Archive for category mitigating risk

5 Rules to Reduce Risk When Starting a Business

5 Rules to Reduce Risk When Starting a Business in the Other 8 Hours

By Robert Pagliarini

I have a metal paperweight on my desk with the inscription, “What would you do if you could not fail?” It’s a nice ornament with a feel good message, but it’s completely wrong and dangerous. Anybody can fail at anything. If you start a new venture without first thinking about and limiting risks, you can put your finances — and worse yet — your relationships in jeopardy. What starts as a way to build a dream life during the other 8 hours, become your own boss, or make a fortune can turn into a nightmare if you don’t limit your risk.

A better and more useful message would be, “What would you do if it didn’t matter if you failed?” To me, that’s much more realistic and powerful. Instead of taking a risk that could end in a cataclysmic strikeout, your goal is to limit the risk of financial catastrophe. This means containing projects so that a swing and a miss doesn’t have the potential to ruin your life.

Here are 5 rules to reduce risk when starting a business in the other 8 hours:

  • Get free help. You should enlist the support of others. Find service partners willing to invest their time a piece of the venture’s future income instead of upfront cash. The same person who would laugh you out of their office if you asked them for a $2,500 investment may gladly trade $2,500 of their services for a small piece of ownership in a promising new venture. Why? Like you, most people are looking for an opportunity to get ahead without risking too much. If someone can invest a little of their time with the hopes of making a huge return, they may jump at the chance.
  • Make small bets. In the investing world, everyone talks about risk tolerance — a measure that determines how psychologically comfortable you are with the possibility of losing money. This is good to know, but more critical is knowing your risk capacity — that is, how much money can you afford to lose without it destroying your finances and your ability to pay your rent? Start small and start slowly. Immediately committing thousands of dollars to an idea is as ridiculous as walking up to a girl you’ve never met and asking her to marry you. You need to put a little out there and get a little back. Then you can put a little more out there and hopefully get a little more back.
  • Negotiate fiercely. You must be relentless about getting what you need. You don’t have the luxury of a six-figure budget. You’ve got to get your ventures up and running as cheaply as you can. One way to minimize risk is to negotiate everything. Don’t accept anything as is. Negotiate discounts, concessions, bonuses, terms, etc. It will feel awkward at first, but keep practicing.
  • Limit liability. If you are producing a product or providing a service that could lead you to get sued, you must protect yourself against lawsuits by incorporating and by having the proper liability insurance. Don’t risk financial disaster by not shielding your personal assets from your business assets.
  • Keep your day job (at least for now). It’s important to have that steady and predictable income during the day while you swing for the fences at night.

Unless you’re sports-challenged, you know if you get three strikes you’re out. But what if that weren’t the case? What if you could swing and swing and swing without ever striking out? A swing and a miss is not a failure when you follow these rules. A swing is simply one swing closer to a hit.

You can download several free resources(assessment, poster, audio interview, video, and more) at www.other8hours.com and learn more about my new book, The Other 8 Hours: Maximize Your Free Time to Create New Wealth & Purpose.

Read More

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* Make Money From Your Hobbies

(Baseball image by Scott AblemanCC 2.0)

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Your Biggest Money Decision

Before worrying about your nest egg, you need to sit down with an attorney and draft a will. MoneyWatch’s Jill Schlesinger explains.

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How to benefit from rising interest rates.

If interest rates start to rise, there are ways you can benefit!


While interest rates have been at a record low, it has been hinted that those days are soon over. Typically, higher interests rates are dreaded, as they lead to lower stock prices and higher home costs. However, there are some investments that do actually benefit from rising rates. In these confusing and dire economic times, it is important to learn how to fluctuate in time with the economy.

If interest rates do actually increase, as had been hinted by Federal Reserve Chairman Ben Bernanke, one of the ways you can benefit is by boosting your short-term savings. When interest rates increase, there are better returns from your cash and other short-term investments. Putting funds in money market mutual funds invests in a mix of stable, short-term instruments and you can access your funds quickly. It can also benefit you to put funds in certificates of deposit (CDs) to ensure that your money is easily accessible to you.

If interest rates are going to rise, it is very important to try and pay as much of your debt off as possible. Because credit card debt is already at a high rate, it is probably best to start by paying that off. Next, work to pay adjustable rate loans off. If you have an adjustable rate mortgage, consider refinancing into a fixed rate loan because mortgage rates are very low currently and will most likely increase regardless.

In short, if interest rates increase, benefit from the rise by boosting your short-term savings and building up your emergency funds with money market funds and CDs. While reaping the benefits, make sure you lower your debts to avoid a rise in your monthly payments.

About the Author

*This article was contributed by consumer protection/bankruptcy Attorney Jonathan Ginsberg, our expert bankruptcy contributor whose website can be found at: http://www.thebklawyer.com/thebkblog/


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Search MLS, find an experienced Realtor, and more!

If you are are looking for a Realtor to help you buy or sell your next home we’d like to help!  Buying/selling a home can be a stressful experience if you don’t work with knowledgeable professionals.  Black Swan Management, LLC would like to put you in touch with a full-service real estate brokerage that serves 34 major cities, offers guaranteed customer service and cash back to home buyers and sellers!

In addition, you can search the Multiple Listing Service (MLS) from the comfort of your own home!  If you live in, or are looking to move to or invest in any of the following areas you definitely need to check this out!

Arizona: Phoenix, Tucson California: Bakersfield, Los Angeles, Orange County, Sacramento, San Diego, San Francisco. Colorado: Denver Florida: Jacksonville, Orlando, Tampa, Miami, Palm Beach Georgia: Atlanta Illinois: Chicago Maryland: Baltimore Massachusetts: Boston Minnesota: Minneapolis-St. Paul Nevada: Las Vegas New York: Long Island, Westchester County North Carolina: Charlotte, Raleigh-Durham Pennsylvania: Philadelphia Texas: Austin, Dallas-Ft. Worth, Houston Utah: Salt Lake City Virginia: Richmond, Norfolk-Virginia Beach Washington: Seattle Washington DC metro area New York: Long Island, Westchester County, North Carolina: Charlotte, Raleigh-Durham, Pennsylvania: Philadelphia, Texas: Austin, Dallas-Ft. Worth, Houston, Utah: Salt Lake City, Virginia: Richmond, Norfolk-Virginia Beach, Washington: Seattle Washington DC metro area

Search for homes in the Atlanta MLS!

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Market Conditions

Money Market Recap and Forecast

Treasury prices took a tumble on the heels of the February employment report two Fridays ago.  Yields, which move in the opposite direction of prices, rose and remained high all of last week.

There were no reports to encourage buying in Treasuries.  And Wall Street was pretty quiet.  Bond traders were concerned about the $84 billion in government debt going on the auction block, but demand was very strong.  Nevertheless, worry persists that huge supply will water down demand.

Monday and Tuesday were void of reports, and there might as well not have been any on Wednesday, considering it was on wholesale inventories for January.  They went down 0.2%.

Thursday’s report on first-time unemployment claims for the week ended March 6 showed another decline.  Claims dropped by 6,000 to 462,000, which was slightly lower than the 460,000 forecast.  The four-week average, which smoothes volatility, rose by 5,000 to 475,000 — the highest level since November.  And continued claims, those collecting benefits for more than one week, rose to 4.56 million.  But there was little reaction in bonds, as traders focused on the 10-year auction.

The U.S. trade deficit shrank to $37.3 billion from a revised $39.9 billion, but trading was unaffected.

Friday’s better-than-expected report on retail sales spurred selling, pushing the yield on the 10-year note even higher.  Sales rose 0.3% in February versus a 0.5% gain the previous month.  Excluding autos, sales rose 0.8%, better than January’s 0.6% increase.

The Reuters/University of Michigan preliminary consumer sentiment report for March unexpectedly fell to 72.5 from 73.6, pushing the yield on the 10-year back down.  The final report showed business inventories for January were unchanged.

Although mortgage rates ticked up during the week ended March 5, the Mortgage Bankers Association said that purchase applications rose 5.7%, while refis were off by 1.5%.  Some believe purchases will stay healthy as home buyers rush to meet the new tax credit deadline.

Unlike last week, there are several reports coming out that could influence trade, for better or for worse.

This week begins with Monday’s NY Empire State index on manufacturing conditions for March.  It’s expected to fall to 23.45 from 24.91, which could encourage buying in Treasuries.

However, trading could be subdued as this is the day prior to the Fed decision on interest rates.  Although no rate hike is expected, the markets will be looking for any clues about when that might happen.  They especially want to know if rates will remain low “for an extended period.”  This phrase probably won’t be removed on Tuesday, but when it is a big sell-off will likely follow.

Earlier in the day, data on February housing starts/building permits are due, with declines expected in both categories.  Starts could fall to an annual rate of 587,000 units from 591,000, while building permits are expected to decline to an annual rate of 587,000 from 591,000.

Separately, industrial production in February is expected to come in flat versus a 0.9% increase in January.  Capacity utilization should dip to 72.3% from 72.6%.  These reports could energize buying in bonds.

Wednesday the producer price index, or PPI, which checks for wholesale inflation, is not expected to find any.  It should show a 0.1% decline for February — far better than the energy-induced 1.4% rise the previous month.  Likewise, the more closely watched core rate, which eliminates food and energy prices, is expected to climb by a tame 0.1% versus 0.2% in January.

Thursday’s consumer price index, which checks retail price inflation, should show similar results.  Both the index and the core rate are expected to rise 0.1%, which bond traders should like.

First-time claims for the week ended March 13 are unpredictable.

The Philly Fed index on March manufacturing conditions could affect trading if it moves sharply up or down, as it has lately.  Right now it sits at 17.6, so three or four points either way could move Treasuries.

Leading economic indicators for February should rise 0.2% — a little slower than the 0.3% increase in January.  This report, however, usually has little impact on trading — nor does business inventories for January, which could rise 0.1%.

No reports are scheduled for Friday.

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4 Biggest Lies in Real Estate

This post was originally published at CBS MoneyWatch and was written by Ilyce Glink.

A funny thing about the digital age — the more information we have access to, the more misinformation we get hit with. In the not-so-long ago days when the Internet was mainly for e-mail and facebooks were made of paper, homes were mostly advertised through newspaper ads. As long as you understood that TLC meant you needed to be handy with a hammer and an “efficiency kitchen” meant you’d better like take-out, you could avoid getting suckered.

Anyone gearing up to buy or sell a house this spring, however, has to bring a bit more skepticism to the process. Sure, the Internet has transformed the process of buying and selling a home in wonderful ways, but it has also increased the opportunities for mischief. Fall for bogus listings and lousy home price “data” and you could wind up overpaying for a home or finding yourself stuck, unable to unload the one you have. Don’t get taken by these big lies:

1. Phony Photos and Videos

Digital photos and video have been a godsend for real estate agents, homebuyers and sellers, enticing prospects to drool over images of Viking ranges, sparkling pools and lush lawns. Lately, agents have been posting interactive photos and floor plans, letting buyers view rooms and exteriors from different vantage points. Some houses have their own YouTube sites.

Problem is, it’s easy to Photoshop photos and edit video to make a house and its neighborhood seem far more attractive than they are. Some sellers post photos of kitchens and gardens you won’t find in the actual property. Videos get color-corrected so the grass, flowers and trees seem fresh and alive. A house may seem newly painted, even though the photo was taken five years ago.

Get the Truth: Go to Google Street View or Microsoft Live Search Maps for a reliable third-party look at a neighborhood or home exterior. They won’t show the inside of a house, though, so you’ll need to drive to the property and see it for yourself.

2. Valuations Lacking Value

Knowing how much a house is truly worth is vitally important whether you’re a buyer or seller. With home values down an average of 30 to 40 percent since 2005 in major metro areas, every penny counts. But you can’t always trust the numbers on home valuation sites such as Zillow,CyberHomes and Realtor.com.

When I plugged in a particular 5-bedroom/4-bath house on these sites, I received vastly different valuations and sometimes incorrect information about the number of bedrooms and bathrooms it had. I’d estimate the house is worth between $1.2 and $1.4 million. Zillow’s “Zestimate” (a calculation also used by RealEstateABC.com) was $943,000; CyberHomes suggested a range of $960,000 to $1.2 million and Realtor.com went with $788,036.

Get the Truth: It’s fine to start with online valuation sites for ballpark estimates. But to get a reliable valuation, get out of the virtual world and into the real world. If you’re selling, invite several real estate agents to walk through your home and analyze its value based on recent comparable sales. You might also hire an independent appraiser (cost: around $350 and up). If you’re buying, hire an agent who has worked the area for years, if not decades. It’s generally a waste of money for a buyer to hire an appraiser, since the lender will require its own appraisal before granting a mortgage.

3. Mortgage Rates You Can’t Get

Visit a mortgage aggregating site such as Bankrate.com and you’ll naturally want to apply for the lowest rate shown. But that rate may not really exist — at least not for every applicant.

Mortgage lenders often advertise fake low rates online without explaining that you can’t get them if your down payment or credit score is too low or you’re not willing to pay extra-high closing costs. At worst, the rate may be a “bait and switch” and wholly unavailable.

Get the Truth: Start your mortgage shopping by identifying a well-known national or regional bank, a small local lender, a well-regarded mortgage broker, a credit union (if you belong to one or can join one), and an Internet mortgage aggregator such as Priceline. Then go toAnnualCreditReport.com to pull a copy of your credit history and to pay to get your credit score. Next, find out what each lender on your list would really charge for your loan. Use the quotes to negotiate the best deal.

4. Unreal Property Descriptions

The old saw, “You can’t believe everything you read” is often true about online listings. A property advertised as having a “water view” might feature a glimpse of the ocean if you open the window, stick your head out, and look left.£ A “light, bright” apartment implies loads of sunshine, but may instead describe the wattage from overhead lighting. A condo’s listing sheet promoting “Southern exposure” might leave out a key fact: The front rooms look south, but the rest of the place faces a warehouse 10 feet away. A mention of an “in-law” or “rentable” apartment over the garage won’t say whether renting out that room is illegal, subjecting you to a future showdown with local zoning officials.

Get the Truth: To weed out unreal estate, do some fact-checking. If the beachfront condo supposedly has a water view, tell the broker to e-mail you a floor plan for the entire building. When a listing sheet says the house had a substantial renovation, check it out before you get too excited. And if you get serious about the property, you can always ask the town building department to confirm a renovation; there may be blueprints on file. If you’re counting on renting out a room above the garage, ask the building department if it’s allowed.

Bonus: Euphemism Alert

One thing that the digital revolution hasn’t changed at all — the extraordinary ability of real estate agents to put lipstick on a pig. Here’s a guide to words and catchphrases you’re likely to encounter and what they really mean:

The Listing Says… The Listing May Mean…
Cozy/Dollhouse The house is tiny, cramped and everyone over 6 feet tall will bump their head on the ceiling.
Handyman’s Special You’ll need to do a gut remodel if you want to make the home livable.
Great View You might have to crane your neck out the window to see the water.
Rentable In-law Apartment This might be a separate room, a half-finished basement, or completely illegal.

About the Author

Ilyce R. Glink is the author of several books, including 100 Questions Every First-Time Home Buyer Should Ask and the upcoming Buy, Close, Move In!. She blogs about money and real estate onMoneyWatch and at ThinkGlink.com.

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