; and maybe the next best thing “Australia”.

Monday, February 6, 2012

Thinking of Starting a Business – Think Capital Allowances

Since 2008 when the economic climate changed a lot of people have seen the entrepreneurial side to themselves rise to the surface and used this time as an opportunity to start their own business. There are many considerations you will need to look into when deciding if this is the right option for you with money usually being a fairly big consideration.

A recent study showed that few people knew what capital allowances were or understood them, when starting a business it is a good idea to familiarise yourself with incentives available such as capital allowances and tax relief and how your start up could benefit. As capital allowances can offer up to £100,000.00 of tax relief in the first year.

Firstly let’s look at what capital allowances are and who is eligible for them :-

When a business is thinking of investing in an asset, which can vary depending on the industry, but the overall areas to look at are:-

Enhanced capital allowances – environmental based tax relief.

Disposal of assets
Acquiring new assets
Ongoing fixed assets

They may be able to claim capital allowances (tax relief) to reduce the financial burden for the company, which early on in a company’s life can help the business grow, develop and be competitive.

Capital allowances, as the recent study demonstrated are a fairly complex subject and having an
understanding of how your business could benefit requires specialist knowledge to your specific situation and requirements together with looking at your specific investments/assets.

Also it is worth pointing out that from April 2012 the tax relief currently available is significantly reduced from £100,000.00 to £25,000.00.

At any time a business should be aware of when it can benefit financially and in this case from tax relief and capital allowances it should look at the above areas and identify whether any assets they have fall into these areas.

Chris Simons recently decided to set up his own business and found the possibility of capital allowances and tax relief to be a huge financial relief.

Facebook IPO: The Lucky Underwriters

Ready for public scrutiny?
Who will be the fortunate few--the lucky underwriters who take
Facebook public this spring, who will earn millions in fees for arranging the most watched IPO perhaps since Google went public (Aug., 2004) or the most interesting banking deal since, say, the breakup of AT&T (1983)?

Sure, the Goldmans, Morgan Stanleys, and JPMorgans will be at the top of the syndicate list--the lead underwriters, the dealmakers who negotiate the fees, arrange the syndicate group, and ensure there is an orderly process when the stock finally goes to market.

Facebook is being valued in the range of $75-100 billion, an unusually wide range, but such range is not a surprise. Facebook has only just begun to share details of revenues, profits and business strategies.  Prospective investors and regulators will now pore through vast amounts of information it filed with the SEC last week and will ask questions about what the company will look like five or 10 years from now. 

They wonder how Facebook will achieve steady revenue growth and high investment returns once the number of users reaches a plateau (at 1 billion?) or when another new thing comes along to distract those same users.  They must determine whether Google+ will be a threat.  And they will assess whether Facebook will be able to handle the strain of being a public company:  shareholders pressing for rapid growth, analysts expecting the company to beat quarterly earnings estimates, or a stock price fluctuating frequently without reason.

While the company will be valued at $75 billion or more, the actual public offering is expected to be $5-10 billion of new shares. Market behavior this spring and investors' response to Facebook's long-term storyline will determine the total valuation (closer to $100 billion than $75 billion?) and the total value of shares offered to the public (closer to $10 billion than $5 billion?).  Of course,  corporate-finance models, the instincts of experienced bankers, negotiations between bankers and company management, and supply-demand dynamics in the marketplace will also influence valuations.

Assume the underwriting will be $5 billion.  Underwriters will line up to share a gargantuan amount in fees, recalling the glory years when IPO activity sparked and soared regularly.  (Remember the gushing over dot-com IPOs in the late 1990s and early 2000s?)  If the conventional negotiated fee for an equity offering is about 4%, Facebook could dangle as much as $200 million in fees for capture by the syndicate group.

But Facebook has leverage--because the offering will be large and closely watched and because investment banks will want to secure other banking business going forward.  With that leverage and with hints that it will use it in the way many Silicon Vally firms have tried in the past, Facebook will negotiate the fees down to levels below 4%, or even 2%.  Still, it's likely underwriters will be paid fees at least in the $75-100 million range.

Morgan Stanley, JPMorgan and Goldman Sachs will be the lead underwriters.  Goldman lost the lead it had for much of the last year. Some say bad publicity that seems to follow Goldman often these days hampered its efforts to be the leader among the leaders.  Morgan Stanley touts its highly regarded technology banking team, and JPMorgan has a leading corporate-lending business that recently arranged a loan facility for Facebook.  Those factors helped thrust them into lead roles with Goldman.

All three will also want a more permanent advisory role with the company in future deals:  other credit facilities, future debt offerings, mergers and acquisitions, another round of equity financing, or an advisory role when Facebook is finally able to penetrate China, if ever.  Don't forget, too, all three have substantial private-banking businesses and will hustle to try to manage the portfolios of newly minted millionaire employees.

For the IPO, banks will, therefore, settle for lower fee rates now to ensure long-term relationships later, but only so much, as investment banks squirm when they set precedents in allowing underwriting fees to fall below traditional levels.

But now comes an interesting question:  Who else will be in the syndicate?

Who else will get to share the exposure, visibility and fees from the Deal of 2012?  Will Facebook ensure the selection of the syndicate is fair and includes regional broker/dealers, small boutiques, and firms majority-owned by those from under-represented groups (women and minorities)?

Sometimes the company issuing shares doesn't rely on investment banks to fill out the lower rungs of the syndicate. Sometimes they request that the syndicate leaders respond to specified wishes. (One frequent wish is to allocate shares to investors who say they will hold the stock, instead of "flip it" shortly after the offering.)

Before it's time to go to market and sell the new shares, the arranging banks are responsible to ensure the offering has been successfully pre-sold at the offering price and under the terms negotiated. They use market intelligence, previous relationships, and industry prowess to get the deal done. Often from experience and habit, they allocate new shares to a club that includes other big names and to others based on expansive retail networks, high-net-worth clients, and large funds that have close ties to the banks. 
They won't necessarily step back to try to be "inclusive"--unless they are reminded to be so or, in some cases, instructed to be so. The company going public will then ask lead underwriters to honor its requests.

Facebook is still young.  Early signals, however, suggest Facebook will have special requests for its syndication.  Founder and CEO Mark Zuckerberg will likely want to folow Silicon Valley patterns of breaking the mold when it comes to relationships with banks (new ways of doing the old kinds of deals). (Google certainly did so when it went public and tested new ways of allocating and pricing shares.)  Zuckerberg and Facebook will not want to be seen as strong-armed by banks.

COO Sheryl Sandberg, from her days at Google to the present, has been an effective advocate for women in business.  She is known to devote extracurricular time as a leader in women's initiatives.  She regularly hosts gatherings to discuss strategies for women to advance to senior management, balance work-life pressures, and have an impact on others in entry-level positions.

Sandberg and Zuckerberg also have binders of statistics that show women comprise the majority of Facebook's 845 million users and drive most of the daily activity.  While the top rungs of banks still have diversity challenges, Facebook users are as diverse as the world is. All groups, many countries, many religious backgrounds, many ethnic groups, and many races log on.

So why shouldn't the prospective list of new shareholders, investors, and underwriters be similarly diverse?  Why shouldn't such firms as M.R. Beal, Sibert Brandford Shank, Guzman and Williams Capital be included in the syndicate list and share in the lucrative fees?

Let's watch and see what happens.

Tracy Williams

Wednesday, February 1, 2012

Life annuity brings Peace & Happiness Unlimited for Retirees

After the successful completion of our working era, we head to another life dominated by security and peace. Well, it’s quite obvious for an individual to expect a hassle-free life where there will be no work responsibilities and unavoidable tensions. Despite, a certain way has to be adopted that can ensure monetary stability till your last breath. So, if you have already bid farewell to your work and therefore looking for extra income, why don’t you go for a long-term investment? People nowadays are going for life annuity policies for sustaining regular income for lifetime. So, let’s see the factors that are making retirees go for such long term investment policies.

·         A life annuity policy certainly scores higher when it comes to financial stability and monetary security. No matter what the market condition stands, you will get your deserved income according to your set time period.

·         Fixed annuity is the best life annuity policy that can let you enjoy a steady income. This means that the rate of interest initially set by you in the contract remains same despite any sort of monetary turbulence in the current market.

·         Life annuity policies are much safer. The annuitant needs to sign a contract with an insurance company. Here in the contract, the applicant is asked to state each and every detail including the series of payments, mode of payments, time period of the contract and of course your personal details.

·    There are no chances of facing duplicities. Remember, everything will be mentioned in a contract. In case of any convenience, you can easily catch hold of your insurance agent since he will be signing the agreement papers.

Now, what if the annuitant dies prior to recovering the actual value of the investment? In this respect, an annuitant can enjoy a superb advantage. If he/she had earlier mentioned the name of any beneficiary, the latter would start receiving the same amount after the death of the former. However, there are certain life annuity policies where the beneficiary gets lesser amount than the one the former used to receive earlier.

 Joint Life Annuities

This is one of the top life annuity schemes that can benefit the couples. In case of the life and joint survivor annuities, the payments stop once the annuitant or both the annuitants die. However, in case of a joint-survivor annuity plan, the first annuity will get a lesser amount than usual only after the death of the second spouse.

Annuity Payments for the Impaired

In case of severe medical problems, if the life expectancy of an annuitant gets reduced, the payment terms can be improved. For this, it’s always advisable to talk to an annuity expert who can help you understand all life annuity schemes other than this.