Single stock Investment – A blessing or a curse

Risks and stock investing are the two different sides of the same coin, but to those who are initiated, minimizing those risks is easier than doubling a 5-figure number. Even you can become one of them if you know the nitty-gritty of investment; if you are unsure about the returns, an aid from a professional accountant can set your deals right. So learn to navigate around the pitfalls and maximize the profits, but before you do so, collect all information that’s necessary for stock investing.

  • Is it wrong to hold a single stock for a long time?

First thing first, you must not stay 100 percent invested all the time. This is because stock investing requires understanding the stocks in your choice list and also the reasons that are forcing you (or not) to invest. But what if you want to shun the rest and only seem interested in a particular stock? It’s the same theory that applies; you need to understand the stock. This is more because while a diversified portfolio translates to a reduced risk (it spreads your money over a vast range), putting all the money on a single stock – how much ever hot it may seem – is putting all the odds tremendously against your strategies and expectations. Thus, for doing the same, you need to be a real expert on that particular company and the money you put there should be an amount you won’t regret losing.

  • Unwritten norms of stock investments

Thus, to make you play safe in the stock investing arena, we advise not putting your entire money in stocks from the same industry. If the particular industry goes down, so shall your entire portfolio, but if you are a veteran in investments and an expert, then do so after taking adequate precautions. A safe way to do the same is by keeping a maximum of 20 percent of your entire investment capital in a single stock. However, if the stock belongs to a company serving food, energy or any other consumer necessities, then the chances for running into a loss goes down by a great deal.


Bankruptcy protection for Lehman Brothers

Bankruptcy - Fall of lehman

Bankruptcy - Fall of lehman

  • What happened?

Bankruptcy showed its ugly face once more, announcing a major slump for the global markets.

  • Who triggered the incident?

Lehman Brothers, the banking titans; their declaration of going bankrupt last Monday made Merrill Lynch (the Wall Street rival) suffer a new financial tumult.

  • What are the reasons behind?

The fall of the Lehman Brothers occurred as a result of massive financing of bad loans. The decision of declaring a bankruptcy by the Lehman Brothers was taken after every form of negotiations failed for arranging a rescue.

  • The Stats

§ Lehman’s loss is estimated at 3.9 billion dollars. The fiscal third quarter went down because of fresh write-downs on mortgage assets.

§ Bank of America is planning to buy Merrill Lynch for 50 billion dollars. Bank of America’s new position as the largest brokerage involves 20,000 advisers and client assets amounting to 2.5 trillion dollars.

  • Counter measures taken

US Federal Reserve, Bank of England and European Central Bank have pushed colossal amounts (in dollars) into the financial markets.

  • The Aftermaths

§ The fallout made Bank of America take Merrill Lynch over; the deal being closed at 50 billion dollar.

§ AIG, the insurance giant’s own crisis made them head for a massive emergency loan.

§ A 70 billion dollars global emergency fund has been set up by a group of banks.

§ Reassurance from the central banks failed to console the European and Asian stock markets and a three to five percent plunge made the dollar fall drastically from its previous value.

· Who’s saying what

§ Marcus Droga (Associate Director, Macquarie Private Wealth) to Dow Jones Newswires: “You’ve probably seen more in one day of financial history than we’ve seen since the great crash of 1929. I’m not suggesting the US market will crash tonight, but in terms of landmark events, it’s a historic day.

§ Federal Reserve: “We are working to identify potential market vulnerabilities in the wake of an unwinding of a major financial institution.”

§ Michael Panzer (author, Financial Armageddon): “It seems clear that a category five storm is making landfall in the US financial system and a lot of very messy stuff is hitting the fan”.

§ Henry Paulson (Treasury Secretary): “The actions taken will be critical to facilitating liquid, smooth functioning markets, and addressing potential concerns in the credit markets.”

§ Lehman: “The bankruptcy was authorized by its board of directors and will take place at the US Bankruptcy Court for the Southern District of New York Monday. The bank was acting in order to protect its assets and maximize value. But customers of Lehman Brothers, including customers of its wholly-owned subsidiary, Neuberger Berman Holdings LLC, may continue to trade or take other actions with respect to their accounts.

· Who’s doing what:

§ The European Central Bank pumped in 30 billion euros i.e. 43 billion dollars, in hope to keep the financial markets safe from the aftereffects of the Lehman collapse.

§ Bank of England has put in 6.3 billion euros i.e. 9.0 billion dollars to keep the short-term financial markets safe from potential credit crunch.

· Shockwaves in financial Markets due to Lehman Brothers bankruptcy

According to the analysts, Lehman’s bankruptcy shall make the global credit crunch worsen, since it shall impact directly a range of companies dealing with the Wall Street giant, though the Deutsche ministry of finance claimed the situation as a manageable one. However, if the shockwave was such a meager one, then why AIG is trying for 40 billion-dollars as a bridge loan? It can well spell its damnation!

Debt Management & Debt Consolidation

Debt management

At its most rudimentary form Debt Management is a step involving three actions:

Knowing the correct amount of debt you have currently.

Stop all the factors that are pushing you further into debt.

Calculate the repayment amounts in a way that it doesn’t affect your financial well-being.

But what’s possible in thoughts are often not in practical life; therefore, there are people who make available funds to clear off the debts a person is currently in. In return, they charge a certain amount of interest which is way down lower than what the individual debts charge. Debt consolidation – in other words – is thus a vital part of the debt management process.

What is Debt consolidation?

Debt consolidation processes multiple payments into one. Thus, it relieves a person from the hassles of remembering multiple repayment debts, but most of all; it eases the burden of paying more in terms of interest. Debt consolidation merges all unpaid debt amounts into a single, monthly payment that can be paid with ease.

Debt consolidation has a direct link with bad credit histories; in the sense, those who mostly apply for debt consolidation are bad scorers on their respective credit reports. This is because clearing off debts increases the credit scores. Therefore, those who are being subjected to:

  • Arrears
  • Zero or very slow payments
  • Bankruptcy
  • County Court judgments/CCJ-s
  • Multiple defaulted payments

May set right their financial health once more by opting for a Debt Consolidation Service. However, now it’s time to have a look at the situations that bring about the need for debt consolidation, with credit card debt being the factor mostly responsible.

What is Credit Card Debt?

Use credit cards thoughtlessly and impulsively; in a couple of months you shall come to know what a credit card debt is. However, if you are not willing to learn the hard way, then the words below shall suffice for your quest.

A person must use his/her credit card(s) according to the monthly income, so that no billings from the lender(s) remain unpaid. But this is often not the case; what most of us think is clearing off a huge amount part by part. What we fail to understand is we also need to pay the interests that grow every month on the unpaid amounts. These all add up to real huge amounts leading to defaulted payments on which late payment fees apply. The accumulated burden, within sometime, multiplies soon to greater magnitudes making it an impossible load to bear. Credit card debt, from this point onwards, starts becoming a much dreaded subject.

How to get out of Debt?

You may either file for a bankruptcy (the escapist’s way for debt management) or go for a debt management program (the sane people’s choice), but opting the first recommendation is also going to give your credit report(s) a 7-year long stigma. So it’s the sane people’s choice that’s left. Sane in the sense, the step shall not only clear the credit card debt peacefully but shall also implement certain habits in the debtor to prevent running him/her into similar debts in future.

So the first step is to get into some constructive shopping. That translates to finding out a financial planner or advisor who can restructure your way to financial freedom and well-being.

Role of a Bookkeeper for Debt Management

A debt manager or Bookkeeping service not only provides the necessary advice but also keeps a sharp watch on how well they are followed. The advices, if followed properly, set the best course for expenditure against a person’s monthly income. Therefore, to find out if an accountant certified for running Debt Management Services is good or not, you must:

· Hold open, face-to-face discussion(s) to see if he can reinforce your credibility to the creditors.

· Find out if he can devise any custom Payment Plans

And if you think you can read from a DIY guidebook and get into action, always remember that a debt management professional has learnt the ways of Credit Card Debt Consolidation through his experiences besides earning the certification from the state. He can devise ways and make sure you walk on them. Or just think it the other way, had a D.I.Y. book on debt management been that good, why would you fall into such a situation?