In today’s world, we have started to interchange the words “saving” and “investing,” but when we start to analyze these two things, we should be engaging ourselves in both of these things to secure our future financially. Although we use the terms saving and investing quite commonly, some people still do not understand the full concept of these two things. Before we go into this a little deeper, let me tell you about what these two ideas mean.
We all know of a family who has always been wealthy. A family of “old money” as they call it, money that has been passed down from generation to generation. Grandparents who have worked hard for the wealth that their grandchildren’s grandchildren use to fund their education and their businesses.
A friend was seeking my advice a few days ago about the business that he wants to put up once the pandemic is over. He said, “I am thinking of opening a welding shop in my town soon. What do you think about it?”
Since I have been to his hometown before, I know he won’t have much competition. So, I naturally told my friend to go for it. His reaction to that, however, caught me by surprise.
“Thank you so much for supporting my idea. Everyone in my family has been opposing it vocally, telling me to stick to my day job. But welding has always been my hobby, and it’s time to make money out of it.”
Although I get that my friend’s loved ones only care about him, I agree that it is best to start a business post-pandemic because:
Construction Will Undoubtedly Resume Post-Pandemic
The first reason why opening a local welding shop is an excellent idea is that all the delayed or postponed construction projects will resume after the pandemic. Nothing seems problematic about it at first glance; the contractors can start making money again. However, the resumption of work may entail that the previous scheduling that they have done may no longer apply, and they need to let go of some projects.
New contractors have a better shot at snagging vacated deals because of that. If you are one of the few businesses that provide welding services in town, you may have one project after another. Hence, you may be able to earn back your investment faster than expected.
You Can Offer Jobs To People
It is no secret that many people are jobless these days. Some have no choice but to wait for their neighbors to give them meals. Others jeopardize their health by going outside to look for food scraps or, worse, become homeless.
When your business starts operating, you can hire as many skilled individuals as possible to complete your projects. They can get paid daily or hourly—that’s okay. What matters is that they no longer need to stoop too low to get by and risk losing their self-respect.
It Will Be Ideal For The Economy
In truth, a lot of friends and family may worry about your decision to open a local welding shop post-pandemic, and you can do nothing but listen to them. They assume that no one will be looking for welders at this time or that the economy is in bad shape, so it is suicidal to think of being a new business owner. However, I believe that opening more business will help the economy to thrive again.
For instance, a shop may be small, but it can give a job to at least three individuals who have been laid off during the pandemic. That’s three more people with renewed buying power. When they buy anything in the market, other businesses will have an income. Before you know it, the economy will be rising slowly but surely.
Making the people around you realize that you are not out of your mind for wanting to open a local welding shop post-pandemic will never happen overnight. After all, you still need to prepare your business permits and workshop and look for clients, and the former can take more than two weeks. Even when everything is ready, they may try to discourage you from pushing through with the launch.
Despite all that, you should stand your ground. Opening a new business is ideal not only for you but also for other people and the economy. The world needs dauntless people like you now more than ever. Good luck!
Jack Ma, the owner of Alibaba, and perhaps one of the richest men in the whole world had something to say to Chinese businessmen during his talk last January, while this COVID-19 pandemic was looming and plaguing Wuhan. Whatever it is that hits a business hard and makes it shiver, entrepreneurs must always look at the positive side of it. Be optimistic always, and think of a way to retool your business. You must also reflect on the outcome of your business and restore your work, after deliberation, at a steady pace.
My son is in college, and for me, he’s become one of the best investors in his age and time. He’s been learning continually and is now unafraid to commit mistakes. He has learned while still in college that aside from building an education, it is also a great time to build his wealth. He didn’t need a large amount of money to start investing. He just learned how to do it.
This article centers on online investing, as this is the first and most successful option that my son chose. If you are a student who wants to learn how to invest while you’re still in college, do read on.
Initial Investment – Stocks
You will learn soon enough that you will most likely invest in stocks when you start your investing journey. This is because stocks are relatable and are also commonly discussed in public and online. You can talk about stocks while having coffee with friends or older family members, and you’ll get a lot of insight into what the best options might be. But if you ask me, it would be great if you have a short but clear education on how to invest. The trick is to be aware of the patterns. It is fine to choose things that make you feel good as long as you recognize that this is part of your motivation,” says Michal Ann Strahilevitz Ph.D.
Creating An Online Portfolio
Financial specialists agree that investing at a young age has a relative advantage over the others because as they start young, they will have a lot of time taking care of and handling their money. And if we talk about compound interest, then indeed it is true that time certainly is money.
Starting small is the wisest initial move for the college student who is looking to increase his funds. It is perfectly okay, as the important thing is the way you invest that will determine the future of your investment. “When it comes to investment decisions made when we are anxious or excited, we can’t trust our instincts. When we let our animal brain make our investment decisions, it wreaks havoc on our financial lives,” Brad Klontz Psy.D., CFP explains.
Here are simple tips to start your investing career right.
- If you plan to invest a small amount, say, $50, find a broker who is willing to transact with small accounts. Later you can always increase your capital by adding funds regularly.
- If you are a risk-taker, you’ll probably be more willing to earn big instead of thinking about the possible losses you might incur. But before deciding to invest a little more to earn more, do make appropriate calculations. College life means money for educational expenses too, and you can’t afford to lose more of what you can spare. According to Denise Cummins Ph.D., “To be an effective financial decision-maker, you need to take calculated risks. And that means asking yourself each step of the way how you can minimize losses, and cognitive reappraising your negative reactions when losses happen.”
- Consider savings options that assure profits at minimal risks. Federal savings, savings bonds, and certificate of deposits are some ways to achieve this – in the form of savings accounts. Although you get the lowest profits, these are surefire ways to protect yourself from losses.
- If you can afford to invest your money at a longer period, try investing in exchange-traded funds or mutual funds. These funds consist of different securities like stocks, commodities, and bonds. Insurance or mutual fund companies are responsible for collecting and managing money from investors. More and more college investors are going for these options.
- Finally, before risking your extra college funds or your hard-earned money, remember to always look into the companies that you are thinking of putting your money into. If you’re interested in mutual funds, do a background check on the corporation that will handle your money. Some of these companies cater to banking or pharmaceuticals specifically, while others accept different portfolios.
As a student starting and making your way into the world of investing, you will eventually learn how the market works, and soon you will be investing in bonds and stocks. However, professionals at BetterHelp often explain, the worst case of mental breakdown comes from financial instability. Thus, you need to be careful about investing. Because one wrong move, the whole process can cause you severe emotional and mental damage. And who knows, at 30-something you’ll be living your dream! So start young and be financially successful before you even hit midlife.
Perhaps you don’t know this, but there is no clear definition that you will see on community banking if you check Merriam or Webster’s Dictionary. And while many people are aware of what community banking is and how it differs from the other banks, still, others do not know what it means. Let me share with you the definition of community banking from a community bank employee’s point of view.
In the year 2013, the community bank I’m working on was named the Business of the Year Award for 2012. I felt so honored to be part of the bank receiving recognition, especially since several other banks were also nominated just like us. I was contemplating on what qualities led to the award, and finally, I arrived at some principles that I believe a community bank should symbolize.
- The bank’s reputation is dependent on its profile. A community bank is measured by praises and recommendations from clients and other people from the business community.
- The bank and its employees must know all its clients and the community must know the bank well. Community banks are proud that because they are relatively smaller compared to others, they know their clients’ names and addresses.
- Decisions and agreements regarding loans are geared toward the community. They must be consistent, trustworthy, and fair to everyone concerned. It is a known fact that community banks are not obliged to always approve of loan requests. If the request is denied, the bankers must stand firm with their decision. The loan officer is the responsible person who can approve or deny a loan request, and there is no one else who can do that task but him.
- Employers and employees of the community bank should prioritize their clients first. This means that they must strive to make the clients feel that their relationship does not only exist when the bank wants something from them. Before they make decisions, they must make sure that they have exhausted all efforts for the good of the clients. It is a gratifying feeling for the bank and the client to succeed in their endeavors by helping each other even through the tough times.
- Community banks are not expected to have marketing plans that are equal to or higher than the larger financial institutions. The client base of a community bank does not depend so much on the market campaign but the honesty, strength, and assertiveness of its employees. When a client is introduced and is walked through the guidelines of the community bank, it is the employees’ goal that the client decides to stay for good.
- Employees of the community bank are obliged to take part in community activities and events. The bank cannot donate large sums of money to show its support; the employees almost always work together with local entrepreneurs as well as the local government to find ways in making their community a much better and safer place to live in.
- Community banks know and understand their roles in society. As a long-time employee, people would ask me how banks like ours could compete with the larger national banks. I would always tell them that it’s because we know who we are and what we can offer, and despite having a limited niche compared to the national banks, we are still able to accomplish the goals that are set for us to achieve community-wise. Our clients are living testimonies of this truth.
Overall, just recalling the award that our bank has received, I feel very proud to work in a community bank. It hasn’t always been easy. Of course – because if it was, then I guess all of us could work here!
Many community banks have remained unfazed and unaffected by the mortgage collapse and still manage to lend money to their clients. However, they are not spared from the routine scrutiny and are striving to improve their portfolios. They try to steer clear of loans from the same businesses. For example, a bank with a lot of outstanding loans to coffee shops will not approve a loan request from the same business despite how strong the application, as it is trying to decrease their exposure to specific areas of town or certain shopping malls.
Getting A Loan In Community Banks
If one bank denies your loan request, you can ask help from the loan officers about what other local establishments are making loans that include your niche or industry. You can also try looking into the bank locator for independent banks in your town. The bank locator is found on the Independent Banks of America website. Executives and senior heads of community banks agree that they typically approve loans to borrowers who are mostly residents. It is because they want to establish an intimate relationship with their clients and be able to do a background check conveniently and easily before giving them a credit line.
Community banks are happy to divulge that they don’t have very stringent written contracts and standards as compared to regional or national banks. They are also willing to help their clients understand as simply as possible why, say, you’ve had a loss for the past year. They would do the necessary steps to find the reason for this loss and then move forward and try to repair that loss.
Here’s a final piece of advice from community bankers: when it’s your first time to visit your local bank, please don’t go there to ask for a loan right away! Allow your bankers to know you and build a relationship with you. Talk to them about you and your business and maybe get a feel of what the bank sees you. Find out the common businesses that the bank usually favors. You can get these details from the loan officer himself. It’s much better knowing straight from him if, say, your loan request might be too large for the bank, or if your business is one of the few new niches you’ll be introducing to them.
Getting A Loan From Credit Unions
Perhaps you gave up on getting a credit line from your bank. Think about getting it from a credit union. When the banks hit their rock bottom, credit unions were popping here and there, silently accumulating millions of dollars from clients’ savings and interests from their car and home loans. A lot of have transitioned into lending – but that’s if you can find their location.
“The world’s best-kept secret.” That is what Mike Hales, Director of the National Association of Credit Union Service Organizations, describes credit unions. That isn’t a compliment, though. He says that there are almost 8,000 listed credit unions and 2,000 of those are lending business credit lines to their clients. Plus, they are encouraging them to become official members. The Boeing Employees Credit Union is willing to help residents from Washington. You may also want to check out the National Credit Union Association website to find other credit unions as well.
Credit union heads agree that their typical small-business lending capabilities are undoubtedly increasing throughout the United States. And in the past few years, there have been approximately 30 cooperatives that have been formed to manage the business loans of several hundred credit unions.
If you are unable to get approved at a community bank or a credit union, there are still hundreds of companies that provide short-term loans. However, be cautious, as many of the agents offering financial loans are former mortgage brokers, and we don’t have to elaborate on that.
Also, business to business lending – which is what it’s going to be called once you decide to go into business with these financing companies – is unregulated and usury laws and guidelines don’t apply to these loans. This means that the loans can have very high-interest rates. Some have reportedly reached as high as 80%.
So before making a final decision, do ask questions. Besides, it’s free to inquire about anything and everything related to your planned loan. Ask around, too from friends and competitors. It’ll do more good than harm!
To date, there were only less than 6000 community banks open in 2018, the lowest so far in current history. This is said to be due to the value and interest in community banks, which had led investors to sell to larger banks when heavy consolidation began in the banking sector. On the contrary, this massive consolidation, in turn, created opportunities for the investors to build new community banks.
In certain states, such as Florida, where there are over 900 new residents that come in daily, there is a shortage of community banks, particularly in the major areas. This has resulted in the opening of new banks like the Gulfside Bank in Sarasota and Orlando, the Winter Park National Bank. The old banks were also assessed and recapitalized under the One Florida Bank and the Beach Community Bank. The state of Florida is only an example of the many states that have welcomed the increase of community banks.
Importance Of Community Banks
Local banks are significant in that our country prospers on medium and small-scale businesses that employ most Americans. The Small Business Administration reports that small companies make up 99% of American firms, more than 60% composed of new private-sector jobs, and almost 50% make up the private sector employment. The lenders of these groups are community banks.
JP Morgan is a renowned brand that has been trusted by many investors and clients for years. Its CEO, Jamie Dimon, wrote in The Wall Street Journal in 2016 that in this business, local and community banks do play a vital role. They are located in the communities that they serve, and ultimately, high-ranking officers reside in the same community as their clients. This gives them a great opportunity to establish strong and long-term relationships and share extensive information regarding the local culture and economy. The banking services they can provide are exceptional.
The Role Of Community Banks
The country should place equal value on community banks as it does on national banks. Each of these types of banks has a responsibility of contributing to the country’s economy and placing the country’s businesses in a steady position both locally and worldwide. And with nearly 50% of business loans transacted through community banks, these locally built banks must be kept strong and significant.
A study done by a university in the United States concluded that major consolidation was seen in many banking sectors, including the community banks. This was seen as a concern because community banks were often the relationship lenders that frequently had local ownership and control and were an important part of the decision-making process. When there is a lot of the lending and depositing transaction locally, it encourages economic progress. The resources of the whole community are ultimately put to good use. Community banks have always been intricately linked to free enterprise. In 2011, they had more than 10% of the industry’s assets and nearly 50% of the industry’s loans to businesses and farms.
Just two years ago, the regulatory sector greatly improved, as seen by the FDIC, decreasing the strict requirements and rules of opening new community banks. This move would lead to more banks and more local investors. And in the markets today, there is a return of 200% of the initial investment. Now, wouldn’t you call that productive?
Are your finances making you stressed and worried all the time? Well, you are not alone. A lot of people are in worse cases than yours. Some of them are even trying so hard to get rid of the impossibility of not having any. Others are also trying to make it through the day with just a small amount of cash in their hands. Either way, all people suffer the same struggle with financial matters. So with all the stress and anxiety that can build up over financial control, you might want to listen to what your BetterHelp therapist advises you to do.
According to the American Psychological Association, money is always the top stress producer among many other things in life. Yes, it is even more emotionally and mentally complicated than having a bad relationship. People will never get through with their life without thinking about money. However, there are specific ways that can help reduce money-related anxiety and stress.
Start Organizing Financially – “Of the patients that I would attribute their medical problems to stress, the overwhelming majority have money at the root,” says Dr. Arta Bakshandeh, senior medical officer with Alignment Healthcare in Los Angeles. “Most commonly, these patients complain of headaches, elevated blood pressure, ulcers, depression and moderate to severe anxiety.”
Organizing your money better is not just buying the stuff you need in bulk. You need to look at what you own and what you owe. You need to understand where you financially stand at the moment. Because when you assume that your money is capable of proving you a fixed help, you will end up using all of it. And in no time, you will get broke.
Track Your Income And Expenses – The misconception about handling financial is the idea that you can buy everything when you have enough cash. Sadly, that is not how financial strength goes. Because when you are spending more than what you are making, you only allow stress to crawl up. It will make you feel lost and unmotivated. If you don’t try and track your income and expenses, there is a tendency that you will gain more debt than savings.
Dr Annie Zhang, M.D. Ph.D., also highlights the importance of family on this matter. “It is good to know that the family and basic human relationships matter and play a significant role in the increasingly complex financial system. On the other hand, however, our reliance on family is problematic because of a real need for considered and educated responses to inform our decision making.”
Live With Your Means – Not because you are earning, it doesn’t mean you need to have everything. But not because you can’t have everything, doesn’t mean you don’t deserve to have something. The only way you can handle personal financial stress is by living with your means. Don’t buy things you don’t need, and don’t disregard the idea of practicality.
“The two things we need for financial health and security are: to save money for the future, and not to spend more than we make,” says Brad Klontz, PsyD, founder of the Financial Psychology Institute and an economics and finance professor at Creighton University in Omaha, Nebraska.
Have A Definite Goal – It is easier to reach a destination when you already planned it in your head. When you know what it is that you want, it will become better for financial adjustments and considerations. But take note, you need to be careful with the danger of mismanagement. Remember that bigger goals take huge responsibilities. Learn to maintain and work on things step by step.
Hold Onto Financial Literacy – Learn to value financial literacy and think of it as something worthy than any other knowledge. It will help you realize things you often don’t consider, such as savings, business, and investments. Learn and create a plan on how to make money work for you. Do not just think of it as something that helps you get through the day. But instead, use it as something that will give you a convenient and brighter future.
Use Technology – Innovation is growing rapidly, and there is no stopping it. Instead of trying to ignore it, use it to your financial advancement. Create something out of it and make the world see how valuable it is for growth and development. Expand your horizon and live with innovation. There are plenty of techniques to use it, such as online marketing, stocks, and currency exchanging, bonds and trading, and so on.
Try New Things – Understandably, your budget means a lot. But it should not limit you from trying new things. You need to understand that the only way to perfection is through practice. Allow yourself to make mistakes, try new budgeting methods, try to adjust on your needs, and create something out of the ordinary. You need to imagine outside the box if you want to reach financial stability.
Seek Out For Help – One thing you need to understand when trying to solve a problem is that not all the answer lies in your hands. Same goes out to financial inconsistencies. You can’t control and handle everything alone because there are things you don’t know. With that, it is favorable to seek out for help. Just remember to be critical in choosing the ones you want to trust with your financial statements. Only consult someone who knows the process better.
There are no definite tricks in getting a financially stable life, only self-awareness, and learning. So instead of complaining all about the anxiety and stress your money-related issue is giving you, start working your ways on it.