Committing mistakes is a part of life, and is an essential part of our progress. However, certain mistakes are too costly to be a part of your learning process. Especially in investment, where you’re talking about your money, you can’t have too many mistakes in your portfolio.
Here are some of them so you can avoid them in the future.
1. Confirmation bias
You may believe certain things about market conditions and research for information to support those beliefs. This is dangerous as you might be ignoring other information that could be valuable in your decision making.
Times are changing faster than ever before, not only in technology but investment as well. You may fall victim of “anchoring” where you become fixated on past information and then use that information to make investment decisions.
3. Herd mentality
People like to “belong.” It’s in our DNA. This desire could motivate you to pursue an investment just because it’s the trend and everybody’s doing it. Study and weigh the investment carefully before committing.
Hi there, Steve Sorensen here. I’m a certified public accountant and business writer from Colorado. I have a strong background in business and finance. I also offer advice to companies on clamping down on employee embezzlement. Visit my blog to know more.
When embezzlement is mentioned, it commonly refers to employee theft. But it is just one form of embezzlement as any act of misappropriation of funds that have been entrusted to someone’s care can be considered as the crime as well.
For example, take someone who works in or manages a rental car business that does not own the vehicles. If he allows anyone else, like a relative or friend, to just show up and use one of the cars, even if there is no intention of keeping it, they could be charged with embezzlement.
For an embezzlement to be charged, the following factors must be met:
The two parties involved must be under a fiduciary relationship, which means one of them has the power to act on behalf of the other. The relationship or partnership is based trust, honesty, and loyalty.
The defendant or accused should have acquired the property because of the said relationship. It is either it was his responsibility to take care of the property, or it was entrusted to him.
The defendant or accused must be proven to have taken ownership or fraudulently used the property in question.
The actions of the defendant or accused were intentional or intended to deprive the owner of its use.
Hi, Steve Sorensen here, a Certified Public Accountant and a business consultant who helps advises organizations on varying issues, including employee embezzlement. To know more about me, visit this Facebook page.
The life of accountants brims with all sorts of tasks and activities. They have to be organized and detail-oriented in their work. Decisions have to be made in a logical manner, and problems approached sequentially.
You should understand that the typical day of a Certified Public Accountant, or a CPA, depends on the day. There are certain dates wherein CPAs do things differently. But apart from these particular days, CPAs are simply immersed in auditing.
The day of a CPA is heavily dependent on the CPA’s office and position. Public accountants need to audit, oversee tax and management duties, and dabble in consulting for their clients. CPAs in businesses and private companies are mostly in an accounting and financial department that supports the organization. CPAs in the government do all these things, but they also conduct performance, compliance, and investigative audits. CPAs that work for non-profits design internal control systems. They also solve tax problems, prep financial reports, and budget resources.
According to analysts, there is an imminent danger of a stock market bubble bursting due to the overwhelming amount of stock market trades that have occurred in the last year alone. Financial advisors caution that regardless of whether these forecasts pan out or not, more people should become aware of market crashes and what defines a bubble. These definitions are no longer lofty concepts that only “expert” investors should know; they are real-world phenomena that affect everyone, whether everyone realizes it or not.
Thus: a bubble describes an investing phenomenon which occurs when investors place too much demand on a specific stock or set of stocks. Investors drive the price of these stocks beyond any reasonable or accurate thought (to the point where it is no longer a good reflection of the company’s actual worth). These bubbles initially seem to blow up forever, but — as with a bubble — they’re insubstantial, they will eventually pop. The “higher” these bubbles rise, the more devastating the crash. It is typical to see market bubbles burst to dissipate millions of dollars.
These bursts are called market crashes, which are significant drops in the total value of the entire market. These crashes create a situation of panic, with many investors often struggling to gain back their losses. Different market crashes involve a myriad reactions, but the most general feeling is one of urgency. The panic that sets in usually leads to massive selling, which eventually crashes even more. In a domino effect, stock market crashes are followed by a depression.
There are other nuances involved in either definition but these general outlooks should at least be understood — especially as the patterns for a stock market bubble are being evidenced in current events.
Financial blogger Steve Sorensen focuses on the topics of embezzlement and stock market culture. To learn more, visit this blog.
It often amazes me whenever I see new restaurants pop up in my town. It’s the business of choice of a lot of people. The appeal is easy to see and understand. However, some people mistake putting up a food establishment as a simple undertaking. There are a lot more things behind the scenes than one may come to expect. Here are some of the financial tidbits people need to consider before they put up their very own dream diner.
For diners, cafes, and restaurants, good equipment is a must. Never skimp on the equipment. Never buy second-hand. It may be expensive at first, but it will save the business more money in the long run. A diner with great equipment requires less staff, and less ingredients. But as I said, it’ll be expensive.
The biggest expense isn’t the equipment. It’s the staff salary. Owners should be prepared for that. And in terms of employment, the restaurant industry is the second-largest in the country.
If you’re planning to open a diner, look closely at your food and drinks. Food should last a week, and alcoholic beverages, maybe four to five weeks. If they last longer, then you may well be overstocking.
Always aim to increase sales. It’s more important than cutting costs. Increasing sales leads to expansion and growth.
A country’s economy expands with the improvement of capital goods structures and the increase of capital stock. This is all tied to capital investment. Without it, no economic expansion would be possible. When investors buy capital goods like factories, machineries, transportation, computers, tools, instruments, or anything that leads to people being more productive, the money used to purchase all this is then termed capital investment. The important thing to consider is that the equipment (bought by financial capital), would need humans to design, build and operate.
Now let’s get to the interesting part – how all this helps our economy expand. When capital goods are improved, the more productive we all become. Look at the fisherman who once fished with a small boat and a small net. He invested in a bigger boat, and some machinery to haul his new mammoth-sized net. He caught more fish than he ever did before. Mr. Fisherman now has a bigger house, an extra car, and a better life. Little did he know that he helped the economy expand.
Another great thing about the increase of a country’s capital investment is the subsequent improvement in the quality of research and development – in businesses. Better R&D means higher productivity. Workers are more efficient and what they produce are better. Then they become like Mr. Fisherman, with his better life.
Hi there. My name is Steven Sorensen, and I’m a CPA and business writer based in Colorado. Learn more about business and investment by checking out this page.
No one is too old or too smart to set goals for the new year. Especially when it comes to
finances. If you think you’re ready with your assets and investments, think again. There might be more in store for you in the next year. But if you’re planning to make resolutions this year, be sure to include these financial goals:
1. Start building your emergency fund.
Instead of splurging on expensive coffee and accessories for your gadgets, why not put a certain percentage of your salary into an emergency fund? Doing this for a whole year will ensure you that if something unexpected happens, it won’t make a dent on your personal savings. Having an emergency fund will ease anxiety in the future.
2. Find a new income source.
Whether it’s by investing, another job, or through a profitable passion project, make it a goal to find a new income source in 2017. Sometimes our jobs are just enough for us to get by. If your goal is to earn more, you have to stretch yourself a bit by finding ways to earn outside of your day job.
3. Be completely debt-free.
This sounds impossible, right? Don’t fret. You’ve got 12 months to complete this goal. Make it your goal to pay off all debts so that you’ll have more money to invest, save, and spend. If you can’t do it on your own, perhaps you can seek the help of a financial adviser who will plan and manage payments with you.
Just remember, these goals require change and effort. Don’t hesitate to ask for help when you need it. Here’s to a richer 2017!
Thanks for reading. My name is Steven Sorensen, and I’m a CPA and business writer based in Colorado. My goal is to help people reach their financial goals. I also advise businesses on issues such as avoiding employee embezzlement and improving retirement plans. Visit this page to know more about what I do.