The more our world advances into new domains, the better the technology taps into it and opens opportunities for its development. Social media happens to be one such domain that has unleashed new horizons for the business world and how it has worked for them. Calling social media platforms as the most crucial to grow and promote a business wouldn’t be an exaggerated statement because that is how it has worked for them. From helping a company increase brand awareness to increasing its sales, how does social media help you? With everything, perhaps?

The idea is our target audience uses social media platforms just as they spent their time watching movies and playing games earlier. These platforms – by the way, entertain them and ensure that your audience is engaged with them. And the fact that COVID-19 has come right at us without any warnings, keeping us locked and chained in our houses – these platforms have become even more mandatory. If you are not convinced yet, use the guide below and benefit from social media platforms in new ways.

Define Your Goals

The benefits you want to uncover from different social media platforms can only work for you once you clearly define your goals. The more precise you determine your goals, the more benefits these platforms provide. Concise, clear goals – following the SMART goals concept, i.e., specific, measurable, achievable, realistic, and timely goals, help you achieve your end goal promptly. So, while defining your goals when utilizing social media platforms, ensure that you define them following the right strategy – in particular, use the acronym ‘SMART,’ and you’ll find social media working wonders for your brand.

Research Beforehand

Your target audience will likely not use every social media platform. While some find Facebook their go-to social media platform, others can spend most of their time on Instagram, Snapchat, Twitter, or whatnot! In such a setting, where options are innumerable, you should choose exactly the one that would work for you according to your research and analytics. However, to narrow your options and cut down on the cost, your analysis would ease the process for you. So, ensure you research the platforms and use them to your advantage.

Choose the Right Platform

Now that you are done with your research and have narrowed down your goals, choosing the right platform is of utmost significance. Your objectives are clear, your goals are set, and you know the same platform your target audience uses. Here comes the time to choose and use the right platform to utilize social media marketing efficiently. On the other hand, if you’re too keen, you can use a bunch of different platforms so that you get to capture a mass audience.

Devise an Action Plan

When you finish selecting the right platform—the one you’ll be using for almost all your social media marketing strategies—ensure you devise an action plan. Create content that gives insight into your brand through texts or infographics. In this way, you’ll find your brand making larger-than-life returns .

Keep Your Audience and Goals on the Same Page

One of the mistakes you make when using different strategies to promote your brand and its offerings is not keeping your audience and organizational goals on the same page. While this confuses your audience, the conflict in your strategies can have unimaginable consequences. For example, your target audience can drift away from your brand, substituting it with others in the market to get the exact product you offer.  

The idea is that with several brands existing in the market, you must be sure of the impact your strategies can make on your brand. Otherwise, your brand will lose its impact on your audience, and they’ll find other brands working for them more than yours. All in all, from your goals to your strategies, you should align your goals in a way that brings you incredible results. Ensure your customers and all your promotional strategies are working at the same pace so there are no conflicts.

Bottom Line

Here are some of the most effective social media marketing methods. Use them to your brand’s advantage and enjoy the results.  

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.

Why should businesses have a strategy to prevent errors and losses? When companies struggle to sustain their productivity and growth, it can directly and indirectly affect employee morale.

Human business errors have become too familiar nowadays, particularly when management has not invested in new technology. Research indicates that human errors may be the third leading cause of new businesses shutting down in the United States. Over the years, progress has been made to mitigate these errors, but it doesn’t seem enough.

Here are strategies that leaders in the business sector can implement to reduce all sorts of errors.

1. Leverage your employees

Motivating your employees is one of the best and most effective ways to prevent business losses. In general, when employees don’t see the bigger picture and how their contribution makes a difference in the company, they don’t care about its growth.

Remember, no matter how much money you have, your employees will always be your biggest asset. Therefore, your employees must invest in the business’s success, allowing them to pay more attention to their work. Here are ways to increase employee morale in your company:

• Career mentoring
• Frequent appreciation events for the employees
• Raises and promotions frequently based on promotions

2. Effective communication

One of the most significant contributors to business errors is miscommunication among employees. Leaders in professional settings, like executives and managers, should come up with initiatives to improve communication. Effective communication between teams can prevent severe financial losses and operational failures from taking place effectively.

Your employees should know that loss prevention is not something the organization takes for granted. As a CEO or director, take regular feedback from your team managers on how everyone is performing. Keep an eye on the factors that are common among all teams. More importantly, communicate regularly and remind them how vital loss prevention is.

3. Clear policies

Your employees need to know what you expect of them to prevent losses. It cannot be done only with a pep talk once a month but should be mentioned clearly in the company policy. A well-documented approach ensures your employees know how you expect things to be done from the very first day and what benefits they can reap if they do.

In addition, your policies should state employees’ responsibilities and how to respond in case of losses. But what if you have suffered losses in the past? In that case, you can make the necessary changes to company policy by conducting an in-depth review of the hiring procedure. Carry out additional background and reference checks, as they might help you find the best talent in the market, increasing your business performance.

4. Update accounting

Okay, let’s take a turn for the obvious. The majority of the errors are caused by business owners’ concerns with finances. There is no denying that businesses run on capital and investment and eventually get returns on those investments. Therefore, don’t forget to check the accounting sheets for transactions, i.e., how much went in and came out. It can take a lot of work, and you might need to hire a neutral party, like a financial auditor, to identify abnormalities in the account.

5. Avoiding diagnostic error

Diagnostic errors don’t just include the wrong diagnosis but also overdiagnosis, delayed diagnosis, and partial diagnosis. It is recommended that leaders involve the entire team while diagnosing business problems, emerging from entry-level employees to high-level executives. Businesses need to introduce an environment of co-creativity, where every single individual uses their expertise effectively. Proper execution of a multi-disciplinary approach can reduce the chances of error dramatically.

6. Root cause analysis

Root cause analysis (RCA) is a systematic approach that requires leaders to ask three questions for information collection.

1. What is the problem?
2. How did it take place?
3. How can it be prevented in the future?

Leaders should generally follow a prespecified protocol to start with data collection and reconstruct the whole event, analyzing the sequence of events leading to that error.

Bottom Line

Successful businesses focus on improving, whether it’s their operations or employee performance. Every member of your organization must understand the importance of error reduction and loss prevention. We hope this article helped us better understand how to reduce errors.

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.

Everything You Need to Know About Equity Financing

Equity financing raises business capital by selling ownership shares to investors who become part-owners and share in your company’s risks and rewards. This method of fundraising gives you access to capital without taking on debt, but requires trading partial ownership and control of your business.

After 20 years as CEO of Complete Controller, I’ve witnessed countless businesses transform through strategic equity financing—and I’ve also seen founders lose their companies by misunderstanding the process. From tech startups raising their first angel round to established companies preparing for IPOs, the principles remain consistent: equity financing can accelerate growth dramatically, but only when you understand both the immediate benefits and long-term implications. In this comprehensive guide, I’ll share the real numbers behind dilution, reveal the hidden costs most founders overlook, and provide concrete strategies for maintaining control while scaling your vision.

What is equity financing, and how does it actually work?

• Equity financing involves selling company shares to investors in exchange for funds to grow your business, rather than taking on debt
• Investors become co-owners and share in profits, but you give up partial ownership and some decision-making control
• Key types include angel investors, venture capital, private equity, crowdfunding, and IPOs
• You benefit from expertise and risk-sharing, but dilute your stake and face complex negotiations
• Equity financing is ideal for businesses seeking high growth or unable to access enough debt financing

Equity Financing Explained: What It Is, When to Use It, and Who It’s For

Equity financing fundamentally changes your business structure by introducing new owners who provide capital in exchange for shares. Unlike debt financing where you maintain full ownership while repaying a loan with interest, equity financing creates a partnership where investors share both the upside potential and downside risk of your business.

The mechanics work through share distribution: you determine your company’s valuation, then sell a percentage of ownership at that price. For example, if your business is valued at $5 million and you raise $1 million, you’re selling 20% of your company. These new shareholders gain voting rights, profit participation, and influence over major decisions—the extent depends on your negotiation and share class structure.

When does equity financing make sense?

Early-stage startups with high growth ambitions represent the classic equity financing candidate. These businesses often lack the revenue history or assets required for traditional loans, yet possess tremendous scaling potential that attracts risk-tolerant investors.

Businesses unable to secure loans or requiring substantial capital beyond debt capacity also turn to equity financing. According to the Federal Reserve’s 2024 Small Business Credit Survey, nearly 40% of small businesses carry over $100,000 in debt, with satisfaction in traditional lenders dropping 12-13 points year-over-year. This debt burden and lending frustration drives many entrepreneurs toward equity alternatives.

Who typically uses equity financing?

Technology startups dominate the equity financing landscape, particularly software companies with low marginal costs and global scaling potential. Innovative ventures in biotech, clean energy, and consumer products also frequently use equity financing to fund research, development, and market penetration before generating substantial revenue.

Scaling businesses across all industries tap equity markets when expansion capital needs exceed their borrowing capacity or when they want strategic partners beyond just capital providers.

Types of Equity Financing and Common Sources

Understanding your funding options helps you target the right investors for your stage and needs. Each source brings different expectations, involvement levels, and growth requirements.

Primary funding sources

• Angel investors typically invest $25,000 to $500,000 of personal funds in early-stage companies. They often provide mentorship alongside capital and make decisions quickly compared to institutional investors.
• Venture capital firms manage pooled funds from institutions and wealthy individuals, investing $1 million to $100+ million across multiple rounds. VCs expect explosive growth and typically seek 10x returns within 5-7 years.
• Private equity firms invest in more mature companies, often taking controlling stakes to restructure operations before exit. They bring operational expertise and extensive resources but demand significant influence.
• Crowdfunding platforms democratize investment by allowing numerous small investors to participate. Regulation Crowdfunding permits raising up to $5 million from non-accredited investors, while Regulation A+ allows up to $75 million.
• Initial Public Offerings (IPOs) represent the ultimate equity financing, selling shares to public markets. The 2025 IPO market shows increased selectivity, with only 18 U.S. companies going public by mid-year, though one-quarter achieved profitability compared to just 12% in 2021.

How each source works

Angel investors often invest within weeks of initial contact, providing not just capital but industry connections and operational guidance. They typically take 10-25% equity stakes and remain actively involved in strategic decisions.

Institutional investors like VCs and PE firms conduct extensive due diligence over 3-6 months, examining every aspect of your business. They’ll negotiate complex term sheets governing everything from board composition to liquidation preferences, fundamentally reshaping your corporate governance.

The Real Pros and Cons of Equity Financing

Every funding decision involves trade-offs. Understanding both benefits and drawbacks prevents costly surprises.

Key advantages

No loan repayments or interest burden represents the primary advantage—you receive capital without monthly obligations that strain cash flow. This flexibility proves invaluable during market downturns or unexpected pivots.

Access to mentorship, expertise, and broad networks often exceeds the value of capital itself. Smart investors open doors to customers, partners, and talent that would take years to access independently.

Shared risk means investors have “skin in the game” and work actively to increase company value. Unlike lenders who want repayment regardless of performance, equity investors only profit when you succeed.

Strategic investors bring industry knowledge, operational experience, and credibility that accelerates growth beyond what money alone provides.

Key disadvantages

Ownership dilution and loss of control represent the fundamental trade-off. As revealed by Quickers Venture’s analysis of 45,000 startups, founders retain only 56.2% after seed rounds, dropping to 36.1% after Series A and just 23% after Series B.

Less privacy and potential for internal conflicts arise when outside investors gain information rights and board seats. Major decisions require approval, and divergent visions can create tension.

Complex and lengthy processes consume significant time and money. The average equity round takes 6 weeks to close after term sheet signing, with full fundraising cycles spanning 5-9 months. Legal fees alone typically cost $50,000 to $150,000.

Future fundraising becomes more complicated as you add investors with different preferences and rights.

Equity Financing Step-By-Step: How the Process Really Works

Successful equity financing requires meticulous preparation and realistic expectations about timelines and requirements.

Preparing for equity financing

Business valuation forms the foundation of negotiations. You’ll need audited financials, growth projections, and comparable company analyses to justify your valuation. Professional valuation services cost $10,000-50,000 but prove essential for credibility.

Pitch materials including executive summaries, detailed business plans, and investor presentations must tell a compelling growth story backed by solid data. Budget 2-3 months for preparation before approaching investors.

Legal and financial due diligence preparation involves organizing corporate documents, contracts, intellectual property records, and compliance materials. Investors will examine everything—disorganization delays funding and reduces valuation.

Negotiating terms and closing the deal

Term sheets outline all economic and control provisions, from valuation and investment amount to board composition and protective provisions. Negotiation typically takes 2-4 weeks with experienced counsel essential for protecting founder interests.

Shareholder agreements formalize all parties’ rights and obligations, covering everything from information rights to tag-along provisions. These complex documents govern your relationship for years—never sign without thorough legal review.

Post-deal obligations include regular financial reporting, board meetings, and investor updates. Budget 10-20% of executive time for investor relations going forward.

What to expect after raising equity

New reporting and accountability standards transform your operations. Monthly financials, quarterly board meetings, and annual audits become mandatory. You’ll need robust business bookkeeping essentials systems to meet investor expectations.

Ongoing investor relations require consistent communication about progress, challenges, and strategic changes. Successful founders treat investors as partners, leveraging their expertise while maintaining vision alignment.

Real-World Case Study: How Equity Financing Fueled Instagram’s Meteoric Rise

Instagram’s journey from startup to billion-dollar acquisition in just two years illustrates equity financing’s transformative potential. Founded in October 2010 by Kevin Systrom and Mike Krieger, the photo-sharing app strategically used three funding rounds to achieve explosive growth.

Their seed round of $500,000 from Baseline Ventures and Andreessen Horowitz provided runway for initial development. By February 2011, with user growth accelerating, they raised $7 million in Series A funding. The pivotal moment came in April 2012 when they closed a $50 million Series B at a $500 million valuation from Sequoia Capital, Thrive Capital, Greylock Partners, and Benchmark Capital.

Days after this funding, Facebook acquired Instagram for $1 billion. The strategic timing wasn’t coincidental—fresh funding demonstrated momentum and gave founders negotiating leverage. Despite dilution across three rounds, the massive exit validated their equity financing strategy. The expertise and credibility from top-tier investors like Sequoia accelerated growth beyond what bootstrapping could achieve.

Despite the Hype: When Equity Financing May Not Be the Right Choice

Hidden costs extend beyond the obvious dilution. Legal fees, compliance requirements, and management time devoted to investor relations can consume 20-30% of raised capital and executive bandwidth.

Long-term ownership dilution often exceeds loan repayment costs for profitable businesses. Borrowing money might preserve more value than selling equity if you can service debt from cash flow.

Tax implications favor debt over equity—interest payments are tax-deductible while dividend payments aren’t. This difference significantly impacts your effective cost of capital.

Preserving founder vision becomes challenging when investors push for strategies misaligned with your values. The pressure for rapid returns can force premature scaling or market strategies that compromise long-term sustainability.

The Human Side: Lessons Learned from the Founder’s Journey

The thrill of closing your first investor meeting with a term sheet fades quickly when negotiating control provisions. I’ve counseled founders who celebrated raising capital only to realize they’d effectively become employees in their own companies. Clear communication about decision rights, board composition, and exit timelines prevents devastating surprises.

Protecting your “why” requires deliberate effort as new voices join leadership. Document your core values and vision before fundraising, then reference these touchstones when investor pressure mounts. The most successful founders I’ve worked with treat investors as advisors while maintaining final decision authority on culture and values.

Conclusion

Equity financing unlocks transformative growth when approached strategically, but success requires understanding both immediate capital benefits and long-term ownership implications. The data tells a clear story: founders who raise multiple rounds typically own less than 25% of their companies, legal costs consume substantial capital, and the process takes far longer than expected. Yet for businesses with explosive growth potential and capital needs exceeding debt capacity, equity financing remains the optimal path. The key lies in timing, preparation, and partnering with investors who share your vision beyond just financial returns.

I’ve guided hundreds of businesses through these decisions at Complete Controller, and the difference between success and regret often comes down to preparation and realistic expectations. Visit Complete Controller for expert guidance on preparing your financials, evaluating funding options, and maintaining the startup accounting systems investors expect.

Frequently Asked Questions About Equity Financing

What is the main difference between debt financing and equity financing?

Debt financing involves borrowing money that must be repaid with interest while maintaining full ownership, whereas equity financing means selling ownership stakes without repayment obligations but giving up partial control and future profits to investors.

Who are typical investors in equity financing?

Common equity investors include angel investors (wealthy individuals), venture capital firms, private equity firms, friends and family, crowdfunding participants, and public stock market investors through IPOs.

What do investors gain from equity financing?

Investors receive ownership shares, voting rights on major decisions, a portion of future profits through dividends or exit proceeds, and potential capital appreciation if the company value increases.

Is equity financing right for small businesses?

Equity financing suits small businesses with high growth potential, limited collateral for loans, or those willing to trade control for expertise and funding. It works best for scalable business models rather than lifestyle businesses.

What are the main risks of equity financing?

Primary risks include diluted ownership (often to less than 25% after multiple rounds), loss of decision-making autonomy, complex and expensive deal processes costing $50,000-$150,000 in legal fees, and potential conflicts with investors over strategy and timing.

Sources

• “Equity in Finance | Definition, Types & Examples.” Study.com.
• “Advantages vs. Disadvantages of Equity Financing.” The Hartford.
• “Equity Financing: Meaning, How it Works, Types, Example, Vs Debt …” Equirus.
• “What is Equity Financing? Pros & Cons, Sources, Definition.” Finmark.
• “Equity Financing: Types & How to Get It – Business.” Lending Tree.
• “Advantages vs. Disadvantages of Equity Financing.” Wilcox Investment Bankers.
• “Equity Financing Guide: Pros & Cons, Types, How it Works.” Dealroom.
• “Advantages and Disadvantages of Equity Financing.” Capstone Partners.
• “How equity financing works for startups.” J.P. Morgan.
• “Equity financing: How it works, plus pros and cons.” Oyster HR.
• “What Is Equity Financing?” Credibly.
• “The Pros and Cons of Debt and Equity Financing.” Business.com.
• “Demystifying Equity Financing – Chapter.” UVM.
• “Debt vs. Equity Financing: Which to Choose?” Preferred CFO.
• “Equity Financing – Definition, How it Works, Pros, Cons.” Corporate Finance Institute.
• Feuer, William. “Warby Parker: From Startup to IPO.” CNBC, Sept. 29, 2021.
• “The Ultimate Guide to Startup Funding Stages.” Visible.vc. 2024.
• “Series A valuations in 2025: what founders need to know.” Zeni AI. 2025.
• “Founder Ownership in VC-Backed Companies – How Much Do Founders Retain?” Quickers Venture. 2025.
• “The Hidden Timeline For Closing A Startup Financing Round.” Alejandro Cremades. 2023.
• “Equity financing rounds should close in days. Here’s why they don’t.” Fidelity Private Shares. 2024.
• “2025 Report on Employer Firms: Findings from the 2024 Small Business Credit Survey.” Federal Reserve. 2025.
• “Small Business Statistics In 2025.” Bankrate. 2025.
• “Q4 2024 PitchBook-NVCA Venture Monitor.” PitchBook / National Venture Capital Association. 2025.
• “Q3 2025 US IPO Market Trends.” EY. 2025.
• “VC-Backed IPOs in 2025.” Free Writings & Perspectives. 2025.
• “Right Before Acquisition, Instagram Closed $50M At A $500M Valuation From Sequoia, Thrive Greylock, and Benchmark.” TechCrunch. April 9, 2012.
• “How Kevin Systrom Sold Instagram to Facebook for $1,000,000,000.” YurExit.
• “Instagram Funding and Investment Information.” Exa. 2024.

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. Reviewed By: Brittany McMillen

Brittany McMillen

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.

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1. Consider your investor profile

Before making any decisions, you must first determine your investment profile, considering your risk tolerance. You can be characterized as cautious, moderate, or daring depending on your willingness to accept chances while investing.

It is feasible to design a portfolio that is matched with your profile by recognizing the risks associated with each form of investment.

2. Understand what your personal needs are

It would be best to consider other individual factors besides the investor profile. As a result, it’s critical to evaluate your needs and expectations in terms of return and investing motivations.

For example, if you wish to replenish your emergency reserve, you’ll need to contribute the equivalent of six months’ worth of monthly spending, leaving the money available at any moment. As a result, you’ll want assets that are both safe and liquid.

If you want to enhance your wealth, seeking assets that provide higher financial returns may make sense. To align your selections, you must understand where you aim to go with the financial market’s outcomes.

3. Know your investment horizon

The evaluation of financial objectives is not limited to the amount you wish to earn. It would help if you also considered how much time you have available and how long you want to devote to it.

Consider the topic of retirement. It is usually a long-term investment, lasting more than five years. As a result, having a deadline in your objectives might help you determine if you can pick solutions with higher or lower risk.

It is also an excellent technique for estimating the amount of work required to meet short-, medium-, and long-term goals.

4. Understand your available capital

Another crucial step is to assess how much money you have access to invest in the first place. It is significant because some investments must be accessible with specific minimum values.

Furthermore, it is a problem that obstructs the capacity to diversify the portfolio — the ability to pick numerous assets when beginning an investment. It is worthwhile to create a financial strategy to address this issue.

Using a budget-balancing plan, you may save money and boost your investment capacity.

5. Know the market opportunities

Following this examination, knowing the available options is crucial for understanding how to invest wisely. The financial market is separated into fixed income and variable income.

The first category includes financial assets with pre-established profit margins of which the investor is aware. The second is made up of investments where the financial return is unclear how (or if) it will materialize.

There are various investment options within each class. As a result, it’s critical to understand the features of each one’s safety, liquidity, and profitability – the so-called investing trinity.

You can choose the most appealing chances for your portfolio based on your unique characteristics.

6. Assess the economic scenario

It is worth evaluating the economic and financial scenario, its characteristics, and how the investments work. For example, before purchasing stock on the stock exchange, it is vital to understand its status and the industry in which it operates.

Analyzing macroeconomic prospects might also assist you in determining the market’s features. As a result, you’ll be able to take advantage of excellent chances while also lowering your portfolio’s risk.

On the other hand, economic scenario analysis should have a limited influence on some decisions. For example, a sector’s poor performance over a semester may not influence the total result in the long run.

As a result, it’s also essential to put up a solid, long-term study. That way, you’ll be able to see what the future holds for that time span.

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.

What is Financial Literacy?

Financial literacy is what separates a wealthy person from a poor person. Statistics say that if a financially literate person does not have money, he will soon have it. And vice versa, if an economically illiterate person has money, he will surely lose it soon! Read on to why this is happening and how to improve your financial literacy.

Modern research shows that financially literate people are more efficient and successful in life, regardless of which country, position, and area they work. Therefore, wealth, together with knowledge, has been passed down for centuries from generation to generation. During the Soviet Union, there was also no need to teach ordinary people financial literacy. Salaries and pensions were set and guaranteed by the state, there were no risks of losing income, and you could count the number of financial instruments legally available to the people on the one hand. However, along with the arrival of a market economy in Russia, it became necessary to understand economic processes by every market participant, every person.

1. Read unique books on the basics and principles of financial literacy

Read some books, especially on the basics of the economic study of stock markets. It is essential to have basic information, or anyone can play with your money without your knowledge

2. Read feature articles

 Many financial advisors, including yours, indeed, maintain their blogs, in which they share “secret knowledge” about personal finance with a wide range of readers. Here, you can familiarize yourself with published articles in my blog and subscribe to receive new pieces by e-mail. Increasing financial literacy is good because it does not take your time. Finding 5-10 minutes during the day to study one article will not be difficult, even for the busiest people.

3. Play financial literacy games

 Among investment simulators, the service www.chartgame.com allows you to hone your investing and speculation skills on accurate historical charts of American stocks and compare your trading results with a passive buy-and-hold investment strategy.

Games allow you to test various assumptions and strategies in practice. At the same time, you can observe the result of your actions almost immediately, and mistakes and failures do not affect your financial well-being. Therefore, developing financial literacy through games is a relatively effective and enjoyable way of teaching financial literacy that is suitable for adults and children.

4. Attend financial literacy workshops, webinars, and courses

In this case, you are required to pay attention to which institution or company is conducting financial literacy courses. For example, seminars with a similar name from some brokerage companies and banks have the real purpose of attracting you as a client and selling you their specific products, so they should be treated with some caution. However, financial literacy courses organized by universities and independent financial advisors can be beneficial, especially if you don’t just listen to them but start applying tips and advice in your daily life.

5. Develop the proper financial habits

Developing just four good financial habits may be enough for many people to improve their financial situation. These four good habits are:

• Avoid debt and loans – live within your means
• Start keeping track of income and expenses. Plan your costs a month in advance.
• Always save and invest at least 10% of the earned immediately after earning income. And from the remaining money, pay for your usual expenses, starting with the most important ones.
• Be sure to ask your financial advisor before investing in any project or investment vehicle.

What Skills Does a Financially Literate Person Have?

1. Maintains a balance between consumption and investment

Living well today and saving and investing enough money to ensure a liveable future is not an easy task. If you do not save anything for the future, then a miserable beggarly pension from the state awaits you. If you save and invest to the maximum and now live from hand to mouth, there is a risk of not living to see that “bright future.” Therefore, it is essential to maintain a “golden mean” that will allow you to live comfortably now and not worse in the future.

2. Manages personal finances effectively, planning income and expenses in advance

It is essential to plan expenses for the next month and analyze and compare the plan with the facts for the past period. Thirty minutes a month devoted to planning and analyzing your budget allows you to find holes in the budget, determine where exactly money is flowing, and make the right decisions to increase the amount of money in your wallet.

3. Sets clear financial goals and successfully achieves them

We do not like to dream about an expensive sports car, a house on the seashore, a yacht, or financial independence. The goal differs from the dream because it has specific deadlines for implementation, cost, priority, and many other parameters. 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.

You will need to invest your money to stay ahead of the financial curve. Since you work hard for your money, you want to make the most of it.

These ideas can assist you in doing exactly that, as well as being more consistent and avoiding costly blunders that might sink your portfolio.

When it comes to investing smartly, these tips will teach you how to improve your investments.

It Would be Best if You Calculated the Risk

Investing entails placing a wager on the unknown. Even skipping the stock market and simply investing in US government bonds (among the safest assets) might be dangerous.

While government bonds are typically regarded as secure, they may not yield enough to outperform inflation and deliver the portfolio growth required to meet your investing objectives.

It becomes essential to discover a strategy to manage risk and return in a way that delivers both safety and portfolio development. It may be a difficult balance to strike, and the amount of risk you are willing to take, or your investment risk tolerance, is unique.

Too much risk can lead to volatility and eventual losses. However, not taking enough risk might deplete your account in retirement.

Consistency is the Key to Success

Automating the process of creating riches is the most straightforward approach. While you can’t predict how the financial markets will behave, you can control your activities.

It entails making consistent contributions to your investing accounts. The more you save and invest consistently, the faster your investment portfolio increases.

Dollar-cost averaging (DCA) is a common approach for making recurring donations. It means that when prices are low, you purchase more shares, and when prices are high, you buy less. Using DCA, you invest the same amount each month, regardless of how the markets perform.

DCA may outperform saving a large quantity of money and then making a more considerable lump sum investment over time. But, more significantly, it guarantees that you invest rather than spend your money.

Don’t Worry about the Market Condition

It would help if you utilized your risk tolerance to help construct a formal Investment Policy Statement now that you’ve examined it (IPS). Each of the investors should have a written IPS that contains the following information:

• Your investing objectives and timetable
• How you want to invest (asset allocation, asset classes, types of investments)
• Tolerance for risk
• Your IPS does not have to be lengthy; you may discover that a few phrases on each issue will be enough.
• When are you going to rebalance your investment portfolio?

Instead of allowing the markets to dictate your activities, you might consult your IPS. When markets get unpredictable, having a written IPS provides you with a written roadmap. It allows you to detach your decision-making from the emotions of a volatile market. When in doubt, consult your IPS.

Think about Taxes

Taxes are an unavoidable part of life. However, tax legislation is constructed so that investors can reduce their taxes on investments. Like investment management fees, each dollar saved is another dollar that stays in your portfolio and may be invested for higher returns.

Here are a few of the most significant tax breaks for investors:

• Examples of small company retirement funds are SEP IRAs, Solo-401ks, and defined contribution plans.
• Employer-sponsored retirement plans (401k, 457, Thrift Savings Plan)
• IRAs, both traditional and Roth
• Health Savings Accounts (HSA)
• 529 Plans for College Savings
• Long-term capital gains are taxed at a lower rate.
• 1031 Exchanges for real estate investors, among other things

Most persons will take advantage of one or more of the tax breaks listed above. It allows you to have a significant say in how and when you withdraw funds from your accounts, perhaps enabling you to minimize the amount.

Ponder Over the Investment Cost

Investment fees are essential. Reduced management fees and other expenditures are some of the simplest methods to increase your investment results. It covers both costs that you are aware of and fees concealed in the fine print of your fund’s prospectus.

Why is this so effective? Each percentage point of management fees you spend directly influences your results. Even small amounts, compounded over time, can have a considerable influence.

Conclusion

If you incorporate the described tricks into your business, you can quickly answer how to improve your investment. So, research, learn, and think before investing!

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 trying to get a car loan, you must meet specific requirements as a borrower. If you want to take out a car loan with a trade-in, you must also meet the requirements for the car you will buy. The requirements are the same, but certain conditions vary between different lenders.

Who Can Get a Car Loan?

You can get a car loan if you are 18 years old and registered in your country. You must also pass a credit check with the lender.

When you apply for a car loan, the lender takes a credit report on you. The credit report provides an overview of your finances and ability to repay the loan. The lender can see your income and whether you already have a payment history.

Basic Requirements to Get a Car Loan

Different lenders may make various assessments of your finances. But if it looks stable and you can pay a cash deposit for the car purchase, finding an alternative that fits should be possible.

1. As with most loans, it is required that you have been registered in the country for at least a couple of years to take out a car loan.
2. You must be at least 18 years old. Eighteen is the absolute minimum age to take out a car loan, but some lenders set the limit at 20.
3. Steady income. You must have some steady income to take out a car loan. The lender must ensure that you can pay off your car loan according to the plan.
4. You can pay a cash deposit. You must always pay a cash deposit if the car is collateral for the car loan. The car loan may not exceed 80% of the car’s value. For example, you can pay the rest with saved money or a private loan.

Do Banks Have Different Requirements for Their Car Loans?

Yes, some lenders may have additional requirements in addition to those we listed above. What these look like can vary significantly between different lenders. So, it is essential to look at other options and decide which one suits you best.

Additional requirements that lenders can set

1. Income requirements. The lender may require a fixed annual income of a certain amount.
2. No payment remarks. Many major lenders require a spotless credit history. If you want to take out a car loan with a ding on your history, it is usually a private loan without the trade-in vehicle that applies.
3. Limited repayment period. Although you cannot always freely choose the repayment period you want, many lenders have a maximum limit.

What are the Requirements for a Trade-in with a Loan?

If you want to take out a loan with the car as a trade-in, you cannot buy just any vehicle. The vehicle must also meet specific lender requirements.

If you pay for the car with a private loan, you will avoid this problem. The vehicle does not stand as a trade-in, so its condition is not significant for the lender.

The requirements for the car can vary between different lenders. However, some conditions are mainly recurring.

Standard requirements for the car you will buy with the car loan

• Not too old. Lenders rarely grant car loans for vehicles that will be older than 12 years old when the loan is repaid. So, with a 6-year loan period, you need to buy a newer car than six years. Some lenders set the limit at 15 years.
• Costs a certain amount. There may be a minimum limit on what the car must cost for you to borrow money. The limit is usually different for different lenders.
• From an authorized car dealer. The car needs to be bought from an authorized car dealer so you can get a loan with it as a trade-in. In some cases, exceptions may be made to that rule in exchange for other requirements on the vehicle.
• Fully insured. The lender often wants the car to have full coverage insurance throughout the loan period. For the first time, however, new cars usually have a car damage guarantee, which meets that requirement even if you only take out half insurance for that time.

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.

Companies, governments, or organizations that borrow money issue debt securities in return for bonds. A bond is a negotiable debt instrument, while a stock is a negotiable instrument of ownership. A lender may decide to sell a debt instrument to another person who acquires the right to the interest payments and the principal invested.

Most bonds have a fixed interest rate. This interest is called a ‘coupon.’ Most bonds have a specific maturity. At the end of this term, you must repay the principal. Short-term bonds usually must be repaid within four years; bonds usually after four to twelve years. Long-standing bonds can have a ripeness of thirty years or even more, but such cases would be rare.

Government Bonds

Of course, not all governments are equally stable. Therefore, government bonds from emerging countries and European peripheral markets can be riskier than bonds from developed countries, such as the US, Japan, and the UK. On the other hand, other countries’ governments are safe because they have time to cash them back, have nothing to do with the global economy, and are not at any risk; they are just like cash in different types.

Company Bonds

When a company needs capital, it can issue bonds, which are expressed in the bond rating. The risks associated with corporate bonds depend on the company’s overall health, which we’ll discuss later in this article.

What is the Bond Market, and How Can You Invest in Bonds?

Investors can take advantage of changes in the stock or bond market, which is where stocks and bonds are sold or issued. Investors usually buy their bonds through a bank or broker. However, you typically must put in a high minimum amount when purchasing bonds, which puts some investors off.

However, you can afford a lower investment if you buy bonds through a bond fund or ETF (exchange-traded fund). In addition, a fund or ETF contains several bonds, allowing you to diversify your investment. Therefore, investing in a fund or ETF involves less risk than buying bonds issued by just an entity.

What are the Advantages and Risks of Bonds?

The main advantage of bonds is that they are generally less risky than stocks. In a bankruptcy, a company must repay the bondholders and creditors, only the shareholders. It means that when a company performs well, the return on bonds is likely lower than the return on stocks. This lower risk also has a downside: because bonds have a lower risk premium, the expected long-term return is lower than equities. In addition, bonds pay a fixed interest rate, while stocks increase in value as the value of a company increases.

Here are the main risks of bonds

Credit risk

It is the risk that the issuer will not repay the principal (or part of it) invested or that you will not pay the interest. It is usually said that government bonds have a lower credit risk than corporate bonds. That’s because governments can raise taxes when they need more money. However, there are numerous examples of governments that did not (entirely) repay their bonds in the past. In emerging markets, the credit risk is significantly higher.

Interest risk

The value of a bond with a fixed coupon (fixed interest rate) moves opposite the market interest rate. When market interest rates rise, investors can buy new bonds with a higher coupon. As a result, bonds already issued with a lower coupon automatically become worthless. On the other hand, the value of a fixed-rate bond rises when the market interest rate falls.

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.

Foundation for Long-Term Success

Saving for retirement is not at the top of a young person’s list of financial goals in their twenties.

On the other hand, getting started early can provide the basis for long-term success.

“Normally, it’s difficult because you don’t have money to spare when you’re starting,” says Rob Greenman, financial planner, chief growth officer, and partner at Vista Capital Partners in Portland, Oregon.

“Most people I talk to say, ‘I wish I had begun sooner frequently,'” Tess Zigo, a financial advisor at Emerge Wealth Strategies in Lisle, Illinois, says. “No one can say, ‘God would not have wanted me to invest in my twenties,'” he adds.

The value of compound interest

It is critical to begin saving sooner since a longer horizon permits compound interest to climb more slowly.

Compound interest happens when the interest gained on the balance of your brokerage or investment account begins earning interest, providing you with even more significant interest gains. Again, it’s all about the money. This interest rate will help speed the growth of your savings or investments over time.

Building good habits

Even if you cannot initially save hundreds of dollars per month, even a tiny amount of money saved for retirement can help young people adopt sound financial habits.

It may teach you about the benefits of saving and assist you in establishing additional assets, such as emergency reserves. However, you’ll also need a budget to stay on track and avoid long-term debt.

Get started the easy way.

For most people, the most convenient way to start saving for retirement is through an employer-sponsored 401 (k) plan.

Many individuals get it automatically at work, which means they may be unaware that they have been putting money down for the future.

If you have a similar plan, make sure you spend enough to match what your business offers, effectively free money that might quadruple what you save.

The Individual Retirement Account ‘Roth’

For various reasons, Roth-style Individual Retirement Accounts (IRAs) are an outstanding choice for young investors. They are only available to those who make a certain amount of money, so opening one when you start working makes sense. Individual taxpayers must have an adjusted net income of less than $140,000 to qualify in 2021, and married couples filing jointly must have an adjusted net income of less than $208,000.

To Protect Ourselves in Times of Crisis.

Let us not fool ourselves. We will have to deal with a new disaster sooner or later. The economy runs on a cyclical basis: there will be times when we have fat cows and other times when we must cope with the fallout from a new catastrophe; this has always been the case, and it will remain so in the future.

To be Protected from Unexpected Circumstances.

You never predict what might happen in your daily life: a vehicle accident, the breakage of one of your appliances, a fine, or the replacement of your laptop are just a few instances of things that can happen at the worst possible time for our money.

To Pay Off Debts

Debt is one of the deadliest adversaries of a family’s finances. As a result, it is best to avoid them as much as possible. And if you don’t have an option but to use them, you should endeavor to save enough money to pay them off as quickly as possible.

To Invest

If we merely save, we would lose buying power due to inflation year after year. Therefore, the next stage in saving is investing our funds in items that will allow us to earn a profit that exceeds the annual increase in pricing.

More Minor “Financial Sacrifice” to Achieve Your Goals

If you start at age 20, you’ll need to save less per month (and it will have less impact on your lifestyle), but you’ll have more time to leverage the strength of compounded capitalization. You’ll have to save more money, but you’ll have to be less aggressive in your investments, as the shorter term doesn’t allow you the luxury of fluctuating along with the market’s ups and downs.

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.

You might wish to refinance for various purposes, like taking cash out of your property, decreasing your monthly bill, and reducing the loan term. But first, we should consider how a mortgage refinance operates so we understand what to anticipate. It is challenging for some people to refinance the mortgage because they don’t even understand its meaning.

The Meaning of Refinancing Home

Whenever we refinance our home loan, we swap in our old loan for a fresh one, usually with a higher principal and a lower interest rate. Your lender then pays off the more senior mortgage with the younger ones.

Homeowners refinance their houses for a variety of reasons. For example, you can take advantage of your home’s equity or receive a cheaper interest rate. In addition, refinancing can help you get rid of a co-signer on a mortgage, which is common after a divorce. Finally, you have the option of adding someone to your mortgage.

The first phase in this procedure is to investigate the many types of refinances available to see which one is ideal for you. Next, your lender will ask for the information you supplied when you bought the house and applied for a refinance. Next, they’ll check your earnings, possessions, indebtedness, and credit rating to see if you are eligible for refinancing and can afford to repay the loan.

Your lender could require the following documents:

• Pay stubs from the last two months
• W-2s from the previous two years
• Bank statements from the last two months

Getting Your Interest Rate Locked

We may be offered the opportunity to set your interest rate after you’ve been authorized, so it doesn’t alter until the loan ends.

The duration of a rate lock might range from 15 to 60 days. If your loan is incomplete before the rate lock term expires, you may be obliged to go to rate locking, including the extra fees. You might also be given a chance to “drift” your rate, through which you will not have to lock before moving from one loan to another, but it also increases your chances of receiving a higher one.

House Evaluation

We must acquire an evaluation whenever we refinance, like when we bought our house. Your mortgage orders the appraisal, the appraiser comes to your home, and you get an estimate of the worth of your home.

It would be best if you made your house appear its best and ready for the assessment. Make a good impression in the first meeting, clean up the mess, and make minor repairs. Creating a list of house improvements you’ve performed since you bought it is also good.

Closing on Your New Loan

You’ll review the mortgage specifics and sign your bank documentation at closing. At this time, you’ll pay any closing fees that aren’t bundled into your loan.

Just wait a few days after your loan closes before you’re locked in. If something unexpected arises and you need to cancel your refinancing, you can exercise your right of rescission before the 3-day grace period expires.

You can also transfer your mortgage if you still have a usury policy, such as an investment or lifetime mortgage. These mortgages are often unpredictable, and in many cases, they do not yield as much as you expected. Banks are no longer allowed to take out these mortgages, but many people still have these types of mortgages. For example, switching to an annuity mortgage can give you much more peace of mind. You will then be rid of your usury policy and have more certainty about paying off your house.

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.