Month: July 2019

How important is it to make investments?

Due to the instability in the country’s economy many people, mainly micro and small business owners, have realized the importance of making investments to ensure their financial security.

However, a lack of knowledge about the subject may result in poor investment choices such as applying to a savings account or simply leaving money standing still in the checking account, reducing purchasing power.

So, one of the first things you need to understand is that investing, unlike saving, is to apply value by thinking about profitability over a given period, whether short, medium or long term.

What are the advantages of investing?

What are the advantages of investing?

Investing is the safest way to ensure stability to any venture in times of crisis, in addition to providing economic growth. But there are also other advantages, such as:

Conquering Independence

How do you see yourself 30 years from now? This is a question that we have to consider, since at present public welfare in Brazil has been a subject much discussed. Because of this, making a good investment is necessary to ensure your future independence.

Personal Financial Education: 8 Steps to Getting Your Personal

Investments such as government securities, for example, when applied to a 30-year period generate funds well above those paid by public and private pension funds.

Achieve objectives

If you have a dream that has not been realized due to lack of conditions, making investments is the surest way to start putting them into practice. It is therefore essential to set your short, medium and long term goals well.

Have financial security

Achieving financial security is the goal of virtually everyone. However, few can reach the finish line, as it is not easy to give up momentary desires for future stability.

Tip: Farmer’s Guide: How to Plan for the Next Harvest?

So, if you do not get lost along the way, it is crucial to understand the importance of financial planning. That is, from the moment you learn to master your spending, it becomes easier to achieve stability.

Maintain a financial reserve

Do you know those unforeseen circumstances that sometimes take us unawares and we have the solution to request loans with high interest rates? An investment serves to make your life easier when these eventualities arise.

What are the first steps to start investing?

What are the first steps to start investing?

1. Set your goal

Before starting the applications it is essential to define your goals, therefore it becomes easier not to be distracted by the way. Therefore, it is important that you know the expected return on that investment.

2. Learn about the market

Because of lack of knowledge in the area, the chances of you falling into a trap are high. So be always informed by books, news, articles, etc.

Tip: Understand the importance of credit unions to market growth

When there is an understanding of how the investment market works, decisions tend to be more accurate, increasing the chances of success.

3. Stipulate the initial value

There are many investment options and each requires different amounts. It has application that has higher initial value and others with lower initial value, including R $ 1.00. That way, knowing how much you have to invest is important in choosing which app will be best for your profile.

4. Set the time

It is very important to know how long you intend to keep the investment, because the longer the application period, the greater its profitability. It is worth remembering that your goals need to be in accordance with the established deadlines.

5. Know your investor profile

There are three investor profiles. Are they:

  • conservative: prefers security to greater profitability. The conservative prioritizes fixed income by investing little in variable income. Another characteristic is the preference for a faster redemption with a few losses;

  • Moderate: They take greater risks, but remain cautious in their decisions. They usually use both fixed and variable income;

  • aggressive: they are generally savvy investors who are willing to take big risks for greater profitability.

Given that, knowing your profile is very important to tailor financial planning and avoid unnecessary risks.

What are the ways to invest?

What are the ways to invest?

The financial market offers a variety of investments both for those who prioritize low profitability and risk as well as for those who want to make high investments in search of greater profitability. Therefore, it is important to study the possibilities that the financial market offers and choose the one that most suits your needs. Therefore, we separate these three investment options:

Public titles

Being considered low risk, government bonds are a way to lend money to the Federal Government. The remuneration for this type of investment is pre- or post-fixed. The application can be made by the Treasury Direct website after registering and hiring an accredited brokerage firm, which will be responsible for formalizing the purchase and sale of securities.

 

Business Loan-Guide to Making a Business Financial Planning

Every company has a common goal: to grow. For this to happen, it is important to take care of a number of internal factors, such as product, service and salaries, as well as external factors such as interest, inflation and falling economy.

This means that, in addition to the difficulties imposed by the scenario experienced by Brazil, the entrepreneurs themselves have not made the right decisions for the longevity of their business.

Careful planning of how to use the resources available

Careful planning of how to use the resources available

 

Without money, it is impossible to make a business go far. Careful planning of how to use the resources available is imperative to ensure the success of a company.

That’s why business planning is much more than spending control. It is able to determine short-, medium- and long-term financial goals, helping entrepreneurs make the best decisions for their business.

Good planning, the current situation of the company and, through a set of actions, allows:

  • Anticipate problems
  • Level your budget
  • Determine whether or not there is a lack of resources
  • Set goals
  • Make investments

Think about your household expenses. In order to have a healthy financial life, you must define your priorities, superfluous discard, and understand where and how your money is being invested.

Guide to Business Financial Planning

money

Now that you know the importance of conducting good business financial planning, it’s time to put it into practice.

As we said before, the main function of this tool is to help companies to have longevity. In a scenario like that of our country, this becomes even more imperative.

After all, according to IBGE, more than half of the companies founded in Brazil closed their doors after four years of activity (figures released in 2015, with data from 2013).

Take note. Follow our steps and achieve even more success in your company.

1. Do not mix individual with legal

It is very common for entrepreneurs to mix their personal finances with professionals, which always gets in the way and confuses the cash flow of the business. To make good business financial planning, it is essential to separate the individual from the legal entity.

Set a pro-labor for the members and follow it to the letter. That way, you can understand what the company’s current expenses are, to make adjustments and perform analyzes that will allow you to make the best decisions in the future.

2. Maintain a relationship with the financial

Dialogue with your financial sector should be part of the whole process within business financial planning. It’s no use setting goals, thinking goals if everything is not aligned with this important department of your company.

If you are the one who takes care of the financier, organize your weekly schedule and set aside time for planning. If it is a task for your partner, understand that it is essential that you have the characteristics to be a good professional in the industry. If you are a contracted person, you have no secret: look for the best.

3. Organize cash flow

Cash flow is the tool that allows you to make a financial control of the inflows and outflows of money of a company, based on a certain period of time. It is the heart of all financial planning.

Identify your company’s revenues and expenses and set a time frame for your reviews.

Put on paper what your accounts payable and receivable. This gives you an overview of your company’s situation, allowing you to identify problems and propose solutions.

4. Make predictions for the operational cycle

4. Make predictions for the operational cycle

 

The operational cycle is the sum of all the events that occur in a company, from the purchase of the raw material to the sale of the product.

How to plan is also to anticipate scenarios, forecast your cycle, defining the costs required to maintain each stage of your production process.

It is in this step of financial planning that you avoid going through unimagined situations, having to resort to loans.

5. Beware of interest

As we explained in the previous step, if you do not make predictions for the operational cycle of your business, you run the risk of needing loans.

The high interest rates charged by this modality are among the great causes for ending the profits of a business and, consequently, its continuity. When conducting your business financial planning, always keep an emergency financial reserve for use in contingencies.

6. Negotiate prices and payments

One thing pulls the other: having a good price allows you to charge more interesting value to your consumer.

If you sell products, look for the best value for the purchase of your raw materials. If your company offers a service, check the amounts spent to keep it running and streamline your process.

Keep a bargaining agenda with your suppliers. This allows you to establish a relationship with them, to achieve higher payment terms and better purchase costs.

Then consider factors like production cost, your expectation of profit, fixed and variable expenses, and establish the best final price.

7. Track return on investment

The ROI, or return on investment, is nothing more than the ratio of the amount of money earned or lost as a result of an investment. In a very simplified way, it’s how much you earned versus how much you spent. To calculate it, it’s simple:

Investment profit minus investment cost

For example, if you invested $ 1,000 in advertising and sold $ 5,000 of your product, that means your ROI was 3%.

In order to achieve good business financial planning, it is very important to keep track of the ROI of your business. By finding out if your spending is giving you the expected return, you can reallocate your money to actions that work the most.

Did you like the tips? Leave your questions in the comments and start doing your business financial planning right now.