Business Economics Finance

Just pledge your home and see the things get easier for you. You may be a bad credit holder or a borrower with already too many loans in your kitty but if you are ready to pledge your home, the lender will surely consider your loan application with a positive attitude.

A privilege is conferred by the lenders on the homeowners. This privilege has many aspects. Generally, a homeowner gets benefits like low rate of interest, a big loan amount, easy availability of loan, flexible repayment term, etc.

Homeowner loans are basically secured loans and these loans create a second charge on the asset secured. The first charge is a mortgage, secured homeowner loans being the second charge. If the homeowner goes insolvent, his property is attached and used to repay the creditors. The mortgagee has the first right to be paid out of the proceeds of the attachment. Next comes the second charge holder – a secured lender. If there is no balance left after paying off the mortgagee, secured lender gets nothing. However, this situation is very uncommon and secured lenders are very much safe when they lend money on the basis of a security.

Secured homeowner loans are suitable for big funding. These loans are therefore used when the money requirement is big like in case of a car purchase, debt consolidation, home improvement, etc. If the requirement is small, say around £10,000, the borrower would not like to risk his home by pledging it. Besides, many lenders provide loans without security if the loan amount is up to £20,000 or so.

Homeowner loans provide relief to bad credit borrowers. People who have bad credit score may not be able to find loans without any security. But, if you are a homeowner you would not find it very difficult to get a loan. Your home will provide the needed security to the lenders that they value so much.

The author is a business writer specializing in finance and credit products and has written authoritative articles about personal loans, shakespearefinance.co.uk/ Secured loans. He has done his masters in business administration and is currently assisting Shakespearefinance as a finance specialist.

For more information please visit: shakespearefinance.co.uk shakespearefinance.co.uk

Are you trading or are you gambling? The answer, of course, is “Yes”.

My Webster’s dictionary’s defines “gamble” thusly: “(vt) to take a risk in order to gain some advantage,” and, “(n) an act or undertaking involving risk of a loss.”

By these definitions, if you are a trader you are a gambler. The more important question is, then, are you a WINNING gambler (day trader, trader, investor . . .) or a LOSING gambler (day trader, trader, investor . . .)? In one of my recent articles, I referred to an undisciplined, haphazard trader as being neither a trader nor an investor, but “simply a gambler.” What I should have called such a person, rather than “simply a gambler”, was “simply an incompetent gambler (or incompetent trader or incompetent investor).”

So, what is the difference between a winning gambler (day trader, trader, investor . . .) and a losing gambler (day trader, trader, investor . . .)? Who is the most successful gambler in a casino? The house, of course. This is because the house has the odds on every game slightly in their favor, they keep their bets small (even a very large bet for an individual is very small for the casino in relation to the size of their total pot), and they play absolutely without emotion. The house knows that over x number of bets, if they have an edge in the odds of just a small percentage, where x is a very large number, they will come out ahead by a steady and predictable amount. The casino is a consistently winning gambler.

So, what do you as a trader have to do to be a consistently winning trader? Recognize that you are gambling, and play like the winning gamblers play. Whether you are investing in stock, day trading futures or forex, or trading longer time frames, your investment or trading strategy must have the same key elements that winning gamblers have in their systems.

Your trading system, whether a day trading system or a system for multiple day trades, or your long term investment strategy, should have the same advantages as the casino owners: Your trading signals combined with your trade management should tilt the risk slightly in your favor, you should keep your total capital commitment on each trade very small in relation to your total capital, and you should trade entirely without emotion.

In order to provide these key elements, your trading system, whether you create it yourself or buy a system “off the shelf”, must have the following characteristics: It must give you clear, objective entry and exit rules; it must give you an overall advantage over the market INCLUDING allowing for slippage and commissions; and it must be a system that fits your personality such that you can operate it without emotion.

If your day trading system, swing trading system, or long term investment strategy does not provide these three key elements, then you will be a losing trader and an unsuccessful investor. If your system gives you clear entry and exit criteria, shifts the odds slightly in your favor, and allows you to trade objectively and without emotion, then you cannot fail.

Vincent Richman has been trading in various markets for three decades. For more information on trading systems and investing, visit tradingprofitsmadesimple.com tradingprofitsmadesimple.com today.

As Penn State professor William Rothwell ominously points out in the forward to Exit Right: A Guided Tour of Succession Planning for Families in Business Together, more than 40% of the people who run the closely held operations that comprise 80% of the North American economy will retire by 2007. Those businesses will either be sold to a third party or management team, closed down, or passed on to the next generation.

In this article I will focus on passing the business on to the next generation.

The government has also encouraged the passing of a business from one generation to the next with several favorable estate and gift tax rulings. Estate planning attorneys have utilized IRS ruling 5960 to minimize the estate and gift tax owed for a business either gifted to or inherited by the next generation.

The business is often placed in one or more LLC’s and divided up into minority pieces to take advantage of very substantial and legal minority discounts, often as high as 40%.

As is often the case, a business owner will have, for example, 4 children. Two sons will be actively involved in running the businesses and two daughters have built lives totally separate from the business. Because 85% of the value of the estate is tied up in the value of the business, to be “fair” the business is gifted and willed to the four siblings in almost equal proportion. Because the sons are running the business, they will get slightly more of the business and slightly less of the remaining estate.

This gives them majority interest in the business. After dad leaves the business, the two sons will continue to run and grow the business without any input or participation from their two sisters. Typically the business does not pay any dividends and the two sisters’ portions are non-liquid because there is not a good market for selling minority stakes in a privately held business.

Also, there is generally a very restrictive buy sell agreement that favors the majority holders. The sisters have no idea what the “fair value” of the business is and the only indication they have ever gotten is an official IRS gift tax or estate tax return with 40% discounts applied. If the enterprise value were, for example, $50 million and the two sisters owned a combined 40%, you would think that they had an asset worth $20 million.
The only document they have seen, however, is the gift or estate return, valuing their portion at only 60% of that number, or $12 million.

The brothers feel entitled to the lions share because Ann and Julie had nothing to do with building this business. The brothers pay themselves big salaries and benefits and pay out little of no dividends. They may approach the sisters with gift tax return and restrictive buy sell agreement in hand and offer to generously buy out the sisters for a combined 8 million, because that is “all the company can afford to pay.”

After this transaction takes place, let’s look at the result of how dad’s estate was fairly divided. Originally the brothers were left with 60% of the $50 million business, or $30 million and a minor portion of the remaining estate. The sisters were left with 40% of the business, or $20 million and the bulk of the remaining estate of $10 million.

That appears to be fair. However, the buyout of the sisters for a combined $8 million results in an effective estate distribution of $42 million to the brothers and $18 million to the sisters. This is not what dad intended, but it happens all the time.

This is a very complex and emotional issue and there are no simple answers. Generally, dad had his identity tied up in the business and wants it to live on through his sons after he is gone. This is a noble, yet impractical thought if all the siblings are not actively involved in the business. The children often inherit the restrictive buy sell agreements that favor the brothers running the business and scare off investors that may have been interested in a minority stake in the business.

Much of the value from a privately held business is derived from the benefits of working in the business. There is the very real concern that the integrity of the gift or estate tax business valuations will be compromised if the sisters are bought out at a price approaching a pro-rated division of total enterprise value.

Unfortunately, in most cases, nothing is done and as a result there are literally hundreds of billions of dollars of minority interests in privately held business that are providing little return or no return to their owners.

One of the keys to unlocking the liquidity in these minority interests is for the business owner to recognize this situation prior to building his estate plan. Unfortunately, we are often brought in after the fact and a fair outcome then is contingent upon the majority owners honoring dad’s original intent of fairness and working toward that end.

midmarkcap.com/about.cfm?BioType=BioBus” target=”_blank Dave Kauppi is a business broker and President of midmarkcap.com” target=”_blank MidMarket Capital. We help business owners with all aspects of Mergers and Acquisitions.