Opinions expressed by Entrepreneur contributors are their own.
From energy-saving cookware and smart bikes to home energy storage systems and efficient composting, many green startups are increasingly looking for capital to launch their business.
But with the forecast for global venture funding continuing to look bleak for early to mid-2023, green entrepreneurs may need to turn to alternative sources to score the cash they need to go to market.
For many startups, crowdfunding platforms have become a popular, more democratic means to secure funding. Rather than leave a business’ fate to venture capitalists, crowdfunding enables entrepreneurs to pitch directly to consumers, including family, friends, and a built-in base of early adopters and sustainability champions who want to be a part of growing a business from the ground floor.
The expansion of crowdfunding platforms in recent years comes at an ideal time as the labor market continues to feel the impact of the Great Resignation, with as many as four million people quitting in the month of October, according to U.S. Bureau of Labor Statistics (BLS) Job Openings and Labor Turnover Survey program. Dissatisfied with their jobs during and after the pandemic hit, thousands of people either landed new positions, left the job market, or started their own businesses.
How to choose the right crowdfunding platform
Trusted crowdfunding platforms, such as Indiegogo, StartEngine, or GoFundMe, are good places to start if you want to raise funds.
Indiegogo’s crowdfunding platform, known for its selection of tech, hardware, and innovative products, has a community of 950,000 founders who can tap into more than 13.5 million backers. The platform has raised more than $78 million for sustainable products and continues to see green tech as one of the most popular categories for fundraising over the last two years.
StartEngine boasts a community of 900,000+ founders. Launched in 2015, StartEngine is an equity crowdfunding platform that enables backers to take some ownership of a company in exchange for financial investments. The business recently reached a sizable investor community totaling one million.
Similar to Indiegogo, StartEngine doesn’t discriminate when it comes to the kinds of businesses that can use the platform for fundraising and welcomes businesses across diverse verticals.
One of the more universally known crowdfunding platforms, GoFundMe, touts a global community of more than 100 million people with more than 17 billion raised for various community causes, including environmental charities.
No matter which platform you choose, here are three essential tips to follow that will help attract interest in a worthy campaign:
Tell a compelling story
Entrepreneurs can’t sell units or build a community of backers unless they have a meaningful way to talk about their product or service. It is essential to develop a compelling mission and messaging that explains what a product is, how it works, and why people should care. Be sure to layer in rich content, including professional photography and video, which gives backers the confidence the product will perform as expected.
Tap into services that help build a fan base
Many crowdfunding platforms offer services and advice that help entrepreneurs build strong campaigns. For example, Indiegogo has a resource center where entrepreneurs can access videos and other rich content on topics such as how to convert followers to backers, how to test messages, how to provide customer support, and marketing best practices. For additional advice, entrepreneurs can visit StartEngine’s blog, one of which encourages startups to market the raise by running incentives, perks, and ads.
Listen, learn, tweak
Browse other crowdfunding campaigns in similar and dissimilar industries to understand what campaigns are doing the best. Take note of how companies position their product or services, whether or not the company used a video, and what kind of messaging was shared on the video to understand what and how the product is resonating with an audience. Incorporate those insights into the materials being developed for your campaign to help draw a big community. When the campaign is ready to launch, be prepared to listen to customer feedback, make tweaks as necessary, and come back with a product that’s ready for prime time.
A success story
BLUETTI AC500 & B300S, a home backup power station, was originally set up to raise $1,000,000 on Indiegogo and raised more than $11.5 million through 4,507 backers in its crowdfunding campaign. BLUETTI has since increased its raise to more than $12 million by using the platform’s InDemand tool, which helps businesses extend its campaign to support e-commerce activities. LaunchBoom helped GoSun, a company that promotes solar-powered tech products, launch four different products, including GoSun Chill, the business’ original solar cooler, in 2019 with a raise of more than $700,000.
The time is now for green entrepreneurs to take advantage of the green market momentum for what could be the difference between a lucrative launch or just a pipe dream.
Disclaimer: This article is for informational purposes only. It should not be considered legal or financial advice. You should consult with an attorney or other financial professional to determine what may be best for your individual needs.
When it comes to investing, there are many different options to choose from. Two of the most popular types of investments are ETFs and mutual funds. But what are the differences between these two investment options–and which is right for you?
Here, you’ll get a full breakdown of the key differences between ETFs and mutual funds, so you can decide which type of investment is best for you.
What are ETFs and mutual funds?
Both types of investment products offer benefits and drawbacks, so it’s essential to understand how they work before you invest.
ETFs (exchange-traded funds) are baskets of stocks bought and sold on an exchange.
On the other hand, mutual funds are managed by investment professionals who buy and sell stocks according to a defined set of criteria.
However, ETFs tend to be more transparent than mutual funds, meaning you can see individual stocks in the basket. Mutual funds are also more expensive to manage than ETFs. As a result, mutual funds typically have higher fees than ETFs, including a load (a fee paid to brokers for their efforts) and management fees (paid to the investment management firm).
When deciding which type of product to invest in, consider your financial goals and risk tolerance. An actively managed ETF may be a good choice if you want lower costs while diversifying your portfolio. However, if you’re willing to pay for a portfolio manager, an actively managed mutual fund may be a better option.
ETFs and mutual funds are both structured as investment vehicles that allow investors to pool their money together to buy a basket of individual securities.
A fund manager typically manages mutual funds, while ETFs are usually passively managed, meaning they track an underlying market index. Both types of funds can be bought and sold on stock exchanges and are typically aimed at outperforming benchmarks like the S&P 500 index.
One key difference between ETFs and mutual funds is that ETFs trade like stocks, meaning they can be bought and sold on a stock exchange throughout the day.
On the other hand, mutual funds are priced only once per day after the markets close. If you want to sell your fund shares in a mutual fund, you must wait until the day’s end.
The market price of an ETF often differs from its net asset value (NAV), which is the value of the ETF shares and underlying securities calculated at the end of the trading day. Mutual funds don’t have this discrepancy, giving them a lower liability to the short-termintradayfluctuations of the stock market.
How are ETFs and mutual funds taxed?
When creating an investment strategy for index ETFs and mutual funds, one must consider how they are taxed. While both types of investments are subject to capital gains tax, there are some key differences to understand.
ETFs are generally taxed at a lower rate than mutual funds, as they are not subject to the same level of turnover. In addition, ETFs tend to have a lower expense ratio than mutual funds, making them a more efficient investment.
Expense ratios, essentially, are fees that cover administrative costs associated with portfolio management — ETFs, which track market indexes, are less work to run on the administrative side, which is why their expense ratios tend to be lower.
Remember that you should make all investment decisions with a financial advisor. Taxes are just one factor when investing in ETFs and mutual funds.
What are the key similarities between ETFs and mutual funds?
ETFs and mutual funds share several similarities, and each can significantly benefit the investor.
You can use both investment types to:
Diversify your portfolio
Access different asset classes (groups of investments with similar characteristics, subject to the same regulations; i.e., equities, currency, fixed-income, commodities, real estate)
Save for retirement
Reinvest your dividends
Whichever type of investment you choose, research and consult with a financial advisor to ensure it’s the right move.
What are the primary differences between ETFs and mutual funds?
Now that you know the basics of ETFs and mutual funds, it’s time to take a closer look at the key differences between these two investment products.
Here are seven of the most important differences to keep in mind:
ETFs are bought and sold on an exchange, while mutual funds are not.
Mutual funds are more expensive to manage than ETFs.
ETFs typically have lower fees (such as management fees and redemption fees) than mutual funds.
ETFs offer more transparency than mutual funds.
Mutual fund managers make all investment decisions, while with ETFs, you can see which stocks are in the basket.
Both ETFs and mutual funds are subject to capital gains tax. A capital gains tax is a tax on the profit an investor makes once an investment is sold.
ETFs are generally taxed at a lower rate than mutual funds.
There is no right or wrong answer when deciding between ETFs and mutual funds. It ultimately depends on your financial goals and risk tolerance.
The benefits of ETFs
For the average investor, exchange-traded funds (ETFs) offer many advantages over traditional mutual funds. ETFs are typically more transparent than mutual funds, meaning investors can see what they hold.
Additionally, ETFs tend to be tax efficient, as they only generate capital gains when sold. This is in contrast to mutual funds, which are subject to annual capital gains taxes.
Furthermore, ETFs often have lower expense ratios than mutual funds or index funds, making them more affordable for investors. Finally, ETFs tend to be more liquid than mutual funds so you can buy and sell them more easily. And ETFs can be even more attractive for investors who prefer active management.
The benefits of mutual funds
Exchange Traded Funds (ETFs) have become a popular investment vehicle for many investors. But mutual funds still offer some distinct advantages that make them worth considering.
One of the most significant advantages of mutual funds is that they offer professional management. This is particularly important in markets subject to high volatility, where having a reputable fund company making investment decisions can help minimize losses and maximize gains.
Additionally, mutual funds typically offer a higher level of diversification than ETFs. By investing in various asset classes, mutual funds can help reduce risk and improve returns over time. And mutual funds typically have lower fees than ETFs, which can lead to better returns.
When is it best to use an ETF or a mutual fund?
When it comes to investing, there are many different options to choose from. ETFs and mutual funds are two of the most popular choices. So, how do you know which one is right for you?
Generally speaking, ETFs are more efficient than mutual funds. They have lower expense ratios and are more tax-friendly. You can also trade ETFs throughout the trading day, while mutual fund trades are only executed once per day (after the markets close).
On the other hand, mutual funds often have a longer track record than ETFs, which can make them more appealing to some investors. Not to mention mutual funds usually provide greater diversification than ETFs. Further, some investors prefer the hands-off approach of mutual funds, where they don’t have to manage their investments actively.
Ultimately, your best choice will depend on your individual investment goals and preferences.
If you’re looking for a low-cost investment that you can actively manage, an ETF may be a good option. A mutual fund may be the better choice if you want a hands-off investment with a long track record.
Comparing costs between ETFs and mutual funds
When comparing costs, ETFs typically have lower expense ratios than mutual funds. This is because ETFs are passively managed, so they don’t require a team of fund managers to make decisions about buying and selling stocks. However, ETFs can also incur other costs, such as brokerage fees and bid-ask spreads (the amount by which the ask price exceeds the bid price).
On the other hand, mutual funds are actively managed, meaning they have higher expense ratios. But since mutual funds are bought and sold directly through the investment company, there are no additional transaction costs.
So when it comes to cost comparison, it depends on the type of fees you’re looking at. If you’re focused on expense ratios, then ETFs may be the better choice. But if you’re looking at total costs — including transaction fees, operating expenses, and trading commissions — then mutual funds may be a better option.
ETFs and mutual funds are popular investment vehicles. They both have unique benefits as well as drawbacks.
Regarding costs, ETFs tend to be cheaper than mutual funds. However, there are some instances where it may be better to invest in a mutual fund instead of an ETF.
Ultimately, the best way to decide whether or not an ETF or a mutual fund is right for you is to continue researching and consult a financial advisor. Both vehicles can help you achieve your investment objectives if you approach them strategically.
Opinions expressed by Entrepreneur contributors are their own.
Short-term trading can be a thrilling and potentially profitable endeavor, but it also requires a deep understanding of not only the markets and strategies but also of one’s own trading psychology.
The fast-paced nature of short-term trading (scalping, day trading, and to some extent, swing trading) can lead to significant stress and emotional turmoil, which can negatively impact a trader’s performance if not properly managed. In this article, we will explore some key aspects of trading psychology and discuss strategies for managing emotions and achieving success in the trading arena:
One of the most challenging things about trading is the ability to remain emotionally detached from our trades. This means that you should strive to separate your emotions from your trading decisions and focus on the facts and data. This can be difficult to do, especially when the market is moving against you or when you’ve already experienced losses. But this detachment is crucial for maintaining a rational perspective and making sound trading decisions.
At all times, you must get into the habit of asking yourself the question, “Am I just projecting onto the market what I want to see happen or not see happen, or am I looking at things objectively?”
This is a very powerful way to notice when you’re getting carried away in rash emotional decisions.
2. Attitude
Another important aspect of trading psychology is having a positive attitude. Attitudes are different than emotions in that they’re the mindset you decide to cultivate day in and day out, in the face of challenges and difficulties.
Trading can be incredibly challenging, and it’s easy to get discouraged when things aren’t going well. So, traders must be able to stay positive and maintain a long-term perspective, even when faced with short-term losses.
This can include things like focusing on the lessons that can be learned from losing trades, rather than dwelling on the losses themselves. It’s also crucial to have realistic expectations — not expecting to become a millionaire overnight, but being patient and consistent in your approach while keeping an open mind to learn and evolve with time.
3. Discipline
It’s also crucial for traders to stay disciplined. Even the most successful traders can fall into the trap of getting caught up in the hype of a new trend. There’s nothing wrong with onboarding a new trend, but generally speaking, traders need to learn to think for themselves and not blindly follow what’s hot at the moment.
To avoid these trading psychology pitfalls, traders should focus on a well-researched strategy and stick to it, even when things aren’t going their way. This can be achieved by developing and following a trading plan, which outlines your risk management, entry and exit criteria, as well as other important elements of your approach.
One of the key elements of a winning trading psychology is self-awareness. This includes being aware of your own strengths and weaknesses, as well as your emotional triggers and tendencies. By understanding these things about yourself, you can take steps to manage your emotions and make better trading decisions.
The best way to develop self-awareness, on purpose, is via meditation. It takes 10-20 minutes per day. That’s it. Observe your thoughts and your feelings objectively and non-judgementally, and when you notice that you get carried away by thinking, mentally detach yourself from the thinking process and observe it objectively again.
Doing this for 10-20 minutes per day is enough to begin exercising your awareness muscle. This greater level of awareness will positively impact the way you trade, guaranteed.
Having confidence in yourself, your abilities and your strategies is crucial to being a successful trader. However, it’s also important to recognize the difference between confidence and overconfidence. The latter could lead to taking unnecessary risks and not managing the risks properly, while the former allows traders to make the right decisions even in adverse situations.
The best way to develop confidence is by practicing it. Be decisive when you trade. Good or bad, when you make a decision, stick with it. And whether the outcome is favorable or unfavorable, keep practicing that decisiveness muscle, and your confidence will grow.
Always remember: Be flexible in what you expect, but be decisive about what you do.
6. Adaptability
One of the biggest obstacles that traders face is fear and greed. Fear can lead to missed opportunities and profits, while greed can cause traders to hold onto losing positions for too long, hoping for a rebound that may never happen.
To combat these emotions, traders must first recognize them and then take steps to manage them by acknowledging the fact of uncertainty. Markets are constantly changing, and what works today may not work tomorrow. Traders must embrace that fact and constantly adopt a mindset that adapts to these changes. This requires flexibility and an open mind, and the willingness to learn and evolve over time.
One technique to embrace uncertainty is to journal about it. Examine the patterns you revert to when something unexpected happens in the market. Do you get emotional and impulsive? Do you worry? Understand what you do and why you do it, and you’ll have an easier time changing those things.
7. Preparation
Preparation is essential for trading success. This includes setting clear trading rules like stop-losses and profit targets, as well as having a plan for how to exit a trade in the case of a black swan event (an adverse event that is completely unexpected). Ideally, this preparation should be done outside of market hours when traders are at their most rational.
Preparation also includes doing certain exercises that promote focus, concentration and equanimity under pressure. Traders can prepare mentally through mindfulness, visualization or another form of mental training.
8. Rest
Finally, it’s important for traders to take time away from the markets to relax and recharge their trading psychology. This can include things like taking occasional breaks from trading and engaging in activities that are unrelated to trading altogether. This can help traders stay focused and refreshed, and it can also serve as a reminder that there’s more to life than the markets. Taking care of physical, emotional and mental well-being will help traders to have a healthier mindset while approaching the markets.
In conclusion, short-term trading requires not only knowledge of the markets and strategies, but also a deep understanding of one’s own trading psychology. By recognizing and managing emotions, maintaining a positive attitude, staying disciplined and taking time to relax and recharge, traders can improve their performance and achieve greater success in the trading arena.
It’s also important to remember that as traders, you are in it for the long term, and you need to be patient and persistent. Successful trading requires consistent effort and learning over a period of time, and you should be prepared to put in the time, energy and dedication required to build your skills, knowledge and perspective.
SAN RAFAEL, Calif., January 26, 2023 (Newswire.com)
– Siemens and Skyway are working together to determine the electrical and digital infrastructure needed to support vertiport operations. Vertiports are hubs for VTOLs (vertical take-off and landing vehicles) such as air taxis and drones. The scope of collaboration involves both companies researching the energy demands of vertiports and developing sustainable electrical supply, standard charging processes, and a system of systems to support aircraft operations. Innovation around vertiport infrastructure will be critical to the future scalability of electric vertical take-off and landing (eVTOL) flight operations.
A main objective of the collaborative effort is to develop vertiports. This includes researching, developing, planning, and being part of the construction and operation of them, with each company bringing its own strength and experience to the effort. Skyway has a vast knowledge of airspace mission planning and management, air traffic navigation, and unmanned aircraft operations, and Siemens has infrastructure expertise in electrification, vehicle charging, and facility operations.
Together, the two will work together to design and engineer a universal eVTOL charging processby evaluating the charging, power, and software requirements to ensure reliable and efficient operations. In addition, Siemens and Skyway will collaborate on innovative ideas to standardize overall vertiport planning and design and reduce energy consumption.
“Sustainable energy solutions will be the foundation and the necessity for adoption of Urban Air Mobility with the electrification of eVTOL aircraft,” says Clifford Cruz, Skyway CEO. “Combining our companies’ resources and industry foresight can influence vertiport construction efforts and general UAM solutions on an industry-wide scale while setting a new precedent for modern transportation.”
“It is exciting for Siemens to contribute to the evolution of the Urban Air Mobility Industry,” says John Kasuda, Head of Airports at Siemens Smart Infrastructure North America. “The development and efficient operations of vertiports will require innovative solutions to meet the expected demands of fast aircraft turnaround times and a network of varying landing facilities.”
The aviation industry is evolving with innovations being made in both flight and air traffic operations. eVTOLs bring a new mobility market that positively impacts communities through traffic decongestion and connection to areas not well served by the current aviation system.
The first step toward determining whether an annuity is right for your retirement plan is to do a little research. In most cases, the first step is to answer important questions such as:
What is an annuity?
Which type of annuity is right for me?
You then have to go through a bunch of information and listen to several sales pitches to pick a company or agent. Then you’re ready to apply, which means double-checking and reading the annuity contract.
As soon as you apply your funds, you might have to wait a little longer until the insurance company issues your policy.
In today’s world, however, online financial services are almost universal. In fact, managing your assets is easier than ever thanks to virtual tax advisors and digital banks.
It seems about time the annuity purchasing process got a little simpler, doesn’t it? The good news? You can finally buy an annuity online now.
What Is an Annuity?
Before going any further, let’s cover some annuity basics.
An annuity essentially guarantees you a certain income for a set period of time. They’re contracts that are sold or distributed by some sort of financial institution, where the money is invested. Often, these institutions are insurance companies.
Most people use them when they’re retired because they reduce the risk of outliving their savings. Basically, you pay the company upfront, then they pay you monthly. The contracts will set the age at which payments start, the interval between payments, etc.
You may receive those payments monthly for a set period of time or for life, depending on how the annuity is structured. Alternatively, you can set up your annuity to continue paying income to your spouse after your death if you’re married.
In a sense, annuities are like life insurance because there’s a guaranteed payout and a premium to pay. The difference? Those benefits usually go to your beneficiaries after you pass away.
The Main Types of Annuities
During retirement, most people purchase annuities to supplement their pensions and social security income. How come? The income is guaranteed for the rest of your life. As a result, if these other income streams dry up, they will still have money to live on.
So let’s focus on the four types of annuities that will help you get this peace of mind.
Fixed vs. Variable Annuities
There are two types of annuities: fixed and variable. How do they differ?
Fixed annuities are probably the most common and well-known type. In this case, a buyer buys a fixed annuity. As a result, the insurance company promises to pay a certain amount at a future date. While it might be decades away, it might be right now if you have an immediate annuity.
How does the insurance company make this money? A lot of insurers invest in safe investments like U.S. Treasury securities and high-rated corporate bonds.
You won’t become Elon Musk-rich through fixed annuities, as the returns on these investments aren’t high. However, they are predictable and safe. The regular monthly payments from fixed annuities make them a desirable option for people who don’t want to take risks.
Inflation can also reduce the purchasing power of fixed annuities. It is possible to plan for inflation in some annuity contracts, however.
With a variable annuity, an insurer invests in various mutual funds. Investments can, however, be chosen by the buyer. The performance of these funds determines the growth of the account. In addition, variable annuities can pay out a fixed amount or change based on performance.
Annuities with variable rates are more suitable for those who are willing to take on some risk in order to generate higher returns. Variable annuities are usually best for experienced investors who know about mutual funds and their risks.
Equity Indexed Annuities
In equity-indexed annuities, the interest rate is linked to a particular index, such as the S&P 500. The rate of growth of the contract will be determined by the insurance company. An equity-indexed annuity is complicated since insurers calculate index returns using various methods.
Despite not knowing how much you’ll get back, the calculations should give you a general idea. The return on equity-indexed annuities is not usually reflected in reinvested dividends, and surrender charges can be high.
Immediate vs. Deferred Annuities
Depending on when the payments start, annuities can either be immediate or deferred. When purchasing an annuity, you should ask yourself if you want regular income now or in the future.
Let’s quickly review each of their benefits and drawbacks in order to help you answer that question.
With deferred payments, your money grows over time. An annuity can accumulate earnings tax-free until you begin receiving payments, similar to a 401(k) or IRA. Continuing to accumulate that amount may result in higher future payments. Annuity terminology refers to this period as the accumulation period.
An immediate annuity is exactly what it sounds like. After the buyer pays the insurance company one lump sum, they can begin receiving payments.
A fixed or variable annuity can be a deferred annuity as well as an immediate annuity.
How to Buy an Annuity
Buying an annuity starts with assessing your financial situation. In particular, how much income do you think you’ll need from an annuity, and how long will it last?
Traditionally, a financial advisor would help you understand what you need from an annuity depending on your current financial situation. Based on your age and retirement status, you can choose an annuity based on your goals and risk tolerance.
For instance, fixed annuities can provide reliable income, but they may yield lower returns. Variable annuities on the other hand tend to have the highest risks. An indexed annuity splits risk and reward.
The next step is to pick an annuity provider. Choosing a provider is key since annuity companies differ. The preferred company to work with has a stellar reputation and strong financial and credit ratings. You’re more likely to lose your annuity payments if the company’s credit rating is low.
Once you’ve chosen a provider, you can apply. This requires sharing personal and financial information. Before submitting your application, make sure it’s accurate, as mistakes or omissions could slow things down.
Next, pay the required premiums. It can be a lump sum or a series of payments. Choose how you’ll pay these, either from a savings account, brokerage account, or some other source. If you withdraw money from a brokerage account or tax-advantaged account to buy an annuity, you might get hit with taxes.
When the annuity is funded, the free look period starts. If you want, you can review the annuity’s terms during this time. Your money is refunded if you decide annuities aren’t for you during the free look period. You might have to pay a surrender fee if you want to surrender your annuity later.
Can You Buy Annuities Online?
Short answer? Absolutely.
You should remember, however, that an annuity is a type of insurance product that can provide you with lifetime income. In terms of retirement planning, it can be a valuable tool. As such, It’s critical to consider factors like fees, customer service, and investment options when choosing a company. Because of that, you should use an annuity expert, otherwise, you might be putting your retirement in jeopardy.
As such, deferred annuities are great for people who want their funds to grow tax-deferred over time, while immediate annuities are excellent for people who need income immediately upon retirement. There are a few providers that are bringing the annuity process into the 21st century. Rather than going through an agent, you can purchase certain types of annuities directly online.
In fact, annuities can be purchased online from several reputable companies such as Vanguard, Fidelity, and TIAA-CREF.
What Are the Steps to Buying an Annuity Online?
It is easy, fast, and safe to buy an annuity online. Here’s how it works.
Get a quote.
Make sure you do your research before buying an annuity online. An expert can provide quotes based on your specific needs if you are interested in researching annuities.
Gather the information you need.
Your social security number, driver’s license, bank account number, and routing number will be needed. In the case of adding an annuitant other than yourself, you will also need their name, address, email address, phone number, and social security number (or green card).
The name of at least one beneficiary is always advisable. Providing the insurance company with as much information as possible about the beneficiary makes it easier for them to contact them if needed.
Answer these questions.
In addition to selecting your contract term and starting fund amount, you will be asked a few basic questions.
You may be asked:
“What kind of emergency fund do you have?”
“Will you need your money before 59 ½? ”
No, these aren’t trick questions. The annuity provider wants to determine whether an annuity is right for you, just as an insurance agent would.
Select the beneficiary and the annuitant.
In the event that your contract is annuitized, the annuitant is entitled to annuity payouts.
There is a possibility that this is you. The payouts can, however, be made to someone else (like your spouse or kids) instead of you. The annuity will still belong to you. It’s just that you won’t receive the payouts.
Alternatively, beneficiaries receive your annuity if you die before the contract ends. Typically, they won’t charge surrender charges for cashing out your premiums.
Decide how you will fund your annuity.
Don’t overlook deciding how you’ll fund your annuity. The most common way to transfer money is via a check or wire transfer.
Your annuity can also be funded with money from a 401(k) or IRA (qualified funds). You can also transfer an annuity from one insurance company to another.
Your application needs to be reviewed and signed.
Make sure your information is right, sign your documents online through a service like DocuSign, and you’re good to go. You’ll have a guaranteed retirement income within 48 hours.
Why Should You Buy An Annuity Online?
Convenience is the biggest benefit of buying an annuity online. From the comfort of your own home, you can also compare different annuities. Furthermore, you’ll have all the info you need at your fingertips. Annuities are cheaper online than through traditional brokers, too.
There are no agent fees.
Commissions are traditionally paid to insurance agents who sell annuities.
Although you may not pay an agent directly, you’re not out of the woods: commissions are usually included in your return. In other words, insurance companies give you a lower interest rate to compensate for the cost of your agent. When you buy an annuity online, you don’t have to deal with an agent, so there’s no fee for them. Since the insurance company doesn’t pay commissions to agents, they can offer you a better rate as well.
There’s no pressure to buy.
What’s the most appealing thing about buying annuities online? No one is trying to pressure you into buying an annuity on the spot. It’s okay to close your laptop, walk around, take another look at your retirement plan, call your financial planner, and come back to it later.
It’s faster.
The process is faster and easier. When you buy an annuity online, you get straight to the point: owning one.
Even better? Conversations don’t drag on. You won’t hear any more sales pitches. You simply buy your annuity and you’re on your way.
How Risky Is An Online Annuity Purchase?
Annuities aren’t easy to understand, so buying them online can be risky. As such, before you commit to an investment, make sure you have done your research and you’re comfortable with it. As with any financial transaction, there is always the possibility of fraud. By using a credit card instead of a debit card and working with a reputable company, this risk can be mitigated.
Annuities should be purchased with caution, as with any other investment. You should not lock yourself into any products until you are sure that you fully understand them. The following are some things you should consider before buying an annuity online.
Having an expert on hand may be helpful.
In some cases, annuities are downright complicated, especially fixed and variable index annuities. A financial professional or insurance agent can help you understand complex annuity contracts.
The information you provide must be personal.
Data theft online is no laughing matter. Be sure your annuity provider keeps your valuable information secure before giving out your personal information online. In addition, make sure to buy your annuity through a trusted Wi-Fi connection, such as your home network, if you want to be extra safe.
You may not be able to purchase annuities from your online provider.
It’s not uncommon for some websites to advertise “online annuities” when, in reality, they’re just providing quotes. Their system generates annuity quotes from insurance companies in your area based on your personal information. However, you will still need to buy an annuity the traditional way, usually in person or over the phone. Moreover, some of these quote-generating sites sell your personal information to insurance companies.
You should avoid these sites if you hate receiving unsolicited calls and emails.
Online Annuities: Which Are Safe?
Fixed, fixed index, immediate, or long-term care annuities are often the safest to buy online.
Annuities with fixed interest rates give you a guaranteed return. If your annuity contract is up, you will receive a lump-sum payment combining your original investment and interest.
The S&P 500 or Nasdaq Index is used when calculating the interest rate on a fixed index annuity. As you earn interest, your money is not directly invested in the stock market, but rather used as a “measuring stick”. If your annuity contract expires, you’ll receive a lump-sum payment that includes your original investment plus interest.
It is possible to convert a lump sum of money into an immediate annuity. This produces a guaranteed income stream for the rest of your life or for a fixed period.
With these annuities, you can rest assured that your money will not be lost due to stock market volatility.
What Annuities Are Best Purchased Directly From An Agent?
In general, it is better to consult with an agent rather than purchase an annuity since there are many poor-quality or poorly-rated annuities available. Additionally, the agent receives a commission from the insurance company instead of charging you a fee.
If you are considering buying variable annuities, you should consult a financial advisor. The reason? They are complex, have investment risks, and can be expensive.
How Should You Choose an Online Annuity Provider?
A high-quality insurance company will cost you a lot of money, so you should be careful when choosing one. Consider these five qualities before making a decision.
Financial stability.
It’s important to remember that annuities aren’t insured by the FDIC, nor are they backed by the federal government — although insurers are backed by their state guaranty association. You should therefore choose an insurance company with good financial standing in order to protect your retirement income. What is the most effective way to ensure that?
Check the ratings of independent credit rating agencies such as Standard & Poor’s, Moody’s, Fitch, and A.M. Best, in order to assess your insurance provider’s financial stability.
Protection of data.
Personal information should be as critical to your insurer as it is to you. As technology evolves, reputable data security providers should partner with them and continue to update their software.
Also, they should explain why they need your personal information in a clear manner. You should be wary if they ask for your credit card number if it’s not related to buying an annuity. Last but not least, make sure the insurance company’s website is safe and encrypted.
Contact customer service to learn more about data protection for complete peace of mind.
Openness and transparency.
Even though annuities can be complex, your insurer should never take advantage of their complexity.
Even the tiniest details should be clearly spelled out in your contract by your insurer. In other words, know what to expect if you withdraw money early and what will happen if you pass away before you retire.
Advice from experts.
Online insurance buying should be simple. At the same time, if you need help, you should be able to speak with a licensed agent at your insurance company. It is a must for these agents to provide you with a clear explanation of the licenses they hold. In addition, they should answer your questions in plain English without trying to upsell you.
Exceptional service.
As a last step, ensure that your insurance company is actually willing to serve your needs. Look for customer complaints on the Better Business Bureau (BBB) or third-party review sites to get an idea of their service.
Selling Your Annuity
Are you aware that you can also sell your annuity? It’s true.
Many annuitants sell the rest of their annuity value when they no longer need the money. Either the entire annuity value or a specific portion can be sold. In order to sell your annuity, you have three main options.
An entire annuity can be sold.
The assets in your annuity will be liquidated if you sell the entire value. All future payments and income won’t be available to you. In accordance with your contract, you can take the lump sum amount from the buyer.
Partial sale of annuity payments.
Depending on your needs, you may wish to sell only a specific portion of your annuity. While enjoying the tax benefits, you can continue receiving periodic incomes. A partial period of payment can be sold to a buyer if you need hard cash urgently.
By selling one or four of your upcoming payments, for example, you will continue to receive your payment as normal once the period has ended.
You can sell a portion of your payments.
Payments can be sold in chunks as well. This is known as a partial buyout. In this case, you can accept a lump sum amount and agree to share a specific amount in your periodic payments.
The Benefits Of Buying And Selling Annuities
There are a lot of benefits to selling your annuity. For example, if you have any pending payments, liquid cash will help you pay them off. As a result, you’ll be able to meet your financial needs. And, more importantly, when you have your own money, you don’t have to borrow it.
Aside from that, an annuity has a lot of advantages. Besides providing annuitants with a stream of income, annuities also offer tax advantages. With its tax-deferred payment method, contributions are limitless. Also, all your money goes to your beneficiaries if you die.
2. Is there a time when annuities shouldn’t be bought?
Annuities aren’t for everyone. For example, there’s no need to get one if you have something already that covers your retirement. It’s also not a good idea to buy one if you’re getting social security or pension benefits to cover all of your expenses. And, it may not be the best investment for you if you want high returns.
In addition, annuities aren’t for people with poor health or who are struggling in the current investment climate.
3. Are annuities guaranteed, and if so, by whom?
There’s no federal agency that protects your annuity’s principal value like the FDIC. So, it’s possible to lose some of your investment’s principal. In other words, you take the same risk when you invest in stocks, bonds, mutual funds, and ETFs.
It is possible to obtain up to $100,000 of coverage through a guarantee association in most states, however. In the event of a default by the insurance company, this would offer a measure of protection like the Securities Investors Protection Corporation (SIPC). In contrast to SIPC, the guarantee association isn’t government-backed.
It’s an industry arrangement between various insurance companies.
4. Can an annuity be a good investment?
In order to determine whether an annuity is a sound investment for you, you must first determine your financial needs and goals. You can however purchase an annuity if you want a guaranteed retirement income. If you want to boost your monthly benefit amount by delaying taking your Social Security benefits, you can get an annuity instead. In the same way, married couples want to make sure their spouses are okay if they pass away. Depending on how the annuity is structured, your spouse may still get payouts after you die.
If, however, you lack cash on hand to cover the premiums or you haven’t taken full advantage of other savings options, an annuity may not make sense. You can benefit from some important tax advantages if you max out your 401(k) or IRA each year. Another option to save tax-free is to use a health savings account (HSA).
5. Is the provider of the annuity financially sound?
By purchasing an annuity, you are trusting the company backing the annuity to pay you in the future. So it’s important to make sure the company is financially sound. You should only invest in an annuity provider that is consistently rated highly by the major credit rating agencies, like AM Best, Fitch, Standard & Poor’s, and Moody’s.
So, here’s something I’ve found myself wondering lately about the stock market (SPY)…maybe you’ve wondered the same thing. The fundamentals are still mostly negative. Less negative than we thought… but still negative. So why are so many people feeling bullish? Read on to find out the answer.
shutterstock.com – StockNews
(Please enjoy this updated version of my weekly commentary originally published January 24th, 2023 from the POWR Growth newsletter).
As I wrote in last week’s commentary, the stock market (SPY) is a complicated place to be right now.
There are a handful of potentially positive signs (the recent rally, some important earnings surprises, softening inflation numbers), but there are also still a number of potentially negative signs (more big layoff announcements, some key earnings misses, a hawkish Fed).
If you look at the broad market indexes, the bulls appear to be winning this tug-of-war game.
And I think that’s because they’ve convinced themselves that the negative has already been priced into stocks.
And as much as I want to be optimistic (and I can’t ignore those green shoots!)… that’s a dangerous place to be investing from.
If this rally is based on the assumption that the negative is already priced in, then…
1) We’ll need some other positive news if we want stocks to continue higher. 2) Everyone is in for a very unpleasant surprise if it turns out the negative wasn’t priced in.
In that second scenario, we’d likely see two waves of selling — one selloff driven by some kind of negative news and a second wave of sellers selling because they were spooked by the first wave of sellers.
“Almost any pin can prick such supreme confidence and cause the first quick and severe decline,” wrote Jeremy Grantham, the co-founder and long-term investment strategist of GMO. “They are just accidents waiting to happen, the very opposite of unexpected.”
Now, Grantham is one of Wall Street’s best-known bears. If anything, it might be more alarming if he wasn’t calling for a severe decline. But his message rings true to me.
They are just accidents waiting to happen.
If we want the bullish atmosphere to stay alive, the next two weeks will be especially important to get through accident-free.
First of all, we must navigate earnings season, which we are already in the middle of. This season was loaded from the beginning, with many watching it for evidence that a recession is looming.
In the run up to the first reports, many companies revised their own guidance for the quarter lower. Of the 101 companies in the S&P 500 (SPY) had issued guidance for Q4 2022, 67 had issued negative EPS guidance. That’s more than usual based on both the five-year and 10-year average.
We’re also seeing lower profit margins for the quarter, which could be a bad sign if costs continue to rise faster than sales, which has been a recent trend. And inventory bloat has proven to be an existing problem for certain retailers, like Nike and Nordstrom.
On top of that, a number of companies are issuing negative guidance and outlooks for the upcoming first quarter.
Then, at the beginning of February, we’ll have our next update from the Federal Reserve. Currently, markets are pricing in a 99.1% chance of a 25-basis point hike.
Now, I’m not saying we WON’T get a 25-basis point hike… but that is a perfect example of the pin that could pop the optimism bubble.
Or!
We could easily thread the needle through all of these potential pitfalls like some kind of financially-inclined Mr. Magoo.
Conclusion
I’ll be watching earnings closely… as will the rest of the market. If companies continue to beat estimates or at least deliver more positive forward guidance than investors are expecting, we should be able to sidestep any potential bubble-popping pins. Then, we’ll be on to the next Fed meeting.
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SPY shares were trading at $399.52 per share on Wednesday afternoon, down $0.68 (-0.17%). Year-to-date, SPY has gained 4.47%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Meredith Margrave
Meredith Margrave has been a noted financial expert and market commentator for the past two decades. She is currently the Editor of the POWR Growth and POWR Stocks Under $10 newsletters. Learn more about Meredith’s background, along with links to her most recent articles.
New York Republican Rep. George Santos is facing new questions not only about the web of lies he told about his background, but his campaign financing and spending as well. Caitlin Huey-Burns has the details.
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If you’re like most other entrepreneurs, you’re always seeking to protect your business (and your finances).
One way to do that is to purchase gap insurance, a type of coverage that helps pay the difference between what you owe on your car loan and what your car is worth if it’s totaled in an accident.
Here’s everything you need to know about how gap insurance works, how much it costs, and more.
Gap insurance defined
Gap insurance is a supplementary type of car insurance that covers the gap between what you owe on a financed or leased vehicle and the car’s actual market value if it’s totaled in an accident.
If your vehicle is stolen and not recovered, gap insurance can also help you compensate for the difference between what you paid and its current value at the time of theft.
Ultimately, gap insurance can be an essential tool to help you meet your financial obligations even when your regular policy doesn’t apply.
Remember that gap coverage only applies when conventional car insurance coverage doesn’t fully service your financial needs. Knowing how gap insurance works is key to understanding whether it makes sense for your situation.
Gap insurance is a valuable option for many car owners needing an extra layer of financial protection. Say, for instance, that your car is totaled in an accident and is worth $3,000 less than the remaining loan balance.
Gap insurance can help make up the difference. It can also be beneficial when trading in a vehicle with negative equity, as it can help to offset some of those costs when rolling them over into another loan or finance agreement.
Sometimes, car insurance companies pay out in cases where there has been a significant depreciation due to age or mechanical issues. Many collectors purchase gap insurance because even a slight devaluation can significantly harm their investment.
Gap coverage isn’t necessary for everyone, but could offer a helpful security net by giving you the peace of mind that you’re covered in the event that anything should happen to your vehicle.
What are some other examples of gap insurance in action?
Gap insurance is worth considering if you finance or lease a vehicle with a high-interest loan. Say that you purchase a new car that costs $30,000 and is financed over six years at 5% interest.
This means you’d pay $34,786.65 throughout the loan, plus taxes and fees. If you totaled the vehicle shortly after purchasing it, it’s likely that the value of the vehicle has already significantly dropped just from you driving it off the lot. Gap insurance could cover (or help cover) the remaining debt you still owe on the loan if the insurance payout is less than what you still owe.
In another example, let’s say you’re trading in a car with negative equity. The car is worth $10,000, but you owe $15,000 on the loan.
If you were to trade it in for a new car and roll that debt into a new loan or finance agreement, gap insurance could help cover the remaining $5,000 so that you don’t have to pay out of pocket.
Gap insurance and comprehensive insurance are two different types of car insurance. Remember that gap insurance covers only the gap between what your car is worth and the amount you still owe on it; it won’t pay out to fix damages.
On the other hand, comprehensive insurance covers damage to your car typically not related to actually driving, whether it’s from a tree branch falling on it, fire, theft, or something else (depending on your policy). It won’t pay out for any damage related to a collision with another vehicle.
Comprehensive insurance provides full coverage when combined with collision coverage. However, insurance providers typically won’t pay out more than the car’s current market value in either case.
This is where gap insurance comes in. Gap insurance takes your coverage one step further by filling in the deficiency between what your comprehensive policy covers and your remaining loan balance. This is why gap insurance is an optional coverage that you can add to a comprehensive or collision policy.
The cost of gap insurance coverage depends on your unique situation. A policy typically costs between $400 and $700 when you get it from a car dealership and $20 to $40 when it’s part of an existing car insurance policy.
But is gap insurance worth it for your used car or new vehicle? Several factors will dictate the specific price and whether you should purchase it.
Vehicle depreciation.
First and foremost, what’s the average depreciated value of the car? Newer vehicles depreciate at a much faster rate than older ones. New cars typically experience the highest costs for gap insurance due to their rapid depreciation.
The specific policy.
Factors like coverage duration and policy type can also impact the overall cost of gap insurance. Most policies last between 12 and 72 months, but some offer up to 84 months.
Standalone policies don’t benefit from some of the discounts associated with insurance packages, meaning they’re usually more expensive. Gap insurance costs will also consider any specific deductibles and annual premiums related to the policy.
Gap insurance is an essential form of financial protection for both car owners and lessees. Fortunately, obtaining it isn’t difficult; you can typically go through your existing auto insurance provider or purchase a standalone policy through a third-party provider.
If you’re buying a new vehicle, most car dealers offer gap insurance policies that you can customize to meet your needs. Gap insurance often provides additional benefits, such as rental car reimbursement or payment for certain charges when your vehicle is declared a total loss because of theft or accidental damage.
Be sure to ask about these features when shopping for a gap insurance policy so that you know what extras are included in your coverage.
No matter where you decide to buy your policy, having gap insurance on hand can help ensure that you have enough money available when unforeseen circumstances arise and you need it most.
Should you purchase gap insurance?
While it’s not required, gap insurance can give you peace of mind in knowing that you’ll be covered in the event of a total loss. Here are a few tips to help you decide if gap insurance is right for you.
Consider your car’s value.
If you’re driving a used vehicle that isn’t worth much, gap insurance may not be necessary since the amount you owe is likely to be less than the value of your vehicle.
However, if you’re financing a brand-new car, it’s a good idea to consider gap insurance since new cars depreciate quickly and could be totaled before they’re paid off.
Think about your deductible.
Your auto insurance policy will likely have a deductible, which you’ll need to pay out-of-pocket before your coverage kicks in. Gap insurance may not help much if you have a high deductible because you would need to cover a significant portion of the loss yourself.
If your deductible is low, gap insurance could save you from paying a large sum of money to replace your totaled vehicle.
Determine if you qualify.
Only some qualify for gap insurance. Often, you must have collision insurance and comprehensive coverage on your vehicle to qualify, and your lender must require it. Check with your insurer or lender to find out if you are eligible.
Weigh the cost
Like any type of insurance, there’s a cost associated with gap insurance. The price usually depends on factors like the make and model of your car and how much coverage you want.
Ultimately, the best way to determine your ideal gap insurance costs for a particular vehicle is to compare rates from various auto insurance companies. Doing so allows you to find the price point that best fits your budget and keep your car secure in case of an accident or other damage down the road.
Gap insurance can be a lifesaver when you experience an unexpected car accident. If your vehicle is totaled and the cost of repairs is more than the value of your car, gap insurance will cover the difference.
It’s essential to remember that not all policies offer gap coverage, so be sure to ask your agent about your eligibility.
The average cost for gap insurance is just $20 to $40 per year when added to an auto insurance policy, making it an affordable option considering the potential payout.
You can get gap insurance from most major insurers or through organizations like AAA. If you purchase a gap insurance plan, research to find one that meets your needs.
For more information on insurance and business trends, visit Entrepreneur.
Opinions expressed by Entrepreneur contributors are their own.
Consumers have become more aware of the security risks their data is exposed to, resulting in tougher privacy regulations that increase business costs and slow innovation. But, with new moves toward open banking on the horizon, there is a better, more secure way to share your data — without the concern that banks will use it for marketing purposes.
Recently, the Consumer Financial Protection Bureau (CFPB) unveiled its plans to activate a dormant authority laid out more than a decade ago in the Dodd-Frank Act. Based on Director Rohit Chopra’s comments, the industry’s assumption that regulators won’t mandate banks to share customer data may not prove true, which could transform the banking industry for good.
Are we entering the open banking era?
On paper, open banking is simple: Create a network where consumers, banks and non-bank financial institutions can securely exchange pertinent data for creating transparency, reducing fraud and improving service delivery. In other words, provide third-party service providers with open access to consumer banking, transaction and other financial data from banks and non-bank financial institutions through the use of application programming interfaces, or APIs. However, with regulatory bodies racing to stay ahead of technology-based privacy concerns over the past decade, many thought open banking was a long way off.
At October’s Money 20/20 conference, Chopra unveiled a process for exercising the CFPB’s authority under Section 1033 of the Dodd-Frank Consumer Financial Protection Act that could lay the foundation for open banking. While specifics have yet to be defined, the rule would obligate financial institutions to share data with consumers upon their request. At the least, this would bolster industry competition by making it easier for consumers to pack up and switch banks for reasons like bad service. It would also take power away from service providers that try to act as gatekeepers, strengthening the competitive advantage of those who provide the best rates, products and customer service.
So, does this mean we’re entering the open banking era? For certain, it means we’re moving one step closer. Even if the CFPB doesn’t mandate data sharing, it will most likely establish standards and guidelines on how to do it. Of course, these processes take time. The CFPB plans to publish a report in the first quarter of 2023 following a public comment period. It will propose rules late next year, and Chopra said that they aim to finalize a rule and begin implementing it sometime in 2024. In other words, official change will not happen overnight, but that doesn’t mean financial institutions can afford to sit and wait.
Supported by droves of startups, certain financial institutions have already begun building the foundation for open banking by utilizing technology like API-based collaboration. Now, consumers can use a non-bank financial app, like a budgeting tool, and connect it to their spending, saving and credit card accounts to reveal insights about their transactions. The banks that support this type of integration recognize it as an opportunity to improve the customer experience and even provide new services. Still, not everyone is on board just yet.
Faced with open banking regulations, financial institutions always have the option to simply comply and do nothing more, like those who have yet to get involved in the voluntary Financial Data Exchange (FDX). It’s a valid choice, but it means staying unaware of what’s happening with customers everywhere else they bank, leading to ecosystem ignorance.
There are other ways to view a financial institution’s role in open banking. Finding ways to share consumer data and leverage other financial institutions’ information will put a business in a far better position for developing competitive offerings, especially as the CFPB moves forward with its plans. We’ll examine each of these different roles next.
Since the industry has already been moving toward standardization independent of regulation, like through the FDX, it’s unlikely any standards established by the CFPB will look dramatically different from the existing specifications. With that in mind, financial institutions have no excuse for not moving forward and getting involved in the innovation that’s already happening, which holds vast opportunities ahead of regulations that may catch some players off guard and vulnerable to increased competition.
The ability to connect financial institutions (FI) and third parties safely and efficiently with well-proven mechanisms is an exciting opportunity, not just for the companies that comprise the ecosystem but for individual and corporate customers. By consuming data instead of just providing it, banks can build an accurate 360-degree view of their customers, helping them recommend the right products, improve service experiences and support users’ financial goals. It allows banks to be more intelligent, creating ecosystem intelligence.
It’s not all about sharing data, either. Sometimes it’s about sharing capabilities through Embedded Finance or Banking as a Service (BaaS) solutions. For instance, banks can allow third parties to initiate transactions from their front end, such as inside an accounting, invoicing or ride-sharing app. In turn, the third-party provider creates a more convenient customer experience while the bank acquires a new client with a substantially lower, if not free, acquisition cost. I call this ecosystem infrastructure.
Taking this a step further and putting everything together, banks can share and consume information from other FIs, fintech and third parties, creating opportunities for business models such as marketplaces and super apps. I like to refer to this ecosystem orchestration, which allows banks to become a one-stop shop for financial services.
Financial institutions that move in this direction while adhering to the emerging open banking standards will be ready to integrate with virtually the entire market while simultaneously solving for immediate use cases. Doing so is a win/win with endless benefits yet to be realized for consumers, corporate clients and financial institutions.
CBS News business analyst Jill Schlesinger joins “CBS Mornings” to discuss her new book “The Great Money Reset: Change Your Work, Change Your Wealth, Change Your Life.” She provides advice for helping everyone understand their own financial situation better, and what they might need to make a change and live their best life.
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Propelled by the shift in consumer behavior boosted by the pandemic, our adoption of contactless and digital payments has accelerated economic change in tangible ways, offering improved traceability, accessibility and security both at home and in developing countries far and wide. The market conditions have further been propelled by expanded access to mobile devices. With a majority of the world’s population having a smartphone today — 86.41% according to Statista in 2022 — this further enables the rise in digital payments globally, which is expected to compound annually at about 15% in emerging markets through 2026.
This democratization of payments from traditional financial institutions to telecoms, merchants, fintechs, global brands and more, has enabled the explosion of the Embedded Finance model and a compound effect on customer financial interactions throughout their digital experience.
Building up economies and powering up new business
One of the positive externalities of the pandemic is that people are more comfortable than ever making purchases online, whether it’s clothing, consumables or groceries. This willingness to interact in the digital space is no longer limited to the younger generations. Purchasing power is no longer relegated to millennials and Gen Z; it transcends age. It’s not uncommon to see the older generation making payments online, including my 84-year-old father.
As a result of the pandemic, the adoption of digital habits was born out of pure necessity. Today, these habits remain sewn throughout our lives due to their sheer convenience. However, in developing countries, the rapid advancements of fintech payments have done more than make life easier — it’s directly contributed to quality of life, empowerment, human safety and policy enforcement, where the shift from cash to digital payments is still in its infancy.
The acceleration from physical to digital payments will create new digital economies and interactions between sellers and consumers on a local and global scale.
On a recent trip to India, I witnessed first-hand a part of the world’s digital transformation. Having last visited India two years before the pandemic, I was expecting to see little change. This time, however, I found myself standing inside a small, local flower shop that had previously accepted only cash. Today, digital payments have modernized it. Instead of promoting “cash only” signs, most shops I went into now presented me with QR codes and app-based payment options. The flower shop wasn’t any different — but now, it has a sign directing customers to pay by app.
In a few years, India’s economy has been transformed by going cashless (a.k.a. the shift to digital), and they aren’t the only ones. Iteratively, developing countries worldwide have inched their way into digital payments, slowly transforming gray economies with vast income disparity into more transparent, traceable and manageable ecosystems. A symbiotic relationship has developed between the private and public markets, enabling competition, economic growth and choice for consumers while driving traceability and accountability for governments and regulators.
It has also empowered new business commerce and expanded the reach for new gig workers — all through the power of your smartphone and digital payments, which have now been embedded directly into your customer experience with your brand.
For example, in Latin America, the informal economy is one of the main sources of income for much of the population. It was estimated by the OECD (Organization for Economic Co-Operation and Development) that approximately 70% of the GDP was not in the formal payment systems, and, therefore, not controlled by the government in 2018. Now, in 2023, according to McKinsey, only 36% of POS transaction values are in cash.
As a consumer, you have the power to search for any product or service through your mobile phone — and as a gig worker, you can have a constant cash flow through the ease of access to consumers and needs. This win-win scenario creates more of an entrepreneurial mindset for all. It can also threaten big box companies, as small business owners have easier access and less friction. Large and small brands see opportunities and challenges to connect and build a lasting direct relationship with consumers who now have digital optionality everywhere.
With this continuously evolving scenario, a question comes to mind: How are companies navigating the ecosystem and merging payments into their businesses? The answer to that is data.
Bringing modern payments to emerging markets creates a world of opportunity. By developing a multitude of microcosms, we can bridge the gaps between the various services people need — like doorstep grocery delivery and rideshares — and the digital solutions necessary to facilitate those instantaneous transactions through new customer experiences and payment flows.
In the process, companies collect a wealth of data about consumers that isn’t possible to trace or understand in a primarily cash-based society. By switching to digital payments, companies gain the power to track a consumer from one merchant to another, better understanding transactional and behavioral patterns and moving into hyper-personalization of offers and products. This helps them to understand the services they’re searching for (i.e., what they ate at the last restaurant they visited and which products they are purchasing — down to the SKU and size). This data can transform marketing strategies and reimagines customers’ journey with vendors to drive new offers and loyalty programs in a direct relationship between brands and consumers through their embedded payment flows.
Of course, alongside this data comes the pressing need for payment processors and issuers to manage and use it responsibly. Currently, the payments industry is on track to realizing the potential of new microcosms previously not possible, all while striking a proper balance of consumer consent, reporting and data protection. It’s only a matter of time that the power of the data will create increased knowledge of the consumer and our respective needs.
When used correctly, modern payment solutions do not simply create user convenience. Rather, they also improve safety, security and speed at every turn. Moreover, the data behind the payments can transform how we discover and interact with customers. For businesses (small and large), this is an opportunity to create targeted campaigns for consumers, offer services and products with ease and globally, create a consumer-friendly user environment in their platforms and ultimately grow their revenue and client base.
How can this be done? The key to ensuring that payments continue to disrupt our ecosystem positively requires the recognition of a fundamental fact:
The power lies with the consumer, who has more choices than ever. Today’s best financial services companies, ecommerce brands and tech startups are leading the pack as they focus on becoming better partners to their consumers, making them better suppliers.
The explosion of optionality and digital touchpoints between consumers and brands has continued to underscore the criticality of customer experience, digital transformation and data enablement for brands and sellers. Robust engagement through the customer journey for brands will set them apart with consumers who are looking for a consistent and frictionless experience from start to finish.
By fixing our alignment on what’s best for the people at the other end of the equation, the financial services industry has the potential to change the world as we know it — and this change is happening right in front of us today.
Business credit cards are one of the most practical forms of small business financing. Not only do they provide a revolving business line with an interest-free grace period, but they also help separate your business and personal transactions.
Due – Due
Getting a business credit card with bad personal credit can be challenging, but it’s not impossible. Here’s what you should know before you start applying.
Can You Get a Business Credit Card With Bad Personal Credit?
When you apply for your first business credit card, your company probably won’t have enough history to generate a business credit score. As a result, your prospective business card issuer will pull your personal credit report during underwriting.
As you’d expect, your chances of qualifying for the best business credit cards decrease as your personal credit score drops. However, there are often accounts available with scores at the lower end of the spectrum.
That primarily refers to secured credit cards, which require that you provide a cash deposit equal to your credit limit as collateral. If you ever default on your account, the credit card issuer can use the money to recoup its losses.
As a result, a secured card is safer for the creditor and easier to qualify for with a bad credit score. However, because business credit cards have higher credit limits than personal cards, you’ll need to provide a relatively high-security deposit to qualify.
You can get a business credit card with bad personal credit, but there’s no guarantee of success, and you’re usually limited to a secured credit card. As a result, it’s often better to focus on building up your personal credit before you apply.
Let’s explore some of the best ways to improve your personal credit score.
Dispute Errors on Your Credit Report
The three major credit bureaus, Equifax, Experian, and TransUnion, compile your historical credit data into a credit report. Creditors use the information in those reports to calculate your credit score.
However, no credit bureau is infallible, and their reports contain a surprisingly high number of mistakes. One study found that a whopping 34% of consumers have at least one error in their credit reports.
Unfortunately, even a single mistake can cause significant damage to your credit score. For example, your report could show that a timely payment was made late or display a higher loan balance than it should.
As a result, it’s worth reviewing your credit report for errors before beginning your credit repair journey. Fortunately, credit bureaus Experian, Equifax, and TransUnion make it easy to dispute any information you believe is incorrect online.
However, because they don’t share information with each other, you must complete the process separately with each of them.
Pay Your Bills on Time
Your payment history refers to how consistently you’ve made your monthly credit payments on time. It’s worth 35% of your FICO score, making it the most impactful factor in the algorithm.
As a result, paying your bills on time should be your top priority when you’re building credit. You must manage your finances responsibly enough to ensure that you never owe a debt payment you can’t afford to make.
That primarily means limiting your credit card purchases to a reasonable level. Generally, the safest approach is to keep your balances at or below your cash reserves.
In addition, be careful not to take on too many credit accounts. Expanding and diversifying your credit mix is beneficial, but it shouldn’t come at the cost of increased financial risk.
Finally, it’s a good idea to set your payments to autopay, which reduces the chances of missing a payment due to a clerical error. That’s particularly helpful when you’re juggling multiple credit accounts with different due dates.
Reduce Your Credit Utilization Ratio
Creditors know that because your income is finite, you can only take on so much debt. The closer you are to your limit, the more likely you’ll miss payments, fall behind on your obligations, and default on your accounts.
As a result, your outstanding debt balance is worth 30% of your FICO score, making it the second most impactful factor after your payment history. However, the gross amount is often less significant than its relative impact on your finances.
Because credit scoring algorithms can’t factor in your income, their creators use different metrics to assess how financially burdensome your debt levels are. The most important of these is the credit utilization ratio.
It equals your current balance divided by your credit limit. For example, a personal credit card with a $5,000 balance and a $10,000 credit limit has a 50% utilization ratio.
People with a perfect 850 FICO Score have a 5.8% credit utilization on average. It’s generally regarded that you should maintain a ratio between 1% and 10% if you want the highest credit score possible.
That shows lenders that you’re actively using the account, but you can easily afford to pay off your balance every month.
The closer your utilization gets to 100%, the more lenders suspect that you’re experiencing financial distress and struggling to afford your debts.
Pay Off Your Balances
Paying off your outstanding debt balances is the fastest way to reduce your utilization. You can get by making your minimum payments, but it’s worth putting additional cash toward the issue when you’re rebuilding credit.
One approach is to prioritize paying down the account with the highest interest rate. That’s called the debt avalanche method, which minimizes your financing costs and time in debt.
Fortunately, every extra dollar you can put toward your debts each month has a significant effect. For example, say you have a credit card with a $3,000 balance, a 16% interest rate, and a $60 minimum payment.
If you settled for making the minimum payment, it would take six years and 11 months to pay off your debt, during which you’d incur $1,976 in interest.
However, if you put just $60 more per month toward the account (for $120/month total), you’d get out of debt in two years and seven months and incur only $673 in interest.
As you can see, freeing up even a little cash flow by cutting back on your expenses or picking up a side hustle can help you rapidly improve your credit and financial situation.
Request Credit Limit Increases
Paying off your outstanding debt balances isn’t the only way to reduce your credit utilization ratio. It’s also a good idea to attack the problem from the other end by requesting credit limit increases.
That won’t reduce your utilization as efficiently dollar-for-dollar as paying off your debts. However, the effects are permanent, and you’ll be able to carry a higher balance on your card without damaging your credit.
For example, say that your typical statement balance is $2,500 on a card with a $5,000 credit limit, so your utilization hovers around 50%. Increasing your credit limit to $10,000 would reduce your utilization to 25% without costing you anything.
Generally, you should only request limit increases after demonstrating responsible credit habits to your credit card company. You’ll have better odds once you’ve made timely payments for at least six months to a year.
Avoid Opening Too Many New Lines of Credit
When you apply for a new credit account, your prospective creditor initiates a hard inquiry and formally pulls your credit report to check your score. Subsequently, that event shows up in your credit report, which lowers your score by a few points.
The damage from a single hard inquiry usually isn’t a cause for concern. Your score will recover after 12 months, and the inquiry will fall off your credit report entirely after 24 months.
However, too many inquiries in a short period can have greater repercussions. That’s because applying for a lot of credit too quickly indicates to a prospective lender that you’re experiencing financial distress and turning to debt for relief.
There’s no specific threshold where you officially have too many inquiries, but each one increases your perceived riskiness as a borrower. Try to accrue no more than one every six months to minimize damage to your score.
Be an Authorized User on a Credit Card
Becoming an authorized user on a credit card lets you make purchases on the account without being obligated to pay them back. It also adds the card’s history to your credit report, which can improve your score.
Fortunately, a friend or family member can add you as an authorized user to their card without either of you undergoing a personal credit check. Most card issuers let you complete the process online in just a few minutes.
You can also buy authorized user tradelines from vendors online, but it’s generally inadvisable. Not only do you expose yourself to potential scams, but creditors, credit reporting agencies, and credit scoring companies disapprove of the practice.
You’re better off saving your money and becoming an authorized user on a card that belongs to someone you trust. Make sure to choose someone who uses the card responsibly, or it won’t help your score.
Have a Variety of Credit Accounts
The diversity of your credit accounts is worth 10% of your FICO score. It’s one of the less impactful factors, but it’s still worth addressing when you’re trying to optimize your personal credit.
Start by aiming for at least three credit cards and one installment loan.
That gives you a mix of revolving and installment debt, the ability to demonstrate responsibility with multiple accounts, and a high enough credit limit to keep your overall utilization down.
If you don’t have the right mix of credit accounts yet, consider applying for whichever ones you lack. Just remember not to pursue them too aggressively. You don’t want to incur too many credit inquiries or overextend yourself financially.
Get a Credit Builder Loan
Having an installment loan in your credit report is beneficial for diversifying your credit mix, but it’s impractical to apply for one solely to build credit.
Not only are accounts like auto loans, personal loans, and mortgages too expensive to open without impacting your finances, but they’re also tough to get with bad credit.
If you don’t already have one of these accounts, consider opening up a credit builder loan to fill the void in your credit profile.
Credit builder loans don’t provide a lump sum upfront. Instead, the provider keeps the proceeds in a locked account as collateral. As a result, there’s usually no credit check to apply, making them ideal for people with poor credit scores.
You make payments toward the account like normal, and the provider reports them to the credit bureaus. Once you pay off your balance, you unlock your proceeds. You can often cancel early without penalty to get whatever portion you’ve paid off so far.
Avoid Closing Old Credit Cards
The age of your credit accounts is worth 15% of your credit score, and older is always better. The idea behind this scoring factor is that having a lengthier credit history means you have more experience managing debts.
The FICO algorithm considers the age of your oldest and newest accounts, plus the average age of your entire mix. As a result, it’s in your best interest to keep your credit accounts open indefinitely.
While you can’t do much to extend the life of your installment loans, at least keep your first credit cards open. It’s also a good idea to use them every once in a while to keep them active.
If you implement these tactics, you should see significant improvements in your personal credit score. Once it reaches 700, you should be able to qualify for a good business credit card or even a small business loan. Get started today!
Once again it looks like bulls are ready to take charge for good as the S&P 500 (SPY) is on the verge of a key breakout. And that is why I say “Stock Buyers Beware!”. That is because this is likely another false start for bulls who don’t understand the big picture that points to much more bearish downside for stocks in the weeks and months ahead. Read on below for the full story.
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The bull vs. bear tug of war is at another critical juncture as they battle over 4,000. The two previous skirmishes were won by the bears.
I am referring to the big rallies that ran out of steam in mid August and early December. The hawkish Fed was the main catalyst each time to swing things back to the downside.
Will that be the case once again after the February 1st Fed announcement?
That is the topic that most deserves our attention at this time, and will be the focus of this week’s Reitmeister Total Return commentary.
Market Commentary
The boiled down version of today’s commentary can easily be labeled: Stock Buyers Beware!
That’s because price action is saying one thing…but fundamentals are saying another with the final verdict likely coming after the 2/1 Fed announcement.
Now let’s go back to the starting line by evaluating this picture of where we stand now with a possible breakout above the long-term trend line. Also known as the 200 day moving average for the S&P 500 (SPY) in red below.
Yes, it appears that we have a break out forming at this time. However, see how similar events happened back in late March and late November before the bears took charge once again.
Chartists will also note that this is still quite bearish. First, because we are officially in a bear market. We would need to cross above 4,189 to state that a bull market was in place.
Second, we have a series of lower highs which is a negative trend until it is officially reversed.
To be clear, this could be the forming of the new bull market. And you should never fully ignore the wisdom of the crowd as it appears in price action.
Yet viewing this without the context of the fundamental landscape is a bit hollow. So, let’s switch in that direction where we have another crossroads. That being investors who are solely focused on the state of inflation (and likely future Fed actions) vs. those who see a recession forming.
This battle was at the center of my last commentary: Investors: Please OPEN Your Eyes. The main theme is that, yes, inflation is coming down faster than expected. But before you cheer that good news it is BECAUSE there is a recession forming which is normally the root cause of bear markets.
That recessionary forecast only grew darker this week starting Monday with a worse than expected -1% reading for Leading Economic Indicators. Check out this quote from Ataman Ozyildrim, Senior Director, Economics at the Conference Board (who creates this indicator):
“The US LEI fell sharply again in December—continuing to signal recession for the US economy in the near term. There was widespread weakness among leading indicators in December, indicating deteriorating conditions for labor markets, manufacturing, housing construction, and financial markets in the months ahead. Overall economic activity is likely to turn negative in the coming quarters before picking up again in the final quarter of 2023.”
Next up to bat was the S&P Composite PMI Flash report on Tuesday coming in at 46.6. This was an even handedly bad showing as Services at 46.6 was on par with the nasty 46.8 showing for Manufacturing. (Remember under 50 = contractionary environment).
These poor economic readings make it hard to be bullish at this time. Even worse is that we are running head long into the next Fed announcement on 2/1 where they are likely to repeat their “high rates for a long time” mantra.
Bulls keep jumping the gun expecting a Fed pivot only to get smacked down again. Such was the case in mid-August when the 18% summer rally ended with the famed Jackson Hole speech from Powell had us making new lows in the weeks ahead. Then the October/November rally ran out of steam when Powell poured cold water on bullish aspirations with the higher for longer rate expectations.
To be clear, the Fed no doubt sees the same signs of moderating inflation. And yet just as clearly, there will be no change in their stance given how the higher for longer mantra was repeated ALL MONTH LONG at nearly every Fed speech in January including similar sound bites from Powell.
These guys are singing from the same song sheet on purpose. That is part of their mission to provide clarity to all market participants. And thus to expect them to abandon the higher for longer mantra as soon as the 2/1 announcement is borderline insane.
Yes, they likely will downshift to quarter point hikes. That seems appropriate at this time. But that is greatly different than ending rate hikes or going lower in time to stave off the formation of the recession at hand.
To boil it down, bulls could stay in charge of price action going into the 2/1 Fed announcement. This could have stocks looking like they are breaking out with some investors getting drawn in by serious FOMO.
However, going back to the main theme of this article, I would say strongly; STOCK BUYER BEWARE!
Simply to get bullish now coming into that 2/1 announcement given the facts in hand seems quite risky. Bears still have the upper hand til proven otherwise.
If by some amazing stretch of the imagination that the normally slow and steady Fed officials do a 180 degree turnabout to become undeniably dovish on 2/1, then certainly join the bull party that afternoon.
Long story short, the risk to the downside is greater than the risk to the upside which is why I remain entrenched in my bearish portfolio and recommend the same for others.
What To Do Next?
Discover my special portfolio with 10 simple trades to help you generate gains as the market descends further into bear market territory.
This plan has been working wonders since it went into place mid August generating a robust gain for investors as the market tumbled.
And now is great time to load back as we deal with yet another bear market rally before stocks hit even lower lows in the weeks and months ahead.
If you have been successful navigating the investment waters this past year, then please feel free to ignore.
However, if the bearish argument shared above does make you curious as to what happens next…then do consider getting my updated “Bear Market Game Plan” that includes specifics on the 10 unique positions in my timely and profitable portfolio.
SPY shares rose $0.81 (+0.20%) in after-hours trading Tuesday. Year-to-date, SPY has gained 4.65%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Steve Reitmeister
Steve is better known to the StockNews audience as “Reity”. Not only is he the CEO of the firm, but he also shares his 40 years of investment experience in the Reitmeister Total Return portfolio. Learn more about Reity’s background, along with links to his most recent articles and stock picks.
Consumer sentiment improved significantly amid easing inflationary pressures. However, many still believe there will be a recession in 2023. Given the inelastic demand for groceries, fundamentally strong stocks Walmart (WMT) and BJ’s Wholesale Club (BJ) could be ideal buys now to navigate a recessionary environment. Read on.
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Inflation showing signs of cooling over the past few months has lifted consumer spirits. The University of Michigan’s consumer sentiment index increased this month to 64.6, the highest reading since January 2022.
While optimism regarding the chances of the economy avoiding a recession has been rising, it cannot be ruled off. The World Economic Forum, through a recent poll of economists, found that nearly two-thirds of the respondents believe there will be a recession in 2023.
Moreover, the IMF expects around a third of the global economy to enter a recession in 2023 and has cut its global GDP growth forecast for the year to 2.7%.
Grocery and big box store stocks tend to be good hedges amid market downturns due to inelastic demand for their goods. Moreover, the sector has been evolving amid the adoption of new technologies and the growing online grocery market. The global online grocery market is expected to expand at a CAGR of 25.3% from 2022 to 2030.
Given the backdrop, fundamentally strong big box retailer stocks Walmart Inc. (WMT) and BJ’s Wholesale Club Holdings, Inc. (BJ) could be ideal buys now.
WMT engages in the operation of retail, wholesale, and other units worldwide. The company operates through three segments: Walmart U.S.; Walmart International; and Sam’s Club.
On January 12, 2023, Walmart Commerce Technologies, one of WMT’s companies, and Walmart GoLocal recently announced a partnership with Salesforce.com Inc. (CRM) to give retailers access to the tools and services that enable frictionless local pickup and delivery for customers worldwide.
In terms of forward EV/Sales, WMT is currently trading at 0.75x, 57.7% lower than the industry average of 1.77x. Its forward Price/Sales of 0.64x is 44.3% lower than the industry average of 1.15x.
WMT’s trailing-12-month ROCE of 11.61% is 9.6% higher than the 10.59% industry average. Its trailing-12-month ROTC of 10.10% is 63.9% higher than the 6.17% industry average.
WMT’s total revenue increased 8.7% year-over-year to $152.81 billion in the fiscal third quarter that ended October 31, 2022. Also, its net sales came in at $151.47 billion, up 8.8% year-over-year. Its adjusted EPS came in at $1.50, representing a 3.4% year-over-year rise.
Analysts expect WMT’s revenue to increase 5.8% year-over-year to $605.99 billion in 2023. Its EPS is estimated to rise 4.3% per annum for the next five years. It surpassed EPS estimates in three out of four trailing quarters. Over the past six months, the stock has gained 7.9% to close the last trading session at $142.64.
WMT’s POWR Ratings reflect this promising outlook. It has an overall A rating, equating to a Strong Buy in our proprietary system. The POWR Ratings assess stocks by 118 different factors, each with its own weighting.
It has a B grade for Stability, Sentiment, and Growth. Within the A-rated Grocery/Big Box Retailers industry, it is ranked #8 out of 39 stocks. Click here for the additional POWR Ratings for Value, Momentum, and Quality for WMT.
BJ operates warehouse clubs on the east coast of the United States. It provides perishable, general merchandise, gasoline, and other ancillary services through its websites and mobile app.
On December 7, 2022, BJ announced the opening of their newest club in Midlothian, Virginia, on December 9, 2022. This brings the overall number of US clubs to 235. The new site should boost the company’s revenues.
In terms of forward EV/Sales, BJ is currently trading at 0.65x, 63.3% lower than the industry average of 1.77x. Its forward Price/Sales of 0.49x is 57.7% lower than the industry average of 1.15x.
BJ’s trailing-12-month ROCE of 65.20% is 515.9% higher than the 10.59% industry average. Its trailing-12-month ROTA of 7.58% is 109.3% higher than the 3.62% industry average.
BJ’s total revenue increased 12.2% year-over-year to $4.79 billion for the third quarter ended October 29, 2022. Its net income came in at $129.94 million, up 2.7% year-over-year. Moreover, its EPS came in at $0.95, up 3.2% year-over-year.
BJ’s revenue is expected to increase 15.2% year-over-year to $19.21 billion in 2023. Its EPS is estimated to grow 16% year-over-year to $3.77. It surpassed EPS estimates in all four trailing quarters. The stock has gained 14.4% over the past year to close the last trading session at $69.24.
BJ’s strong fundamentals are reflected in its POWR Ratings. It has an overall B rating, which indicates a Buy in our proprietary rating system. It also has a B grade for Value and Sentiment.
BJ is ranked #21 in the same industry. For BJ’s additional POWR Ratings for Stability, Momentum, Growth, and Quality, click here.
WMT shares were trading at $143.16 per share on Tuesday afternoon, up $0.52 (+0.36%). Year-to-date, WMT has gained 0.97%, versus a 4.72% rise in the benchmark S&P 500 index during the same period.
About the Author: RashmiKumari
Rashmi is passionate about capital markets, wealth management, and financial regulatory issues, which led her to pursue a career as an investment analyst. With a master’s degree in commerce, she aspires to make complex financial matters understandable for individual investors and help them make appropriate investment decisions.
Amazon is adding generic medications to the list of goods and services it offers. How will that impact its revenue and share price?.
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Amazon may suffer due to the economic contraction occurring, but its expansion into the pharmaceutical market may help offset some of these losses. That is thinking behind RxPass, Amazon’s latest offering that allows its Prime members to order generic medications for a $5 USD per month subscription fee. Below, we take a look at some of Amazon’s recent financials and price momentum.
Tracking AMZN’s Performance from 2020 to 2022: Net Income, Price/Sales Ratio, and Revenue
AMZN‘s net income has been volatile over the past few years. Trailing twelve month net income has more than tripled from March 2020 to December of 2021, but then sharply declined to 11.61B in June 2022. Overall, AMZN’s net income has been trending upward, with the latest value of 11.32B being 19% higher than the starting value in March 2020. Here is a chart of AMZN’s Net Income over time.
The Price/Sales Ratio of AMZN fluctuated throughout the recorded period of 2020 to 2022. Starting at 3.85 in March 2020, it peaked at 4.93 in June 2020, before dropping to a low of 2.10 in September 2022. The overall trend shows a decrease in the Price/Sales Ratio of AMZN, with a 21.2% decrease from the initial value. This is likely a reflection of the bear market and the decline in multiples that virtually all equities have seen.
AMZN’s revenue has generally been increasing over a two year period from March 2020-September 2022, with the most significant growth occurring between December 2020 and September 2021, when revenue grew by around 24%. The last value of this data in September 2022 marks a time when Amazon crossed the $500 billion in trailing twelve month revenue mark. Amazon’s revenue growth rate was declining in 2022, but remains positive and thus overall revenue is still trending upwards.
AMZN Stock Price Increases Rapidly over 6-Month Period
The stock price of AMZN has seen its price steadily decline from July 29th, 2022 ($130.50) to January 20th, 2023 ($95.84). These declines did come with some small rallies along the way — specifically, from August 12th to August 26th, the share price increased from $140.94 to $141.97 ($+1.03), from September 2nd to September 9th, the share price increased from $128.25 to $128.94 ($+0.79), and from October 14th to October 21st, the share price increased from $111.78 to $115.55 ($+3.77) — but the overall downwards trend is quite clear. January of 2023 has seen its price rally, as has been the case for the broader US equities market. Here is a chart of AMZN’s price over the past 180 days.
shares were trading at $400.27 per share on Tuesday afternoon, down $0.36 (-0.09%). Year-to-date, has gained 4.66%, versus a % rise in the benchmark S&P 500 index during the same period.
About the Author: Simit Patel
Simit Patel has 2 decades of investing experience applying a top-down approach starting with macroeconomics followed by price action technical analysis to find more winning trades.
Opinions expressed by Entrepreneur contributors are their own.
You’ve done a lot to build your brand as a financial advisor. Your business is prominently displayed on bus benches, billboards and even at local little league sports games — but now, you could be missing the bigger opportunity.
The internet isn’t just where people will find out the name of the actor that’s on the tips of their tongues or check the weather; the internet has become the one-stop shop for everything.
With unlimited information at our fingertips, the world has gone digital and isn’t turning back. If you’re not taking advantage of digital marketing options, chances are your marketing strategy could use an overhaul. The internet is a treasure trove of new clients just waiting to be discovered, and here’s why you should be taking advantage of it.
Brand compliance and digital marketing can co-exist
Just about every business industry has taken to the internet to attract new customers. However, the financial services industry, specifically financial advisors, has been slow to hop on the bandwagon. The reason is simple. As a financial advisor, you have a fiduciary responsibility to your customers that’s heavily regulated. Both brand and regulatory compliance are important, and you’re not willing to risk compliance issues to put your brand online.
Well, what if you didn’t have to?
When you partner with a strong marketing vendor that can provide the digital marketing strategy and automation needed to reach your prospects, your chances of actually converting these prospects into clients skyrocket. First, it’s important to understand why a solid online presence is key for your business.
Why you should embrace this new age of opportunity
Even if you don’t feel like you’re embracing digital marketing opportunities, there’s a strong chance that you’re already online. These days, customers share their experiences on social media and review websites, which have become crucial to building client trust in a new audience.
If you take advantage of the opportunity to use online tools, you have more control over your brand’s identity online and the opportunity to tap into a vast audience you may not have known even existed.
That’s why more than half of the companies in the United States are using some form of marketing automation.
There are several ways you can go about advertising online. Some of the most popular options for advertising online financial services include:
Social Media: Social media is a hotbed for online activity. To put the power of social media into perspective, Facebook has more than 2.9 billion active users. That means nearly a third of the global population is on it.
Search Engine Optimization: Google started as a brand name but has become a verb. If you don’t know something, you “Google” it. So, what happens when a customer in your area googles “Financial Advisor Near Me?” Are you on the list? Search engine optimization (SEO) can help.
Local Listings: Online local listing websites are free to use and have massive audiences. You can use these local listing websites to expand your clientele.
Paid Search: You can also take advantage of pay-per-click advertising. This allows you to show up at the top of search results and only pay a small fee when someone clicks your link.
Display Ad Campaigns: Banner ads on websites could expose your brand to thousands of potential customers for a minimal cost. CPM, or cost per mil (cost per thousand views), advertising campaigns allow you to put banners on popular websites for between $10 and $20 per thousand views, in most cases.
Online Videos: You might be amazed at the response you get from creating YouTube videos. A few short videos telling people things they may not already know about finances and the financial industry could drive customers through the door.
Email Marketing: Keep in touch with previous customers to ensure they come back when they need services next time.
Marketing automation is your biggest ally
Of course, there are several moving parts to a solid online marketing plan, but technology has also created incredibly efficient solutions for that. Marketing automation is a hot ticket and continues to rise in popularity. You can automate everything from paid search, organic and social posting to display campaigns. With the help of a solid digital marketing strategy and marketing automation, you get to focus on what you’re best at – providing financial advice to your clients.
Opinions expressed by Entrepreneur contributors are their own.
If you own a small business, then you have a few bank accounts — at least I hope so. Most likely, you have a checking account or two, a few savings accounts and maybe some type of investment accounts as well. Now, when it comes to banking, and if you’re a one-man or one-woman operation, it’s just you on the account. But what about when your company gets bigger and bigger, and you have a difficult time keeping up with what’s happening in your accounts?
This is the point when you need to add people to your accounts to ensure that everything gets paid and there are no overdrafts. Here are some ideas and suggestions that can help you navigate the ins, outs, risks and rewards of having someone on your business bank accounts.
Signer: This is when you add another owner or a high-level employee (obviously one that you trust) to help you get your business banking done on time, every time. For banking purposes, this does not mean that they own the company in any way, they are just a signer on the bank account. They will be able to write checks, make cash withdrawals, order items like stamps, new checks and their own debit cards. They can also get online access, which is often a huge help to so many business owners as this person can help with bill pay, sign up for other online services, call the bank to inquire about fees or charges that they see on the account and any other account info they need. This is a great step if the business is growing and the owner can only do banking about once a week or so, which allows the signer to handle the day-to-day.
Downside? You better trust this person, as they have every right to write any check for any amount they want, even to themselves. They can literally clean you out by making a large cash withdrawal if they wanted to. To get the money back, the bank will not help since you were the one who added them as a signer on the account. You would have to take them to court for that matter. In the end, just be careful.
POA: Having a Power of Attorney added to your bank account can be a big help if you will be, for example, going in for surgery and will be out of commission for a few weeks or months. Or if you plan to travel overseas for a few months. Or for that “just in case” thing that usually happens in life. By designating someone as a POA, they can act on your behalf to ensure that bills are being paid, checks are being written, the mortgage is getting paid, etc.
For this, you’ll need to have the proper documents, which a good attorney can complete for you. Each bank is different in its requirements for a POA, but these papers will always need to be reviewed by the legal department of the bank before anyone can be actually added. Often, the paperwork is incomplete because the account owner is doing the paperwork themselves, so be sure to consult an attorney for this.
One more thing, if the account owner passes away, the POA is immediately null and void. POA is only good for people who are living.
POD: POD (Payable On Death), which is also referred to as a beneficiary for many banks, is also a good thing to have on your accounts. Let’s say you are getting much older or having extreme health issues, and the prognosis is not good, and the doctors are giving you only so much time left to live. It’s a smart thing to add the family member of choice to the bank account.
And here’s why: When you pass away, and you do not have a POD on the account, most times, the bank accounts will go directly to probate court, and your family will wait a long time for the funds and jump through needless hoops. Many people really need the money, too. By having the POD on the account, they can just come to any branch with your death certificate, close the account within a few days to a few weeks and have a cashier’s check issued to them directly.
If not, the funds can go to probate as mentioned, or the check issued will have to be issued to the Estate of “the person who just deceased.” All banks vary in their requirements as do state laws, so speak to your banker about this in detail.
Co-owner: This is just as it sounds and is similar to a signer on a business account, but this is for personal accounts, not business. To add a co-owner to the bank account, you must be present in the branch to do so. Adding someone by phone or online is generally never an option. Here is what a co-owner can do when you add them to the account: They can do any transaction they wish on the account, including closing the account. What they cannot do is remove the other owner without them being present. In the world of banking, the phrase is “if you’re getting a divorce, the person who gets to the bank first gets the money.”
Pro tip: There are many ways to add someone to your bank accounts — both business and personal — and there are a lot of benefits as well as a lot of risks involved, so you’d better talk to your banker. While the government makes the regulations that each bank must follow, each bank must decide what they will do to comply with that law and what logistical steps they will take to ensure that they are reducing any risk that comes with adding people to accounts. So, be sure to talk to your banker first to see what steps you need to take to make sure everything is properly conducted.
Automation and the growing online food delivery market will likely boost the restaurant industry in the long term. Hence, fundamentally strong restaurant stocks McDonald’s (MCD), Nathan’s Famous (NATH), and Rave Restaurant (RAVE) might be ideal buys for 2023. However, given the macroeconomic headwinds, fundamentally weak Dutch Bros (BROS) might be best avoided now. Read more.
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While labor shortage has been marring the restaurant industry, according to a forecast by restaurant consultancy Aaron Allen & Associates, up to 82% of restaurant positions could, to some extent, be replaced by robots. Automation is likely to save U.S. fast-food restaurants more than $12 billion in annual wages, the group said.
Moreover, the growing prominence of hassle-free online delivery, various discount offers, convenient payment options, etc., is driving the online food delivery market in the United States. IMARC Group expects the market to reach $46.50 billion by 2028, exhibiting a CAGR of 10% during 2023-2028.
Furthermore, the rising online delivery services have also led to the growth of ghost kitchens (or cloud/dark kitchens). Euromonitor predicts that the ghost kitchen market will be worth $1 trillion by 2030.
Given the solid long-term prospects of the industry, fundamentally strong restaurant stocks McDonald’s Corporation (MCD), Nathan’s Famous, Inc. (NATH), and Rave Restaurant Group, Inc. (RAVE) might be ideal buys.
However, considering the macroeconomic challenges, including labor and food cost inflation and supply chain issues, fundamentally weak restaurant stock Dutch Bros Inc. (BROS) might be best avoided now.
MCD and its franchisees are renowned for operating restaurants globally. The company operates through three segments: the United States (U.S.); International Operated Markets (IOM); and International Developmental Licensed Markets & Corporate (IDL).
On October 13, MCD announced an increase of 10% over the company’s previous quarterly dividend, reflecting confidence in the Accelerating the Arches growth strategy and a continued focus on driving long-term profitable growth for all stakeholders.
MCD pays $6.08 annually as dividends. This translates to a yield of 2.26% on the current price. Its four-year average dividend yield is 2.27%. The company increased its dividend payouts for 21 consecutive years.
MCD’s revenues from franchised restaurants increased 4.6% year-over-year to $3.71 billion in the third quarter, which ended September 30, 2022. The company’s total operating costs and expenses decreased 3.3% year-over-year to $3.11 billion, while its EPS stood at $2.68.
Analysts expect MCD’s EPS for the fiscal year that ended December 2022 to be $9.95, indicating a 7.3% year-over-year growth, while its revenue is expected to be $23 billion. Additionally, it has topped consensus EPS estimates in three of the trailing four quarters, which is impressive.
MCD’s trailing-12-month EBIT margin of 43.70% is 449.1% higher than the industry average of 7.96%. Its levered FCF margin of 17.77% is significantly higher than the 1.35% industry average.
The stock has gained 5.8% over the past three months to close the last trading session at $269.29.
MCD’s POWR Ratings reflect its promising outlook. The stock has an overall rating of B, which translates to a Buy in our proprietary rating system. The POWR Ratings are calculated by considering 118 different factors, with each factor weighted to an optimal degree.
MCD also has an A grade for Quality and B grade for Stability and Sentiment. It is ranked #16 of 46 stocks in the B-rated Restaurants industry.
To access additional ratings for MCD’s Growth, Value, and Momentum, click here.
NATH operates in the food service industry as an owner of franchise restaurants under Nathan’s Famous brand name. The company also sells products bearing Nathan’s Famous trademarks through various distribution channels.
On December 14, NATH announced the launch of a new franchise sales initiative aimed specifically at these struggling restaurant owners, offering to cost-effectively convert their location into a Nathan’s Famous.
The conversion program is expected to offer flexibility across restaurant design, equipment, and infrastructure, often using the restaurant’s current arrangement to save costs and open quickly. Potential franchisees can also take advantage of additional revenue opportunities through its ghost kitchen brands, Arthur Treacher’s and Wings of New York.
The company pays a $1.80 dividend annually, which translates to a yield of 2.51% at the current price, and has a 4-year average dividend yield of 2.3%. Its dividend payments have grown at a CAGR of 11.5% over the past three years. Also, it has paid dividends for four consecutive years.
NATH’s total revenues increased 14% year-over-year to $37.50 million in the fiscal second quarter ended September 25, 2022. Adjusted EBITDA and income from operations increased 32.8% and 33.3% year-over-year to $10.32 million and $9.91 million, respectively. Also, its net income and income per share came in at $5.96 million and $1.46, increasing 68.1% and 69.8% year-over-year, respectively.
The stock’s trailing-12-month EBIT margin of 26.13% is 228.3% higher than the industry average of 7.96%. Its levered FCF margin of 11.04% is 720.2% higher than the 1.35% industry average.
The stock has gained 47.4% over the past nine months to close the last trading session at $71.55.
NATH’s robust prospect is reflected in its POWR Ratings. The stock has an overall A rating, equating to a Strong Buy in our proprietary rating system.
NATH has an A grade for Quality and B grade for Sentiment and Stability. It is ranked first in the same industry.
Click here to see the additional POWR Ratings for NATH (Growth, Value, and Momentum).
RAVE operates and franchises pizza buffets, delivery/carry-out, and express restaurants under the Pizza Inn trademark worldwide. It operates through three segments: Pizza Inn Franchising; Pie Five Franchising; and Company-Owned Restaurants.
For the fiscal first quarter ended September 25, 2022, RAVE’s revenues increased 17.7% year-over-year to $3.01 million. The company’s net income increased 7.7% year-over-year to $307 thousand. Its adjusted EBITDA increased 25.8% year-over-year to $542 thousand. Additionally, its EPS came in at $0.02.
RAVE’s trailing-12-month net income margin of 72.18% is significantly higher than the industry average of 5.18%, and its levered FCF margin of 21.45% compares with the 1.35% industry average.
The stock has gained 73.5% over the past year to close the last trading session at $1.70.
RAVE has an overall rating of A, which translates to a Strong Buy in our proprietary rating system.
RAVE has an A grade for Quality and a B for Value and Sentiment. Within the same industry, it is ranked #3.
Beyond the grades above, we have also given RAVE grades for Growth, Momentum, and Stability. Get all RAVE ratings here.
BROS operates and franchises drive-thru shops. It offers Dutch Bros hot and cold espresso-based beverages and cold brew coffee products, as well as Blue Rebel energy drinks, tea, lemonade, smoothies, and other beverages through company-operated shops and online channels.
BROS’s loss from operations amounted to $6.38 million for the nine months ended September 30, 2022. Net loss for the same period amounted to $16.44 million or $0.08 per share.
Analysts expect BROS’s EPS to decline 51.5% year-over-year to $0.15 for the fiscal year that ended December 2022. Additionally, BROS has failed to surpass the consensus revenue estimates in three of the trailing four quarters.
Its trailing-12-month gross profit margin of 23.52% is 33.9% lower than the industry average of 35.58%, while its EBITDA margin of 3.47% is 68.7% lower than the 11.09% industry average.
The stock has declined 32.8% over the past nine months to close its last trading session at $34.42.
BROS’s POWR Ratings reflect this bleak outlook. The stock has an overall D rating, equating to a Sell in our proprietary rating system.
The stock is graded D in Stability, Value, and Quality. It is ranked #43 in the same industry.
In addition to the POWR Rating grades we’ve stated above, BROS’s rating for Sentiment, Momentum, and Growth can be seen here.
MCD shares were unchanged in premarket trading Tuesday. Year-to-date, MCD has gained 2.19%, versus a 4.76% rise in the benchmark S&P 500 index during the same period.
About the Author: Kritika Sarmah
Her interest in risky instruments and passion for writing made Kritika an analyst and financial journalist. She earned her bachelor’s degree in commerce and is currently pursuing the CFA program. With her fundamental approach, she aims to help investors identify untapped investment opportunities.
Having bad personal credit, admittedly, doesn’t make it easy to build business credit. But it can certainly be done with the right approach.
Due – Due
Here are some specific strategies on how to build business credit with bad personal credit to make yourself a more attractive borrower.
Establish Your EIN
A good starting point is to establish an Employee Identification Number (EIN).
This is a nine-digit number that’s assigned by the IRS to businesses operating within the United States and the US Territories.
An EIN is used for multiple purposes, including “filing company tax returns, opening a business bank account, applying for licenses and permits, and applying for business credit,” the Small Business Administration explains.
It’s helpful to have an EIN because it gives you another means of attaining business credit lines, and you can open a business bank account with it rather than using your personal information.
An EIN kills two birds with one stone because it will help get your small business off the ground and also serves as a workaround for bad credit.
So if you haven’t established one yet, now is the perfect time to do so. You can find all the information you need for applying for an EIN here.
Register with Dun & Bradstreet
While the three major credit bureaus for reporting personal credit information are Equifax, Experian, and TransUnion, it’s a little different for business credit.
Information is still reported to Equifax and Experian. But, instead of TransUnion, the other main credit bureau it’s reported to is Dun & Bradstreet, among others.
Another critical part of establishing business credit is registering with Dun & Bradstreet where you apply for a Data Universal Number System (DUNS) number.
Simply complete the four basic steps, and after your information is validated, you’ll receive your nine-digit DUNS Number.
Once you have it, lenders and credit agencies will use it to verify your legal status as a small business owner from the Dun & Bradstreet Database and assess your credit profile.
This, along with setting up a business bank account, is integral to “legitimizing” your business. It also should unlock opportunities for partnering with other companies and put you on your way to building business credit.
In turn, it should increase your odds of being approved for a small business loan, business line, credit line, and other forms of business financing. This brings us to our next point.
Apply for Tradelines with Your Vendors
Tradelines can be helpful to most small business owners. But they can be especially helpful for newer business owners who are just getting started and need to get some credit under their belt.
Even with bad credit, vendor tradelines should be a feasible way to start generating some trade credit, which can get you moving in the right direction.
With vendor tradelines, you set up an account with a vendor that has payment terms where invoices must be paid by an agreed-upon time frame.
Under net-30 terms, for example, you have 30 days to pay the invoice. With net-45 terms, you have 45 days to pay. With net-60 terms, you have 60 days to pay, and so on.
As long as you pay on time and the vendor reports it to a business credit bureau, it should start alleviating your bad credit and boost your business credit score.
And as you get in the habit of consistently making prompt payments, your business credit should keep growing, eventually helping you overcome your poor credit history.
Just be sure that the vendor reports payments to the business bureaus — ideally, choosing those with short payment terms, as this will help you build credit faster.
Apply for a Business Credit Card
One of the primary factors for determining business credit is payment history. In fact, most experts agree that this carries the most amount of weight overall.
Besides paying your vendor tradelines on time, another good way to build credit quickly is by applying for a business credit card and using it responsibly, not merely making your payments on time but ahead of time.
Also, just like with a personal credit score, credit utilization comes into play here, meaning you’ll want to keep your credit card usage low.
The combination of prompt payments and low credit utilization can quickly build good business credit and counteract a bad personal credit score.
Just note that you may have to opt for a secured business credit card initially if you don’t qualify for an unsecured credit card.
Make sure that your secured business credit cards report to the business credit bureaus and not to the personal credit bureaus. There aren’t very many secured business credit cards that report to the business credit bureaus, so this is worth calling out.
When you’re just starting out, you may also need a personal guarantee or have a higher interest rate than you may like from a lender.
But once your business credit improves, your options should increase and you may be able to obtain a better credit card with better terms and conditions.
Pay Your Business Bills on Time
Again, payment history is the single most important factor for determining your business credit score.
Just as it’s critical to pay a vendor trade line, business loan, and business credit card bills on time, you should get in the habit of paying all your business bills on time.
And whenever possible, go the extra mile and pay them off in advance so you’re always ahead of the game.
Establishing strong business credit is all about creating a virtuous cycle of good credit.
Staying on top of bills helps you avoid falling into debt and being delinquent on payments. This, in turn, should make you a more attractive borrower to lenders which should help you negotiate better business loan terms and repayment options.
In time, this can help you achieve a good business credit score and may even give you access to the best business credit cards.
While it can be tough at first when you’re trying to work your way through bad personal credit and generate cash flow, it should get easier in time.
Monitor Your Business Credit Reports Regularly
Just as it’s important to routinely monitor your personal credit, it’s the same with your business credit score.
That’s why you should get in the habit of regularly monitoring your business credit report so you know what’s happening with each major credit agency.
Doing so has two key advantages.
First, it will give you a baseline assessment of how you’re doing with your business credit and what your overall trajectory is.
While you won’t likely be in an ideal position initially because of your bad personal credit, your trajectory should hopefully improve over time, and you’ll know exactly where you stand.
Second, you should be able to identify any incorrect information and catch errors.
Although each major credit reporting agency does a pretty good job at credit reporting, mistakes do occasionally happen.
If there’s an issue, staying on top of your business credit report should ensure you quickly find it so you can dispute an error before it damages your business credit score.
It’s just a matter of contacting the credit bureau that made the mistake via a formal letter.
Keep Working on Your Personal Credit
Even though you may have poor personal credit right now, it doesn’t mean it has to stay that way long-term.
Your credit — both personal and business — is constantly fluctuating, and it’s never too late to right the ship.
This starts with first understanding which factors contribute to your personal credit score, which, according to FICO, are:
Payment history – 35%
Amounts owed – 30%
Credit history length – 15%
Credit mix – 10%
New credit – 10%
The other part of the equation is following fundamental best practices, such as:
Consistently making payments on time or ahead of time
Keeping your credit utilization ratio no higher than 30%
Diversifying your credit
Not closing out credit card accounts (this adds to your credit history length and lowers your credit utilization ratio
Not applying for too many new accounts at once (this can be a red flag to lenders)
I spoke with Forrest McCall, a personal finance expert and founder of Don’t Work Another Day, who emphasized a more personal approach to building credit, “When it comes to managing your personal credit, it’s all about comparing yourself to where you were a few months ago, instead of comparing yourself to others.”
McCall recommends keeping tabs on your credit over time and making small changes to how you manage your money so you can start seeing your score climb.
You may also want to consider applying for a credit limit increase on a business credit card as you become a more trustworthy borrower because this too should lower your credit utilization ratio.
That way, you should be able to steadily improve your personal credit score while simultaneously establishing good business credit for a win-win.
Closing Thoughts
Building credit as a business owner with bad personal credit can certainly be challenging. But it’s by no means an insurmountable obstacle.
Even with poor personal finance, knowing what to prioritize and having a clear-cut strategy should help you quickly build business credit and set the tone for creating a thriving company.
Ask any entrepreneur what their most valuable asset is, and ten out of ten will answer the same: time.
You can’t buy more of it and try as you might, you can’t squeeze more of it into a day. But you can save time, which is why we’re introducing Entrepreneur Guide, a one-stop shop for all of your business needs. We’ve pulled together this heavily-researched compendium to help you make the best decisions for your personal and business finances. No more hours wasted shopping around — Entrepreneur Guide has expert-vetted and time-tested resources to build and manage your wealth quickly and efficiently.
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