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Cash Management Solutions for High Liquidity Requirements

admin — Wed, 26 Feb 2014 01:22:40 +0000

When people talk about timescales of investing they generally think about 5 year, 10 year and retirement plans. While these are certainly the most common, there are other areas that your investment advisor can assist you with that pertain to timescales of months or even weeks. We were recently approached by one of our customers to assist them with their cash management planning. As payday lenders they face weekly, bi-weekly, semi-monthly and monthly cycles that leave them with varying levels of cash in a relatively unpredictable environment. Even so, like all businesses, they wanted to get their money working for them whenever possible yet were unable to use traditional methods such as stocks due to their liquidity concerns. These are some of the options available to investors seeking high liquidity.

High Interest accounts

Most banks offer some form of electronic-only high interest accounts. For example, RBC offers a High Interest eSavings account that pays 1.100% and HSBC offers a High Rate savings account paying between 0.70% and 1.20%. This is the ultimate in liquidity, while offering relatively low return. This is a reasonable option for holding operational cash on a weekly basis.

Guaranteed Investment Certificate

When the funds are not needed for a month or longer, most Canadian banks offer GICs for terms as low as one month. This can be effectively employed when dealing with seasonal cashflow variances. The interest rates are typically low but provide substantial liquidity.

Repurchase Agreement

For substantial sums of money, repurchase agreements (often called repos) offer access to the stock and bond markets for extremely short periods of time. The owner of a stock agrees to sell that stock to another party along with the guarantee to purchase the stock back at a specified price at a specified time. The size of the repo market is well over $10 trillion, providing ample opportunity for aggressive cash management.

Credit lines

When the average amount of available cash is substantial but the low points go close to zero it can be a good idea to use a line of credit to finance the infrequent low periods of the month while maintaining longer term, higher paying investments. The downside of paying high rates of interest for one week out of four are easily counterbalanced by earning high rates of interest for the other three.

By using a combination of these methods we have been able to provide stable cash management solutions that minimize risk while maximizing return and liquidity. While our strategies in this case have been tailored for the payday loan industry, the concepts can be applied to any business model. Contact us for more information on how we can help your business put your money to work for you.

What can affect your Decision to Invest

admin — Wed, 07 Aug 2013 23:46:16 +0000

Should you invest or shouldn’t you? Remember, the primary goal of investing is to build wealth over a certain period of time. This involves purchasing assets such as real estate, commodities, bonds, stocks and mutual funds with the hopes that these assets will grow over a period of time.

Needless to say, such a decision is based on more factors that you think. Here are some of the many –

Previous Market Trends

There are times when history repeats itself and some investors keep making the same mistakes. However, you can learn from these by understanding the factors that constituted to their failure or how various asset classes worked in the past before you plan your finances.

The Amount of Money Invested

The old adage “It takes money to make money” rings true where investments are concerned. How much funds have you set aside for your particular investment? A simple strategy would be to start off with an investment plan. Of course if you are like most new investors, you might not be familiar with how the economic market works or how you can utilize your investment to get the most out of it. A professional financial planner can be convenient during times like these.

Inflation

An IRA account that was worth a million dollars offered retirees more lavish retirement plans during the 1980. However, the same rate hardly does the same today. The amount was corrected by the Consumer Price Index according to the state of inflation today and came up to $2.3 million in 2010.

In other words, inflation will be a large factor in your investment ventures. In cases such as these, you will need to need to consider the amount of money that you might require to take you closer to your goals but not according to the dollar rates of today.

Let’s analyze this with an example; if inflation is at 3% and your investment returns come up to 7% over a year, the buying power of your investment will grow by 4%. In other words, you might need to start planning to invest more now if you want your investments to bring you a sizeable amount of profit later.

Your Penchant for Taking Risks

How long can you maintain investments? The general purpose of keeping investments for longer is to acquire greater returns as the said investments mature. The element of risk also reduces with time in cases such as these.

Returns

Your expected returns will be a crucial factor in the type of investment you choose. For instance, you can decide whether you want to invest in debt, equities or balance out your portfolio to provide you more diversity in your choice of investments.

Of course, time, risks and inflation are only some of the many factors that can affect your decision to invest or the type of asset you want to invest in. Ultimately, your success will depend on how you choose to handle any issues that arise. Financial investment planners can provide you with a wider range of options in this regard.

Ways to Better Manage your Time

admin — Wed, 06 Mar 2013 18:39:46 +0000

Many people are finding methods which they can use to save more money, but many people are also trying to find methods that they can save time. Learning how to organize your time is a very important thing to do because time really does equal money. Also time wasted could be time that is well spent in another way. Let’s look at an example. Maybe you take a few hours every day watching television. This is time that might have been better spent with your family or getting the chores done. These types of bad time management skills aren’t hard wired into your brain. If you are determined, you can change them. One way you can improve your time management skills is to take a step back and look at how you are spending your time. Time can even be spent trying to find ways to further economize. There are so many positive ways that you can spend your time. If you spend your time working a little bit extra or putting more time in at work, then you can earn more money. This could be replacing some unnecessary television watching. Keep in mind that you don’t need to get rid of recreational activities; you just don’t want to waste too much time.

Investing Wisely With Stock Options

admin — Mon, 04 Feb 2013 00:22:15 +0000

Full time employees looking for investment opportunities can usually go for stock options, if the organization is offering this benefit to its constituents. This allows employees to own part of the company that they’re working for, and gives them more incentive to stay longer with the company.

Stock options are usually given to employees at discounted rates. For employees, this is more than enough reason to go this route as they will always have the option of selling of the stock in the near future. The downside is if the stock’s market value goes down, the employee also loses out. This is a rare occurrence however, and employees who buy stock options also help the company sustain itself in the outside market.

There is a limitation for employees however, as it wouldn’t be prudent to give them all the benefits at the expense of the public. Companies will usually have a vesting period which limits the number of stocks purchased, and only on certain occasions. This vesting periods are usually spread out over two to five years, making those times important periods not only for employees, but for the buying public as well as it might affect the performance of their own stocks.

Today’s companies also have a limited time window for stock options. Employees will only be given a certain period of time before the discounted rates are lifted. Rookie investors should then do research ahead of time in order to get the most out of the opportunity window presented.

Low-Cost Easy-to-Make Household Cleaning Solutions

admin — Tue, 29 Jan 2013 19:33:13 +0000

For every stain or mess, there is now a household cleaner that sweep away the mess. Every few months, a new detergent or cleaning agent will be introduced into the market with the advertised capacity to clean anything faster and more efficiently. Because of this media barrage, it’s easy to forget that there are plenty of easy ways to clean up almost any mess using everyday household items.

For example, one of the most popular glass cleaning solutions is diluted vinegar in water. The ratio to vinegar and water should never exceed one- third, with the most common ratio being one part vinegar to four parts water. The glass might smell for a bit because of the vinegar, but it’s an easy way to clean up stains.

Going the opposite direction with smell, baking soda can make a good deodorizer, especially for carpets. A few sprinkles over the carpet before vacuum cleaning should decrease the stuffy smell from old carpets. Baking soda is also effective for helping to remove food that’s been cooked into pans and pots.

Aside from baking soda, other household items salt, washing soda, borax and even water can clean stains effectively with a little elbow grease. There are plenty of ways to minimize on needless cleaning items with a little bit of research beforehand.