7 Factors to Consider Before Choosing an Investment Banker

The total revenue for 12 of the largest investment banks was $147.5 billion in 2019. While the revenue was a 4% decrease from the previous years, investment banking remains a crucial aspect of the economy. Consequently, there has been a surge in the number of investment bankers.

Selecting an experienced and qualified investment banker can be daunting. You need to be critical in your vetting as the choice of investment banker will impact your transaction experience. A professional investment banker will give you the best advice, negotiate with the utmost prowess, and ensure that you get the best deal.  

Are you looking for assistance in managing your investments? Here are factors you might want to consider when choosing an investment banker.

1. Reputation 

The reputation of a bank is an essential consideration. However, the character of the people transacting on behalf of the bank is more crucial. It would be best if you vetted an investment banker as an individual.

Check their past deals. Do they have a track record of success? The main areas to consider are the banker’s industry, the size of the deals closed, and the transactions involved.

Your chosen investment banker should be someone whose reputation is commendable. You can research and vet more to know the type of person who will be handling your investments. 

2. Chemistry and Trust 

You don’t want to take chances collaborating with an investment banker you can’t trust. You will be entrusting all your financial transactions based on advice from this specific investment banker in the long-term. The process will undoubtedly be time consuming and intimate.

As such, ensuring that you develop synergies with the investment banker is necessary. Chemistry refers to the inherent feeling of being comfortable listening to your banker’s advice. You’ll also need to ask relevant and somewhat delicate financial questions over time. 

It would help to focus on the chemistry when shopping around for an investment banker. If the chemistry isn’t there, you might end up dealing with a more stressful situation. Trust, on the other hand, is non- negotiable. 

You can’t afford to deal with someone you can’t trust. Trust must be at the centre of any relationship with an investment banker before committing to a long term engagement. This is especially crucial considering the value of your investment. 

3. Get a Relational Investment Banker 

In investment banking, creating rapport with clients is essential. You need to prioritize a banker with essential relationship skills. While the skill is intangible, it’s one of the most critical for investment bankers.  

The stakes in investment banking are quite high. An investment banker with the right social skills and attitude will address extreme conditions and individuals. Nothing is more fulfilling than having an investment manager who understands you!

You’ll be communicating with bankers often when running a transaction. It would help to identify bankers with the right communication skills. Within the first encounter, you can gather clues that will determine whether the banker has the right set of communication and relational skills.

4. Valuation and Fees

Cost is always a factor when choosing a reliable investment banker. You want to understand the cost implications before committing fully to such services. The banker should be able to present an accurate cost of services.

While you might be keen to attract someone who charges the lowest fee, it would help focus on the ROI. Your goal should be to work with someone who has the highest qualifications.  It would help balance the need for a pocket-friendly deal with a highly reliable banker to ensure value.  

It would also be essential to ensure that you understand all the hidden fees and any other charges before hiring an investment banker.

 When it comes to valuation, a good banker should keep up with the trends in your specific industry. This helps in interpreting the market activities and their impact on the value of your valuation. Ensure that you understand the range of valuation before committing to hiring.  

5. Availability of Resources 

A reliable bank should have adequate resources for your deal. If a firm has large teams, they are unlimited on the financial transactions it can handle. While this might be a positive aspect of the bank’s view, it might not favour you.

It is best to work with an investment manager who will guarantee you a personal experience. Confirm if they have the right resources. You can check out the different types of investment banking services and the available resources to know if they resonate with your business needs.

6. Transaction Experience

One of the essential factors you might need to consider when selecting an investment banker relates to experience. Can they get the deal done? You don’t want to deal with a novice who might take longer to deliver. 

You also want to rest easy, knowing that your investment banker has the experience necessary to deliver. A banker who has been in the industry long enough understands the dynamics in the sector. The easiest way to validate an their experience is to consider the number of past transactions.

The more the number of transactions the banker has, the more the experience they bring on the table. It would help to consider the level of experience the they have before proceeding to commit. 

7. References and Reviews 

Every investment banker worth their salt has a battalion of loyal clients. Reviews play an important role in determining any business’s repute. Before you decide to hire an M&A specialist, consider the testimonials that back up their exceptional services.

Most past customers provide honest feedback on their engagement with respective investment bankers. You can utilize such information to determine the most suitable banker to handle your case. It would also help consider negative reviews as a red flag when dealing with investment banking service providers for the first time.   

The Right Investment Banker Has a Significant Impact on Your Wealth  

Transactions are often laden with challenges. You’ll meet buyers who are more familiar with the market than you, leading to disagreements. With an experienced investment banker, you can rest easy knowing that the process will be seamless. 

You need to familiarize yourself with the banker’s skills and experience. Thorough vetting will enable you to settle for the best talent around. 

Contact us today for compelling articles on financing.

7 Benefits of Using Private Banks for Small Businesses

When considering your options about your finances and your new business, the tendency is to only consider high street banks.

This might not always be the best option for you and your business. It is essential to consult all the types of banks that are available and how they can facilitate your requirements and needs.

Private banks might just be the way forward when looking at a bank to store and manage your company’s finances and outgoings.

In this article, we will go through and explain 7 benefits of how using a private bank can help small businesses and why you should choose one.

Read on to find out more about private banks and why they could be the solution for your business.

1. Private Banks Offer Additional Support to Their Clients 

Private banks are run in a different way than average high street banks. They actively work with their clients and can offer tailored advice on not just various financial aspects of their business, but their personal finances as well.  

Private banks are able to go above and beyond for their clients in terms of managing their assets, wealth, and finances and give an in-depth analysis of what a client should be doing with their projections and future investments.

2. Private Banks are Highly Personalised For Their Clients

A real benefit of choosing a private bank over a regular one, is you are often assigned a private banker who manages your account. This means that a singular person is in charge of your finances, and has a much greater understanding of your goals and has a keen knowledge of your business. 

They are able to actively recommend and advise on your finances whilst developing a relationship with you.

You are able to have confidence in your own personal banker who will be proactively searching for the best investment options and course of action for your business. 

3. You Have a Direct Line to the Bank

Often one of the most frustrating things with traditional banks, is that if you need an issue resolved or have a question that needs to be answered, you might have to ring and wait for hours on hold to speak to someone. 

The person you eventually get through to has no knowledge of your business, and you will probably need to repeat yourself a few times whilst you are transferred to different departments.

This whole process can be incredibly time-consuming and frustrating, and you might not even get the resolution or information you need.

With private banks, this is never an issue. You often will have a direct line to your own personal banker, who is completely in tune with your finances and is able to facilitate your requests much quicker than a regular bank.

4. Private Banks and Bankers Fit into Your Financial Support Network 

If you have other elements to your financial support network such as an accountant or lawyer, the private bank or banker will be able to take an active role in this infrastructure and speak to them regarding any issues or financial information.

This connection between the various aspects of your financial support system can be integral to how your business can develop and grow. This is not something that can be achieved or managed using a regular bank.

5. The Relationship is Tailored and Flexible 

When beginning an account with a private bank, you will have a meeting to discuss everyone’s expectations and what you are wanting out of the relationship between your business and their bank.

You are able to tailor a schedule of how often you should meet and what needs to be discussed at these meetings. And if they need to be done in person, or whether a phone or video call will be adequate.

The benefit of a private bank is that the contact and schedule of the client and bank relationship is personalized to the client’s requirements.

6. The Bank Will Assign You a Banker Best Suited to Your Account 

This is dependant on the bank you decide on, but private banks will take a look at your application and make informed choices based on who at their company will be the best fit for you.

Bankers will have specific knowledge and expertise in certain industries and sectors, the bank will always try and match a client with an employee who is most qualified to handle your finances. 

7. Private Banks Offer Additional Perks

If you qualify for certain VIP services then you might have access to some great perks or discounts.

Some banks offer premium travel services or favorable mortgage financing and options with discounts on fees and reduced interest rates.

There are some that offer free worldwide travel insurance, discounts on hotels and give you a certain number of points every year to redeem on holidays and breaks away. 

It is worth enquiring with a private bank to see what type of perks and discounts they can offer you if you become a client. These options could help you save or redeem hundreds of pounds in your private finances. 

Private Banks: Where Can I Find Out More?

We hope you have enjoyed this article explaining the benefits of choosing a private bank for a small business. 

The focus is always going to be on personalization and quality service with private banks. You do not have access to that level of care and proactiveness with a regular bank.

If you want a bank that will act as a consultant, who will be supporting you at every stage of your financial cycle, then a private bank might be the option for you and your business.

If you have any further questions about the benefits of private banking, why not check out our previous blogposts? Or contact us directly?

7 Mistakes to Avoid When Opening a Business Bank Account

When you’ve just begun a new business venture, one of the first things that you’re advised to do is open up a business account for the company. But, when you’re opening a business bank account, there are somethings that you’re going to want to avoid at all costs.

What should be avoided? We’re glad you asked because in this article we’re going to give you a list of things that you should try to avoid doing at all costs.

1. Incomplete Account Information

When you attend your account opening appointment, ensure that you’ve got all the documentation you need. And if you’re not sure if the document is required it’s best to bring it along just in case.

Before attending your meeting when setting up the appointment check with the bank about what documentation is required. This will reduce the likelihood that you don’t have all the information needed to begin setting up your account.

Having missing information could mean having to reschedule your appointment altogether.

2. Using Your SSN Instead of FEIN

If you’re not aware of what these initials stand for the first is your social security number and the next one is your federal employer identification number. When you arrive for your meeting ensure that the number you place on your account is your FEIN and not your SSN.

Many business owners that are just starting out make the mistake of placing their SSN on the account, which can prove problematic in the future especially when it’s time to fill out tax documents for your business taxes.

Anything that requires a number for your business should almost always feature the FEIN that was assigned to you when you filled out the paperwork to register your company as an LLC.

3. Having One Account

Some people may think that there’s no way they’re going to mix up the money that’s deposited into their account if they keep one account for personal and business needs. But, the reason that it’s recommended you have separate accounts is so that you don’t experience issues when it comes to doing your taxes, accounting needs, etcetera.

Another reason that you want to keep your accounts separate is that you’ll want to refrain from being tempted to reach into the money that is designated to the company. And if you’ve only got one account, it can be challenging to differentiate between your personal funds and the business funds.

4. Check-Signing Access

If you’ve got a business partner or plan to take on one in the future, you need to ensure that you provide them with access to sign checks. If you don’t provide your partner with check-signing access you’ll be the only one able to deposit checks or a check may be flagged if your partner attempts to sign it.

To avoid wasting time and becoming frustrated, ensure that you’ve taken care of this minor detail beforehand. You never know when you’ll need that check deposited, or you may be out of time and not able to do it yourself.

5. Picking the Wrong Bank

Not all banks are created equal, nor do they all offer the features that you would be looking for when it comes to opening your business account with them. The bank you choose may have strict limitations on what they will allow a new business owner to take out when it comes to business credit.

Another thing you’ll want to watch out for are banks that are new and not as well known. The reason that you want to steer clear of these banks is for the protection of your company money.

When it comes to your business banking account, you want to make sure that you’re able to meet the requirements of the bank and protect your money at the same time.

6. Minimum Monthly Balance and Fees

Another common mistake made by small business owners is not taking note of the minimum monthly balance. This means that at the end of every month, your account must have a specific amount in it or you’ll face some kind of monetary penalty.

You’ll also want to ask about any monthly maintenance fees that will be deducted from the account. It’s also beneficial to ask if there’s anything that you can do on your side that will wave additional fees such as making a large transfer to your business savings account.

Speaking of your business savings account the typical bank will only allow you to make a specific number o withdrawals from this account every month. If you exceed the number of acceptable withdrawals, you may face a monetary fine.

7. Ordering the Wrong Checks

Ensure that when you’re ordering checks for your business, the correct name is printed on the checks. Some people make the mistake of using other names or their personal names on the check instead of putting the name of the business.

The reason that this is problematic is that when a processor of a payment goes to put a payment through to prevent fraud, they ensure that the name on the check is legit. If your name or another company name appears, then it could lead them to flag the payment as a fraudulent payment.

This would then leave you having to be on a lengthy phone call explaining the mistake and inevitably having to order all new checks. Avoid this from the beginning and ensure that the checks you’ve ordered for your business have the legal name of the business that appears on all your company paperwork.

Trust us, no one wants to deal with the headache of having to wait for checks to arrive in the mail.

Business Bank Account Mistakes Avoided

Now that you know all of the mistakes not to make when opening your business bank account, you can open your account. Avoiding the mistakes listed above will help you to save valuable time and frustrations correcting your mistakes.

If you’ve found this article useful, then you’re going to want to check out some of our other articles. Our site focuses on providing engaging and informative content about things like finance and business every day.

You won’t want to miss out on the advice offered on our site.

7 Questions to Ask Before Choosing Banking Services

The number of unbanked Britons currently stands at around 1.2 million. Banks in the United Kingdom play an essential role in bridging the individual and business-related financial needs. These financial institutions provide access to lending and borrowing facilities on top of offering safe volts for savers. 

As a client, choosing a bank that serves your needs is never easy. It would help if you considered a wide range of factors before settling for specific banking services. A reliable banking services provider should be able to guarantee you security, convenience, and cost-effectiveness. 

Are you in the process of selecting a banking services provider? Vetting such potential financial institutions is vital. These eight questions can help you probe such prospective banking service providers before entrusting them with your financial needs. 

1. How Much Are the Bank Charges?

Let’s face it; cost is the main deal-breaker when choosing a banking services provider. You might need a clear summary of the banking charges before selecting the right bank for you. Consider the summary of all the costs, terms, and conditions stipulated by the institutions before making a decision.

You might need to ask the potential service provider about any extra charges attached to their bank cards. This question will also help you figure out other management fees that apply. Some banks charge a fee for keeping your current and saving accounts.

It’s important to consider all these charges before making a decision. These standard banking fees should help you determine whether the potential banker is convenient for you. 

2. What Are the Digital Services Available?  

Every sector of the economy has since gone digital. The banking sector is not an exception.

 Most banking services providers now offer online services. However, there’re disparities on the different platforms and the range of services each bank offers. A reliable banking services provider should provide online services that help you save time and money. 

Online banking services should also be available at all times and on any device. Today, over 2.5 billion people globally have access to smartphone devices. As such, a suitable banking services provider should offer online banking services and mobile banking options.

Digital banking plays a vital role in bridging the gap among unbanked citizens. The Union Bank of the Philippines has been at the forefront in providing digital banking services to these unbanked populations. 

3. What Are Your Account Requirements?

Before you settle for a banking services provider, it would help to consider the dynamics related to account opening. You don’t want to end up selecting a specific bank only to learn about unfavourable account opening requirements later. 

What are your potential bank’s minimum requirements when opening an account? You might need to consider the minimum balance you need when opening an account. Further, it would help to consider the minimum balance that your account must have to remain active. 

Be sure that the underlying account requirements are stipulations you can easily manage. This will limit the risk of surprises in the future.  

4. Do You Allow for Overdraft?

Sometimes your account balance depletes below the withdrawable minimum. When this happens, most customers result in overdrafts. It’s important to understand beforehand if your bank allows overdraft transactions.

You would also want to be sure that the bank charges manageable charges when you overdraft. It would also help to gather information on whether your bank allows for overdraft protection. This is where you have the option of covering an overdraft with money from a different account. 

5. Do You Have a Branch Near Me?

Online or digital banking introduces remarkable ease and convenience when accessing financial services. Some particular needs or queries may require a physical meeting with a representative or the bank manager. It’s comforting to know that you have your money in a bank where you can walk in and out at your convenience.  

You might need to consider an institution that’s closer to your work or home. It’s safer to spend your time researching on banks that are closer to you on top of fitting your criteria. A bank that’s close enough makes the process of filing and receiving feedback on complaints easier.

6. What Other Services Do You Offer?

Not all banks are the same. Financial institutions offer different banking services that suit varying customer needs. Talking to bankers can help you unpick the unique services on offer. 

Apart from lending and borrowing, banks also offer a wide range of differentiated services. It would help to consider these unique services when considering a bank. For instance, banks that provide both regular banking and Islamic banking show a unique sense of inclusivity. 

It would be best if you also considered a bank with unique facilities such as investment and wealth management. Partnering with the Union Bank of Philippians ensures that you have access to private, wealth, and investment management.

7. Are There Withdrawal and Transfer Limits? 

You don’t want to end up working with a bank that limits you. Part of the need to have a convenient banking service is to expand your freedom when making transactions. It would be objectionable to rack up interest on your hard-earned money, yet have limits when it comes to withdrawal.

If you intend to save up considerable amounts of money in your account, this question is essential. Ultimately, how much you can withdraw should interest you. You don’t want to end up having to borrow money elsewhere while there’s money in your account due to limits. 

8. Do You Have Testimonials?    

There’s nothing more important than a reputation when dealing with a banking services provider. This is why references and reviews should be at the centre of this vetting process. Can your potential bank present a list of testimonials for exemplary services?  

Positive reviews play an essential role in determining a bank’s reputation. Consider testimonials as one of the determining factors when dealing with a banking services provider. 

Vetting Your Prospective Banking Services Provider Is Non-Negotiable  

Finding a secure and convenient way to bank your hard-earned money is vital. You don’t want to end up feeling frustrated when trying to access banking services. Convenience, affordability, and accessibility should be at the centre of your selection process.

Are you looking for a reliable banking services provider? These eight top questions can help you get a secure banking facility as soon as possible. At Union Bank of the Philippians, our impeccable services and products are the perfect answer to these questions.  

Have you been looking for a bank that encompasses convenience and safety under one roof? Visit our page for more resources.

Is Investing in Green Energy Financially Savvy?

The global market for green energy is expected to grow to a value of $1.5 trillion by 2025. 

When you consider the fact that this was a market that barely existed a few decades ago, it’s obvious that investing in green energy has made many people rich. It’s also going to continue making people rich for as long as the world needs renewable energy, which is likely to be forever.

The question, therefore, is this: what is the best way to make money from the green revolution if you’re new to the game?

Read on as we look at the answer to that question and set you on the path to becoming a profitable green investor.

The Different Ways of Investing in Green Energy

There are many different ways to get exposure to green energy. The right one for you will depend on your risk appetite, the amount you want to invest, and whether you want to be actively involved in the investment.

We’ve looked at the different options in more detail here.

Starting a Business

If you want to take an active hand in the green energy market, you could set up a business in the field. There are a few different options here.

Wind and solar energy are the two main forms of renewable energy in the world today. If you enter this industry, you’ll likely be setting up either a wind farm or solar farm.

This is, of course, specialized work. You’ll need an educational background in energy or physics, and you may need prior professional experience of working with renewable energy.

In order to produce energy on an industrial scale, you’ll also need to make a considerable initial investment. Solar panels and wind turbines are both expensive to buy in bulk. They also take up considerable space, which means that you’ll need to have a large plot of land to work on.

Buying Stocks

If you don’t want to set up a green energy company yourself, you could choose to invest in one that’s already in operation.

There are many different options here, from established energy giants to brand new operations. The latter will not feature on public stock exchanges, however, so you’ll need to look to different investment platforms for these.

If you invest in a new start-up while its shares are cheap and it goes on to create highly valuable energy solutions, you could end up multiplying the value of your investment many times over. On the other hand, if the company goes bankrupt, you’ll lose all your money.

If you’d prefer a lower-risk stock investment, it might be a good idea to look for a publicly-traded, blue-chip green energy company.

Investing in a Green Mutual Fund or ETF

This is similar to investing in green stocks. It will offer passive exposure to the green energy market, giving you financial benefits if and when the market as a whole improves.

The key difference between this and the option of buying company shares is the risk-reward profile. Because funds diversify your investment across a large number of ventures, you won’t lose all your money because of one company’s bad decisions.

However, you will also have a much more limited growth capacity. 

There are a couple of important differences between an ETF and a mutual fund. Most significantly, a mutual fund is actively managed, which means that fund managers will pick up and drop stocks in real time on the basis of market trends.

ETF managers, on the other hand, pick a basket of stocks or index at the fund’s inception and leave them in place regardless of trends. Because of this passive strategy, ETF fees tend to be much lower.

Setting Up Solar Panels or a Windmill

This admittedly isn’t an investment in the business sense. However, that doesn’t mean it’s not a great bet.

Recent COVID-19-related dips aside, fossil fuels are getting more expensive. As oil-producing countries tinker with the supply chain and the reserves of natural fuel continue to dwindle, the price of non-renewable energy will eventually become unsustainable.

When that happens, the homes and businesses that are self-sufficient in terms of energy will be much better off. If you live in an area that gets a lot of sun or wind, this is something you should consider.

The Advantages of Investing in Green Energy

The main advantage of investing in green energy is the market outlook. There aren’t many industries with as bright a future as renewable energy.

Green companies also benefit from government subsidies and tax breaks in many areas. Because many places desperately need green energy, ruling bodies are happy to incentivize its development in whatever ways they can.

To make the most of this, you should research political attitudes to green energy in a given country before deciding to invest in a company from there.

Depending on the investment you make, you might also be helping to fund a company that makes a real breakthrough in the field of clean energy. There are countless capable energy specialists that only need start-up capital to start building the energy solutions of tomorrow.

Investing in the Energy Solution of Tomorrow

When it comes to investments with future value potential, you might find it difficult to come across a better option than green energy. Our planet’s energy requirements are massive, and continuously growing, while non-renewable energy resources continue to dwindle.

Investing in green energy is therefore likely to be a successful strategy. However, to make sure you take on an investment that suits your goals and outlook, you’ll need to do a little research on the various available options.

To learn more about investment opportunities, check out our finance section.

What Happens When You Declare Bankruptcy in the Philippines?

After East Asia’s financial crisis in the 1990s, middle-income countries including the Philippines made up 80% of the total East Asian bankruptcies filed

Do you know what happens when you declare bankruptcy in the Philippines? We’re coming up on another financial crisis, so now is the best time yet to learn your legal rights. That’s why we created this guide. 

Are you considering filing bankruptcy in the Philippines and want to know what to expect? Then you’ve got to keep reading because this article is for you.

What Exactly is Bankruptcy?

Bankruptcy is a legal process that takes place after an individual or company has defaulted on a debt. 

Filing bankruptcy allows individuals options to either repay or offer collateral to erase their debts. At the same time, bankruptcies allow the bank or other lending institution to remove bad debt from their ledgers. 

When the bankruptcy filer can’t repay debts, they typically end up divesting an asset. An asset is anything a company or individual owns outright. For example, buildings, homes, cars, etc. 

The Philippines Bankruptcy Law: The Financial Rehabilitation and Insolvency Act

The Financial Rehabilitation and Insolvency Act (FRIA) legally allows the declaration of bankruptcy in the Philippines. Individuals can file for personal bankruptcy. Companies will file for business bankruptcy. 

In the Philippines, there are three ways to file bankruptcy legally. We’re going in-depth with each method next, so check it out.

Suspended Payment

In some cases, an individual or business filing for bankruptcy can repay the debt over time. A Philippines court will restructure the debt payments to allow for a longer period of repayment. 

Suspended payment bankruptcies are allowed when:

  • The debtor has the collateral to cover the debt but can’t meet payments by their due date
  • The debtor presents a restructuring payment plan that is both possible and agreeable to the lending party
  • Creditors or lenders who hold 60% of more of the debt liability get together and agree on the debtor’s proposed repayment plan

Once the lender agrees to the debtor’s restructuring strategy, the debtor can proceed with the suspended payment bankruptcy agreement. 

Voluntary Insolvency

With voluntary insolvency, an individual or business defaults on a debt. Unlike suspended payment bankruptcies, voluntary insolvencies allow debtors to voluntarily give up assets to repay debts. 

To file for this type of bankruptcy, the individual or company must have assets that sufficiently balance out the debts owed. However, these debts must be in excess of P500,000. 

Individuals or businesses filing for voluntary insolvency are responsible for petitioning the court. The court will then determine whether the collateral offered is equal to the debts owed.

Within five days of approving the petition, the court will issue a liquidation order. Liquidation orders allow the original lenders to claim the proposed collateral to settle the debt.

Involuntary Insolvency

Involuntary insolvency is different from both suspended payment and voluntary insolvency bankruptcies in the Philippines. Why? Because Philippine creditors and lenders, not debtors, initiate involuntary insolvency.

Under FRIA in the Philippines, lenders with claims of P500,000 or more can file a petition with the courts. The court should be that of the city or province where the debtor lives. 

This petition will outline that, upon default of the debt, the creditors will seek liquidation. If the debtor does default, the court can order the lender to seize the individual or businesses’ assets. 

Civil Small Claims

In some cases, a lender can file a civil small claims case instead of choosing involuntary insolvency. This can only happen for debts of less than P400,000. The proceedings of a small claim case tend to be cheaper and quicker, which is why many creditors are more likely to use it. 

The bad news? Individuals and businesses can’t actually have legal representation in small claims cases. If creditors win, debtors can’t appeal the ultimate decision either. 

What Happens When You Declare Bankruptcy? 

Bankruptcy is an extremely helpful tool for individuals and companies that can’t pay back debts they owe. Yet, bankruptcy isn’t without some serious consequences. Here’s what to expect after filing bankruptcy. 

Your Credit Score Will Drop

After filing for bankruptcy, it will stay on your credit report. The bankruptcy will also lower your credit score. This will make it difficult to open lines of credit or apply for a mortgage in the future. 

You Could Lose Your Stuff

If you go through voluntary or involuntary insolvency, you’re going to lose your assets. Debtors can choose which assets they’d prefer to divest in voluntary liquidation. Yet, if your lender files for involuntary insolvency, you’ll have no control over which assets they take from you.

You May Lose All Your Credit

Many credit card companies will immediately terminate your lines of credit after a bankruptcy. This is especially true if your credit card company is the same bank filing bankruptcy against you. 

You Could Have Trouble Getting a Loan

We’ve already mentioned that a lower credit score means more problems getting a mortgage. This is also true for loans in general. Not only that, lenders see bankruptcies as a huge red flag, meaning you may have to pay ridiculously high interest rates for loans.

You May Not Get a Tax Refund

If you qualify for a tax refund in the same year you filed bankruptcy, you may not receive it. 

You Could Face Difficulties Finding Housing and Jobs

Many employers and building owners pre-screen potential candidates for bankruptcy. Some employers won’t hire you if you’ve recently filed for bankruptcy. Worse, recent bankruptcy can affect your desirability as a tenant. 

More Financial Advice from Capital Finance International

Now that you know what happens when you declare bankruptcy in the Philippines, you should feel confident knowing your rights when you can’t repay a debt. 

Are you looking for more financial advice during these trying times? Then don’t forget to subscribe to our finance blog for new updates every week. 

Cryptocurrency 101: Learn the Basics

Unless you’ve been living under a rock, you’ve heard of cryptocurrency. Cryptocurrency is a virtual currency that could replace our cash system one day. 

Virtual currencies like Bitcoin are working to cut out the middle man in our banking transactions. Read this article to learn cryptocurrency 101 and whether you should invest or pass. 

Cryptocurrency 101

Cryptocurrency is a virtual or digital currency. It is secured by cryptography. Cryptography is a method of encoding and decoding data. Essentially cryptography puts the “crypt” in cryptocurrency. Cryptography makes it almost impossible to counterfeit money. 

Cryptocurrencies (yes there are more than one) use blockchain technology. It works by dispersing a ledger among a network of computers. These computers all work to keep up with it. 

Understanding Cryptocurrency: How it Works

With cryptocurrencies, there isn’t a central authority. They are not issued by a government or a bank. In theory, this makes cryptocurrencies free from government interference or manipulation.

Payments are made online using “tokens”. The ledger keeps track of all the entries and how much currency everyone has. Verifying transactions is usually the role of the banks but cryptocurrency relies on the peer-to-peer system. 

This system allows for your transactions to be secure. It reduces the risk of fraud and allows your transactions to be more transparent. 

Popular Cryptocurrencies 

Bitcoin was the first blockchain-based cryptocurrency. It was started in 2009 by an individual known as Satoshi Nakamoto. Today it remains the most popular and valuable. 

Since Bitcoin started there are now thousands of different cryptocurrencies people can use. Each cryptocurrency has its function in the market. Some of these cryptocurrencies copied Bitcoin and others were built from scratch. 

At the time of this article, USD 27.5 billion BTC has been traded in the past 24 hours. A single token or BTC of Bitcoin is worth USD 9,435.04. 

Other popular cryptocurrencies include Litecoin, Ethereum, Namecoin, Cardano, and EOS. If we calculator the total value of cryptocurrencies all together that number would be around USD 251.8 billion. To put that into perspective that is about 0.7% of the world’s money. 

Is Cryptocurrency Safe?

Cryptocurrency experts would remind you that Investing is always a risky business. However, Some traditional experts say investing in cryptocurrencies, like Bitcoin, is even more of a risk. 

The world has been caught up in “crypto-mania” as people began buying and selling cryptocurrency like stocks. We’ve all heard the stories of people who became millionaires overnight thanks to Bitcoin business opportunities. 

We’re not going to suggest investments. That should be left to you and your portfolio manager. However, we will say you shouldn’t invest in something you don’t fully understand. This advice goes for any investment. 

Pros of Cryptocurrency

There are a lot of pros of cryptocurrencies. Cryptocurrencies make it much easier for two parties to exchange funds. No longer do you need a bank or credit card company to serve as a middle man. 

The transfers are secure. There is very little risk of counterfeiting or double-spending. They are also completed with very minimal transfer fees. The fee is much lower than the charge for a wire transfer from a bank. 

With more customers choosing to make payments from their mobile phone, tablet, or Apple Watch, cryptocurrency is a cheaper and more efficient system for payment. 

Cryptocurrencies have the potential to create a borderless, global economy. That’s a win for everyone (well, maybe except banks). It can help fight financial inequality by taking out the bank and credit card middlemen and bring financial services directly to the people.

Cons of Cryptocurrency

Cryptocurrency sounds great but there are a few drawbacks to blockchain the technology it is based on. For one, blockchain isn’t as scalable as centralized banking systems. If you’ve ever made a bitcoin transaction then you noticed it took some time to complete. 

Remember the ledger we talked about? The blockchain network of computers is kinda slow to make changes to the ledger. And if you think it is slow now just think about how slow it would be if more people started using bitcoin!

Another common issue is that you can lose your cryptocurrency hack. When you purchase cryptocurrency most people store it in their wallet. Wallets are located on the exchange.

Billions of dollars of Bitcoin and other cryptocurrencies have been lost on the exchange from hackers. 

A smarter place to store your cryptocurrency would be on your smartphone’s cryptocurrency wallet because generally speaking, smartphones are not hacked. 

But even if you use a wallet on your smartphone it is still possible to lose your cryptocurrency. You could misplace or forget your “key” or password for the account. There is no forgot my password link to click with cryptocurrencies.  

Your phone’s OS, operating system, could also become corrupt. This could delete your wallet from your phone. Bye-bye cryptocurrency. There is hardware now available for people to back up and secure their wallets. 

Trading Cryptocurrency 

If you are trading cryptocurrencies, there will be fees involved. These fees are still a fraction of a per cent of the total transaction amount depending on the cryptocurrency exchange you use. You can also avoid some fees by using your wallet.

The fees involved will vary depending on the total number of people who are buying and selling your particular cryptocurrency.

In general, the more people the higher the fee. In the beginning, when most people had never heard of trading Bitcoin the transaction fee was around 6 cents. Today that fee is much more and it is always changing. 

Consult With Your Financial Advisor

We hope you enjoyed reading cryptocurrency 101. Many positive benefits could come from a virtual currency like Bitcoin or others. There are also many other positive benefits blockchain technology has in healthcare or voting systems that are also being explored. 

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How Do Mutual Funds Work? The Complete Guide to Mutual Funds

Are you a long-view investor with an interest in seeing your wealth grow over 10, 20, or 30 years? If the answer is yes, then you need a diverse portfolio of assets to help you achieve your goals.

One of these assets is a mutual fund. Mutual funds are a collection of assets grouped together according to an investment strategy and run by a fund manager. Compared to individual securities, mutual funds provide a certain level of protection against the volatility of the stock market and still deliver steady returns for investors.

How do mutual funds work? Keep reading for a quick primer.

What Are Mutual Funds?

Mutual funds are called investment baskets. Rather than being one form of security or investment on their own, mutual funds are a container for a group of different types of investments, usually stocks, bonds, or a combination of the two. However, they can contain other types of investments. The primary types of mutual funds include:

  • Equity funds
  • Bond funds
  • Balanced funds (equities and bonds)
  • Money market funds
  • Fixed-income funds

When you invest in a mutual fund, you invest in the basket of investments rather than a single stock or share. You also pool your money with all the other fund investors, which grants you access to investments that aren’t available to the average solo investor.

How Do Mutual Funds Work?

A mutual fund has a fund manager, who oversees the fund and chooses the investments found within it. The manager may choose to actively or passively manage the fund according to a set strategy or according to the manager’s whims.

Many mutual funds are increasingly passively managed because research shows that passive investments earn better returns compared to actively managed investments. It’s rare for active investment strategies to outperform the market.

How does the mutual fund make money? It depends on the type of fund you choose. When your investment earns you returns, it comes in the following forms:

  • Income earned via dividends
  • Growth in price of securities or capital gains
  • Fund share price (net asset value) grows

You’ll also pay fees for your mutual fund. These include the cost of the fund (e.g., administration and operating costs) and sales commissions. Keep in mind that these fees are typical percentages of the fund, and you’ll pay them annually. A fraction of a percent can be the equivalent of thousands of dollars.

The fees you pay depend on the structure of your fund. It pays to research the type of fund that best suits your financial goals and to compare fees between funds and fund providers.

Why Choose a Mutual Fund?

Mutual funds are increasingly popular because they offer even the novice investor something that the pros could only covet a few years ago: a diversified portfolio. Because you invest in a basket of investments, your profits and losses aren’t solely tied to one company’s performance. Diversity means you have a lower risk of losing everything if a stock performs badly.

Another reason investors of all types choose mutual funds is that they come with a fund manager. You don’t have to actively trade them or even worry about all the investments inside the basket. You pay the investor a fraction of a percent of the value of your account to worry about that for you.

By working this way, mutual funds use a high volume of transactions to reduce the cost for you as an individual investor. Rather than paying as much as $5 a transaction, you split the bill with other investors.

Are There Disadvantages of a Mutual Fund?

Mutual funds do come with disadvantages compared to other types of funds like exchange-traded funds (ETFs).

The biggest issue that investors find with mutual funds is that they can be expensive. Typically, mutual funds become very expensive with a small investment and then again at the top of the scale. Many providers offer the best rates to those with mid-size accounts.

Another issue with mutual funds is that they can be inefficient compared to ETFs. Efficiency applies both to tax efficiency and the cost of maintaining the fund vs. the returns it offers. ETFs generate fewer capital gains distributions, and they have their own way of buying and selling that triggers less taxable income. However, you may find that some passively managed mutual funds are also tax efficient if only because they generate fewer transactions.

How to Find the Right Mutual Fund

Although there’s a shortlist of widely popular mutual funds, a fund’s popularity doesn’t necessarily mean it’s right for you.

Finding the right mutual fund requires you to find a fund that meets both your financial goals and your risk tolerance as well as a philosophy that reflects your own investment philosophy.

From there, you can start to consider the costs of the fund and the management style to whittle down your list of contenders and begin investing.

Use our guide to choosing the best performing mutual funds to get started.

Are Mutual Funds Right for You?

How do mutual funds work? They pool investors’ money together in a basket of securities to provide long-term growth with some protection from market volatility.

Mutual funds are a diverse group of investment tools, but almost every investor can see some benefit in adding top-performing funds to their portfolios. The trick is to find the fund that best matches your personal goals and your investment philosophy and strategy.

Looking for more investment content? Visit our Finance archive for the latest news.

What Are the Types of Mutual Funds?

When one wants to build their capital, the stock market is often the first port of call. But investing in the stock market is often not worth the stress. In the worst of times, investing in stocks have bankrupted investors. 

You wish to invest your money but are frightened that you may lose it all. With the financial crises that we have collectively experienced, one is right to be hesitant.

Fortunately, there is an alternative option. Mutual funds are a great avenue for investors.

But with all the different types of mutual funds available, we cannot blame one for feeling puzzled as to which ones to invest in.

While we aren’t here to advise you, we can explain the different types of mutual funds so you can make a better decision on where to invest.

The Guide to Types of Mutual Funds

A mutual fund is a fund created when a plethora of investors put in their money in securities, bonds, money market instruments, and a variety of other assets.

This pool of money is what you would invest in. The mutual fund is controlled by a money manager who attempts to produce capital gains income for the investors.

We suggest seeking the aid of a financial consultant when deciding to invest. 

Here are the different types of mutual funds for you to consider:

1. Equity Funds

Also known as stock funds, this is the most popular type of mutual fund. Equity funds will have different subcategories. These can include subcategories based on the size of the company (large, mid-size, small) or the type of company (tech, finance, etc.)

There are also equity funds defined by their approach—this can include aggressive growth, slow growth, or income-oriented.

To choose the best equity fund, you want to look at the subcategory as well as the investment approach. For example, you may wish to invest in a technology equity fund that has aggressive growth.

2. Fixed-Income Funds

This type of mutual fund offers a set rate of return. These include government bonds and corporate bonds. The mutual fund will generate income which is how the investors earn.

The money manager usually focuses on bonds that are undervalued. They purchase these bonds and then focus on selling them to make a profit. They can be risky as one can never guarantee the outcome or value of the bonds.

There is also the issue of the interest rate risk—which means that the value of the bonds will decrease if interest rates increase. On the plus side, this type of investment usually pays higher than money market investments and certificates of deposit.

3. Index Funds

Index funds have become increasingly popular. With this option, one chooses a portfolio of stocks to invest in. These can include the S&P 500 and the Dow Jones index.

While a money manager would look at these index funds, this type of mutual funds requires a more hands-off approach. 

This type of mutual fund is targeted toward the investor on a budget. If you are a beginner to investing, you may wish to consider index funds over other types of mutual funds.

4. Money Market Funds

This type of mutual fund is also a fixed-income mutual fund. This fund focuses on high-quality debt from corporations, banks, and governments. This debt is usually short term.

These type of funds include U.S. Treasuries, commercial paper, certificates of deposit, among others. An ideal money market fund will be: low risk, will produce high yields, and will require low expenses.

These are considered to be one of the safest investments available. They are used by beginners and seasoned investors alike.

5. Balanced Funds

Balanced funds, or asset allocation funds, are a combination of fixed-income funds and equity funds. They have a fixed ratio of the two funds. For example, you may have a balanced fund that is 70% equity fund and 30% fixed-income fund.

One type of balanced fund is target-to-date which alters the ratio to favour equity funds as you get closer to your retirement.

6. Income Funds

This type of fund is intended to provide a continuous income on a regular basis.

Usually, these funds consist of government and corporate debt. The funds hold onto the bonds until they mature and produce interest. 

As they provide continuous income, they are usually targeted toward retirees, conservative investors, and can also be beneficial to beginners. But because they produce regular income, one must be aware of possible tax obligations.

7. Foreign Funds

Generally speaking, foreign funds (funds outside of your home country) can be volatile. It is imperative that if one invests in foreign funds, that adequate research is conducted on the stability of the jurisdiction.

At times, the foreign fund can be far riskier than a domestic fund. At other times, the foreign fund may be much safer than domestic funds. Make sure your money manager has adequate experience in managing foreign funds.

You should also do your research on the stability, country, and political risks of other jurisdictions.

As the economies of other nations grow, you may find that investing in a foreign fund is more lucrative than investing in Britain.

8. Speciality Funds

These are usually funds that have gained popularity among investors. There are no set criteria other than the popularity and success of these funds.

For instance, there are sector funds that target particular industries. One can select a successful fund in the technology sector, agriculture sector, or in healthcare. One should be aware of the possible volatility of a sector before investing in it.

Speciality funds can also comprise of regional funds that focus on successful mutual funds in particular regions—ranging from nations to continents (i.e., investing in Peru vs investing in South America as a whole).

Finally, we have seen a keen interest in ethical funds. These are funds for socially-responsible mutual funds such as solar energy, green energy, waste management, etc.

Build Your Portfolio

Now that you know the different types of mutual funds, you are ready to consult your financial advisor and build your portfolio.

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7 Benefits and Reasons to Invest in Mutual Funds

According to industry watchers, the net asset value of mutual funds across the United States stood at $17.71 trillion as of 2018.

Many individuals are looking to put their wealth into securities and other assets. However, due to the small size of their checks, investing in securities carries high costs.

Mutual funds come in to help aggregate individual investors. A principal mutual funds advantage is that you enjoy more convenience in investing. Here are seven reasons why a mutual fund is right for you.

What Is a Mutual Fund?

A mutual fund is an investment firm that brings together money from various investors to buy large-sized assets.

The assets that mutual funds typically put their money into are stocks, bonds, and other securities. The total sum of all the holdings a mutual fund invests in is called a portfolio and is managed by paid professionals.

When you give a mutual fund your money, you’re effectively buying its shares to become a part-owner earning from the income it generates. 

How Mutual Funds Work

Regardless of the kind of fund you invest in, its performance (and revenue) will depend on its kind of management.

A passive mutual fund will invest according to a set strategy whose goal is to match a particular market index. As a result, these kinds of mutual funds don’t require you to have deep investment skills.

Passive funds charge lower management fees since they don’t call for as much hands-on management.

It’s worth noting that two popular types of passive mutual funds today are exchange-traded funds (ETFs) and index funds.

Actively traded funds, on the other hand, work to outperform the market indices. Consequently, they hold the potential to earn you more. They also carry a higher risk than passively traded funds, which you must put into consideration.

How Do You Make Money With a Mutual Fund?

Once a mutual fund makes a profit, there are three ways that you, as an investor, can earn a return – dividends, net asset value (NAV), or capital gains.

Dividends come from when the fund receives interest on the share it holds. Each investor in the fund gets a proportional amount, and you can choose to reinvest that in the fund.

When a mutual fund sells a security at a higher price than it bought it, it makes a capital gain. You’ll receive your portion of this income annually from the fund.

NAV is where the security you own increases in value due to the fund’s astute management. While you don’t immediately receive funds from the growing NAV, it means you stand to make more money should you sell your stake in the fund.

Mutual Funds Advantage

Mutual funds hold distinctive advantages as tools to help you grow your wealth. These benefits include:

1. Your Investment Is Diversified

Any financial consultant will tell you to take a diversified approach when it comes to wealth management. Diversification is whereby you mix the resources and investments in your portfolio to reduce the risk you face.

A mutual fund helps you to access various investments that face varying risks that can offset one another.

As a result, if a crisis or loss hits one sector, you won’t face as significant a loss as investments in other sectors can help offset the outflows.

2. Economies of Scale

One of the most compelling features of a mutual fund is the scale at which it operates. When many investors come together and pool their funds, they can buy into more lucrative assets that would have been hard to purchase as individuals.

Additionally, because of the large size of mutual funds, individual investors pay less for the service.

3. There’s Professional Management

If you don’t like picking the stocks to buy due to a lack of time or in-depth knowledge, then a mutual fund is for you.

Each mutual fund employs professional managers who do the heavy lifting with the research, picking stocks, and managing the portfolio. Thus, you get to access a full-time investment manager to help you grow your holdings at a fraction of the cost.

4. Liquidity

When you’re considering an investment as an individual investor, you have to assess its liquidity. The easier it is to sell what you hold, the faster you can access your money when you need it.

You can buy and sell a mutual find relatively easily unlike say disposing of property you have invested in.

In case you need money urgently, you can sell your holding in the fund fast. Should you spy out an opportunity in a sector your fund invests in, you can quickly and easily take up a position to benefit.

5. There’s Variety

As an individual investor, a mutual fund opens up a variety of options to put your money in that you’d not access on your own.

For example, a manager can run a fund that employs several investment approaches. You can access value investing, macroeconomic investing, and other methods all in one package.

Some mutual funds (known as bear funds) are structured to make money from a falling market. Such funds can enable you to protect your downside in ways you couldn’t as an individual.

Through this variety, you get to access foreign and domestic deals that can attractively grow your portfolio.

6. Easy Access to Specialized Sectors

If you’re interested in securing a position in complex sectors as an individual investor, then a mutual fund is the best tool to use.

Mutual funds have built up a track record of tackling extremely complex investment areas in a logistically easier manner for you. With one, low ticket investment, you get to outsource all the hard work that goes into such investment selections.

7. Transparency in Investment

Where you put your hard-earned money to work for you must be secure, and mutual funds give you this advantage.

Every mutual fund is heavily regulated to ensure investors are treated fairly. Therefore, with a mutual fund, you can have peace of mind since there is greater visibility into where you invest your money.

Let Your Money Work for You

Securities are a great way to grow your wealth, but as an individual investor, it can be costly to invest in them. A mutual fund is a vehicle through which your small check can make consistent returns. Another significant mutual funds advantage is the convenience you have as professional managers handle things. Pull together with other small investors to gain access to consistent investment returns.

Capital Finance International (CFI.co) is your premier online resource for all things investment. Reach out to us today for news, commentary, and analysis that will shift your investment thinking.