Often, businesses require investments at the initial stages of project development – when they attempt to develop a prototype or launch the first sales. Then, the businessman faces raising capital from private investors and investment funds. Due to increased uncertainty and risks, banks refuse to lend to such startups or do it on personal property security.
My experience in corporate finance is over 15 years. I help startups, and growing businesses raise investments and get their finances in order.
This article will tell you where to look for investors and how not to miscalculate financing terms.
Ways You Can Increase Capital for Your Business Idea
Investment in external funding keeps a business going until it gets back on its feet and starts generating sustainable profits. Or until the investor runs out of patience – after all, many projects never realize their potential.
It is one of the critical types of investments – it is also called venture capital. This is true when it comes to innovative startups. According to statistics, 75% of such projects do not survive, and the investor completely loses the invested funds in 30-40% of cases.
External financing is often necessary for business development. According to surveys, 49% of startup entrepreneurs consider investments an essential resource for the company’s growth.
The seed and startup stage is when the product is being developed and brought to the market. This period is also known as the Valley of Death because, according to statistics, 8-9 projects out of 10 fail here. They never reach the break-even point, and investors partially or entirely lose their investment.
The expansion stage occurs when the company strives for a successful business model and effective promotion strategy, and sales growth and cash flow become positive.
Growth and mature growth occur when a company steadily strengthens its position in the market and becomes consistently profitable.
Each stage implies a different level of risk: the younger the project, the higher the uncertainty and chance of failure. Accordingly, the amount of capital raised and the purpose of its attraction also differ.
If, in the early stages, the main task is to bring the product to the market to test demand, then in the later stages, it is to increase market share and profits.
Typical Mistakes of Novice Entrepreneurs
Entrepreneurs must remember that investing is free capital to make a profit for any investor.
About half the time in my practice, I encounter startups that are not serious about money: often, they treat a potential investor like an ATM from which you can make money with the promise of dim prospects. The entrepreneur does not have a transparent business model but expects that the attracted investments will somehow start sales.
Another option: the owner of a dying company is looking for investments. We often talk about a small enterprise that fed the owner for some time, but something went wrong – the market changed, or a key customer left.
Often, the matter is complicated by an enormous debt to banks and suppliers. There is usually nothing to support here:
The equipment is outdated.
The customer base is small.
There are illiquid goods in the warehouse.
The owner does not even have a well-thought-out anti-crisis plan, but at the same time, he hopes that the investor’s money will help save the situation.
I recommend that all entrepreneurs put themselves in the place of an investor and think like him. Professional investors are primarily interested in the following:
Projects with Launched Sales, Demand Confirmation, and a Clear Promotion Strategy
Companies with attractive assets: patents, equipment, or customer base that can generate synergies with other investments
In other cases, I usually advise looking for an investor in your immediate environment – among friends, acquaintances, or relatives.
Investment Types
So, you are an entrepreneur and are planning to attract investments. When trying to be effective in fundraising, it is essential to remember that each investor specializes in specific industries and stages of their development. Therefore, it is necessary to focus on those investors whose sphere of interest your project falls.
The advantages of debt financing are that you do not need to share profits and control over the company. However, suppose a business is starting up. In that case, a novice entrepreneur is unlikely to receive a loan from a private investor – except perhaps on the security of expensive property, a car, or an apartment. Therefore, sharing a share in a business with an investor is a good option. It is ideal if, in addition to money, the investor also brings his experience and connections to the project.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Do not worry. Being debt-free is a great thing, but for most of us, the reality is different. Few people can give cash for a home, a car, or a college education. Still, it’s sensible to understand your debt and manage it properly.
Not all Debt is Bad
You require some credit history to qualify for a loan when you need one.
“Most of us are programmed to feel guilty when we owe money. It doesn’t matter if you owe a person, a bank, or a credit card company. The key is determining the level of debt that’s right for you,” explains Heather Winston, Associate Director of Financial Planning and Counseling at Principal.
Winston offers some rules of thumb:
28% of income before taxes
It is the maximum amount of debt for your home (principal, interest, taxes, and insurance)
36% of income before taxes
It is the maximum amount of all debts, including your home
You are Not the Only One
In a present survey, we asked consumers if they were making any economic changes due to COVID-19. 21% said they were going to pay off their debt*.
Three ways to strike a balance:
Know what you owe
It’s like keeping track of everything you eat when trying to get healthier. You write it down so you know where you are in the process.
In the case of debts, write down the balance, the interest rate, and the minimum payment. Please enter the data in our debt management worksheet (PDF).
Reduce the balance
Rank your debts according to size or interest rate. Then, analyze how you are going to deal with them.
Snowball Method: First, focus on paying off the account with the lowest balance. Continue to make the minimum payment on other debts. Once you eliminate that first debt, move on to the next debt with the most insufficient balance. It could be the correct method if you are motivated to make more minor credits disappear.
Highest Interest Rate Method: Focus on debts with the highest interest rates first. Try to pay off the next one with the highest interest rate when you pay off one. Of course, you continue to make the minimum payment for the other debts. If you want to pay the minimum over the life of your loans, this could be the proper method for you.
“When you pay off high-interest debt, you generally gain more long-term purchasing power,” says Winston. “But at the end of the day, do what works well for you. The key is that no matter which technique you choose, choose one and stay focused on it.”
When you pay off high-interest debt, you generally gain more long-term purchasing power.”
-Heather Winston, Associate Director of Financial Planning and Counseling
Manage your debts
Continue managing your debt as part of your overall financial plan.
Set up regular automatic payments. Late payments can hurt your credit, and you could be penalized. Automatic payment can be your friend in this regard.
To pay off debt faster, cut expenses from your budget or increase your income.
Suppose you hope to finance future expenses (buying a house next year or paying a deductible because you’re having a baby) and factor those expenses into your overall financial plan. Apply for loans intelligently and think very well before acquiring a debt. Read “Five questions to ask yourself before taking on debt.”
For credit card debt, try negotiating for lower interest rates. Ask for a lower interest rate, and you might get it. Or consider transferring your credit card balance to one that offers zero interest for a set period. Make sure you read the fine print. It is necessary to be aware of when the promotional period ends.
Refinance. You could save money, especially now that interest rates are so low. Or you can consolidate your debts and thus make a single monthly payment. Check the terms and conditions; there may be costs in the process.
Know Your Credit Score
Don’t forget about your credit score. Please get to know it and recheck it every year. The FTC has the information you can trust, including links to accessing your free annual credit report.
Having a lot of debt, especially high credit card debt, could affect your credit score. High credit scores typically allow loans to be approved more quickly. Of course, paying off your loan balance helps.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Life insurance deals with an insurance company where the policyholder agrees to pay a premium. The insurer admits to paying capital to the beneficiaries designated in the policy in the incident of the insured’s death.
Who Can be the Beneficiary of Life Insurance?
The designation of beneficiaries is what you decide; they can be one or several beneficiaries with equal or different percentages. You may change the initially designated beneficiaries and persons other than the heirs at any time.
If you have kids or other family members dependent on your income, they are usually the beneficiaries of your insurance policy. You can also name an NGO, a creditor bank, or another entity.
Who Needs Life Insurance?
I can’t think of anyone who may not need life insurance: anyone who has payment obligations for mortgages, personal loans, a partner, children, or dependents who depend on their income in entire or in part to meet their needs.
What if I Don’t Have Family Responsibilities or Loans?
Have you thought that life insurance can cover you for possible disabilities? Then, you will be the beneficiary with a capital that will help you maintain your standard of living if you can no longer work for health reasons. If you are from that small part of the population in this situation, perhaps your parents need help in their old age, and you are not there to provide it.
Can I Have More than One Life Insurance?
Yes, you can have as much as you need, each for the amount, term, premium, and beneficiaries you decide.
It is usual to have life insurance that covers the outstanding amount of the mortgage. In this case, the beneficiary is usually a Bank Entity. Still, you can also take out life insurance that guarantees your children’s studies and another that can generate income to complement widows’ and orphans’ pensions.
What if I Have Enough Money and Don’t Need Life Insurance?
Life insurance has many more advantages in addition to financially protecting the family. You can use it to create an inheritance since it can be self-settled independently of the rest of the hereditary mass. The beneficiaries will always receive the insured capital.
You can also leave an estate with life insurance to people other than the heirs.
If a Person Has No Income, Why Take Out Life Insurance?
Not doing paid work does not mean that your contribution to the family does not have an economic value. A person dedicated to caring for children and the home does an essential job; hiring people to do that work is costly if missing. And the life insurance compensation could serve to cover that need.
If you have debts, life insurance is ideal for preventing the heirs from having to bear them in the event of death. In addition, life insurance always covers obligations, even if the heir renounces the inheritance.
Can My Company Take Out Life Insurance for its Workers?
Yes, then the figure of the policyholder comes into play, who is the one who signs the contract and assumes the payment obligation, which is different from the Insured, who is the person whom the insurance protects.
For example, within the social benefits it gives its employees, your company can take out life insurance in their favor.
Can a Bank Force Me to Take Out My Life Insurance with Them?
Not; the law supports you in this regard. You can get life insurance from the insurance company of your choice. Remember that a comparative study of risk life insurance premiums, carried out by INESE, indicates that life insurance contracted with a bank can be up to 42% more expensive than with an insurance company.
Will I Have to Have a Medical Examination?
It is not usual, but it is possible that depending on the age and the capital you want to contract, the insurer requests a medical examination before signing the policy. In this case, the insurance company usually assumes the medical examination and tests cost.
Does Life Insurance Deduct Tax?
The life insurance linked to the mortgage deducts up to 15% of the premiums, the amounts destined to pay the mortgage, and the maximum limit of $9,040/year.
The conditions to deduct taxes are that the mortgage loan is for the primary residence, the acquisition is before 2013, and the beneficiary is the bank.
If you are self-employed, you can subtract, in the form of a reduction on the income tax base, the life insurance premiums that contingencies of death, permanent disability, or total disability up to a maximum of $500 per year.
How Would I Know if a Family Member had Life Insurance?
All you must do is request the information from the Registry of Death Coverage Contracts, which depends on the Ministry of Justice. This registry allows queries through three channels: online, in-person, or mail. Access here to find out all the deadlines and documents.
How is Life Insurance Compensation Taxed?
If you have been the beneficiary of life insurance contracted by another person, the amount to be received will be taxed through the Inheritance and Gift Tax. Depending on the Autonomous Community of residence and the relationship between beneficiary and policyholder, there are essential deductions of a specific nature. In addition to the ordinary deductions of inheritance tax, a total exemption may occur in the most common cases.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Requesting a loan to receive a personal vehicle is only a few days. In addition, the interest rate on a car loan is noticeably lower than on other types of loans. And you can use borrowed funds to buy a new and a used car. We have compiled a simple step-by-step guide to help you get a car loan quickly and safely.
Step 1: Apply for a Loan
First, a potential borrower is required to assess their financial capabilities. The monthly payment amount should not exceed 30% of the family income. Based on this, you should select a suitable model and loan program; too expensive a car can cause a permanent shortage of funds. It will be easier to decide on a bank by compiling a table and describing the conditions of various programs that seemed the most attractive.
There are many methods to apply for a car loan. For example, fill out a form on the bank’s portal or personally visit the office. Requirements for borrowers usually are posted on the official websites of credit organizations. Another way is to fill out a questionnaire on the dealer’s website, indicating the model you like. The car dealership manager will contact the potential borrower to clarify the details and independently send an application to many partner banks.
Step 2: Submit Documents and Wait for Conclusions
The list of documents needed to consider: you can clarify the application on the bank’s website or from a loan officer. The classic package includes a passport, income statement, a certified copy of the employment record, and a loan application. In rare cases, employees of financial organizations are required to bring a copy of a higher education diploma, marriage certificate, TIN, SNILS, bank account statement, and other papers.
Recently, express lending programs have been gaining popularity. In this case, the issuance method is as simple as possible. Money is provided based on a passport and any other document.
Step 3: Make a Down Payment
The next step is to conclude a contract of sale with a dealer center or an individual from whom the borrower buys a car. In the meantime, the borrower makes the down payment. In this case, the rule most often works: the more significant the amount of such a payment, the less the overpayment on the loan. As a rule, it ranges from 10 to 50% of the cost of the vehicle.
After agreeing to the contract, the buyer receives two sets of keys, a TCP, a service book, and an invoice with the debt balance. You need to decide on a particular car and complete these procedures within a limited time, which the bank sets. After its expiration, you will apply for a car loan on a new one.
Step 4: Take Out an Insurance Policy
Executing a comprehensive insurance policy is a prerequisite for issuing a loan. Since the car will become the collateral subject, the bank must protect it from all sorts of troubles. Therefore, such insurance should be valid for the entire loan term. In the meantime, the bank has no right to force the client to insure. Instead, he may charge a higher interest rate or refuse a loan.
The sum insured must be the same or higher than the car’s market value. Thus, the bank lessens the risks of non-repayment of credit funds. At the same time, credit organizations usually limit the list of companies where you can purchase insurance to the list of their partners.
Step 5: Sign an Agreement with the Bank
After that, the purchaser goes to the bank to sign a loan agreement and a pledge agreement. The latter restricts the borrower’s rights to dispose of the vehicle. Without the bank’s approval, the owner will not sell the car, rent it out, re-register it in a different name, or make significant structural changes. Such actions may be selected as fraud.
Before signing a loan agreement, it is necessary to study its terms carefully. If the contract infringes on the borrower’s rights, demand changes its terms or applies to another credit institution. It is better to ask for a draft contract in advance and read it calmly, and if you find its wording incomprehensible, contact a lawyer.
Step 6: Pick up the Car from the Seller
The bank transfers the loan money directly to the account of the seller organization. Before signing the transfer deed, inspect the car and carefully check all documents for errors. The transfer method may take several days, after which the purchase will be considered complete.
After that, the borrower will only have to register the car and transfer the original title to the bank for safekeeping. By the way, purchasing an OSAGO policy from the insurance company chosen for CASCO is better. Firstly, the policyholder, in this case, may receive an additional discount. Secondly, if you need to change the contract terms, do it with one insurer much faster.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
When you find yourself a career you love and want to succeed at, it becomes a high priority to sustain or raise the status of your career and avoid at all costs derailing its path or being responsible for its decline. However, even if we worry about adequately doing our job, sometimes we can make honest mistakes and deal a blow to our careers.
The most determining factor in our advancement is ourselves. Therefore, we are the ones who have the strength to cause the most significant possible damage to our Careers. Based on this, we should be mindful of the conditions and avoid mistakes that could destroy our professional careers.
The Habits that Can Most Harm Your Professional Career
Over-promise and under-deliver
It is widespread that we promise more than we can deliver to secure a job or a client. But, by setting unrealistic goals, the conclusion is that we cannot fulfill what we promised, which harms us immediately. It happens even if we believe that we can achieve it.
The most common method this happens is with delivery times. Perhaps we said we would do the job in a month, knowing it is a job of a month and a week, but we thought we could demand more of ourselves and achieve it. When we recognize that we cannot, we realize the error. Perhaps we will transfer the project in a month and a day, an adequate time; however, we could not fulfill our promise.
From the moment a customer agrees with something, they expect nothing less. Therefore, the explication is always to set realistic goals. Not too exaggerated, not too lazy. Fair enough.
Comfort
Comfort can destroy entire races without us even realizing it. When we are in ideal comfort, we may forget to keep improving, learn new things or methods, and continue our horizons. It will lead us to a sluggish condition, where believing everything is okay will make us fall behind.
Have you seen how much the world has emerged in a few years? These changes happen daily, and if you don’t stay current in your field, you’ll soon find that you’ve fallen behind and your career is in serious jeopardy.
Have an inflated ego
It can affect us similarly to the previous case, comfort. One that will be hard to wake up from when the bubble of our ego bursts and we admit that we were not what we thought we were. Perhaps after a series of successes, we consider that we are well, flourishing, and our ego is inflated. In this condition, we believe we already know everything we need to know and lose the craving to improve, inevitably leading to stagnation.
Negativity
Negativity can harm us as much as if we are independent and part of a workgroup.
If we remain negative, we lose the wish to work, and we will be complaining about everything, making it unlikely that the projects will turn out well. In the same way, if we are part of a workgroup and all our conversations, interactions, and cooperation involve negativity and complaints, people get fed up. They will not desire to work with you as a team.
Losing sight of the end goal
We must first achieve a chain of small things to achieve remarkable goals. It is so and has always been so. However, sometimes, we get so diverted by the little things and tasks in front of our eyes that we forget about the goal and the real motivation that should drive us.
Therefore, we should never forget why we do each little duty and know they will take us where we desire.
Act only for your interests
It is good to set up labor and professional relationships in any career. The worst thing is when we build them based on conflict, gossip, and creating hostilities for our profit. Our preference should always be our work but, above all, to be genuine with our colleagues.
Labor relations are there to boost us, not distract us or waste time in useless conflicts.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Being a businessman entails taking chances, but we may avoid the most common problems by developing a clear plan of action. Of course, certain risks are unique to an organization, but others are more universal and can thus be anticipated. On the other hand, successful people have a track record of taking risks and succeeding as a result. It’s more realistic to say that successful people chase possibilities only after establishing the boundaries of the risks they’re willing to take. Here are some of the most significant risks:
The Funds are Drained
It’s critical to have a sound capital plan in place so that you can reach the sub-goals that make the film appealing to investors at different stages of growth. Understanding the factors investors use to make investment decisions is crucial to your success. One of the critical duties of any Startup & Growth unit should be to assist firms in developing a strategy to ensure that they can acquire money at each stage of their life cycle. Businesses should have enough money to endure 2 to 2.5 years. If the company has less than that, it may face challenges if something unexpected occurs, such as a viral outbreak. Hedging capital is a crucial aspect of risk management.
Investors Who Made Poor Decisions
We should be picky about who we invest in. Problems can emerge if the company and the investor have conflicting expectations. While the investor may want to put money into sales to boost income, the founder would rather spend time and money on the company’s product or technology. Also, remember to run a background check on any potential investors. For example, if the company attracts an investor with payment terms, obtaining a bank loan in the future may be problematic. Determining whether the possible investor can and is willing to offer additional funds is also crucial if the situation gets urgent. Companies with investors who can provide extra funds have a better success rate. Those with investors who refuse or cannot commit extra money are more likely to face difficulties. Too many businesses only take cash when they should spend more time assessing whether investors are the best fit for them. Investors’ contributions to the company can be critical, so it’s necessary to understand what you’ll require.
A Poor Fit Between the Product and the Market
Without a marketplace, there will be no revenue. Thus, the corporation figures out what demand must look like early on—finding a good market for products and ensuring that the items fit the market’s needs. Please do not overlook the importance of establishing a shareholder’s agreement that spells out the shareholders’ rights and responsibilities and their interests and positions in the organization. Such an agreement can be invaluable when setting expectations and determining how to respond to certain crisis circumstances before they emerge. Make a detailed analysis of the company and industry and the competitors and customers to guarantee that there is a market for the product. Launch a stripped-down product with a minimal viable cost and test it on your target audience to increase your chances of avoiding a flop. We can’t always know who our competitors are in today’s fast-paced world. We may have an excellent idea for a product we want to produce, but someone in another country may already work on it. As a result, the planning process must be completed immediately.
Currency Risk
One of the most significant hazards for growing businesses is being caught off guard by financial auditing and reporting requirements. Many companies are subject to currency risk whether they realize it or not. The recent significant volatility in the foreign exchange market should remind all enterprises with international clients, subcontractors, or production to put currency risk at the top of their priority list. Many businesses realize the advantages of automating their currency risk management. In the early stages of a company’s growth, falling behind on accounting is extremely tough and costly. When businesses begin to expand faster, they frequently require additional funding, making it even more critical to maintain good accounting practices to prevent the danger of venture capitalists devaluing the business.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Following are some points that need to be considered to get maximum benefits from social security.
Examine Your History
You may receive a decent estimate of how much Social Security income you can expect by opening a My Social Security account with the Social Security Administration (SSA). It will allow you to view the Social Security Administration’s record of your wages, which you should review periodically to ensure they are accurate. If they aren’t, you may receive fewer benefit checks than you have earned. Correcting inaccuracies in your record is an excellent strategy to boost your benefits.
At the Very Least, Work Throughout the Entire 35-year Period
Your benefit amount is calculated by the Social Security Administration (SSA) based on your lifetime earnings. The Social Security Administration modifies your payments by indexing them to account for changes in average salaries since the years you received them. The Social Security Administration then adds up your earnings from your 35 highest-earning years. It applies the average indexed monthly earnings (AIME) calculation to calculate the amount you’ll get when you reach full retirement age.
Until You Reach Full Retirement Age, Maximize Your Earnings
The Social Security Administration (SSA) calculates your benefit amount based on your wages; thus, the more you earn, the greater your benefit amount will be. Some pre-retirees search for methods to supplement their income by working part-time or starting a company. Others, ignorant of the effect on benefits, may reduce their work hours or semi-retire, lowering their Social Security income.
Delaying the Benefits
Delaying the commencement of your Social Security payments is another strategy to boost your benefits. You can begin as early as 62 and continue until 70. We all have a “full” retirement age (usually about 66 or 67), after which your benefits will increase by around 8% for every year you postpone. If you wait until you’re 70 instead of 67, your benefits will increase by 24%. If you achieve full retirement age at 67 and start collecting benefits at 64, your payouts will be 80% of what they could be if you started at 67.
Begin Collecting at the Age of 62
Postponing will not benefit you much if you live an ordinary life since you will end up with fewer checks than those who started earlier with smaller checks. Waiting will be worthwhile if you live far longer than the average person. Start saving now if you have reason to believe you will live a shorter life than the average person or if you need the money. For the most part, that is a reasonably prudent course of action.
Take Advantage of a Spousal Benefit
If you’re married and your partner has a lengthier work record than you, you could be eligible for a “spousal benefit” based on your spouse’s earnings rather than your own. Spouses can get benefits equal to up to 50% of the benefits received by their other half. It is especially beneficial for spouses who have never worked or have a low income.
If You’re Working in Retirement, Don’t Make Too Much Money
If you want to start receiving benefits before you reach full retirement age and work part-time while doing so, remember that your payouts may be reduced. “We must subtract $1 from your benefits for every $2 you earn above $17,040 throughout the whole year if you are less than full retirement age,” the Social Security Administration adds. The earnings ceiling increases to $45,360 when you reach full retirement age, and the penalty reduces to $1 withheld for every $3 earned above the maximum. Any money withheld, on the other hand, is not lost. It’s accounted for in subsequent benefit checks, which are improved consequently.
Investigate Surviving and Disability Benefits
Social Security disability payments are offered to people of all ages who qualify. If you’ve been divorced, are handicapped, or are related to those who are disabled, you may be eligible for greater Social Security benefits than you thought. Social Security sometimes pays widow and disability allowance and retirement payments to retirees’ dependents. If your spouse passes away, you and your kids may be entitled to survivor payments up to the age of 17.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Is it hard to find a career that suits your personal qualities and interests? Take a test to see which profession might do you. Start at the right end – with yourself.
We all strive to find a good job by choosing the right career. The phrase “find a job you love and you will never have to work another day in your life.” It illuminates something most of us strive for. It puts a lot of tension on those trying to choose the right career. But can you find a job you appreciate so much that it does not feel like work?
Is it Possible to Discover an Excellent Job by Choosing the Right Career?
There will be days when we do not feel like working for most of us. No matter how much time we spend finding an excellent job by choosing the right career. There will also be days when you think you want to do just that job, even if you are unpaid. The trick is to select a career with an overwhelming majority of good days versus those that may not be so good.
With the vast number of professions available, you should keep a few things in mind to increase the odds of a satisfying career. Try to find a job that suits your interests, suitability, personality, characteristics, and values. You must also enjoy the work tasks; the salary is acceptable, the job prospects are excellent, and the company culture is correct. Below, you can read more tips for finding a good job by choosing the right career.
Get to Know Yourself
The initial step you should do is to learn as much as possible about yourself by spending some time doing a self-assessment. Only when you have a greater understanding of yourself can you successfully explore careers based on what you come up with.
Learn More About Different Professions and Careers
The results of a self-assessment often include a list of other disciplines and trades that may suit you based on various factors such as personality. But choosing the right career and finding a suitable job does not end there. Some of the trades you find after a self-assessment may suit you perfectly; others may be completely wrong.
Many Different Criteria Must Agree
Although some careers seem to be a good match based on your personality type, interests, and values, they may be inappropriate in other ways. It may be that the tasks do not appeal to you. Or that the outlook for the labor market in the future may be poor. It may also be that the training required involves more time and commitment than you are willing to give.
Investigate Several Career Opportunities
Make sure you make an informed opinion by carefully researching each career you are interested in. Carefully read job descriptions for different professions and think past some preconceived notions you may have. If you do not have personal experience before starting your review, there is much to learn before finding a good job.
Find Out if You Meet the Requirements
Suppose you are still interested in specific careers after researching different professions in more detail. Then, the next step is to see what the training requirements are. If an academic education is required to advance in a career, you are not prepared to pursue one. Then it might be the best idea not to choose that career. Make sure to match the requirements of your resume.
Examine the Prospects for Jobs in the Future
You are doing yourself a disservice if you do not examine what a specific profession has for prospects in the labor market. Whether the competition is low or high and in which parts of the country. Investing time to study for a profession and career and then realizing that competition is high and high unemployment is not fun. Choose right from the start!
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
To get a mortgage, you first apply for a loan promise. Below, you can read more about how to take out a home loan. It is easier to make a good home purchase if you are prepared and know how much you can borrow. When you search for a new house, it is wise to have the loan promise in order even before the show. A loan promise is an advance notice from the bank about how much you can borrow for your new home. However, it is necessary to remember that the loan promise is limited in time and only applies for a certain period. You also find out how much the bank thinks you can afford with a loan promise. You can embrace up to 85% of the value of the home. You need to shoot the remaining part yourself, a so-called cash bet.
Review Your Finances
Before looking for condominiums, reviewing your finances may be a good idea. What can you afford? Start by doing a mortgage calculation and see your housing cost. Then you know how much you can afford and can focus on the right home. Remember to consider costs such as electricity, property tax, and the margin for interest rate increases.
How Much Can I Borrow?
How big a mortgage you can receive depends on many different things you agree with your bank. The bank considers, among other things:
How many of you are in the family
Form of employment
Household income
How much cash bet can you put
Other possible loans that you or you already have.
The monthly fee to the association (if you want to buy a condominium)
Apply for a Loan Promise
It is essential to be prepared. You don’t know when your dream home will turn up. With a loan promise in hand, you know in advance how much you can borrow and can strike immediately when you have found your new home. A loan promise costs nothing, is not binding, and is limited in time.
Valuation of Existing Housing
Do you own a home to be sold while you’re looking for a new one? Of course, we are happy to help you sell your current home. Contact your local broker for free valuation and advice. Then, you get a head start when the dream home appears. Together, we lay the foundation and tailor your home sales search for your new dream home.
Cash Bet
To take out a mortgage, you must have a cash contribution of at least 15% of the price of the home. A cash contribution is part of the purchase price not covered by the mortgage.
Down Payment Loan
At the housing deal itself, you need to pay a down payment. It is produced when you sign the purchase contract and must be paid back by the seller when you gain access to your new home.
Bridging Loans
A bridging loan is a temporary loan for you who take over your new home before you have had time to sell your previous home. The sale of the old home usually finances the new home, and if you have not had time to sell the old house, a situation arises where you lack the purchase price for the new home. You will repay the bridging loan as soon as the old home has been sold.
The Size of the Mortgage
When you take out a mortgage to purchase a house, the mortgage may not exceed 85 percent of the purchase price, i.e., the final price for the home. The remaining 15 percent must consist of a cash contribution. If you buy a house for $1 million, the loan must not be more than $850,000.
Amortization Requirements
On March 1, 2018, there was a stricter repayment requirement, meaning the bank needs to consider the loan amount to your income. New borrowers with mortgages that exceed 4.5 times the gross income must repay at least 1% of the mortgages in addition to the application requirement.
If you have a loan between 70–85% of the market value, you must repay at least 2% of the loan amount per year
If you have a loan between 50–70% of the market value, you must repay at least 1% of the loan amount per year
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Smart Strategies for Effective Investment Allocation
Investment allocation is the strategic process of distributing your money across different asset classes—such as stocks, bonds, real estate, and cash—to optimize returns while managing risk according to your financial goals and time horizon. This fundamental investment principle determines approximately 90% of portfolio performance variation over time, making it the single most important decision investors face.
As the founder of Complete Controller, I’ve spent over 20 years helping businesses across every industry manage their financial futures. Through thousands of client consultations and portfolio reviews, I’ve witnessed firsthand how proper investment allocation transforms financial anxiety into confidence and turns modest savings into substantial wealth. Recent data shows that younger investors are embracing this wisdom earlier than ever, with 37% of 25-year-olds now utilizing investment accounts compared to just 6% in 2015—a generational shift toward deliberate wealth building that excites me about our collective financial future.
What is investment allocation, and how can you master it?
Investment allocation means dividing your portfolio among stocks, bonds, cash, real estate, and alternative investments based on your goals, risk tolerance, and timeline
Setting the right allocation requires clarity on your objectives—whether seeking growth, income, or capital preservation—and matching them with appropriate asset mixes
Periodic rebalancing maintains your intended allocation as market movements shift your portfolio’s composition over time
Proper diversification extends beyond asset classes to include geographic regions, market sectors, and investment vehicles
Mastering allocation helps grow and protect wealth for anyone willing to learn, not just sophisticated investors
The Fundamentals of Investment Allocation: Building a Resilient Portfolio
Investment allocation begins with understanding how different asset classes serve distinct roles in your portfolio. Stocks provide growth potential but carry higher volatility. Bonds offer stability and income while typically delivering lower returns. Cash preserves capital and provides liquidity but loses purchasing power to inflation. Alternative investments like real estate and commodities add diversification through different risk-return profiles.
Your personal financial inventory forms the foundation for smart allocation decisions. Start by cataloging all assets, debts, income streams, and future obligations. This comprehensive picture reveals your true capacity for risk and highlights gaps in your current allocation. Many clients discover they’re overconcentrated in employer stock or underallocated to international markets simply because they never took this crucial inventory step.
Assessing your starting point
Setting investment allocation goals requires brutal honesty about where you stand today. Calculate your net worth, review your cash flow, and identify specific financial objectives with clear timelines. Whether you’re saving for retirement in 30 years or a home down payment in 3 years dramatically impacts your optimal allocation.
Risk assessment tools provide valuable guidance, but nothing replaces honest self-reflection about your emotional tolerance for volatility. The best allocation strategy fails if you panic-sell during market downturns. Match your investment horizon to your risk appetite—longer timelines allow for more aggressive allocations since you have time to recover from market setbacks.
Determining your risk tolerance and horizon
Investment allocation by risk level follows predictable patterns based on investor psychology and mathematical realities. Conservative investors typically hold 20-40% stocks with the remainder in bonds and cash. Moderate investors often target 50-70% stocks, while aggressive investors may hold 80-100% equity exposure.
Time horizon acts as a natural risk mitigator. Young investors with 40-year timelines can weather significant volatility that would devastate someone retiring next year. The “Rule of 110” suggests subtracting your age from 110 to determine your stock allocation percentage—a 40-year-old would hold 70% stocks. While simplistic, this framework provides a reasonable starting point for age-appropriate allocation.
Investment Allocation Strategies That Stand the Test of Time
Different market conditions and investor needs call for distinct allocation approaches. Strategic allocation maintains fixed targets regardless of market movements, rebalancing periodically to restore intended weights. This buy-and-hold approach minimizes transaction costs and emotional decision-making while capturing long-term market returns.
Tactical allocation allows modest shifts based on market opportunities while maintaining core positions. An investor might increase international exposure when valuations appear attractive or reduce equity allocation when recession indicators flash red. Dynamic allocation takes this further, making frequent adjustments based on quantitative models or market momentum.
Strategic vs. tactical allocation
The strategic vs. tactical allocation debate misses a crucial point—both approaches work when implemented consistently. Strategic allocation suits investors who prefer simplicity and recognize their limitations in market timing. Historical data shows that maintaining a disciplined 60/40 allocation through all market cycles delivered 6.9% annualized returns over 150 years with remarkably low volatility.
Tactical allocation appeals to engaged investors willing to monitor markets actively and adjust positions based on valuation metrics or economic indicators. Success requires genuine skill in identifying opportunities and the discipline to act contrarian when markets reach extremes. Most investors overestimate their tactical abilities, leading to performance-chasing behaviors that destroy returns.
Popular portfolio models
The classic 60/40 portfolio split between stocks and bonds remains popular for good reason—it balances growth with stability while requiring minimal maintenance. During the worst market crash in history (the Great Depression), a 60/40 portfolio declined 52.6% compared to 79% for pure equity holdings, demonstrating meaningful downside protection.
Target-date funds automate allocation adjustments based on retirement timelines. Vanguard’s LifeStrategy funds exemplify this approach, gradually shifting from growth-oriented allocations to conservative mixes as investors approach retirement. These funds delivered 6.71% returns over the past year compared to 5.26% for their peer group, validating the systematic approach to age-based allocation.
Diversification Done Right: Protecting Your Investments
True diversification extends far beyond owning multiple stocks. Effective risk management requires spreading investments across asset classes, geographic regions, market capitalizations, and economic sectors. Each dimension of diversification reduces specific risks while maintaining return potential.
Within equity holdings, balance domestic and international exposure to capture global growth while reducing country-specific risks. Small-cap and large-cap stocks behave differently across market cycles. Growth and value stocks often move in opposition. Technology and utility stocks respond differently to interest rate changes. Building portfolios with intentional exposure across these dimensions creates resilience.
Diversify investment allocation across asset classes
Diversifying investment allocation starts with the major asset categories but shouldn’t stop there. Within bonds, mix government and corporate issues across various maturities. Short-term bonds provide stability while long-term bonds offer higher yields. International bonds add currency diversification and exposure to different interest rate cycles.
Real estate investment trusts (REITs) provide liquid exposure to property markets with attractive dividend yields. Commodities like gold traditionally hedge against inflation and currency devaluation. Each alternative asset class adds unique risk-return characteristics that enhance overall portfolio efficiency when combined thoughtfully.
Alternative assets and geographic spread
Allocating to alternative investments has become increasingly accessible through liquid fund structures. Private equity exposure through interval funds allows participation in company buyouts and growth investments previously restricted to institutions. Infrastructure funds capitalize on global needs for transportation, energy, and communication assets.
International diversification proves especially valuable during periods of US market stress. While correlation between US and international markets has increased due to globalization, meaningful opportunities for reduced volatility remain. Emerging markets offer higher growth potential despite increased volatility, while developed international markets provide exposure to different economic cycles and currency movements.
Avoiding Common Mistakes in Investment Allocation
Overconcentration represents the most dangerous allocation error, whether in a single stock, sector, or asset class. Employees holding excessive company stock face career and investment risk simultaneously. Technology investors in 2000 learned painfully that sector concentration multiplies downside risk regardless of individual company quality.
Overdiversification creates different problems through excessive complexity and costs. Owning 20 mutual funds doesn’t improve diversification if they hold similar securities. Each additional holding increases monitoring requirements and potentially creates tax inefficiencies. Most investors achieve adequate diversification with 4-6 well-chosen funds covering major asset classes.
Behavioral mistakes in investment allocation
Behavioral mistakes in investment allocation stem from predictable psychological patterns. Loss aversion causes investors to hold losing positions hoping to “break even” while selling winners prematurely. This tendency locks in losses while limiting gains—precisely opposite to successful investing.
Recency bias leads investors to overweight recent performance in allocation decisions. After strong equity markets, investors increase stock allocation just as valuations peak. Following market crashes, they reduce equity exposure at precisely the wrong moment. Breaking this cycle requires systematic processes that override emotional impulses.
The importance of regular rebalancing
Neglecting rebalancing allows market movements to distort carefully planned allocations. A 60/40 portfolio can drift to 70/30 or 50/50 based on relative performance, fundamentally altering risk exposure. Setting rebalancing triggers based on percentage deviations (such as 5% moves) maintains intended allocations while avoiding excessive trading.
Tax considerations complicate rebalancing in taxable accounts. Selling appreciated assets triggers capital gains taxes that reduce long-term returns. Tax-loss harvesting—selling losers to offset gains—provides one solution. Another approach involves directing new contributions to underweight asset classes rather than selling winners.
The Human Element: How Your Mindset Shapes Your Investment Allocation
Investment success depends more on investor behavior than investment selection. The most sophisticated allocation strategy fails when abandoned during market stress. Understanding your psychological tendencies and building systems to counteract them determines long-term outcomes.
Overconfidence plagues even experienced investors. Research shows 64% of investors believe they possess high-level investment knowledge despite evidence that cognitive biases consistently undermine decisions. Recognizing this gap between perceived and actual competence creates space for improvement through education and systematic processes.
Building discipline through systems
Creating written investment policy statements forces clarity about goals and strategies before emotions interfere. Document target allocations, rebalancing triggers, and conditions for strategy changes. Review this document during market extremes when emotions run highest.
Automation removes emotional interference from routine decisions. Automatic investment plans dollar-cost average into markets regardless of headlines. Automatic rebalancing maintains allocations without requiring active decisions. These systems compound small advantages into significant long-term outperformance.
Action Steps: Creating Your Personalized Investment Allocation Plan
Building your investment allocation plan begins with honest assessment of your current situation and future goals. Calculate your net worth, project future income needs, and identify specific financial objectives with timelines. This foundation determines appropriate risk levels and asset allocations.
Choose an allocation strategy matching your engagement level and expertise. Strategic allocation with annual rebalancing suits most investors through simplicity and effectiveness. Document your chosen allocation and establish specific triggers for rebalancing. Select low-cost index funds or ETFs implementing your allocation efficiently.
Fund your portfolio systematically through automatic investment plans. Regular contributions regardless of market conditions build wealth through dollar-cost averaging. Schedule annual reviews to assess progress and adjust for life changes. Major events like marriage, children, or career changes warrant allocation updates.
Monitor your portfolio quarterly but avoid impulsive changes based on short-term performance. Compare actual allocation to targets and rebalance when deviations exceed predetermined thresholds. Track costs carefully—fees compound negatively just as returns compound positively. Even small fee differences create substantial long-term impact.
Final Thoughts
Investment allocation stands as the cornerstone of financial success, yet its implementation requires balancing mathematical optimization with psychological reality. The evidence overwhelmingly supports diversified portfolios maintained through disciplined rebalancing, but only when investors stick with their plans through inevitable market cycles.
My decades of experience at Complete Controller have taught me that successful allocation combines knowledge with systems that enforce discipline when emotions threaten sound judgment. Whether you’re just starting your investment journey or managing substantial portfolios, the principles remain consistent: diversify thoughtfully, rebalance regularly, and maintain perspective through market turbulence. For personalized guidance on implementing these strategies in your unique situation, the experts at Complete Controller stand ready to help you build and maintain allocations aligned with your goals.
Frequently Asked Questions About Investment Allocation
What is investment allocation in simple terms?
Investment allocation is dividing your money among different types of investments like stocks, bonds, and real estate to manage risk while pursuing your financial goals. Think of it as not putting all your eggs in one basket—you spread investments across categories that behave differently to protect and grow your wealth.
How often should I rebalance my investment allocation?
Rebalance at least annually or when any asset class drifts more than 5% from your target allocation. Research shows that threshold-based rebalancing (triggered by specific deviation amounts) generates better results than calendar-based approaches, adding 15-22 basis points annually to returns while maintaining your intended risk level.
What is the 60/40 portfolio, and is it still relevant?
The 60/40 portfolio allocates 60% to stocks and 40% to bonds, balancing growth with stability. Despite recent challenges during simultaneous stock-bond declines, its 150-year track record of 6.9% annualized returns with reduced volatility remains relevant for moderate investors, though some experts now suggest higher equity allocations for longer time horizons.
Should I include international assets in my allocation?
Yes, international diversification reduces dependence on any single economy and provides exposure to different growth opportunities. While US-international correlation has increased, international markets recently outperformed with 18.1% returns versus 6.4% for US markets, demonstrating the cyclical nature of geographic performance that rewards patient diversification.
How can behavioral biases affect my investment allocation?
Behavioral biases like loss aversion, recency bias, and overconfidence lead to poor timing decisions and suboptimal allocations. Investors experiencing losses feel twice the emotional impact of equivalent gains, causing them to sell low and buy high. Regular systematic reviews and automated rebalancing help counteract these psychological tendencies.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
Jennifer BrazerFounder/CEO
Jennifer is the author of From Cubicle to Cloud and Founder/CEO of Complete Controller, a pioneering financial services firm that helps entrepreneurs break free of traditional constraints and scale their businesses to new heights.
Brittany McMillen is a seasoned Marketing Manager with a sharp eye for strategy and storytelling. With a background in digital marketing, brand development, and customer engagement, she brings a results-driven mindset to every project. Brittany specializes in crafting compelling content and optimizing user experiences that convert. When she’s not reviewing content, she’s exploring the latest marketing trends or championing small business success.
About Complete Controller® – America’s Bookkeeping Experts Complete Controller is the Nation’s Leader in virtual bookkeeping, providing service to businesses and households alike. Utilizing Complete Controller’s technology, clients gain access to a cloud platform where their QuickBooks™️ file, critical financial documents, and back-office tools are hosted in an efficient SSO environment. Complete Controller’s team of certified US-based accounting professionals provide bookkeeping, record storage, performance reporting, and controller services including training, cash-flow management, budgeting and forecasting, process and controls advisement, and bill-pay. With flat-rate service plans, Complete Controller is the most cost-effective expert accounting solution for business, family-office, trusts, and households of any size or complexity.
