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Add You - Time Value of Money
Whether you’re a student job seeker or a polished and proven executive, the first thing you must come to terms with is, “Regardless of the position you seek, you are now in sales!” The product you are selling is YOU! The interview is your opportunity to differentiate yourself in the eyes of your customer [the interviewer] when compared to your competitors [other job applicants].Successful companies today are focused on building what’s known as, corporate “Unique Value-Add Propositions.” Simply put, a unique value proposition is designed to differentiate companies / products and services, by making a decision to do business with you, an easy one. This is accomplished by means of removing the risk in customer’s minds through obvious value-add.So before you go into an interview, ask yourself, “What is my unique Value-add
You are excited, it's a new business day! You glance at your business plan on the pin board in front of you. A shiver of excitement races up your spine as you think of your business potential. Just 8 hours a day on this plan will mean a better life for you and your family, all within 2 years. Then the phone rings…It's a customer! They are enquiring about that widget they bought from you yesterday.Will it do x and y?So you explain that it will do x and y. And because you are focused on providing the ultimate customer service, you talk them through the steps on the phone. After all you need to go the extra mile, don't you?You hang up and think "Another satisfied customer, but I wished they had read the owners manual before calling me!" You glance at your watch, then look at your diary and realize you are a
An annuity is a series of regular periodic payments comprising principal and interest. In the case of retirement, an annuity is usually purchased from an insurance company who then pays the purchaser a monthly amount while still alive. Annuities may have more complicated features such as indexing, guarantee periods and benefits payable to a spouse or other beneficiary after death. (Agents, 2006)
Annuities are used to preserve a cash investment and there are a few types of annuities which include CD, fixed, equity, and immediate. (Annuity Advantage, 2006) Since annuities are a safe place to keep money they offer a lower return than some of the more risky investment avenues such as stocks. When an individual purchases an annuity, they usually pay a lump sum to an insurer. The insurer then takes this (premium) and divides by an annuity factor based on mortality, current interest rates and payment features.
In this case the interest is the amount paid to the individual by the insurance company for the privilege of using the individual’s money. Interest is usually calculated as a percentage of the principal balance of the loan, and the security comes from the interest rate being fixed. Regular savings accounts have an adjustable interest rate. However, a savings account compounds the interest and annuities do not. Compounded interest is interest that is paid on both the principal balance of the loan and on any accrued interest.
When looking at annuities compared to traditional stocks it is important to understand the present value of the payment received and the future value of the investment. The present value of a future payment is calculated by first determining how many years until the payment is received, and then using the interest rate to establish how much you would be paid on the money if you invested it from now until the future payment is received. That amount is deducted from the principal.
So, let’s say that you inherited $100,000 and had the choice of collecting all of the money now, or all of the money in three years. Ignoring the obvious that you would want your money now, let’s look at the present value of the future payment received. If we take the first option and invest it for three years, at an interest rate of 5%, after the first year the $100,000 would be worth $105,000. After the second year you would have $110,250 and at the end of the third year you would have $115,762.50. So working the numbers backward, if you waited three years for the $100,000 it would be the same as getting $84,237.50 right now. So the difference in three years is huge, and knowing this before you come into some cash is a huge advantage. I hear so many people say that if they won the lottery they would take the 20 year payment plan, and so many others say that they would take the lump sum. By looking at it with the scenario described above it is easier to ma
Email is THE medium of communication for business transactions. Unfortunately, people don't treat email with the same care as face to face interactions. It's almost as if we're so complacent with the speed of email that our ability to use it in an effective manner diminishes with every message.But even with technology, you must maintain approachability. In other words, you must be capable of being reached. So, email is not unlike any other form of communication in that requires consideration for the message, the sender and the receiver. Here are four critical keys for email effectiveness.Consistency Do you check your phone messages every day? Or do you let that blinking red light pulsate out of the corner of your eye for a week before you listen to the recording and call someone back?O
Annuities are used to preserve a cash investment and there are a few types of annuities which include CD, fixed, equity, and immediate. (Annuity Advantage, 2006) Since annuities are a safe place to keep money they offer a lower return than some of the more risky investment avenues such as stocks. When an individual purchases an annuity, they usually pay a lump sum to an insurer. The insurer then takes this (premium) and divides by an annuity factor based on mortality, current interest rates and payment features.
In this case the interest is the amount paid to the individual by the insurance company for the privilege of using the individual’s money. Interest is usually calculated as a percentage of the principal balance of the loan, and the security comes from the interest rate being fixed. Regular savings accounts have an adjustable interest rate. However, a savings account compounds the interest and annuities do not. Compounded interest is interest that is paid on both the principal balance of the loan and on any accrued interest.
When looking at annuities compared to traditional stocks it is important to understand the present value of the payment received and the future value of the investment. The present value of a future payment is calculated by first determining how many years until the payment is received, and then using the interest rate to establish how much you would be paid on the money if you invested it from now until the future payment is received. That amount is deducted from the principal.
So, let’s say that you inherited $100,000 and had the choice of collecting all of the money now, or all of the money in three years. Ignoring the obvious that you would want your money now, let’s look at the present value of the future payment received. If we take the first option and invest it for three years, at an interest rate of 5%, after the first year the $100,000 would be worth $105,000. After the second year you would have $110,250 and at the end of the third year you would have $115,762.50. So working the numbers backward, if you waited three years for the $100,000 it would be the same as getting $84,237.50 right now. So the difference in three years is huge, and knowing this before you come into some cash is a huge advantage. I hear so many people say that if they won the lottery they would take the 20 year payment plan, and so many others say that they would take the lump sum. By looking at it with the scenario described above it is easier to m
There is a difference between an existing note secured by deed of trust and being assumed, and a sale subject to a note and deed of trust.When a buyer assumes an existing loan, he signs and Assumption agreement with the lender. In this agreement, the buyer agrees to assume the responsibility for paying the remaining balance of payments, and to comply with all the other terms and conditions of the loan. The lender may can choose to:1. Release the previous trustor from all responsible you to pay2. Retained a former pay are responsible, so that he must make payments if the new trustor fails to pay3. Activate the acceleration clause in the deed of trust, by either demanding payment in full or by changing the interest rate.If the sale is designed subject to, the buyer friendly signs any sort of ag
When looking at annuities compared to traditional stocks it is important to understand the present value of the payment received and the future value of the investment. The present value of a future payment is calculated by first determining how many years until the payment is received, and then using the interest rate to establish how much you would be paid on the money if you invested it from now until the future payment is received. That amount is deducted from the principal.
So, let’s say that you inherited $100,000 and had the choice of collecting all of the money now, or all of the money in three years. Ignoring the obvious that you would want your money now, let’s look at the present value of the future payment received. If we take the first option and invest it for three years, at an interest rate of 5%, after the first year the $100,000 would be worth $105,000. After the second year you would have $110,250 and at the end of the third year you would have $115,762.50. So working the numbers backward, if you waited three years for the $100,000 it would be the same as getting $84,237.50 right now. So the difference in three years is huge, and knowing this before you come into some cash is a huge advantage. I hear so many people say that if they won the lottery they would take the 20 year payment plan, and so many others say that they would take the lump sum. By looking at it with the scenario described above it is easier to m
Another protective strategy that allows for some upside capital gain while providing maximum down side protection is the collar. The collar is a combination of the covered call and protective put strategies. The collar uses a long put position in coordination with a short call position along with a long stock position. The ratio is one short call, one long put (not of the same strike) and 100 shares of stock. As you remember, one contract is equal to 100 shares. The options that we will use to construct this strategy will be out-of-the-money puts and calls. The object here is to construct a protective put strategy without having to pay for the purchase of the put. We talked about premium in the covered call strategy and how we are better off collecti
So, let’s say that you inherited $100,000 and had the choice of collecting all of the money now, or all of the money in three years. Ignoring the obvious that you would want your money now, let’s look at the present value of the future payment received. If we take the first option and invest it for three years, at an interest rate of 5%, after the first year the $100,000 would be worth $105,000. After the second year you would have $110,250 and at the end of the third year you would have $115,762.50. So working the numbers backward, if you waited three years for the $100,000 it would be the same as getting $84,237.50 right now. So the difference in three years is huge, and knowing this before you come into some cash is a huge advantage. I hear so many people say that if they won the lottery they would take the 20 year payment plan, and so many others say that they would take the lump sum. By looking at it with the scenario described above it is easier to m
Have you submitted articles to the high-traffic web sites and article directories, but had few people come to your site to buy?Do you want your advanced article marketing to work so well, you will realize triple, even quadruple sales at your site? And, never have to go back to expensive, hard work publicity or marketing campaigns?Now, you can get a head start to get more visibility for your book or business and high sales when you pay attention to these mistakes many new article authors make.1. Check your title.Is it too general, weak or boring? Remember to include a benefit in the title to compel your readers to read the rest. Your article can't be all things to all people, so the more targeted your title is, the more qualified web visitors will visit your site. Have more than one audience? Revamp the a
Now since we just invested the $100,000 for three years at 5% we may wonder if this investment was our best option. Opportunity cost is the value of the best alternative use of a resource (BioSociety, 2006); in this case the best alternative use of our $100,000. This basically means, how much could and would we have made if we had not invested the $100,000 the way we did which we know gave us $X in return.
Considering a three year term we may have made more money by investing in an annuity, but if it were a three year term the annuity would expire in three years and we would have to deal with the $100,000 again if we had not spent it. If the annuity paid us 36 payments with all things being equal, we would have reeled in 36 payments of about $3,216. That amount would be pretty easy to spend and at the end of three years we might have nothing. Whereas the $100,000 in our other investment (wherever we put it earning the 5%) would still be there in three years. Life expectancy plays a big role in how we invest, and I guess if the doctor gave you three years to live it might be better to go with the annuity.
So let’s say that I want to retire in 20 years and we want to use the $100,000 as my retirement fund. We would want to see if the $100,000 would be enough when we retire and one way to figure our sum is to use the rule of 72. The rule of 72 says that to find the number of years required to double your money at a given interest rate; you just divide the interest rate into 72 (MoneyChimp, 2006). For example, if you want to know how long it will take to double your money at eight percent interest, divide 8 into 72 and get 9 years. The rule of 72 is an approximation, but pretty accurate. So using our 5% interest rate from above we can determine that in 14.4 years the $100,000 will double. If we think we can make it on a little more than $200,000 when we retire in 20 years from now then this is a good route. Personally I think it would be best to find an interest rate that would double the money in 10 years or less, and then take the entire amount and double it again in 10 to 14 years. I would follow an aggressive investment strategy now with things tapering toward a more conservative strategy as I near retirement.
Annuities are more of a cash management tool (in my opinion) and less of an investment. Focusing on the time value of money it just makes more sense to invest money with the goal of growing rather than losing the principal.
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