Can Finance Really Become a Strategic Partner to the Business?

Much has been written about how finance organizations can become strategic partners with the businesses they support. While purported experts point to a variety of frameworks, scorecards and key performance indicators, etc. as the keys to bridging the gap between finance and business, these trite ‘solutions’ have done little to make finance the strategic business partner it seeks to be. Worse yet, pursuing these ideas has put finance organizations on a treadmill where they expend energy and resources (e.g., money and time) ultimately to get nowhere while the issue persists. So if you are still looking for a silver bullet or quick fix to this seemingly incurable problem, stop reading now.

Given the time, money and effort spent, you may be a bit demoralized and even speculating that the finance-business chasm cannot be crossed. Paradoxically, the link between finance and the business has been under finance’s proverbial nose for some time – resource allocation. A serious concerted effort to optimize an organization’s resource allocation ultimately enables finance to develop the bridge between finance and strategy. This discipline known as corporate portfolio management works to actively manage the company’s resource allocation as a portfolio of discretionary investments. All companies allocate their resources – very few optimize their resource allocation. Finance is uniquely positioned to enable this because they sit at the nexus of information and data required to undertake a corporate portfolio management effort. (Note: Corporate portfolio management is often referred to by different terms so as a point of reference, terms such as IT portfolio management, enterprise portfolio management, product portfolio management, project portfolio management, resource allocation and investment optimization are similar. In fact, these all are slices or subsets of corporate portfolio management.)

From Resource Allocation to Strategy

First, it is worth understanding the tie between resource allocation and strategy – they are the same. Where you allocate your resources is your strategy. PowerPoint presentations, speeches by senior leadership, strategy bullets nicely framed on a wall, etc. are all interesting and potentially useful, but they are not your organization’s strategy. For instance, if your stated corporate strategy is to have the most engaged and loyal customers (this sounds good, right?), but you allocate all your investment dollars to acquiring new customers, your strategy is actually around customer acquisition. This is a very simple example but clearly demonstrates the dichotomy that can and often exists between a stated and real strategy.

A great article entitled “How Managers’ Everyday Decisions Create – or Destroy – Your Company’s Strategy” that recently appeared in the Harvard Business Review (February 2007) nicely articulated the connection between resource allocation and strategy and also pointed to the need for a corporate portfolio management discipline. “How business really gets done has little connection to the strategy developed at corporate headquarters. Rather, strategy is crafted, step by step, as managers at all levels of a company – be it a small firm or a large multinational – commit resources to policies, programs, people and facilities. Because this is true, senior management might consider focusing less attention on thinking through the company’s formal strategy and more attention on the processes by which the company allocates resources.”

The upshot of this is that if finance can enable the process to enable better resource allocation (which is strategy), they will have succeeded in becoming a de facto strategic partner to the business.

The Two Levers of Corporate Portfolio Management

So now the question turns to how to build a corporate portfolio management discipline and ensure its success. A successful corporate portfolio management effort is predicated on two dimensions.

1. Modern Portfolio Theory (aka the process) – This is what people generally think of when they think of corporate portfolio management. It is comprised of:

* Investment valuation – This includes defining what an investment is. It is worthwhile to take an expansive definition of what comprises an investment because this is not just capital expenditures (capex), but also should include operating expenses (opex). In general, 25-40% of an organization’s expenses are discretionary and hence are investments. Investment valuation also requires consistency of valuation methodology which necessitates using driver-based models to create projections and also looking at past NPVs and ROIs to consider strategy and other qualitative aspects that drive investment ‘value’.

* Portfolio allocation – This requires determining investment areas/themes and the associated allocations. Basically, what are my strategic priorities for investment and how much will go to each area? For example, 25% in customer acquisition, 20% in IT, 55% in customer retention. The allocation should also consider the risk profile of investments, e.g., 60% in low risk, 30% in medium risk and 10% in high risk.

* Portfolio optimization – This requires selecting the best investments to support the portfolio allocation and periodically rebalancing the portfolio to ensure consistency with desired portfolio allocations. The aim is to maximize strategic and financial return per unit of risk.

* Performance measurement – A key element of successful corporate portfolio management is capturing actual investment results to enable promise vs. performance. Doing this ultimately lets an organization improve ongoing investment valuation based on actual results and allows it to rebalance the portfolio based on performance achieved.

Most people with a finance background will recognize the above tenets of portfolio theory. The problem with most of the discussion of corporate portfolio management is that it assumes that people behave according to a theoretical/rational construct. While various experts like to offer platitudes saying things like, “Just manage your company’s investments like you manage your own investments,” they fail to realize that many individuals may not even manage their own personal portfolios as they should. They may know what they should do but emotions, intuition, and other external influences take them off this rational path. What often leads us astray in our personal portfolio is what leads us astray in an organizational setting – behavior. The challenge in an organization is magnified by the fact that it is hundreds or thousands of people whose behavior that needs to be considered. And so this is the second fundamental lever of corporate portfolio management – organizational behavior.

2. Organizational Behavior – In order to optimize one’s corporate portfolio, the behavioral elements must be understood with:

o A data-driven mindset – Organizations often make decibel- or intuition-led decisions and corporate portfolio management, like 6-Sigma, requires data and analytical decision making.

o Silos removed – Corporate portfolio management success requires people thinking about what is best for the organization and not just what is best for “my world” – silos and organizational dynasties need to be broken down.

o Incentive alignment – People should be motivated by similar short- and long-term incentives.

o Accountability & transparency – There should be a willingness to share information and effectively create a marketplace for investments.

Moving organizational behavior is the larger challenge and this takes time to change. At American Express, we have actively worked on changing organizational behavior and have made significant inroads over time, but it has not happened overnight. We have conducted cross unit investment reviews, sponsored an internal corporate portfolio management conference and even created a resource allocation simulation to visibly demonstrate the benefit of corporate portfolio management.

Bringing Corporate Portfolio Management to Your Organization If you think corporate portfolio management can be implemented in one month or one quarter, it is not for you. Corporate portfolio management is not a sprint and requires the will and heart of a marathoner. You will see benefits along the way, but it takes time to realize the full potential of a well developed corporate portfolio. But once defined and running, an actively managed corporate portfolio management discipline will pay immeasurable dividends. For American Express, we can point to stock price out-performance over our benchmark indices as well as our competition since adopting corporate portfolio management. Our resource allocation effectiveness also helps to drive our PE multiple (price to earnings multiple), which is significantly larger than our competitive peers.

Very tactically, the corporate portfolio management discipline has helped us understand what businesses we should exit and where we might want to invest more. It has enabled us to reallocate money across business segments for the first time which can be very challenging in large organizations. Most importantly, corporate portfolio management has become part of the DNA of the organization with finance and the business talking about their investments on an ongoing basis. Finance leads the corporate portfolio management effort but with significant and very direct input and interaction with the business. The chasm between finance and the business has been bridged by utilizing corporate portfolio management, and the benefits to the organization in terms of financial and strategic performance as well as employee engagement have been significant.

If you are serious about making finance a strategic partner with the business, and if you finally want to make some forward progress after being on the treadmill for so long, corporate portfolio management offers you a solution to this intractable problem. It requires effort and patience, but, as evidenced by American Express, it can close the finance and business gulf and ultimately generate outstanding performance.

How To Save Money On Your Two Wheeler Insurance

Tips to save money on two wheeler insurance

Many people in India own two wheelers. It is compulsory for you to buy a two-wheeler insurance policy if you own a bike or a scooter. But can you reduce the insurance expenses? Sure you can! Just follow these tips and you will see a difference.

Avoid making smaller claims: Before you make a claim, see how much the bill amount is. If it is a small amount, pay it yourself. Making numerous small claims will unnecessarily bring down your NCB to zero which will overall lead to a loss.

Attach anti-theft devices: A car insurance plan offers protection against theft and other dangers to the car. So if the car is found to be safe and less susceptible to thefts and break-ins, the insurer will offer a discount on the premium. Therefore look to install some anti-theft devices to the car to not only keep it safe but also to reduce your insurance costs.

Be a good driver and earn No-claim bonus: Driving carefully will reduce the chances of your car getting into mishaps. This will reduce the need to make claims and you will earn NCB. The NCB will in-turn pull down your insurance premium costs.

Renew two-wheeler insurance before expiry: Do not wait for the two wheeler insurance policy to expire before you renew it. If you have a lapsed policy, you may need to pay some fees and fines to get a new plan. So always try to renew the policy on time to save money.

Buy online: It is known fact that insurance bought online is cheaper. So buy a two wheeler insurance plan online and save a considerable amount of money.

Choose the right kind of cover: If you have a two wheeler that you use occasionally or is almost on its way out, opt for a third party cover. If however your bike is used daily and is a valuable vehicle, go for a comprehensive plan. Knowing which cover you need will help you save money.

Deductibles: Every two wheeler insurance plan has a deductible component. This means that as the policyholder, you will have to pay certain amount at the time of a claim and the insurance provider will pay the rest. A high deductible will lower your premium costs and vice versa. If you are confident of your driving skills and feel you won’t need too many claims, opt for a higher deductible. This will help you save money on your two wheeler insurance plan.

Compare: Last but not the least, you most definitely need to compare the available car insurance plans to get the best deal at the best rate. This is one of the easiest and quickest ways to save money on your bike insurance plan. Compare when you buy a new plan or renew an existing one.

A Dance With Finance – Make Sure You Take The Lead!

FINANCE:

Definition – A branch of economics concerned with resource allocation as well as resource management, acquisition, and investment. Simply, finance deals with matters related to money and the markets.

Role – Finance is used to raise money through the issuance and sale of debt and / or equity. Institutions could also use finance techniques to create balance sheets, general ledgers, profit and loss statements, etc..to determine the health of the business.

EFFICIENT MARKET:

Definition – A market in which the values of securities at any instant in time fully reflect all available information, which results in market value and the intrinsic value being the same.

Role – A good example of efficient markets in finance could be seen with the stock markets because information is available to all participants at the same time and the prices respond immediately to the available information.

PRIMARY MARKET:

Definition – Transactions in securities offered for the first time to potential investors.

Role – To illustrate the role that primary markets have in finance, people could look at “initial public offerings (IPOs)” in the stock markets where companies offer shares of common stock to the public for the first time.

SECONDARY MARKET:

Definition – The market in which stocks previously issued by the firm trades.

Role – The role that secondary market has in finance could be seen with numerous stock exchanges on Wall Street, such as the DOW, NASDAQ, etc. Through these stock exchanges, people trade company stocks.

RISK:

Definition – The likely variability associated with expected revenue or income streams.

Role – Risk plays an integral role in finance because it determines the probability that an actual return on investment (ROI) will be lower, or higher, than the expected return.

SECURITY:

Definition – A financing or investment instrument issued by a company or government agency that denotes an ownership interest and provides evidence of a debt, a right to share in the earnings of the issuer, or a right in the distribution of a property.

Role – The role that security has in finance could be seen when people make investments in securities such as bonds, debentures, notes, options, and shares that may be traded in financial markets such as stock exchanges.

STOCK:

Definition – Equity capital raised through sale of shares and it is the proportional part of a company’s equity capital represented by fully paid up shares.

Role – Stocks has a major role in finance because investors commonly trade stocks on a daily basis from a variety of institutions in the secondary market.

BOND:

Definition – A type of debt or a long-term promissory note, issued by the borrower, promising to pay its holder a predetermined and fixed amount of interest each year.

Role – A good example of the role of bonds in finance could be seen with how the government uses the purchase and sale of bonds to inject money into the economy.

CAPITAL:

Definition – Wealth in the form of assets, taken as a sign of the financial strength of an individual, organization, or nation, and assumed to be available for development or investment.

Role – The role that capital plays in finance is that institutions use capital, such as stocks, to create capital gains that could be used to improve on the overall business.

DEBT:

Definition – Consists of such sources as credit extended by suppliers or a loan from banks.

Role – Debt is used in finance to determine certain ratios pertaining to individuals or organizations. For instance, prior to giving out loans to individuals, banks tend to do background checks to determine the individuals “debt-to-income-ratio,” thus knowing if the loan is repayable.

YIELD:

Definition – The annual income earned from an investment, expressed usually as a percentage of the money invested.

Role – Yield is used in finance to determine how profitable an investment is, along with knowing if the investment is priced at a good value based on the “rate of return.”

RATE OF RETURN:

Definition – The annual percentage returned realized on an investment, which is adjusted for changes in prices due to inflation or other external effects. Expresses the nominal rate of return in real time, which keeps the purchasing power of a given level of capital constant over time.

Role – The role that the rate of return plays in finance is that people, including institutions, use this to adjust the nominal returns to compensate for factors, such as inflation, to determine how much of the investment is actually being returned.

RETURN ON INVESTMENT:

Definition – Return on investment (ROI) is the measure of a corporations profitability, equal to a fiscal year’s income divided by common stock and preferred stock equity plus long-term debt. The ROI is the income that an investment provides in a year.

Role – The ROI measures how effectively the firm uses its capital to generate profit; the higher the ROI, the better for the company.

CASH FLOW:

Definition – A measure of a company’s financial health, and equals cash receipts minus cash payments over a given period of time; or equivalently, net profits plus amounts charged off for depreciation, depletion, and amortization.

Role – In finance, investors and companies use cash flow to purchase assets in hopes of achieving higher ROIs. In addition, cash flow is also used to maintain the business or household, and is a necessary part of finance.

Top 6 Advantages Of Student Loans

It is just a common myth that only the federal loans provided by the UK government are cheaper and easier to repay than the student finance options provided by the private direct lenders. However, if you see the APR and repayment modes, then you come to know that private student loans are the clear winner! Let’s have a quick look at the top 6 advantages of education funds offered by the direct lending companies:

Borrow Short-Term and Long-Term Funds

Whether you are looking for a big amount to complete the higher education course, or need short-term funds, to give just hostel and tuition fees; both options are easily available and you can access the required funds in less than 24 hours without facing any hurdles. You can ask the lender to transfer funds directly to your bank account or deliver to your doorstep.

No Documentation to Waste your Time

The time of a student is very precious and instead of taking stress about the cash, he should focus on studies. Direct lending companies know the importance of young generation in the development of the UK and hence they offer paper free student loans plans. You are not required to submit your last class mark sheet or the address proof.

Apply Online in Just 2 Minutes

You don’t have to bunk classes or take leaves from the college, just open your laptop or smartphone and apply for the student finance loans on any reliable direct lending website. You would need just 2 minutes to complete the online application procedure. No hard copies or soft copies are required.

Avail Funds with No Guarantor

Students don’t have a big network to arrange a guarantor. They are dedicated towards their studies and interact less with people. Arranging a guarantor is an embarrassing task for them as people are not ready to co-sign their application. They can easily access student education loans with no guarantor and no broker by applying to a reliable direct lender.

No Hurdle of Bad Credit History

Some students have bad credit issues due to pending credit card bills or some other reasons. Banks and conventional lending companies don’t entertain their funding requests. However, they can easily secure the cash by applying student loans to a bad-credit friendly lender. There are no hidden charges. You can compare various deals and grab the best one with the lowest APR.

Easy and Flexible Repayment Modes

Everybody knows that a student can’t repay funds during his education time. He doesn’t have a steady source of income. Direct lenders offer various student repayment plans that can be chosen as per comfort. You can either start repaying in installments from the next month or repay the total debt in instalments after completing your education.

3 Small Business Administration Loan Programs To Finance Your Franchise

Franchises are a simple and effortless way to jump right into the business world – to finally be your own boss.

Plus, franchises are probably the easiest businesses to get financed because they usually do not come with a lot of the start-up risk (unknown risk) that banks and other business lenders tend to shy away from. Since most franchises come with strong brand names, proven profitability and cash flow track records and tend to perform well in nearly any location (globally), these business models have the propensity to fly through the loan underwriting process and go from application to funding in no time flat.

In fact, the Small Business Administration (SBA), in hopes of speeding up their funding process and funding more franchise loans, have created a “SBA-approve franchise” list – a list of franchises that the SBA has already vetted through their underwriting process.

According to Jim D, a former moderator for the SBA.gov website;

“SBA-approved franchises are select business opportunities whose agreements have been accepted by the SBA. When it comes to securing an SBA-backed loan, those applying for an approved-franchise have it easier and quicker. Applicants for SBA-approved franchises benefit from a streamlined review process that expedites their loan application. Because the particular franchise is pre-approved, the loan review is less complex and focuses on specific aspects of that brand’s business plan.”

So, if the SBA likes franchises so much, what loan programs do they offer?

3 SBA Loan Programs For Franchises

First things first. The SBA does not directly provide loans to business or franchise owners. Thus, you will still have to take your loan request to a SBA lending bank or financial institution. However, these originations also know that the SBA likes proven franchise businesses and are more than willing to review and process your application.

When seeking a SBA loan for your franchise you should focus your specific financing needs and match them to the SBA’s loan program as follows:

SBA 7(a) Loan Program: This is the SBA’s flagship program designed to fund almost all aspects of a business.

According to the SBA, the 7(a) loan program can be used:

To provide long-term working capital to use to pay operational expenses, accounts payable and/or to purchase inventory
Short-term working capital needs, including seasonal financing, contract performance, construction financing and exporting
Revolving funds based on the value of existing inventory and receivables, under special conditions
To purchase equipment, machinery, furniture, fixtures, supplies or materials
To purchase real estate, including land and buildings
To construct a new building or renovate an existing building
To establish a new business or assist in the acquisition, operation or expansion of an existing business
To refinance existing business debt, under certain conditions

This program has a maximum loan amount of $5 million with the average, in 2012 – the last published figure, being around $337,730.

As most SBA loans come with longer loan terms making monthly payments even more affordable, loan maturities for real estate can go out to 25 years, up to ten years for equipment and up to seven years for working capital.

Now, all SBA loans are assumed to be fully collateralized by either business or personal assets. However, while the SBA expects this, they will not decline a loan based solely on the lack of adequate collateral.

Lastly, know that these loans do require that the borrower provide 20% or more as a down payment or their own equity in the deal. Thus, the SBA will only guarantee 80% of the needed amount.

As you should be able to see, this SBA program can cover almost all franchise financing needs from real estate purchase and development to business equipment to working capital needs. Thus, if that is what you need to buy or grow your franchise, start here.

CDC/504 Loan Program: The 504 loan program, like the 7(a) program, is great for franchises. However, this program is limited to real estate and equipment purchases only.

According to the SBA, the 504 loan program can be used for;

The purchase of land, including existing buildings
The purchase of improvements, including grading, street improvements, utilities, parking lots and landscaping
The construction of new facilities or modernizing, renovating or converting existing facilities

But, the real benefit with this loan program is that the equity portion or down payment required from the borrower is lower – usually around 10% – thus, requiring less out of pocket expense.

How this program works. This program was designed to help facilitate additional business growth and development within community areas. Thus, when a 504 loan is requested and approved, a local Community Development Corporation (CDC) – the community part of the loan – will fund and guarantee up to 40% of the loan request, a local SBA approved bank will fund 50% of the loan request leaving the remaining 10% from the borrower. Three partners all working for the same goal – the long-term success of your franchise.

This program can provide up to $5 million for businesses that can and will create jobs in the community, up to $5 million for businesses that provide stated public benefit such as energy reduction or alternative fuels as well as rural development businesses, minority, women or veteran businesses, export companies – just to name a few – these are stated goals that are known to have public benefit and as such the SBA wants to fund these companies. And, up to $4 million for small, job creating manufacturing firms.

Lastly, to make these loans and their resulting payments more affordable – ensuing the long-term success of the borrower – the SBA will allow loan terms of 10 and 20 years.

SBA Express Program: The SBA express program is like the little brother of the SBA’s 7(a) loan program with several benefits and restrictions.

First, this program offers a hastened review process. In fact, the SBA guarantees that your express loan application will receive a response in less than 36 hours. But, while you might receive a response, this does not mean you will receive an approval. It just means that you will know that the SBA has receive your application and they will usually ask for additional information from you at that time – but, at least you know it is being worked.

Second, the maximum loan amount under this program is only $350,000. Which is not a huge amount these days but might be enough to get you into the franchise of your dreams – especially when compared to the average loan amount of the full 7(a) program of around $337,730.

Third, the SBA will only guarantee up to 50% of the loan amount – meaning that more of the risk of the loan will fall back onto the bank or lender. Yet, if your deal is strong enough, this 50% guarantee might just be the difference between approval and denial.

Lastly, these loans offers loan terms up to 7 years only and can be used for nearly any business capital need.

What Is A Small Business?

Now, to qualify for a SBA loan, your franchise has to meet the SBA’s small business definition of:

Be for-profit.
Have up to 500 employees – up to 1,500 for manufacturing.
Have under $21 million in annual receipts – less for certain businesses or industries.

Which nearly all individual franchise businesses fit.

Conclusion

Franchising is a great way to jump into the business world with a proven, well known business model. Yet, like almost all businesses on the planet, financing that franchise either to get it started or to grow it is still a hard hurdle to overcome.

Finance, Credit, Investments – Economical Categories

Scientific works in the theories of finances and credit, according to the specification of the research object, are characterized to be many-sided and many-leveled.

The definition of totality of the economical relations formed in the process of formation, distribution and usage of finances, as money sources is widely spread. For example, in “the general theory of finances” there are two definitions of finances:

1) “…Finances reflect economical relations, formation of the funds of money sources, in the process of distribution and redistribution of national receipts according to the distribution and usage”. This definition is given relatively to the conditions of Capitalism, when cash-commodity relations gain universal character;

2) “Finances represent the formation of centralized ad decentralized money sources, economical relations relatively with the distribution and usage, which serve for fulfillment of the state functions and obligations and also provision of the conditions of the widened further production”. This definition is brought without showing the environment of its action. We share partly such explanation of finances and think expedient to make some specification.

First, finances overcome the bounds of distribution and redistribution service of the national income, though it is a basic foundation of finances. Also, formation and usage of the depreciation fund which is the part of financial domain, belongs not to the distribution and redistribution of the national income (of newly formed value during a year), but to the distribution of already developed value.

This latest first appears to be a part of value of main industrial funds, later it is moved to the cost price of a ready product (that is to the value too) and after its realization, and it is set the depression fund. Its source is taken into account before hand as a depression kind in the consistence of the ready products cost price.

Second, main goal of finances is much wider then “fulfillment of the state functions and obligations and provision of conditions for the widened further production”. Finances exist on the state level and also on the manufactures and branches’ level too, and in such conditions, when the most part of the manufactures are not state.

V. M. Rodionova has a different position about this subject: “real formation of the financial resources begins on the stage of distribution, when the value is realized and concrete economical forms of the realized value are separated from the consistence of the profit”. V. M. Rodionova makes an accent of finances, as distributing relations, when D. S. Moliakov underlines industrial foundation of finances. Though both of them give quite substantiate discussion of finances, as a system of formation, distribution and usage of the funds of money sources, that comes out of the following definition of the finances: “financial cash relations, which forms in the process of distribution and redistribution of the partial value of the national wealth and total social product, is related with the subjects of the economy and formation and usage of the state cash incomes and savings in the widened further production, in the material stimulation of the workers for satisfaction of the society social and other requests”.

In the manuals of the political economy we meet with the following definitions of finances:
“Finances of the socialistic state represent economical (cash) relations, with the help of which, in the way of planned distribution of the incomes and savings the funds of money sources of the state and socialistic manufactures are formed for guaranteeing the growth of the production, rising the material and cultural level of the people and for satisfying other general society requests”.
“The system of creation and usage of necessary funds of cash resources for guarantying socialistic widened further production represent exactly the finances of the socialistic society. And the totality of economical relations arisen between state, manufactures and organizations, branches, regions and separate citizen according to the movement of cash funds make financial relations”.
As we’ve seen, definitions of finances made by financiers and political economists do not differ greatly.
In every discussed position there are:

1) expression of essence and phenomenon in the definition of finances;

2) the definition of finances, as the system of the creation and usage of funds of cash sources on the level of phenomenon.

3) Distribution of finances as social product and the value of national income, definition of the distributions planned character, main goals of the economy and economical relations, for servicing of which it is used.

If refuse the preposition “socialistic” in the definition of finances, we may say, that it still keeps actuality. We meet with such traditional definitions of finances, without an adjective “socialistic”, in the modern economical literature. We may give such an elucidation: “finances represent cash resources of production and usage, also cash relations appeared in the process of distributing values of formed economical product and national wealth for formation and further production of the cash incomes and savings of the economical subjects and state, rewarding of the workers and satisfaction of the social requests”. in this elucidation of finances like D. S. Moliakov and V. M. Rodionov’s definitions, following the traditional inheritance, we meet with the widening of the financial foundation. They concern “distribution and redistribution of the value of created economical product, also the partial distribution of the value of national wealth”. This latest is very actual, relatively to the process of privatization and the transition to privacy and is periodically used in practice in different countries, for example, Great Britain and France.

“Finances – are cash sources, financial resources, their creation and movement, distribution and redistribution, usage, also economical relations, which are conditioned by intercalculations between the economical subjects, movement of cash sources, money circulation and usage”.
“Finances are the system of economical relations, which are connected with firm creation, distribution and usage of financial resources”.

We meet with absolutely innovational definitions of finances in Z. Body and R. Merton’s basis manuals. “Finance – it is the science about how the people lead spending `the deficit cash resources and incomes in the definite period of time. The financial decisions are characterized by the expenses and incomes which are 1) separated in time, and 2) as a rule, it is impossible to take them into account beforehand neither by those who get decisions nor any other person” . “Financial theory consists of numbers of the conceptions… which learns systematically the subjects of distribution of the cash resources relatively to the time factor; it also considers quantitative models, with the help of which the estimation, putting into practice and realization of the alternative variants of every financial decisions take place” .

These basic conceptions and quantitative models are used at every level of getting financial decisions, but in the latest definition of finances, we meet with the following doctrine of the financial foundation: main function of the finances is in the satisfaction of the people’s requests; the subjects of economical activities of any kind (firms, also state organs of every level) are directed towards fulfilling this basic function.

For the goals of our monograph, it is important to compare well-known definitions about finances, credit and investment, to decide how and how much it is possible to integrate the finances, investments and credit into the one total part.

Some researcher thing that credit is the consisting part of finances, if it is discussed from the position of essence and category. The other, more numerous group proves, that an economical category of credit exists parallel to the economical category of finances, by which it underlines impossibility of the credit’s existence in the consistence of finances.

N. K. Kuchukova underlined the independence of the category of credit and notes that it is only its “characteristic feature the turned movement of the value, which is not related with transmission of the loan opportunities together with the owners’ rights”.

N. D. Barkovski replies that functioning of money created an economical basis for apportioning finances and credit as an independent category and gave rise to the credit and financial relations. He noticed the Gnoseological roots of science in money and credit, as the science about finances has business with the research of such economical relations, which lean upon cash flow and credit.
Let’s discuss the most spread definitions of credit. in the modern publications credit appeared to be “luckier”, then finances. For example, we meet with the following definition of credit in the finance-economical dictionary: “credit is the loan in the form of cash and commodity with the conditions of returning, usually, by paying percent. Credit represents a form of movement of the loan capital and expresses economical relations between the creditor and borrower”.

This is the traditional definition of credit. In the earlier dictionary of the economy we read: “credit is the system of economical relations, which is formed while the transmission of cash and material means into the temporal usage, as a rule under the conditions of returning and paying percent”.
In the manual of the political economy published under reduction of V. A. Medvedev the following definition is given: “credit, as an economical category, expresses the created relations between the society, labour collective and workers during formation and usage of the loan funds, under the terms of paying present and returning, during transmission of sources for the temporal usage and accumulation”.

Credit is discussed in the following way in the earlier education-methodological manuals of political economy: “credit is the system of money relations, which is created in the process of using and mobilization of temporarily free cash means of the state budget, unions, manufactures, organizations and population. Credit has an objective character. It is used for providing widened further production of the state and other needs. Credit differs from finances by the returning character, while financing of manufactures and organizations by the state is fulfilled without this condition”.

We meet with the following definition if “the course of economy”: “credit is an economical category, which represents relations, while the separate industrial organizations or persons transmit money means to each-other for temporal usage under the conditions of returning. Creation of credit is conditioned by a historical process of fulfilling the economical and money relations, the form of which is the money relation”.

Following scientists give slightly different definitions of credit:
“Credit – is a loan in the form of money or commodity, which is given to the borrower by a creditor under the conditions of returning and paying the percentage rate by the borrower”.
Credit is giving the temporally free money sources or commodity as a debt for the defined terms by the price of fixed percentage. Thus, a credit is the loan in the form of money or commodity. In the process of this loan’s movement, a definite relations are formed between a creditor (the loan is given by a juridical of physical person, who gives certain cash as a debt) and the debtor.
Combining every definition named above, we come to an idea, that credit is giving money capital of commodity as a debt, for certain terms and material provision under the price of firm percentage rate. It expresses definite economical relations between the participants of the process of capital formation. Necessity of the credit relations is conditioned, from one side, by gathering solid quantity of temporarily free money sources, and from the second side, existence of requests of them.

Though, at the same time we must distinguish two resembling concepts: loan and credit. Loan is characterized by:

o Here, the discussion may touch upon transmission of money and also things form one side (loaner) to another (borrower): a)under the owning of the borrower and, at the same time, b) under the conditions of returning same amount or same quantity and quality of the things;

o The loaning of money may bear no interest;

o Any person may take part in it.
With the difference with loan, credit, which is somehow a private occasion of the loan, represents:

o One side (loaner) gives to the second one (borrower) only money, and _ for temporal usage;

o It may not bear no interest (if the assignment doesn’t foresee something);

o In it creditor is not any person, but a credit organization (at the first place, banks).
So, a credit is the bank credit. To our mind, it is not correct to use “credit” and “loan” as the synonyms.
Banking crediting is the union of relations between bank (as a creditor) and its borrower. These relations touch upon:

a) Giving a certain amount of money to the borrower for definite purpose (though, we meet with the so-called free credits, aims and objects of crediting are not appointed in the assignment);

b) Its opportune returning;

c) Getting percentage rate from the borrower for using the sources under his/her disposal.
The essential foundation of the credit essence and its important element is existence of trust between the two sides (in Latin “credo”, from which comes the word “credit”, means “trust”).
From the position of circulation of money forms (in the abstraction, historical process of formation economical relations and social budget and banking systems expressed by them) comparing different definitions of finances and credit, the paradox conclusion appears: credit is the private occasion of finances. And truly, from the position of movement of the money forms, finances represent the process of formation and usage of the funds of cash means. Very often such movements are fulfilled without returning, but sometimes, it is possible to give loans from the budget for the investment projects of other needs. Also, when a manufacture or corporations use their cash funds and we mean the finances of industrial subject, such usage may be realized as inside the manufacture or corporation (there is no subject about returning or not returning of the usage), so gratis under conditions of returning. This latest is called commercial form because of transmitting the sources to others, but even in this occasion, it is the element of financial system of the manufacture and corporation.

From the point of cash means movement, main character of credit is the process of formation and usage of the funds of cash means under the conditions of returning and, as a rule, taking the value-percentage. If gating the credit value doesn’t take place (even in the exceptional occasions), according to the movement form, credit becomes a private occasion of finances, as from the net financial funds (consequently from the state budget) the loans which bear no interests may be used. If gating credit value takes place, by the appearance form, credit is discussed to be financial modification.

From the historical point of view, finances (especially in the sort of the state budget) and credit (beginning with usury, later commercial and banking) were developing differently for considering credit to be the part of finances. Though, from the genetic-historical point of view, previous loaners, before giving loan, needed gathering the permanent capital not returning, that is the net financial foundation. The banks analogously needed concentration of the important own capital for influxing the consumers’ means and for getting higher percentage rate under the conditions of returning. Herewith, exactly on the financial basis, in the sort of financial fund (which later partially becomes loan fund) part of the bank capital appears to be the reservation (insurance) part of the fund, which by nature is financial and not loan. So notwithstanding the essential distinctions between finances and credit form the genetic-historical point of view, credit appears to be formed from finances and represent their modification.

From the essential position of expressing economical relations of finances and credit, we meet with cardinal distinctions between these two categories. Which mostly expressed by the distinction of the movement forms notwithstanding they are returnable or not. Finances express relations in the aspects of distribution and redistribution of social product and part of the national wealth. Credit expresses distribution of the appropriate value only in the section of percentage given for loan, while according to the loan itself, a only a temporal distribution of money sources takes place.
Herewith, there is a lot of common between the finances and credit as from the essential point of view, so according to the form of movement. At the same time, there is a significant distinction between finances and credit as in the essence, so in the form too. According to this, there must be a kind of generally economical category, which will consider finances and credit as a total unity, and in the bounds of this category itself, the separation of the specific essence of the finances and credit would take place.

Funding of the cash means is common to the researched economical categories. It takes place in any separate system of finances and credit, which have been touched upon during the analyses of defining finances and credit. Word combination “funding of the cash sources (fund formation)” reflects and defines exactly essence and form of economical category of more general character, those of finances and credit categories. Though in the in economical texts and practice, it is very uncomfortable to use a termini, which consists of three words. Also, “unloading” with an information hardens greatly its influxing into the circulation even in the conditions of its strict substantiation and thoroughness.
In the discussing context we consider:

1) wide and narrow understanding of economical category of the finances;

2) discussing finances in narrow understanding under general traditional meaning;

3) discussing finances, as funding of the cash means, in wide understanding, which concerns finances – in narrow meaning and credit – in complete meaning.
Termini “funding” and its equivalent “fund formation” are used by us as the purposeful structuring of cash means, which is based on two poles – accumulation of money sources (gathering) and its usage for definite purpose in the way of financing and crediting.
We have established a new termini – “finance-investment sphere” (FIS). Analyses about interrelation of finances and credit made by us give us an opportunity of proving, that in the given termini, the word “financial” is used with the meaning of funding cash sources, its purposeful structuring. In this process we consider at the same time financial, credit and investments’ economical categories.

Let’s sum up middle results of discussing new concept – “finance-investment sphere” and discuss its investment consisting parts.

The concept “investments” was brought into the native economical science from the West. In the Soviet economical science they for a long time used in the place “investments” the termini “capital placement”, which expressed the usage of the industrial factors in the sphere of real industrial activities during realization of capital projects. From one glance, this termini in its concept is identical to the “investments”, consequently it is possible to use them as synonyms. Though the termini “investments” and “investing” have the advantage towards the termini “capital placement” from linguistic and philological points of view, because they are expressed with one word. This is not only economical and comfortable in the process of working with the termini “investment” itself, but also it gives an opportunity of termini formation. More concretely: “investment process”, “investment domain”, “finance-investment sphere” – all these termini are much more acceptable.
Changing native economical termini with foreign ones is purposeful, if it really matters (by keeping parallel usage of the native termini for the inheritance). Though we must not change native economical termini into foreign ones all together, when by ordinal traditional language easy to explain private and narrow concrete processes and elements get their own termini. The “movement” of these termini is approved in the narrow professional bounds, but their “spitting out” into the economical science may turn economical language into the tangled slang.

Let’s discuss termini – “investment” and “capital placement’s” usage in the economical literature.
Investments are placement of funds into the main and circulation capital for the purpose of getting profit. “Investments in material assets – are the placements of funds into the mobile and real estate (land, buildings, furniture and so on). Investments in financial assets are the placements of funds into the securities bank accounts and other financial instruments”.

We don’t meet with the termini “investments” in the earlier economical dictionary, but we meet the combined termini “investment policy” – the union of the industrial decisions, which guarantee main directions of the capital investments, the activities of their concentration in the determinant suburbs, on which the reaching of planned rates of development of the society production is depended, balancing and effectiveness, getting more and more production and profit of the national income for every lost Ruble”. For today, in the most actual definitions, the capital investments are bounded only by financial means, when not only financial, but also the investment of natural, material-technical and informational resources takes place. Labour resources take an actual place in the investment process. They themselves fulfill this or that investment process.

A positive side of the discussed definitions is that they connect investment policy and capital placements (investments):

- economical development according to the key directions to the concentration;

- providing high rates of economical growth;

- raising an economical effectiveness, which is expressed:

a) by growing the throw off of the production and national income for every lost Ruble;

b) by fulfilling the branch structure of the investments;

c) by improving their technological structure;

d) by optimization of their further production structure.

Compared with such definition of the investments (capital placement) the definition of investments in the dictionary attaching the “Economics” seems to be unimproved: “investments – the expenses of gathering production and industrial means and increasing material reserve”. In this definition current expenses (production expenses) are mixed with the investment (capital) expense. Also, not the investment expenses but (though the investments are followed by the appropriate expenses) exactly advancing. It differs from the expenses by that the means (means) are put by returning the advanced values, also, under the conditions of growth, to which the concept-advanced capital is corresponding. the advancing may be realized in the money, natural-material and informational forms.

Except the termini “investments”, there are two more termini related with the investment. They are shown below.

“Human capital investment” – any activity provided for rising the workers labour productivity (in the way of growing their qualification and developing their abilities); at the expenses of improving the workers’ education, health and raising the mobility of the working forces”. It is very useful to use the mentioned termini, though it needs one correction: the human capital investments do not concern only workers, but also the servants, representatives of every kind of labour.
“Investment commodity, capital goods – a capital.”

In the official manuals of political economy of the reformation time the capital investments are discussed as “expenses for creating new main funds and widening, reconstruction and renewing the active ones”. In this definition the investments (capital placements) during separation of the forms (types) of further production of the main funds are bounded only by main funds (without increases of the circulation funds and insurance reserves):

a) creating new ones;

b) widening;

c) reconstruction;

d) renewing.

Also, the concept of the industrial gathering appears, at the expenses of widening of basic, circulation funds and also insurance reserves takes place”.

You’ll meet below the definitions of investments from “the course of economy”: the investments are called “placements of fund into the basic capital (basic means of production), reserves, also other economical objects and processes, which request long-termed influxing of material and cash means. “According to the division of capital into physical and money forms, the investments too must be divided into material and cash investments”.

They apportion investment commodity, to which belong industrial and nonindustrial building objects, vehicles purposed for changing or widened technical park and the furniture, increasing reserves and others.

“They call the total investments of production an investment product, which is directed towards keeping and increasing the basic capital (basic means) and reserve. Total investments consist of two parts. One of them is called the depreciation; it represents important investment resources for compensation of renewal till the level of before industrial usage, wearing out and repairing of the basic means. Second consisting part of the total investments is represented by net investments – capital investments for the purpose of increasing basic means”. Depreciation is not a compensation resource of wearing the basic funds out, but it is the purposeful financial source of such resources.
Human capital investment is “a specific kind of investments, mostly in education and health protection”.

“Real investments are the investments in the economical branches and also, they are kinds of economical activities, which provide influxing the increases of real capital, that is increasing material values of the industrial means”. We can agree with such definition with one specification that material and nonmaterial values too belong to the real capital (wealth), consequently science-researching experimental-construction results, various information, education of he workers and others. Such service as organization of the excitable games, also the service of redistribution social wealth from one private person to another (except charity).

“Financial investments represent placement of funds into the shares, obligations, promissory notes, other securities and instruments. Such investments, of course, do not give increases of the real material capital, but they help getting profit, consequently at the expenses of changing the course of the securities in the time of speculation, or distinguishing the course in different places of sell and purchasing”. We share wholly such definition, hence it follows that financial investments (if it is not followed by real investments as a result) do not increase real material wealth and real nonmaterial wealth. According to this context, the expression below is very important: “we must distinguish financial investments, which represent placement of the funds in the ways of selling and purchasing the securities for the purpose of getting profit and financial investments, which become cash and real, moved to real physical capital.”

In the “economical course” quoted before long and short-termed investments are separated. Recognizing the existence of the bounds between them, the authors ascribe short-termed investments to “one month or more” investments. If we get such conditioned criteria, that we can call the investments which overcome the terms of some months, long-termed ones, which is very doubtful and we don’t agree with it. A long-termed character of the fund placement is a significant feature of the investments (short-term doesn’t combine with the concept of investments). Principally, it would be better to point out quick compensative, middle termed compensative and long-termed compensative investments:

- less then 6 months – quick compensative;

- from 6 months up to the year and a half – middle termed compensative;

- more then the year and a half – long termed compensative.

We stopped at the definition of the investments in the capital work “economical course” for the special purpose, as, in it the author tried to discuss the concept of investments systemically and quite completely, herewith the book is published just now.

We’ll return to the discussion the definition economical category of “investments” in different publications in the following chapter. The definitions given here are quite enough for having a notion of the level of lighting up the given category in the economical literature.
What conclusions may be made according the definition of the mentioned economical category in the published works, except the made notions and specifications?

There is quite deeply, concretely and thoroughly defined the concept of “investments”, different definitions in the economical literature; but mostly in every works about the investments discussed by us until now, there is not opened the essence of investments as an economical category. In every monograph , even if it has a title investment, as an economical category , there is given only the definition, concept of investments. But, as the Academician Vasil Chantladze explains, “a concept is a discussion, which proves something about the distinguishing feature of the researched object. A concept out of much essential characteristic features represents only one, and essential in it is only – definition”.

But the categories are much wider; it is “a key, the most fundamental concept of every science”. Economical categories theoretically represent real, objectively existed productive relations. A category is the defining of occasions of existed characters, connections, relations of the objective world. Generally, any educational process is fulfilled by the categories, which give opportunities for dividing the processes and occasions semantically, for expressing the definitions of a subject and realize their specific peculiarities and economical relations of a material world.
Our goal is exactly to substantiate investments – as an economical category and also, as a financial category in the narrow understanding.

Here we apply for another manual thesis made by the academician Vasil Chantladze: “every financial relation is an economical one and every financial category is and economical one, but not every economical relation and economical category is financial relation and financial category”.
In the process of defining the investments, it is important to take in mind the sides of resources, expenses and incomes, because investment, from one side, is the result of the manufacture’s activity, and, from another one, – a part of income, which, in this case, is not used for usage.
Another occasion: it is advisable to discuss investments in two aspects: as a category of reserve and flow, which will reflect exactly the connection between “placement of funds” and “investments”.

The Latest Trend In Doorstep Loans

These days, individuals frequently have no opportunity to visit loan specialist’s office to apply for quick cash bolster. Henceforth they begin asking financial assistance from relatives and companions that is exceptionally humiliating. Be that as it may, no more you need to shoulder the disgrace of looking for assistance from companions for banks and facilitates everywhere throughout the United Kingdom have presented Doorstep loans. As the very name suggests, finances under this cash backing is conveyed comfortable doorstep. Additionally, the sum affirmed is all that anyone could need for all your unimportant needs that look for your moment consideration.

Until the point that a couple of years back, applying for extra subsidizes was a testing assignment as you were requested to experience repetitive customs. You were solicited to submit piles from archives. Actually, it took a very long time to finish the whole procedure. The greater part of the circumstances, when you got an endorsement, the requirement for stores was finished.

Be that as it may, things changed with online machine mode that scarcely took a couple of minutes of yours. Simply peruse pages and you will run over different banks offering moment cash backing. Because of regularly expanding rivalry among moneylenders, it has turned into a great deal less demanding for you to pick the loan specialist that offers bargains according to your need.

Render your own subtle elements on an online application frame yet ensure it is finished and exact. Numerous loan specialists may get in touch with you inside no season of applying. You can choose from bargains that suits your current needs. In the event that they are happy with your data, assets may be authorized into your bank tally and you can sue it the way you need with no confinements. From paying pending power charges, Visa charges, stockpiling charges; obligation solidification, child’s instructive expenses to traveling, meeting wedding costs and therapeutic urgencies, you can do everything.

Regardless of where you live in the United Kingdom, you will get cash comfortable home as 12 Month Loans. Assets will contact you either as cash or as a check. Loan specialists will charge financing cost contingent upon your current settled pay and reimbursement capacity. Sometimes, reimbursement residency is additionally broadened. Here, loan specialists charge extra expense for late installment. Be that as it may, paying extra sum isn’t an issue as you can dispose of every one of your inconveniences without running all over.

There is all around the energy among the general population about getting the sum specifically at the entryway with no dreary undertaking by any stretch of the imagination. What’s more, the news is valid and spread like a fire over the United Kingdom. In this way, it is awesome time for those individuals, who used to go to the entryway of the bank keeping in mind the end goal to have exchange about the loans. However, now, the time has come to desert the conventional framework for the acquisition of the earnest bucks in light of the fact that the presentation of doorstep loans UK has been influenced the impact in the finance to advertise.

In this way, the borrowers don’t need to squander their valuable time in going all over on the grounds that the sum something like 100 to 500 is specifically dispatched at the home of the candidates inside round the clock. There is no prerequisite of playing out the hassle full customs. In this way, influence a call to the appropriate loan specialist with the sensible enthusiasm to rate and get the sum as ahead of schedule as could be expected under the circumstances.

Does Social Media Help In Getting An Auto Loan?

We live in a world dominated by technology and social media. Whether they are your shared posts, status or your connections, social media platforms play a key role in carving your virtual personality. A well-known fact is that technology is an inevitable yet an integral part of our lives. When it comes to financing your car, social media is building its way and becoming a relevant medium of profiling. For instance, John walked into a dealership to purchase and obtain financing for a car. The quickest and easiest way to search for a tentative background of John would be to get a grasp of his personality on the basis of his behavior on Facebook and Twitter account, respectively. Currently, a small percentage of lenders use social media for judging an individual’s creditworthiness. However, the developing presence of social media is gaining mind share of the lenders.

Can Social Media help in ascertaining the Creditworthiness of an individual?

1) Facebook can build your Credit Circle

The very essence of Facebook lies in networking. A creditworthy profile does not require millions of posts or many friends. However, if you have a genuine profile and do not pose any abnormal social behavior, your profile is likely to get approved for an auto loan. Additionally, the presence of certain contacts in your friend list with a clean history and a strong credit score further add to your creditworthiness. Lenders can look for mutual contacts that have been previous customers. The payment history of the mutual contact can then be used as a basis to judge your creditworthiness. In order to get the most out of your circle, seek a person with a good credit score and make him a cosigner and your auto loan process will become smooth.

2) With LinkedIn, lenders can check your Employment Stability

A stable employment speaks volumes about your personality and trustworthiness. LinkedIn can serve as the best source of obtaining information regarding your job history, duration, professional position and interests. The documentation of an auto loan requires you to display evidence of a source of income through pay stubs. However, there is less proof one can gather regarding the stability of employment. Social media can become a tool to ascertain not only if there is job-hopping, but also the financial strength of the individual. A person with a 500+ connections, long duration of employment history and a considerable profile activity can become a favorable applicant in the eyes of the lender.

Buying a Car: Making the Most of your Social Media Profile

Social media has made its way into the minds of auto buyers as well as lenders. As primary sources of guides, nothing comes above your credit score, current income status and payment history. However, virtual platforms such as Facebook and LinkedIn are starting to occupy mind share in terms of creditworthiness. Once the primary sources of information seem insufficient, lenders may turn to social media to get an idea of your personality. A few helpful ways to make sure your social media positively adds to your credit score is to be careful with your online posts, invite only genuine friends into your virtual circle and to always keep your professional profiles updated.

Top Five Intra Day Trading Tips To Become A Better Trader

In words of Warren Buffet The stock market is a device for transferring money from the impatient to the patient. Let’s read between lines. The investor or trader who is impatient (frequent buy/sell strategy) transfers money to the patient (holding strategy).

Find below herewith five tips which should be followed by a day trader:

Take advice of professional trader

Before one starts day trading it is better to take advice from experienced and expert day trader trainer. Every trainer will have different teaching method and style. See for one who has good teaching method. He should also suit your trading style. They may be ready to teach in their free time. He may charge the fee. As he is spending his free time with you. But it is worth. You can assume that paid fee as an investment, which you need to get knowledge. They are the best share tip providers when you trade.

In future when you grow big, many newbies’s will come to get knowledge from you. At that time you can charge them likewise.

Gather information from financial news

One has to gather news from across the globe. Segregate relevant news, which affects your business. Analyze and set priority which news will most affect your business. Stay updated on news like meetings, change in government policies and rules. Local, national and international news should be followed.

M&A, financial results, entry/exit of members of BOD, etc. These types of related news of the company one have shares in, make sense.

Though the news does not impact a common man but may have an impact on your investment in the concerned company. This news helps to take a smarter decision, especially while trading shares. Through nifty future tips also one can gather information.

Treat trading as any other business

Take day-trading as any other business. It is not a hobby, but a serious business. It is not for fun that one is in day trading. Like any business, it needs devotion and dedication. Trading is a part. One has to devote a lot of time preparing a plan. Study different charts before coming to any conclusion. Follow news on TV, read business magazines, study reports etc. It is a full day activity.

Keep eye on professionals

One should study professionals. What they are buying, when they are selling. For how much time do they hold the script? Since they have experienced one can learn a lot by keeping eyes and ears open and mouth shut. If one makes mistakes, then analysis the mistake. What went wrong and where? You can find them in many share market advisory companies.

Patience

It needs time, energy and devotion to master the skills. As the old saying goes Rome was not built in a day It was destroyed and then rebuild. This process was repeated many times over. Even if one makes loss he has to get up again for a fight.

Traders do not profit all the time. Many a time they incur losses. So one has to be prepared for losses and have patience during the time of loss. Commodity tips are also helpful to know the market trends.

Today’s successful traders were also novice once in a while. They got success by their hard and smart work. They had put in their efforts, made mistakes, but kept up their learning process.

Sip Calculator Magnetizing The Investors Towards Online Investing

Online investing option has reached to a higher level with the introduction of SIP calculator. Making the calculation of SIP amount easy, the tool is handy to use as well. Let us understand the concept of SIP calculator with a story. There were two friends Yash and Rohan. Both had passed out college and were placed in MNCs. With the commencement of their career, they took a resolution of initiating their investment also. Yash was very trendy, and new technologies magnetized him. On the contrary, Rohan was simple and was not much of a techie. As both of them decided to invest, Yash did all the research online and also prompted Rohan to take up the online investment method. But, as for Rohan, it was not his area of expertise. So, Rohan relied on the mutual fund agent, and Yash went for online investing. When it came to deciding the amount to invest as SIP monthly both were confused. Yash took the help of an SIP calculator, and Rohan trusted the agent. But, the outcome was that Yash got the exact amount required for investment and the agent failed to calculate the precise amount and thus took an approx figure. Thus, for the same scheme Yash paid the correct amount that was required and Rohan had to pay a little more due to the inaccuracy of calculations.

The story signifies the importance of SIP calculator in the investing process, because the amount of SIP decides the corpus (the main aim of investing). Especially in the online investing the role of an SIP calculator is of vital importance. The investor advances towards being free in order to make the optimal use of their money. SIP calculator acts as a catalyst in aggravating the process investment through proper channel.

Features of an SIP calculator:-

There are a lot of features which motivates an online investor to use SIP calculator. A few amongst them are stated below:

Easy to use:

SIP calculator is an easy tool to operate on. The user-friendly approach is the striking feature of the tool. Providing an environment of smooth functioning and quick calculations, an SIP calculator in India is making online investments attain new heights with each passing day. The main reason of the increasing inclination towards online investment is the handy tool (SIP calculator), which ease out the complex calculations manifolds.

Using CAGR:

SIP calculator uses the formula of CAGR (Compound Annual Growth Rate) to calculate the returns. CAGR is the most widely accepted concept for the growth calculation of investment over a period extending one year. The calculation of CAGR is very complex and not beyond the grasping power of non-financial people. It is a mind wrecking concept and takes time to understand. But you need not worry. The CAGR calculation is simplified with the help of SIP return calculator. Paving the way for quick and easy calculations, SIP return calculator has become a defining point of online investment.

Targeting accuracy:

The goal of an SIP calculator is to provide results that are 100% accurate. But, it works on the inputs that are fed to it. Any mistake in the input data leads to an erroneous result. Otherwise, the result shows the exact and accurate outcome without the mistake of a decimal place. A perfection of that level is surely a strong feature of SIP return calculator.