Wednesday, March 28, 2018

How Dividend Investing Can Change Your Life

dividend investments
This is a guest post by Millionaire Mob, a blog focused on investing in dividend growth stocks and travel hacking. We have helped thousands of people with bettering their financial future through passive income and dividend investing.

I am on a path to achieve financial freedom through dividend investing and passive income. I am seeking to secure my financial future through these two methods to build income. I seek to have multiple side income streams to be used to recycle into my dividend portfolio. The average millionaire has at least seven different income streams to live off of, so get find yours. Time to go get mine, which is dividend growth investing!

With dividend investing, I like to think of it as a second job. Dividend investing allows me to build an income stream, but also gives an opportunity to realize long-term capital appreciation as stock prices rise. Thus, this results in the ultimate total return scenario.

What is dividend investing?

Dividend investing is a proven strategy that is focused on solely investing in dividend growth stocks that pay a dividend. Usually a company has two options use their cash flow from operations: one is paying a dividend to shareholders and the other is reinvesting the cash flow into the business. A dividend is a payment made by a company to reward shareholders. We’ve built the ultimate guide to building a dividend portfolio to help you succeed in your path to financial freedom.

Why is dividend investing life changing?

If you turn your focus to building a dividend portfolio, you enable yourself to live free. Building a dividend portfolio takes time and effort. However, if you have a specialized plan, you can build your wealth rapidly. Warren Buffett invested in Coca-Cola over 25 years ago. The stock and dividend has increased so much in value that Warren Buffett receives over a 40% dividend yield from his initial investment! I doubt Warren Buffett will ever sell a share of Coca-Cola.

If you look at Warren Buffet’s portfolio, nearly all stocks pay a dividend.

Where do you start to build a dividend portfolio?

• Find a brokerage that you like and one that offers low-commission trading. There are a number of different sites out there that will allow you to trade completely commission-free.

• Write down on paper how much you plan to allocate to the portfolio each month. Try to exceed that amount each month and increase it each year.

• Find the best undervalued dividend growth stocks to start building your portfolio. I suggest having at least 3-4 Dividend Kings in your portfolio. Dividend Kings are safe, high-quality dividend growth stocks that have at least 50 years of increasing their dividends.

• Make your initial investment in the companies that you understand. 

• When you receive your first dividend payment, reinvest it back into your portfolio of stocks! Make sure you are fully invested at all times and continue to allocate your balance transfers.

• Sit back and enjoy the show. Follow the plan and before you know it, your income will continue increase over time.

Please note that you should make these considerations after you have funded your retirement accounts in full or as much as possible. I always advocate for tax-advantaged accounts like a 401(k), Roth IRA or IRA should be fully invested first. After that, you can allocate the remaining to the dividend portfolio as a “sidecar” to build your income.

Dividend investing is not easy and is not a get rich quick method. It takes time and patience, but it is extremely rewarding. What are you going to do to achieve financial freedom? Please let us know in the comments below. We’d love to hear from you.

Follow us on our journey to achieve financial freedom through dividend investing. You can follow along as well with each stock purchase that we make! We look forward to growing with you.

Millionaire Mob is a blog focused on everything online income including: Travel Photography, Travel Rewards, Passive Income, Dividend Growth Investing and Personal Finance advice. I hope to provide the best advice to help you learn and grow along the way. Join the mob of financial freedom experts and escalate your life.Follow us on Twitter or Instagram!

Tuesday, March 27, 2018

What Are Bridging Loans And How Do They Work?

property loans
What Is A Bridging Loan?

Bridging loans are a financial product designed specifically to ‘bridge’ the gap between the sale of an existing property and the purchase of a new one. Buyers often find that the funds required to purchase a new property are effectively stuck in their old property until an often lengthy sale has gone through. A bridging loan allows purchasers to access the capital they require to proceed with their new purchase before it has been released from their previous property.

Potential users of bridging loans vary, and span both the private and commercial sectors. Bridging loan customers can range from developers wanting to ‘flip’ houses to buyers securing property at auction without having sold their previous home. The common trait is the need to access substantial finance quickly so that a new property can be secured and the purchase does not fall through.

Bridging loans are popular with private buyers who don’t want to lose their dream property, but can’t get immediate access to the capital required for purchase. They are equally popular with non-residential buyers as a source of finance because of the quick capital that they help unlock. For those in business, the ability that bridging loans grant to act fast on promising projects means that they remain popular as an option for short and mid-term finance.

How Do They Work?

A bridging loan can be a useful financial product because they offer an amount of capital to the user taking out the loan for a short to medium timeframe. Like similar short-term financial options interest rates are normally relatively high and additional administration fees may be applied to the loan. Lenders view bridging loans as higher risk than traditional mortgage finance or other longer-term lending, so rates reflect this additional lending risk.

When a buyer finds a property that they wish to purchase using a bridging loan they need to find a provider to offer this product to them. One of the easiest ways to do this is to use a mortgage broker, who will search for products across a range of lenders, often for no fee. The capital will then be provided against a security, normally the existing property that the borrower owns.

It’s important that borrowers consider how they are going to repay their bridging loan. Normally this is a simple process, as the loan can be repaid once the borrower’s previous property has sold, but this process can become lengthy if the property does not sell or the market dips. The borrower may also not achieve the price they hoped for. In most cases however, bridging finance is a relatively common, simple and low risk way to unlock potential properties that would otherwise be unavailable to the purchaser due to circumstances.

In many cases, once the sale of the previous property has been completed the borrower will convert their bridging loan into a more traditional mortgage against the new property. Borrowers should be aware that this ‘conversion’ from bridging finance into a mortgage isn’t always guaranteed, but if successful it can help keep the process simple, and allow buyers to purchase a property that wouldn’t have otherwise been available to them. For this reason, bridging loans are normally only recommended by professionals to buyers who are confident that they will be able to get a mortgage on their property once the process has been completed, because it will be the capital from this mortgage that is used to repay the bridging loan.

Overall, bridging loans and other similar financial products can help buyers move forward when they otherwise wouldn’t be able to. The capital that bridging loans offer means that opportunities and options for purchase become available that wouldn’t otherwise be suitable for the buyer. The important element of bridging loans is their duration and the higher interest rates associated. Bridging loans do come with added risk from market fluctuations and problems with the sale of existing property, so it is important to consider these factors carefully become proceeding. In the right hands though, a bridging loan is a powerful tool that can help a buyer secure a dream property that they otherwise wouldn’t be able to complete on.

Monday, March 26, 2018

Common Invoice Factoring Mistakes You Should Know

matter of invoices
Factoring is used by many businesses to increase their capital. A factoring agreement is where the funding source, called the factor, buys the right of the seller (client) to collect on an invoice at a discount.

The factor usually pays most of the value of the invoice upfront and the remaining balance upon actual payment of the buyer. It is not a loan and helps keep the business cash flow steady. Here are some common invoice factoring mistakes to avoid:

1. Not sending an invoice - This one is pretty obvious, but a lot of companies don’t send invoices. Invoices should be sent for both written and verbal contracts. This is a means to remind your customer that they need to pay you and exactly how much they owe. People tend to have a lot of things going on for them and payables can easily happen.

Invoices are part of your records and if you’re not careful with your accounting practices, you could be at risk of being overcharged by the factor. Make sure you plan for how you account for the advance and fees attached to it.

2. Failing to ask for the maximum limit upfront -The factor will usually appraise your business and set a maximum amount that you can advance. You need to find out how much is available to you before you enter into an agreement. It is important that the amount is enough to fund your business so you that you can look for better alternatives if it is not enough.

On this note, you should also ask how much is the upfront percentage that you will receive. As already mentioned, the factor will pay a percentage of the total advance (75% to 85%) and pay the remainder once the buyer pays the invoice.

3. Not exploring all your options - Just as it is with any aspect in your business, you need to do a thorough research on your options for funding. Different businesses have different needs and thus have different financial solutions. Just because a friend’s business is doing well by using one particular facility does not mean it is good for your business to. Explore your options by finding out what’s available out there, weigh the pros and cons of each option and determine whether or not these apply to your business.

Consider your options before committing to a contract with one funder. Speaking of contracts, don’t commit to a long-term receivables finance contract of several years. You need to make sure that you have the ability to refinance or not and a long-term contract will limit this capacity. Make sure that you have an alternative plan and that you can gracefully exit the agreement and switch strategies when you see the need.

4. Not monitoring your factor’s relationship with your customer - Remember that once you enter into a debtor financing contract, your factor will be the one who will handle collections. They will be the ones who will deal with your customers in terms of invoice payments on your behalf. Make sure that the factor has exceptional customer service. They should make sure that your relationship with your customers remains intact and positive.

A good way to check your factor’s responsiveness and customer service practices is to try out their contact points yourself. Send them an email, give them a call and chat with their chat support and see how well they handle questions and attend to concerns.

One other important issue in this matter is that when you turn over your invoices to a funder, you will lose track of your customers’ payment habits. You will not know whether or not your customers are paying promptly. You will also not be able to keep track of your cash collection cycle. These are things you would want to think of when considering invoice factoring as a financial solution.

5. Invoice factoring vs. invoice financing - Make sure that you are entering into an invoice factoring agreement and not one for invoice financing. The difference between the two is that for invoice factoring you are turning over collections of your invoices to the factor as a third party in the sales contract with your customer. Invoice financing is where your invoices are merely used as collateral for a loan from the financing company.

It is also important to note that as a business owner, you should not turn to invoice factoring as a solution for every small setback in your business finances. Note that most invoice factoring finance companies have higher interest rates compared to business cash flow loans. However, it is easier to procure invoice factoring than it is to get a bank loan.

6. Failure to understand all the terms of the contract - Make it a habit to read everything when you are running a business. This is particularly important in contracts because you will be binding yourself to these terms and you will be held liable for any violations or non-conformity. Read the fine print, make sure that there are no hidden fees or conditions that were not made known to you upfront.

Be sure that you know the term requirement or whether you are required to meet monthly minimums. Find out what will be the penalties if the terms are not met. Determine these factors before you enter into an invoice factoring contract.

Business is not a simple, one-sided operation. There are so many factors to consider and this compilation of common invoice factoring mistakes will hopefully help you make sure that your business runs as smoothly as possible.

Whatever your business decisions are in terms of funding, debtor factoring etc, the most important factor to consider is whether or not you do need to bring in a third party into your business relationships. Consider the benefits as well as the risks and continually weigh these extremes because things and circumstances change. What you need now may not be what you need in six months or a year.

Aside from regular self-evaluation of your business practices and standards of procedure, take into consideration your customer. Are they happy with your practices? A good business standard is to make sure that your customers don’t just buy from you once. They should want to keep coming back to you to buy more.

Sunday, March 25, 2018

3 Reasons to Invest on Luxury Real Estate

invest in properties
Whenever you think of a luxury home the first thing that comes to mind is all the lavishness, the high-end living, and the comfort you will have the privilege to enjoy; from classy architecture, beautiful and opulent interiors to exquisite finishes and the access to all luxury activities like high-end shopping, dining, and the arts that surrounds it.

But there are other long-term benefits to take into account when investing on a luxury property, for example:

High Demand

Luxury homes are always in demand; therefore, they are seen as the perfect investment opportunity that guarantees multiplied returns in the future. This demand is driven by the rising standard of living and increasing disposable income among successful entrepreneurs, high-flying corporate executives and professionals, and of course, the prosperous cuttings of traditionally well-off families.

Investment Value

Luxury real estate prices are burning and they are always soaring. Regardless of economic circumstances and other market variables, there will always be people who are not happy or satisfied with just any kind of home. As a result, the demand for luxury homes may rise and fall but never goes entirely away.

The Most Exclusive Properties on the Market

A luxury home has to be distinctive and exclusive, in a good and desirable way and this is exactly what the South Florida luxury real estate market has to offer. Here are some properties you may want to check out if you are about to invest on a luxury home:

By the hand of award-winning architectural firm Sieger Suarez and The Related Group, this residential masterpiece offers 67 exclusive residences set right on the waterfront in the elite area of South Beach in Miami Beach with prices starting at 8.2 M

The services and amenities offered in the building are at par with 5 star hotel services. This residence is also gated – providing extra security to its residences. You can find units at the low $445,000.

Muse Residences

This property is pure luxury in the heart of Sunny Isles, an undoubtedly ideal place to relax on sunny days facing the sea. Prices go from $4.9 M and higher.

Santa Maria Brickell

La Santa Maria Brickell is an architectural jewel in the sparkling Miami skyline. The residential building rises at a prime waterfront location in Biscayne Bay, and it provides the ultimate luxuries of a high-style lifestyle. Residences startat 1.7 M.

Echo Brickell

Amazing views, stunning marble finishes handpicked by architect Carlos Ott and high-end appliances, just a couple of the details that the penthouses in the Echo Brickell building will offer. Prices go from 4.8 M and higher.

Saturday, February 10, 2018

5 Ways to Save Tax for Salaried Employees

tax benefits
It is the duty of every citizen of India to pay taxes. As a diligent taxpayer, it is imperative to know about the various deductions and exemptions allowed under various sections of the Income Tax Act, 1961. Besides, there are numerous other methods to reduce your tax liability largely.

Following are five most popular and common ways to save tax for salaried employees in India.

1. Submit medical bills to your employer on time

Most salaried individuals are eligible to receive medical reimbursement of INR 15000 as part of their Cost ToCompany (CTC). Therefore, you may claim a tax deduction for all your medical expenses up to this amount. For this purpose, you may submit all your medical bills, medical reports, lab test bills, or doctor’s consultation bills to your employer. It is important to note that such a tax benefit may be claimed only through your employer, and hence you may submit such bills to your employer on a timely basis.

2. Save tax through House Rent Allowance

House Rent Allowance (HRA) is a common component for many salaried individuals. The rules of tax deduction on HRA are stated in Section 10 (13A), Income Tax Act. The amount that may be claimed as exemption is a minimum of –

a) Actual HRA amount received
b) 50% of the salary in case you live in a metropolitan city or 40% for a non-metropolitan region
c) Excess of rent paid annually above 10% of your salary.

In order to claim deductions on House Rent Allowance, you may submit rent receipts to your employer.

3. Claim deductions under Section 10(14)

The good news for salaried individuals is that they may avail of numerous deductions as per Section 10(14) of the Income Tax Act. You may avail of deduction on children’s education allowance up to a maximum amount of INR 100 a month, per child, up to two children. Besides, you may seek deduction on hostel expenditure allowance of INR 300 a month per child up to two children. You may also claim an exemption on helper or assistant allowance as well as uniform allowance up to the amount of expenses incurred.

4. Invest in medical insurance

You may claim health insurance tax benefits on your health plan. A medical insurance plan is indeed an integral part of financial planning. Besides providing a great degree of financial security during a medical contingency, it also provides tax benefits. You may seek health insurance tax benefits on the premium paid towards your policy. You may claim health insurance tax exemptions on premiums paid for yourself, spouse, parents, and dependent children. According to Section 80D, medical insurancepremiums are exempted up to a maximum of INR 25000. In an event that you or any of the covered members are senior citizens, you may enjoy a higher limit of INR 30000. You may, therefore, avail of such health insurance tax exemptions and reduce your tax liability.

5. Maximize utilization under Section 80C

Section 80C of the Income Tax Act allows a maximum deduction of INR 1.5 lakh. You may claim a deduction on investments made in various financial vehicles such as Public Provident Fund (PPF), Unit-Linked Insurance Plans (ULIPs),National Savings Certificate (NSC), andEquity-Linked Savings Scheme, among others. You may also avail of this section to reduce your taxable income through premiums paid on life insurance plans. Besides, you may claim deductions on tuition fees paid for the education of two children.

The Income Tax Act allows for numerous such deductions and exemptions for salaried individuals. You may, therefore, avail of health insurance tax exemption, numerous investment vehicles, and HRA component of your salary, among numerous others. You may take advantage of them and lower the amount paid towards income tax.

Friday, February 9, 2018

How refinancing student loans frees up money for investing or to start your own business

loan for studies
Where can I get more capital? For the investor, startup, or entrepreneur this question is on your mind constantly. In some cases, the answer might be reducing your cash outflow. Plus, the benefits extend beyond just having more money to invest. Let’s find out more.

Monthly expenses

What if you could cut your utility bills in half? What would you do with the savings? While reducing energy consumption is always a good idea, there are limits to how much you can cut back. One of the biggest checks many people write each month is their student loan payment. 

If a significant portion of your monthly income is devoted to paying down student debt, that can increase your debt-to-income (DTI) ratio and make it harder to borrow money to start a business, or buy a car or house. Many graduates with student loan debt even forgo marriage or having children due to the financial strain of their student loans. 

In many cases though, refinancing can remove this limitation. If you were to reduce your monthly student loan payment, you might end up with hundreds or thousands of dollars more to invest each year. 

How refinancing works

When you refinance your student loan, you basically swap your current loan for one with a lower interest rate. The end result is a smaller monthly student loan payment. This lets you free up capital to put towards personal investments or startup projects. An alternate strategy is to keep paying the same monthly payment, but shorten the overall payment terms. This allows you to pay off your debt faster. 

What method you choose depends on your overall investment horizon. If you need the cash now, then lowering your monthly payment is probably best. 

How much refinancing can save you

In many cases, the savings from refinancing student loans at lower interest rates can be substantial. Your savings will depend on how much of an interest rate reduction you can qualify for, and how long you take to pay your loan off.

When you refinance, you may choose to:

● Lower your monthly payments, but take more time to repay your loan. This will lower your DTI, but could increase your overall repayment costs.
● Get the most savings by increasing your monthly payments, paying off your loan faster. This could increase your monthly payment, and your DTI.
● Stay on the same repayment schedule, but with a lower monthly payment and overall repayment costs. 

Borrowers who have used the Credible marketplace to refinance into loans with shorter repayment terms have reduced their interest rate by 1.71 percentage points, and are on track to pay $18,668 less over the life of their new loan, on average. 

Debt-to-Income ratio benefit

Besides freeing up cash, refinancing your student loan may have other benefits. For example, when you apply for a loan, lenders don’t look at your credit score alone. For many lenders your debt-to-income (DTI) ratio is even more important than your FICO score. It’s simple to calculate your DTI ratio; just take your total debt and divide it by your total income. 

When you refinance your student loan, your overall debt burden goes down. This means your DTI improves in the eyes of lenders. So if you need to take out more credit in the future, your chances of getting approved are better after refinancing. Also, the stronger your credit profile, the higher the chance you qualify for lower interest rates. This is a great strategy if you think you might need to inject cash into a future business venture. 

What are your priorities?

For some, investing means buying a property, starting a business, or purchasing stocks. For others, it’s buying a home to invest in your family’s future. No matter what your priorities are, refinancing your student loan can give you more financial freedom.