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What Is a True Investment?

As the first step on the path of learning about investments, one must answer the fundamental question: What is an investment?Surprisingly, a lot of people are actually confusing investment with speculation or even gambling.The Merriam-Webster dictionary defines an “investment” as follows:”the outlay of money usually for income or profit”This definition however lacks one crucial ingredient. An investment should have a reasonable chance of returning both the principal (i.e. money originally invested) and the profit. If an opportunity does not provide a reasonable chance of returning both the principal and the profit, then it is not an investment. This is an extremely important point to understand and in my mind it represents the core of what a true investment is.When one makes an investment, one forgoes immediate consumption in exchange for future consumption. This delay in consumption must be compensated by profit. For example, let’s say you have $1,000 right now. You could spend this money today and get the benefit of goods and/or services that this money can buy. Alternatively, you could invest it, thus delaying your ability to enjoy your money into some future point in time. If in the future, all you got back was your original amount then it would not make sense for you to invest it, as you would not be gaining anything. In fact, you would probably be losing money since your $1,000 in the future would be worth less due to inflation (i.e. it would buy less goods/services). Therefore a true investment must not only return your original amount that you have invested, but also profit as a compensation for using your money. Not only that, but to be worthwhile (assuming your principal was after tax) the profit after paying taxes should be higher than inflation over the period during which your money was invested.You will notice that in my definition of an investment, I referred to a “reasonable chance” of returning both principal and profit. What is a “reasonable chance”? Interestingly enough that depends on an individual investor. Every single investment entails “risk”. Risk is the lack of certainty regarding how much principal and profit you will get back. History has shown us that even the highest rated securities issued by governments are not free of risk. Therefore it is up to each individual person to decide what their comfort level for taking investment risk is. The riskier the investment, the less certainty there is regarding the outcome. If an investor is knowledgeable and has done their due diligence, they would demand a higher profit for riskier investments. Unfortunately in the real markets this is not necessarily the case. There are many investors who own risky investments which do not necessarily pay bigger profits than the available alternatives.Let’s look at some examples of investments and speculation/gambling according to our definition:

Is buying a lottery ticket an “investment”? Absolutely not! Since the chance of winning a lottery is exceedingly small, you cannot have any reasonable expectation of receiving back your original amount plus profit. Hence it is nothing but a gamble.
Is buying a stock about which you know nothing about an “investment”? No, since you know nothing about the particular stock, you have no reasonable expectation of receiving back your principal and profit. This would be gambling rather than investing.
Is buying a stock below its intrinsic value an “investment”? Yes, provided you have done your due diligence and can reasonably expect the stock price to return to its intrinsic value within some limited time frame, you have a reasonable chance (but not guaranteed) of getting back your invested amount with a profit at the end of the period. This would be considered an investment.Hopefully this article helps you think about investment opportunities in a different light. You should always be asking yourself the questions:Can I reasonably expect to get back my invested amount with a profit?
What is the chance that I will not get back part or all of the invested amount and profit?
Am I comfortable with these chances?If you’ve answered “No” to any of these questions, it is a good indication that this investment opportunity is probably not for you.

Professional Travel Agent – 8 Benefits of Utilizing Their Knowledge

Travel Agents have been helping travelers plan their vacations and trips for decades. The brick and mortar agencies are still going strong and many times beating the prices of online competition.Now that almost every home in America has a computer and internet access, many people are trying to do it all by themselves when planning a vacation thinking they’ll get the best deal. For an international trip, the typical person will spend many, many valuable hours online doing research and making reservations if they do it alone. Why not just go to a Travel Agent? Contacting a knowledgeable individual can save you time and money. That’s what they are for.Here are some of the many benefits of using a Professional Travel Agent.Your time is valuable. Instead of spending your precious time searching the internet, going from website to website, comparing prices, itineraries, hotels and destinations, you can make just one call and have a Travel Agent do all the planning.Service. There is something to be said for good, old-fashioned, person to person service. This is an attribute you will not experience with an online booking engine. Travel Agents are happy to help you with your travel arrangements including inception of ideas and thorough planning. Plus they are available for the duration of your trip, upon your arrival home and for all future travel. The personalized service you receive provides peace-of-mind whether you purchase an air ticket or an entire travel package. A travel agent is ready to answer any and all questions.Knowledge. Travel Agents have the most up-to-date information about specials, promotions and rates. Because they are the professionals in the industry, they are notified first of all current special rates and promotions stemming from airlines to tour companies to hotel deals. Many agencies who have weathered years of ups and downs in the travel industry have also built excellent relationships along the way. More times than not, they can provide better rates than what can be found online due to wholesale status and working with airline consolidators.Specialized. More and more Travel Agents are becoming specialized in a specific geographic region or type of travel through study and hands on travel experience. This means that if you are traveling to Australia, for example, and want assistance from someone who really knows the country by the best places to visit, climate, exchange rates, cuisine, clothing to pack and the inside scoop to the best deals, utilizing a Travel Agent is a great resource. They often have personal travel experience and the experience of all their clients who have booked their trips with them. Plus the accumulative travel knowledge of their fellow agents giving you real information about how a hotel may suit your needs or a great tour guide that would jive with your travel style. It’s specialty information only a real, live human can provide when you are booking your trip.One-Stop Shopping. With a Travel Agent you can book all your reservations and services in one place. Travel Agents can book everything from airfare to car rentals, to tours and show tickets. This also means you only have to give your personal information, like credit card details to one business.Someone to call in case of an emergency. If you should have some type of a glitch or emergency while abroad, trying to get through to an actual person at an airline or online agency can be practically impossible and completely time consuming. It can be reassuring knowing that you have someone you can call in case of an emergency.Unique Travel Itineraries. Travel Agents can help put together a trip and itinerary based on your interests. Tell a Travel Agent what you like to do during vacation, how active you want to be and your budget, and she will give you suggestions based on that information. This usually results in a more enjoyable vacation developed just for you instead of following an itinerary suggested by a friend or family. Just because your friend enjoyed a specific tour doesn’t necessarily mean that you will.First Hand Hotel Information. Most Travel Agents have up-to-date information on hotels that are under construction or being refurbished. You do not want to arrive at your hotel, only to find that the reason why you got such a great deal is because they are in the middle of construction on the pool.To book your international vacation of a lifetime, contact a Travel Agent today, or visit us on the web.

4 Reasons The Study Of Organizational Behavior Is Imperative

The managers or entrepreneurs are the leaders who can shape the success of their organization. For a successful run, a leader needs to ensure that the business carries out its internal and core operations Organizational Behavior plays a vital role in any enterprise’s success. It outlines the system in which the company will run, where it’ll fit in the industry and it also decides the future of the company. It defines the vision, mission, and goals of the company and outlines a way in which the members of the company will interact with each other. Thus, every manager or entrepreneur should learn the core principles of Organizational Behavior for the success of the business. Here are a few more reasons that exemplify the significance of the study of organizational behavior:

1. It helps in understanding the mission of the enterprise
Every organization has its quintessence or its purpose of carrying out the intended operations. Organizational behavior aids the entrepreneurs in defining the task of the organization- what a company will do and how it’ll do it. It defines an infrastructure that will be followed by the company throughout its run. It also emphasizes on establishing a mission statement that the company wants to achieve through its operations. The mission is not only monetary but it speaks of the company’s culture and aims at bringing a change in the lives of the customers, stakeholders and all the people involved with the company. The mission statement tells everyone about the goals of the organization and can be used to gauge the effectiveness of its operations.

2. It aids in establishing clear expectations
The organizational behavior not only helps in establishing a mission, but it also helps the managers or entrepreneurs in setting expectations for the employees, stakeholders as well as the customers. It helps in formulating the chain of command performed by each employee and also decides the kinds of vendors and customers the company should expect.

3. It helps in better decision making
The organizational behavior paves way for uniformity in the company and its core values. The establishment of the uniform mission, actions and messages facilitate the managers to make better decisions that are fruitful for the company. Organizational Behavior entails an identity to the organization so the managers can make their decision aligning with the nature of operations of the organization.

4. It ensures that managers hire the right person
The employees are the main pillars of organizational behavior. The people that bring new ideas and passion to the organization are considered as the perfect employees for the organization. If the organizational behavior is clearly defined, the newly employed candidates can easily understand their duties and it also makes easy for the managers to hire the right people and communicate with them effectively.

Would You Benefit From Making Early Payments on Your Auto Loan?

Monthly payments make up an important element of the auto loan. The amount of money that you will pay each month depends on a number of things; such as the money you put down, the value of the car, loan term, your current income and credit score, etc. Many a times people wish to repay their auto loan earlier than their term or wish to get the loan refinanced. Understanding the effect of paying your loan early vis-à-vis making timely payments can help you in making a well-informed decision.

Pay Early or Pay on Time: The Auto Loan Question

· Are you interested in making Early Payments?

You know you are a financially adept individual when you think about paying your auto loan early rather than spending the money on frivolous things. The following pros and cons of prepayment will take you one step closer in making the right decision.

Pros: The reduction in the interest amount can help you save a great deal of money. Paying off your auto loan early gives you the financial freedom to use that money elsewhere. Secondly, if you are going to receive a large sum of money in the near future, it is wise to prepay your loan instead of spending it elsewhere. It will make your debt-free early and allow you to live a tension-free life.

Cons: Timely auto loan payments mean that you have planned your finances in an efficient way. If you repay your loan all at once, it may project that you are unable to manage your credit. Remember prepayment of your auto loan will not hurt your credit score, however, it will not improve the score either.

· Do you believe Timely Payments are a Good Choice in the Long Run?

Small payments made every month can surely have a positive impact on your credit rating. The following pros and cons will help you clarify the advantages and disadvantages of timely payments.

Pros: Timely payments made every month are certain to keep your credit score in check. Many a times people may forget to make the payments on time. However, automatic bank payments can help you to keep your payments regular. A shorter loan term with timely payments will help you in obtaining lower interest rates and an overall cheaper auto loan deal in the future.

Cons: An automatic timely payment means that you will have to maintain a certain balance in your bank account, which may temporarily block your finances. A certain amount of your income gets allocated to the monthly payment. Compared to a prepayment strategy, timely monthly payments carry less financial freedom.

Your Auto Loan Payment Schedule: What is Best for you?

Income is an important element that decides which option you should choose between paying your auto loan early and making timely payments. If your monthly payment is manageable and your income supports the loan, you should opt for timely payments. However, if your income source is unstable and you require a car on an immediate basis, you should opt to make a prepayment of your entire loan. On the basis of your financial situation and circumstances, make the wiser choice.