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Sitting down and managing your finances and accounts is never going to be something you look forward to. However, it is essential for keeping your company afloat and keeping heaps of debt at bay. Here you will find advice on how to find fresh cash flow and the best ways of managing your business’s finance.

wad of money

New Business Financial Issues


The majority of start-up businesses aren’t profitable for the first few years of trade, therefore it’s not uncommon to find yourself losing money if you’ve just got into the game. That said, you need to ensure that your business isn’t haemorrhaging money, as this is a one-way ticket to failure. Take some time every week to evaluate your businesses expenses and incomings and see if it is possible to make cut backs or introduce a price hike for some of your products or services.

Problems with Existing Business

If you’re not a new business then losing money is unacceptable. It may be time to completely re-evaluate the way in which you’re currently operating and assess whether or not the prices you are charging and paying need to be changed. Try to find out where all your money is escaping from and try to plug the hole before it sinks your company.


Understand Your Cash Flow


Hundreds of businesses have gone under as the result of poor cash flow. This problem occurs most often when you’re operating on a credit system and your clients are either slow to pay or they don’t pay at all. You can find fresh cash flow by using invoice factoring to provide you with the finance you need during the time in lieu of payment.

A huge benefit of invoice factoring is that the factoring company will often chase up the payments for you – ensuring you get the payment, while providing you with the vital funds you need to continue operating. These payments can also be scheduled for more regular times, allowing you to plan your finances.

 Separate Personal and Business Money


If you’re a family business or sole proprietor then it can be tempting to simply keep all your money in one place – especially if this is your only income. This is a very bad idea for a number of reasons but primarily for tax purposes and figuring out exactly how much cash your business has in it.

You need to calculate your profit after you’ve paid your staff (even if that’s just you) as it should be considered an overhead just like the rent/ mortgage rates. This will give you a much clearer picture of how much money your company is making, as well as making tax returns a lot easier!


Keep Accurate Records


If you don’t maintain organised records of all your companies then it will be very difficult to keep track of your finances. Make sure that you’re refreshing your records at least once a week and have an evaluation of your expenses at least once a month – by doing this you can stop wasting money and are able to pinpoint which clients are the worst at paying, allowing you to make the necessary changes.

Should you keep your Mutual Funds?

If you own a lot of mutual funds this next bit of news isn’t going to exactly make your day. The fact is, the vast majority of them underperform the average return of the stock market. The simple fact is that it’s probably a good chance that you own one of these underperforming mutual funds. In fact, most Americans do because most 401(k) plans will only let you invest in mutual funds.

What this means is that it’s up to you to decide whether or not you’re going to just accept the substandard returns that your mutual funds are giving you or whether you’re going to  become enlightened about the rights that you have to get returns that match the market.

The question now that you have to ask yourself is whether you should stay invested in mutual funds or look for greener pastures. If you recall the binder that you were given when you signed up for the 401(k) plan at your company or the quarterly mailings that have been coming to you since you opened your IRA, the first thing you’re going to want to do is grab those and start going through them for critical information that they hold.

Be prepared for some of the most confusing, boring and dry language you’ve ever encountered. Somewhere in that confusing mess you’ll find wording that describes not only your fund’s investment policy’s but also their  objectives, their risks and, most importantly, their costs. You’ll also find historical performance data and all sorts of legal mumbo-jumbo.

You can also go online to find all of the information that you need about your various mutual funds, along with all sorts of data and analysis on the thousands of them that happen to be out there. Once you do there are 5 specific things that you need to start looking for in those reports.

  1. Management changes. One of the most important things about a mutual fund is that it has a long-term and stable manager. In some cases you’ll find changes but, no matter who’s in charge, it’s always important to know exactly who’s handling your money.
  2. Fee changes. Another key factor, you should be aware that mutual funds are NOT required to keep their fees at the same level that they originally started at. One of your jobs as a fund shareholder is to make sure that the fees for your mutual funds don’t keep increasing and, if they do, consider dumping them.
  3. Style changes. If the mutual fund that you have in your portfolio is known for purchasing slow growth, high dividend blue-chip stocks and they suddenly start buying stocks from a nameless startup that just entered the market, you definitely will want to know about it and keep an eye on your fund’s holdings.  If you purchased it because it was assigned one label and it suddenly starts changing style to another, you need to know about it  and make changes when necessary.
  4. Turnover changes. A mutual fund with lower than average turnover rates is much more preferable to one that turns over on a regular basis. Rates of 50% or lower are best. Index fund turnover can be as low as 5% for example.
  5. Performance changes. While this one is a little bit more difficult the fact is that underperformance, even on a relatively frequent basis, is not unusual or particularly unexpected even with a good fund. The reason we mention this is that just because your funds might have had a bad quarter or even a bad stretch of a year or two, you might not particularly want to dump them. Track performance of course and, if you see poor returns over a five-year period, it might be time to start looking in another direction.

Noteworthy changes in any of these areas may mean it is time to reassess the mutual funds that you hold in your portfolio. It doesn’t necessarily mean that you have to automatically sell them because, in some cases, these changes might be for the better. In other cases they might not be positive but they’ll be better than the ill effects that selling will cause.

If you’re truly keen on keeping track of your mutual funds and increasing your returns, the 5 areas above are definitely what you should be looking at regularly. Reviewing them quarterly is a great idea so that it becomes as automatic as changing the oil in your car or giving the house a thorough cleaning.

If you’re looking for a great vehicle to meet some of your financial goals, the Vanguard Dividend Appreciation (NYSEARCA: VIG) exchange traded fund (ETF) is definitely one you should consider.

ETF’s are investment funds that, like standard stocks, are traded on the various stock exchanges. The big difference is that they track either the performance of a number of different assets (like VIG), a commodity like gold or silver or an index like the S&P. The reason that we like Vanguard is that it follows the NASDAQ Dividend Achievers Select index, an index that has a variety of stocks that have faithfully, year after year, increased their dividends. For investors this means protection from the volatility of the stock market and an investment that delivers reliable dividend revenues due to buyers that are seasoned professionals.

Unlike mutual funds where money is pooled by do-it-yourself investors and then given to a professional fund manager to invest, ETF’s are traded throughout the day. What’s good about both of these options is that, since there’s no need to continually monitor the stock market, they are great for everyday investors. While mutual funds have a minimum investment however, ETF’s don’t and generally will deliver more “bang for your buck” as they are more tax efficient.

With a 9.9% gain for the year (compared to 8.8% for the S&P) the ETF from Vanguard Dividend Appreciation has solid returns and a 2.17% 12 month yield. While it doesn’t gain as much as some other well managed mutual funds, since it focuses on quality it’s less of a risk. On the plus side the fact that VIG is so passive means that expense rates are ridiculously low and  thus profits are higher. Indeed, most similar holdings and mutual funds have an expense rate that hovers around 1% while VIGs expense rate comes in at 0.13%, or 88% lower!

And, even though they’re on the passive side, VIG still conducts screenings to make sure that their firms are financially strong and, when necessary, dumps the ones that aren’t.

Even better for the average consumer is that, since Vanguard has holdings in a lot of companies that the average consumer uses daily, investing in their ETF can be very satisfying. Companies like Coca-Cola, Procter & Gamble, Wal-Mart and Pepsi are included in their top 5 holdings and they also have holdings in energy, healthcare and other major industries. Quality, strong balance sheets and modest risk are they common themes that all of these companies share and that Vanguard vigorously seeks out.

So, as we stated at the beginning of this blog article, Vanguard Dividend Appreciation is definitely one of the better exchange traded funds that you going to find on the market today and worth your consideration if you’re looking for a low risk, relatively high return investment. It’s also something that the average consumer can invest in with confidence.

If you have questions about investing, the stock market, stocks, ETF’s or any other personal finance questions, please let us know and will get back to you with options, advice and solutions ASAP.

As the market nears a historic high on the S&P 500 some analysts are concerned that it’s looking a bit complacent. Maybe even bored.

The fact is that, while many have assumed that the Syria “problem” has gone away, that the economic data coming out of China will continue to improve and that the yield for US 10 year treasury bonds will stay in a range of high 2% to low 3%, all of these assumptions are far from a certainty.

Indeed, in the next few weeks there are at least 4 different events that could definitely shake up the markets.

  1. Fed tapering. Wall Street seems to be convinced that there’s not going to be tapering or what they call “taper light”. What this is is a cut of only $10 billion in treasury purchases with little or no cuts in mortgage-backed securities. While that’s all good and well, if there’s a $20 billion taper, it’s not going to be priced into the market.
  2. The federal government’s continuing spending resolution. On October 1, unless the federal government produces a continuing spending resolution, there’s going to be a complete government shutdown. Since a part of the deal that House Republicans want is Obama care restrictions, this is a brewing mass that could very easily blow up and cause all sorts of market ramifications.
  3. The debt ceiling hike. This is also part of the continuing spending resolution deal however, as of yet, House Republicans have not even said what they want. That’s never a good sign.
  4. Germany’s September 22 elections. Two things are clear in Germany right now: the German electorate definitely does not want endless bailouts (of Greece, Spain or any other country) and Merkel is having a much tougher time winning the race than she anticipated. Recent polls show that, even though the electorate wants to continue with the European Union, they would like it to be much smaller. What’s expected by traders is that Greece will be quietly moved out of the EU during the following year. As far as the market is concerned, this is definitely not priced into it.

Yet, despite all of these concerns, at 14 and change the CB0E Volatility index is remaining near its lows for the year. What that leaves the market with is the S&P that nearly historic highs, a bunch of macro events that could potentially rattled the market over the coming weeks and VIX near lows. As far as risk is concerned, it appears to be on the downside.

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