Invested Credit

retirementThe results of a recent survey have revealed that a rising number of workers in America are keen to be able to continue working past the official retirement age. According to the survey there are various reasons behind the rising number of people who want to be able to continue working past the full retirement age, with financial concerns being one of the key reasons behind this.

The study was carried out by the Aegon Center for Longevity and Retirement, which said that more than two thirds of workers in the United States wanted to be eased into retirement gradually rather than having to retire once they reached a certain age. The study was carried out on Americans that were nearing retirement age and many of those responding also stated that they were looking to try and get working hours that were outside of the usual 9-5 hours.

Top reasons for want to work after retirement age

There were a number of reasons identified by the survey with regards to why so many American workers want to continue working past their retirement. Amongst the top reasons that were given were being able to continue being active, enjoyment of working, and a desire to continue earning money rather than having to turn to social security. Many were concerned about their financial security after retirement. Read the rest of this entry »

US Capitol South Side

US Capitol South Side

In lieu of the Consumer Financial Protection Bureau (CFPB) releasing a series of proposed regulatory reforms for the payday loan lending industry, many of the smaller payday lenders are seeking assistance from Congress. But will congressional representatives and senators offer assistance to bad credit loan lenders?

With the influx of numerous reforms, at both the federal and state level, very few are willing to come to the aid of the payday loan industry. And it hasn’t been without the industry trying.
The Hill reported that many smaller payday loan lenders, including Thrifty Loans LLC and Payne’s Check Cashing, have appealed to lawmakers for help in their fight of the CFPB’s new rules.

Writing in a letter to Louisiana Republican Senator David Vitter and Ohio Republican Congressman Steve Chabot, chairmen of the House and Senate committee on small business, seven small payday lenders have requested to review the federal agency’s regulatory framework. They noted that they have attempted to engage with CFPB to discuss the proposals, but to no avail.

“In fact, many of our fellow lenders believe the CFPB is trying to eliminate the payday lending industry and only conducted the Small Business Regulatory Enforcement Fairness Act (SBREFA) process to try to prevent its regulation from being overturned in court,” their letter said.

The group of bad credit loan lenders added in their letter that it has been a frustrating process because CFPB officials failed to outline problems with the state regulatory reforms and proposals. They even concede that bureau regulators “admitted they had not even analyzed the existing state programs.” Read the rest of this entry »

Walmart Store ExteriorBefore the opening of the market on Thursday, Wal-Mart came out with its 3rd quarter fiscal 2015 results. Wal-Mart stores Inc. declared EPS of $1.15 on overall revenues of $119 billion. These numbers include the membership fees involved in Sam’s club. Last year‘s statistics around the same time showed EPS of $1.14 on revenues of $115.69 billion. Thomson Reuters had anticipated the 3rd quarter results with the EPS of $1.12 with revenue of $118.35 billion.

Wal-Mart same store sales showed a boost after 7 quarters and according to Wal-Mart the rise in sales were due to inflation cramped by SNAP related headwinds. The Same Store Sales at the U.S based Wal-Mart showed an increase of 0.5% at the superstore and other discount stores. This increase was the same both with and without the fuel sales. Same Stores Sales in Wal-Mart’s Sam’s club rose by 0.4% without fuel and were up by 0.3% with fuel sales. On the other hand the Same Store Sales at the Neighborhood market went up by 5.5% brining the net total of the U.S sales to 3.4% in the quarter.

In last year’s 4th quarter Wal-Mart’s EPS was $1.60, however the predictions made were of $1.57. The predictions for the 4th quarter of 2015 EPS are between the ranges of $1.46 and $1.56. Wal-Mart also lowered its full year expectation of the EPS range from $4.90 – $5.15 to a new range of $4.92 – $5.02. However the overall consensus estimate is said to be $4.99 EPS for the whole year. The 4th quarter EPS estimate will include a $0.03 charge which will be related to the store closing in Japan.

Wal-Mart’s CEO expressed his contentment and said that the highlights for the quarter include the positive comp in Wal-Mart U.S, which include strong performance from Neighborhood markets, the 21% increase in e-commerce sales globally and the profit gained by the performance of Sam’s club and the company’s international business. He also said that it is their priority to remain the price leader and it is their commitment to their customers as well. And this responsibility becomes more important during the holiday season. He further said that this year’s 4th quarter had the advantage of lower fuel prices in the U.S and other key markets. Read the rest of this entry »

payday-fireAmong the many regulatory issues that the payday lenders are currently facing, the problem with their adverts and their implications is another reason of concern for financial regulatory authorities. The catchy adverts of these companies are allegedly promoting an easy-going attitude towards borrowing money and spending more than you make without thinking about consequences. Several researches have been conducted with the result that these adverts are promoting an instant gratification culture, not just in grown-ups but in kids as well.

The payday lenders are already facing regulatory issues and several allegations regarding their debt recollection practices and their extortionate fees and charges. Their irresponsible lending practices are causing them considerable trouble. Now, with another issue to face, these companies can get into even more trouble than before. However, this is not the first time the adverts of these payday lending companies have come under scrutiny. A few of them have been banned in the past for giving out an inappropriate message to consumers and developing wrong attitudes towards borrowing.

The main concern behind the issue that has made it a major issue is the increasing impact of these adverts on kids. As these companies use catchy slogans and jingles in their adverts, they are catching the attention of children more often and children are found to be repeating these slogans and jingles. A research has also shown that kids today are nagging parents to get quick loans to buy more toys for them as presumably these loans are “really easy to pay off”. The lending company Wonga even released a movie that seems to be promoting payday lending and the lifestyle it can unassumingly give to customers.

This indicates an irresponsible attitude in kids towards money management. Researchers indicate that these adverts are not only promoting a culture of instant gratification for now but also giving way to an upcoming generation of borrowers that considers payday loans to be an easy solution for all their financial problems without fully understanding the consequences and risks involved. According to several consumer rights’ groups, these companies are trapping families into a cycle of un-payable debt that leads them to a financial crisis.

These companies are being are being prompted to undertake more responsible lending measures and ethical recollection techniques. They need to inform the audience about the hazards of becoming habitual borrowers instead of promoting the practice as a thing that can bring satisfaction. These payday lenders try to defend themselves by indicating that they are not completely aware of the impact they are causing on the society or by claiming that these reports are not true at all.

The responsibility of responsible borrowing and more careful attitude towards money management also lies on the consumers themselves. Getting loans from unregulated payday lenders, and exposing yourself and your kids to such adverts is irresponsibility on part of consumers. Consumer education regarding their rights as borrowers is another initiative that needs to be promoted by the regulatory authorities.

Companies like Landmark Cash are helping consumers find more responsible lenders while they search for online payday loans. You will notice that Landmark Cash clearly states they provide a matching service and offers full disclosure of the process. There are many matching services that try to trick consumers into thinking they are direct lenders which is were the problem lies. Further FTC intervention will be needed to weed out the “bad apples”.

signing a loanA personal loan is when an individual borrows an amount of capital for personal use from a financial institution. The borrower is able to use the cash for anything they want, such as new car, perhaps some home improvements consolidating bills or a vacation.

People who take out a personal loan is required to make monthly payments to the borrower, repaying the principal plus the interest accrued on the loan. Personal loans provide borrowers the flexibility of being able to make purchases while not accumulating the funds first. Many financial lenders are able to offer several types of personal loans, with the main difference being the interest rate as to whether it is fixed or floating.

Personal loans fall under two categories, unsecured or secured. A secured loan is when an asset is pledged by the borrower, providing a piece of collateral in exchange for the loan and a more favorable rate. If the borrower is unable to pay off the principal and interest and effectively defaults on the loan, the bank offering personal loans has the legal right to take possession of the asset.

An unsecured is different in that there is no asset put up as collateral. The terms of the loan agreement are determined by the creditworthiness of the borrower. If an individual winds up defaulting on the loan the financial institution has the right to take legal action against the borrower. Normally, both the interest and the principal must be paid in order for the debt to be satisfied. Read the rest of this entry »

0_02909.jpgOver the last few articles we have been discussing the pros and cons of using EBIT and EBITDA metrics to choose investment opportunities. While the revenue-bias of the metric can be fairly well balanced out by balancing out the evaluation with a few more conservative cost-side metrics, it is important to understand exactly what it is that we need to be using these checks and balances, if nothing else for the sake of motivation.

During periods of economic growth, companies begin to aggressively expand their operations so as to make the most of the macro opportunities while they are available. While the smaller companies will do this by aggressively pursuing increased revenues through sales and distribution, larger companies will begin actively acquiring the smaller ones in order to keep their percentage rate of expansion at an acceptably high level. Eventually, this leads to an environment in which leveraged buy-outs become a popular venue for acquisition.

However, as companies continue to pursue debt for the sake of expanding their enterprise value, interest rates will begin to climb to fight the ensuing inflation. This will in turn force companies to find alternative means of financing their acquisitions. Read the rest of this entry »

interest-calcHaving looked at how EBIT and EBITDA can support an investor’s pursuit of understanding what kind of impact management’s decisions are having on a business’ revenue generating capabilities, it is important for us to take a moment to also look at some metrics that can also be used to counter-balance the income-bias that EBIT-based metrics create for us. By balancing the returns of EBIT(DA) against the costs associated with leverage and depreciation-based performance metrics, we can create a much more encompassing picture of exactly how it is that a company is being run.

The first metric that can be used to evaluate the cost implications of management’s decisions is called the Interest Coverage Ratio. The ICR defines the proportion of interest expenses that is covered by EBIT (ie. ICR = EBIT/Interest Expense). The lower the ratio, the more debt that a company is servicing, and the less ability it has to pay off its debts based on its incomes. In general, an ICR of less than 1.5 is considered to indicate that the company’s operational direction has overleveraged itself.

When looking at how the formula is built, it becomes apparent that a change in ICR is an effective metric for counter-balancing EBIT because of the way in which it takes the fundamental costs of debt into consideration against the metric itself. This results in a metric that demonstrates how it is that management’s preference for leverage has exposed it to risk in the hopes of boosting top-line performance. This means that, if ICR is decreasing while EBIT is increasing, management is taking on debt faster than it can earn its way out of it. Read the rest of this entry »

earnings-interestWhen looking at investments, there are two key metrics that analysts return to over and over again to define a company’s profitability. While both EBIT and EBITDA have been surrounded with controversy throughout their introduction to the capital markets, they continue to serve as an invaluable tool for understanding exactly how profitable a company is for shareholders, and what kind of impact both depreciation and interest expenses erode away the margins.

The Earnings Before Interest and Taxes metric was originally introduced to measure the amount of money that investors have a claim to before the fundamental costs of debt and tax are taken out. This is done to measure the operating profitability of the company. Understanding how it is that interest expenses represent the cost of leveraging the company, and taxes are imposed upon the company by outside powers, they do not so much reflect the benefits of operating decisions as they do the costs and implications of them.

As such, EBIT creates value for analysts in the way that it demonstrates the ability of management to create nominal returns through their decisions and actions. That being said, it does not take into account the expenses associated with those decisions, and should be taken in consideration against a comparison metric that does exactly such. Read the rest of this entry »

Compact DiscsHaving looked already at how it is that a personal can weigh the costs and financial benefits of learning to play music, it has become somewhat clear how the music industry is able to perpetuate itself with such profitability. While we might not be personally interested in the pursuit of music itself, we might feel as though the actual industry presents an investment opportunity for a personal saver. As such, this article is going to look at the different opportunities for investors to benefit from the music industry, how it is that they produce these returns, and at what risk.

The first, and probably the most obvious way for an investor to profit from the music industry is through a record label itself. These companies earn an income similarly to a bank, in that they effectively lend money to a portfolio of musicians, using the royalties associated with the songs they produce as collateral. From there, the label stands to earn a great deal of profit based on their ability to promote both the live and recorded performances of the songs that they own. These royalties are then passed onto shareholders, and leveraged into further investments in music.

That being said, because of the way in which the probability of a musician being wildly successful is extremely small, a great deal of these returns are further consumed by searching for and promoting a new sensational asset. Regardless, investors have been made wealthy by investing in the assets of companies such as Warner Brothers, and privately in Virgin Media, because of their ability to leverage their sheer scale towards continually introducing the market to new and exciting performers. Read the rest of this entry »

music-hatWhile we took the time to look at all the costs associated with buying, renting, and learning a musical instrument, it is important to remember that music can provide financial returns next to its role as a hobby. Be it through the pursuit of a full career in music, or instead a lucrative hobby, there are certainly options available for musicians to make contract-based income through their talents. In this article, we’ll dive in to a few of the more traditional sources of income for musicians, and how it is that a musician of any level can access them.

The most obvious way for a musician to earn an income through their trade is by playing concerts and selling recordings. Since most artists will never actually see major distribution agreements in their lifetime, it is important to recognize how it is that these products will generally be produced and distributed independently at the concert itself. What I personally find most interesting about this model is the way in which the economies of scale actually most favor the production of an independent CD, because the revenues do not get eaten up by distribution costs. In general, a no-name band will earn between $100 and $7,500 per show played.

That being said, these numbers need to be taken into perspective. Venues will not usually pay the band itself, and will instead allow them to charge cover for ticket sales, meaning that the band itself must promote the sale of their own tickets. This sort of agreement adds a great deal of risk to the equation, because it places the musicians in a position where they need to take on the role of a marketer (one which they are not likely trained for).

From there, they might expect to sell 1 recording for every 40 people that attend the show. This means that they need to be particularly aggressive in promoting their live shows, so as to get the foot traffic to their show. Read the rest of this entry »