What will do you when your investment nest egg is empty?

The 2009 recession has delivered a heavy blow to investors. Before you think about reinvesting, first decide how much money you are willing to risk. You might be able to save $2,500 a year, but are you prepared to risk all of it on a single investment?

To anyone who is new to investing, or to seasoned professionals, I strongly suggest you consider the principle of diversification. This simply is the art of investing portions of your money in different things so that, if one of them goes south and bottoms out, you will not lose the entire portfolio of wealth. This is also a good way to reduce your risk.

However, you must also give careful thought to how widely you wish to diversify what proportion of your funds you want to dedicate to various investments. The real reason this should be a concern is that if you divide your money into smaller amounts, you reduce the number of investment alternatives available for each portion of your portfolio.

For example, let’s say you set a limit of $1,000 for any particular investment, you restrict your choice of bonds, CDs, stocks worth $10 a share or less. And yes, since stocks are usually traded in round lots of 100 shares, gold coins, and a couple of other instruments are available for consideration.

Another example — you increase your investment to $5,000, you can also consider small real estate properties, such as rental houses and duplexes, and stocks up to $50 a share. With a $10,000 limit per investment, you can include on your list of possibilities small commercial real estate properties, such as small apartment buildings, T-Bills, and stocks worth $100 a share or less.

The good thing is the larger amount you are willing to commit to any one investment, the broader the range of choices open to you. But, keep in mind too that the greater amount you commit as an investor, the more your whole financial standing will be affected by the success or failure of the ventures into which you have place your money.

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What Makes Your Business So Unique

For those businesses with similar competitors eventually learn they must establish their own unique brand. In fact, there should be a huge difference between your business and others doing the same work. I can tell you from first hand experience that being different and more efficient at the same time will not only be more productive, but it gives your customers more purchase options.

Questions you must ask yourself are:

a) Should I offer my customers something for free?
b) Can I offer solid guarantees and still make a profit?
c) Will my years in business make a difference?
d) Should I really charge for after hours work?
e) Must I invest in new breakthrough equipment?
f) Should I offer special financing options to my customers?
g) Will my bottom line increase if open weekends and nights?

Consumers want more bang for their buck during a recession. They will not purchase from you unless they receive some kind of benefit. First time customers need to be told how they will benefit by doing business with you. Regardless if you own your market, do you know

what makes your business stand out from the rest?

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A major investment objective that investors aim for is always capital growth. With the current state of the economy, this is the most popular, but also the most difficult goal among investors today. A capital gain is achieved whenever the original item is resold above its purchase price. Profit is always the purpose of a growth investment where regular income is a secondary consideration from growth stocks, commodities, or raw land.

With a growth stock or raw land, the investor receives low or no yield, but the possibility of an increase in value. One such example could be a company show definite signs that its earnings are on the upswing, but management has decided to reinvest most of them in new equipment instead of paying increased dividends to shareholders. The results are good growth prospects and very low yield. Sound familiar?

Another example you could look at, let’s say you buy some undeveloped land on the out-skirts of a fast expanding metropolitan area. The yield will be zero, because you’re collecting no rent, but the prospects for growth will soon be promising. The only thing is when you sell the land for a profit or develop it as income property you will receive a capital gain, but at a lower value due to the current economic downturn.

If you are willing to forgo present income for the sake of possible increase in the value of your funds in the years to come, then I strongly suggest a growth investment. The difference between income and capital gain is very obvious during a recession or depression. Income is normally received regularly, while capital gains are much more uncertain and can be realized only when you sell. The difference in time pattern of return is critical to your objectives as an investor. If you rely on a definite amount of return, you will need this for your present consumption. Capital gains, however, are for acquiring wealth for future consumption.

The safety/income/growth (capital gain) choice is not a 1 out of 3 decision. Selection is a matter of emphasis. Many securities offer you a combination of two needs, playing down the third. It may be necessary for you to choose a mixture of investments.

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Most businesses have no idea what it takes to get just one customer. They are so busy trying to include their marketing budget into a percentage of their sales, that during a recession they cut their ad budget. This is a huge mistake.

The very principle to continue advertising at their current level, they will eventually get their customers. But, how well do they know what one customer is worth? Calculating your customer’s worth is basically done by taking the average sale number, your profit per that sale, how much additional profit a customer is worth to you, and determine how many times they come back and buy. You will want to be very conservative when adding this up.

Next, figure out what a customer costs by dividing your marketing budget by the number of customers it produces. If you spend $1,000 on marketing and you get 1000 customers, they are costing you $1 a piece. Prospects are the same. Maybe out of that $1,000 you get 10,000 prospects for $.10.

Calculate how many sales you get for so many prospects. The percentage of prospects that actually become customers. This will be your closing ratio. If you get 10,000 prospects and you have 1,000 customers, it’s a 10% closing ratio.

Additionally, the marginal net worth of a customer is figured by subtracting the cost to produce that customer from the profit you expect to earn from them over their lifetime. Your goal should be spending less to get customers through your acquisition cost. However, this method is one way to generate customers in a short term.

The key is to try and do business for free on a front end sale where you will be attracting new customers. This will ultimately be the driving force to cut back back and reduce how much it cost you to get them. Every business right now wants as many new customers as they can get, but noody really knows how much a customer is worth. So, they end up NOT knowing how much they can spend to get one.

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Our political system is screwed at every angle and cannot be defended by American people at any angle. Too many bad habits have turned into rotten decision making. If America wants to reverse the recession, then leave government out of it.

If America wants to regain making money a wonderful habit, there’s certain rules everyone must follow before that habit takes root. Good investment decisions and superior money management practices must be ingrained into your daily living!

Everyone must take control of their personal finances and learn various money management concepts. Each U.S. citizen must learn negative spending habits and quickly discover how to reverse them. All Americans must form a systematic plan of action that can produce important financial benefits in a relatively short period of time.

Financial security and wealth do NOT result from luck!

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In order to survive in today’s economic climate, it is essential to surround yourself with smart people, and practice sound business management at all times.

The most important, is to know the direction in which you’re heading and document your progress on a daily basis in that very direction. Be aware of what your competitors are doing and practice good money management at all times. All this will prepare you to recognize potential problems before they arise.

Amother very good business practice, but few business owners do, is to methodically build a credit rating with your local bank. Particularly, when you have a good cash flow, you should borrow $100 to $1,000 from your bank every 90 days or so.

Simply borrow the money, and place it in an interest bearing account, and then pay it all back at least a month before it’s due. By doing this, you will increase the borrowing power of your signature, and strengthen your ability to obtain needed financing on short notice. This is a kind of business leverage that will be of great value to you if or whenever your cash position becomes less favorable during a recession period.

Whatever business you’re in, by now you have found that most of your customers have the money to pay at least some of what they owe you immediately. To keep your cash flow current and the number of accounts receivable in your files to a minimum, you should implement all types of communication (phone, fax, email, direct mail letter) and ask for some kind of explanation why they’re falling behind.

If you develop such a habit as part of your operating procedure, you’ll find your invoices will magically be drawn to the front of their piles of bills to pay. While maintaining a courteous attitude, don’t be hesitant, or too lenient when it comes to collecting money.

Your business documents should reflect your way of thinking, and should be maintained to generate information according to your policies. It will be wise to hire an outside accounting firm to figure your return on your investment, as well as the turnover on your accounts receivable and inventory.

Such an audit or survey should focus in depth on any or every item within your financial statement that merits special attention. This way, you’ll probably uncover any potential financial problems before they become readily apparent, and certainly before they could get out of hand.

In conclusion, if you can manage the money first, the rest will follow! While you may think you cannot afford it, be sure that you don’t short change your self on professional services. This would apply especially during a time of emergency.

Anytime you commit yourself and move ahead without completely investigating all the angles, and preparing yourself for all the contingencies that may arise, you’re skating on thin ice. Regardless of the costs involved, it always pays off in the long run to seek out the advice of experienced professionals before embarking on a plan that could ruin you and your business – forever.

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