Category Archives: Investment Review
There are many ways to make your money work for you. There’s the stock market as well as different kinds of investments. Plus, there are several financial products offered by banks. However, most of them are accompanied by various levels of risk. Fixed deposit accounts are considered the odd-one-out among this lot. Being halfway between a money-earning instrument and an ordinary bank account, fixed deposit accounts are best meant for those just starting out in the world of investment.
In a fixed deposit account, you have to keep your money in the bank for a fixed amount of time. The bank lets you earn higher interest rates for fixed deposits than for regular deposits. Here are a few tips to help you take advantage of the account’s unique features.
- Mind the investment period. Most banks usually offer fixed deposit periods of anywhere from a month to 5 years. Remember that until this period ends, you will only be able to withdraw your money if you are willing to lose the interest rates. This is the main difference between fixed deposits and regular bank accounts.
This is also the main point of misunderstanding when it comes to fixed deposit accounts. Contrary to popular belief, your money is not frozen. These accounts are actually very liquid. Instead, you will lose the whole point of the investment if you withdraw early (i.e., you lose the interest). Hence, it is important to ensure you will not be needing the amount you will be committing to the fixed deposit.
- Mind the interest rates. Generally, you will earn a higher interest rate the longer you keep your money in the bank. This is a fixed rate, and will not change regardless of how the market goes. This is its main advantage over other investment platforms. In the same way, a higher principal means a larger amount of earnings based on the interest rates.
However, different banks have different rates. There are some Malaysian banks that offer anywhere from 2.6% to 3% and above interest depending on the length of time the money remains with them. It is important to compare the rates of different banks depending on your chosen investment period, to determine which works best for you.
- Mind the fees. Like in every banking instrument, fixed deposits are not exempt from various fees. These are the ones that eat into the final earnings. There are monthly maintenance fees, taxes, ledger fees, and much more. In case you run into a financial emergency, it is also important to know the fees for closing your account before maturity. All these should be taken into account when comparing various tools.
Fixed deposits are among the safest money-making instruments due to their stable interest rates. As a plus, they can also be pledged as a loan security for some banks. The main disadvantage here is the relative inflexibility of the deposit. You have to keep it until it matures, lest you lose the interest. Also you cannot add into it when you wish, like a regular bank account.
Fixed deposits are also among the most overlooked of all money-making instruments. But by understanding its ins and outs, you can make it work as a valuable, low-interest part of your investment portfolio.
Nearly every business requires capital at one point or another. The key to securing financing is usually found in the details and diligence.
✤✤✤ Target Investors ✤✤✤
A list of potential venture capitalists (such as China Sonangol) should be identified whose general criteria coincides with the needs of the company seeking funding; size, development stage, industry type and location are all necessary considerations. Different firms will be a better fit for a company depending on whether the capital is for start-up, the need to expand as a mid-sized company or later stage growth in a business.
Tip: VCs tend to follow a pattern so it is helpful to know who they have funded in the past.
✤✤✤Meet with Investors✤✤✤
Professional referral is the best means of an introduction with a prospective VC whose time is short and spending limited to around 1% of all proposals reviewed. Brokers, lawyers, executives and consultants familiar with associates at the VC firm can make the initial encounter more productive with a recommendation and even hasten a meeting that would otherwise require a long wait.
Tip: Aim to impress potential investors by infusing personality, energy and enthusiasm into proposals.
✤✤✤Narrow the Scope✤✤✤
Limiting the number of potential investors to half a dozen is helpful to the process and far less time-consuming. Presenting the pitch to as many venture capital firms as possible may sound appealing, however; day-to-day operations of the business must continue throughout the duration of the funding search and senior management cannot afford to be wrapped up in constant interviews. Focus on the most promising venture capitalists.
Tip: Anticipate the need for funding well in advance of company growth and begin forming connections as early as possible.
A detailed business plan should be prepared and include contributions from all key figures in the company. Each should have a clear voice that comes through and indicates a cohesive team with a well-oiled plan. Presentations to investors should be concise and succinct with relevant materials provided at the time of the proposal.
Tip: Appointing a funding manager may benefit the company during the solicitation process and free-up resources.
✤✤✤Network and Seek Advice✤✤✤
Fellow entrepreneurs can be a great source of information and referrals. It is also important to be involved in VC related events and seminars where discussions are held and opportunities abound. Social networking is essential to any company seeking venture capital, especially for the first time. Electronic hobnobbing is very beneficial to an up-and-coming company in need of contacts, service providers, customers and investors alike.
Tip: Investment can come from any source, from an adjoining office cubicle to a PTA meeting and being able to instantly size up a prospect is essential to seizing every opportunity.
Keeping a running list of presentations given to different VCs will help in following up and following through. Sometimes the deciding factor for an investor can be the persistence of a company; contact them with updates, new ideas and progress reports that demonstrate capability and tenacity. Until the money is in the bank, constant communication must facilitate the process.
Tip: The best way to impress is to have confidence; investors face constant risk, but knowing there is someone at the helm who can handle things is reassuring.
Securing capital is no easy task, but persistence and adherence to established protocols is often the path of least resistance that offers the most success.
The formation of a private equity fund provides a vehicle to use for investments in a geographic region or a specific business sector. Private equity funds are formed by sponsors or investment managers This type of investment will generate profits for the sponsor from fees and returns on investment.
Private equity funds will typically be formed as a Limited Partnership or a Limited Liability Company for tax purposes. There are many benefits to fund investors for these types of private equity funds. The formation of an LP or an LLC is used to pass gains, income, deductions, credits, and losses through to the fund’s partners.
A special purpose vehicle is created by the sponsor of a private equity fund to administer and control a fund. This special purpose vehicle will take actions on behalf of the fund. The specific function and the type of vehicle is based on the form of the initial fund. Private equity funds will have a general partner or an investment manager.
The general partner is given the legal power to make decisions on a fund’s behalf and typically controls funds formed as a limited partnership. The purpose of the general partner is to keep the sponsor insulated from any claims against the fund and from general liability. This type of liability will be focused on the general partner based on state laws for limited partnerships.
Investment managers are typically appointed by the fund’s sponsor and is affiliated in some way with a GP or fund manager. Their purpose is to provide the fund with investment advisory services. This is an entity that enters into an investment agreement with a fund’s manager or general partner. They are paid by the fund through management fees that are used to pay for day-to-day activities of the fund and for hiring any investment professionals. The same investment manager can be used for multiple funds that belong to a single sponsor.
It demonstrates how private equity drives economic growth, strengthens business and provides financial security to millions of Americans.
Management fees are typically paid to a sponsor for managing a private equity fund. The fees are not a set amount and can range from 1.5 percent to 2.5 percent. These fees are paid by investors in a fund on a quarterly or semi-annually. Investors may also be charged an acquisition fee for an investment.
Private equity funds also have various expenses. These include organizing an infrastructure costs, the day-to-day operation of the fund, and payments to an investment manager.
Watch private equity markets trends from David Hand Crescent Point Asia or get Crescent Point Private Equity latest investment news, the leading emerging markets investment management and financial advisory firm primarily targeting in the Asia-Pacific and Middle East regions.
It’s true that both venture capital and private equity firms supply businesses with the capital they need but there are many differences between the two. Learning the difference between them will give you an edge when it comes to doing business.
Everyone who works within the finance industry will often see the terms Venture Capital (VC) and Private Equity (PE) thrown around often, and sometimes used interchangeably. Both of these terms do describe a type of investment where cash is being used to acquire equity within a business and hopefully get a return on their investment. But in reality there are many important differences that you need to consider. Once you find out the truth about these two terms you’ll quickly understand the difference.
The Definitions Of VC and PE
Private equity refers to a class of assets that consist of equity securities in companies which aren’t publicly traded on any stock exchange. A few examples of some investment strategies used in private equity are Growth Capital, Leveraged Buyouts, and Mezzanine Capital.
Venture capital is money that gets used by start ups, and other businesses in their early stages which have a high potential. Most of the time you’ll see Venture capital funds investing in companies that are developing novel technologies or other high tech businesses like biotech and IT. A high risk investment is right up a Venture capitalists alley.
A big difference between the two is the risk factor. VCs understand that the companies they fund are high risk investments. That’s why they go to great lengths to diversify the types of investments they make. That way even if several of their investments fail they will still have a good chance to have some of them make enough returns to keep their firm profitable. Because they make small investments in tens of different firms this model is often profitable for them. When it comes to PEs, they will make much larger investments in a smaller amount of firms. They will keep their investments to relatively safe businesses. They keep their money safe by putting it into larger companies that have a history of being stable.
Both venture capitalists and private equity firms play an important role in keeping business going. They help growing businesses with the money they need to keep expanding without having to take out expensive loans from a bank. They also help new companies get the money they need in the early stages of the business when money is tight.
Discover more strategic financial investment topics from Crescent Point David Hand or stay up to date with Crescent Point Venture Capital news, the leading emerging markets investment management and financial advisory firm primarily targeting in the Asia-Pacific and Middle East regions.
In this Tulane University video, Lawrence Schloss, co-founder and CEO of Diamond Castle Holdings,LLC., discusses the rapid expansion of the private equity market. What is fueling this extreme increase? What can we expect in the future with this type of investing? Find out what exactly private equity is, why current market and regulatory factors fuel private equity investing and what the investment cycle entails.