Nelson Peltz is not the man one would think of when he drives into an Arby’s. His name does not explode in your mind as the All-American Roastburger does in your mouth. It should though --- Nelson Peltz is the man behind Trian Partners and Triarc Cos., two related firms that focus on food and beverage operations. They own restaurant franchises such as Arby's, Wendy’s, TJ Cinnamon, and Pasta Connection.
Not what you would expect of a billionaire, the 64-year old’s silver hair, deep voice, handsome features and compelling nature are not all that set him apart from all the other big shots on Wall Street. The success story that is Nelson Peltz goes beyond mere genius. Nelson Peltz is defined not only by his hardworking and competitive nature, but also his devotion to the people nearest and dearest to him. Before seeing his empire launch in the 1980s, he enrolled at the MBA program at the Wharton School of the University of Pennsylvania. Here, his path to success hit a speed bump when he had to drop out to drive trucks for his father’s food-distribution business. Now with sons of his own, Nelson Peltz has made sure that his boys never have to go through the same.
Insightful and a natural dealmaker, Nelson Peltz is able to focus on the bigger scheme of things. After dropping out of college in 1962, he was able to turn his family’s little frozen-food distribution business into the largest distributor in the Northeast. In 1985, Nelson Peltz assembled Triangle Industries, the largest manufacturer of tin cans, containers, and packages of tin in the United States. Building companies from the ground up since he was out of high school, it is no wonder that Nelson Peltz has lived his life knowing business inside and out.
Looking back on his truck-driving years, Nelson Peltz makes no apologies. He has been known to say, “I believe in pay for performance.” In the years since then, it is evident in the pay that the performance is nothing short of extraordinary.
Monday, August 31, 2009
Friday, August 28, 2009
Henry Kravis: LBO Pioneer
(This is the first in my series of profiles of big time private equity investors. I've done a piece on Ken Mehlman already, so I decided to continue with other major figures of KKR. Enjoy!)
Henry Kravis has mastered the art of leverage buyouts and takeovers. With George Roberts and Jerome Kohlberg, Henry Kravis founded KKR, a firm capitalizing on leverage buyouts and reselling companies for profit. Since its foundation, the firm has had more than 30 company buyouts and has invested over $90 billion in these ventures reaping profits for the firm and their investors. In 1987, Jerome Kohlberg retired from the firm and Kravis was left with his other partner, George Roberts. In 1988, the two of them led the takeover of RJR Nabisco for $25 billion dollars, the biggest acquisition of its kind during that time.
Henry Kravis graduated as an economics major at Claremont McKenna College and spent his summers working in Wall Street and companies like Goldman Sachs, where he learned the movements of the financial industry. After he graduated, Henry Kravis worked at Madison Fund where he fine-tuned his skills and knowledge of the financial industry. It was in this job that he learned decision making with regards to buying stocks and companies. He took his Masters degree at Columbia and went back to working for Madison Fund. He then transferred to Bear Sterns where he met Kohlberg and with Roberts, founded their own company in 1976. And the rest, as they say, is history.
Henry Kravis has been a staple in the Forbes list of richest Americans because he has continued to be passionate about his craft. Likewise, he remains one of the pioneers of leveraged buyouts. Alongside JP Morgan, he is considered one of those who significantly changed the financial industry landscape.
Taking over a company and turning it from struggling to profitable is a difficult task. A business venture is not like your normal walk in the park. It takes a lot of work; long and very hard work. It takes risks; risk that the company you obtain have a 50-50 chance of being a bomb. It takes research and carefully calculated moves. It is pressure exemplified. Henry Kravis, without a doubt, is the greatest master of this extremely difficult art.
Check out this great interview of Henry Kravis and George Roberts on YouTube.
Henry Kravis has mastered the art of leverage buyouts and takeovers. With George Roberts and Jerome Kohlberg, Henry Kravis founded KKR, a firm capitalizing on leverage buyouts and reselling companies for profit. Since its foundation, the firm has had more than 30 company buyouts and has invested over $90 billion in these ventures reaping profits for the firm and their investors. In 1987, Jerome Kohlberg retired from the firm and Kravis was left with his other partner, George Roberts. In 1988, the two of them led the takeover of RJR Nabisco for $25 billion dollars, the biggest acquisition of its kind during that time.
Henry Kravis graduated as an economics major at Claremont McKenna College and spent his summers working in Wall Street and companies like Goldman Sachs, where he learned the movements of the financial industry. After he graduated, Henry Kravis worked at Madison Fund where he fine-tuned his skills and knowledge of the financial industry. It was in this job that he learned decision making with regards to buying stocks and companies. He took his Masters degree at Columbia and went back to working for Madison Fund. He then transferred to Bear Sterns where he met Kohlberg and with Roberts, founded their own company in 1976. And the rest, as they say, is history.
Henry Kravis has been a staple in the Forbes list of richest Americans because he has continued to be passionate about his craft. Likewise, he remains one of the pioneers of leveraged buyouts. Alongside JP Morgan, he is considered one of those who significantly changed the financial industry landscape.
Taking over a company and turning it from struggling to profitable is a difficult task. A business venture is not like your normal walk in the park. It takes a lot of work; long and very hard work. It takes risks; risk that the company you obtain have a 50-50 chance of being a bomb. It takes research and carefully calculated moves. It is pressure exemplified. Henry Kravis, without a doubt, is the greatest master of this extremely difficult art.
Check out this great interview of Henry Kravis and George Roberts on YouTube.
Three Essential Investing Tips
True, most people understand the concept of investing: exchange your money today for a company you hope will earn you more money over the coming years. While this may seem simple, what we have seen in reality suggests that doing it “right” and succeeding in it is far from easy. Those who have proven their mettle have done it differently from in their own ways --- take Warren Buffett, James Simons, and George Soros, who have made it big with varying approaches to investing. As the market evolves and becomes more complex, every investor, whether freshman or veteran, needs three essential tips to secure a return on their investments.
1. Know what kind of an investor you are and make sure your investments are consistent with that. Is your personality fit for a “speculator,” looking to maximize on short-term movements? On the other hand, are you the “investor”; more interested in buying stocks off a great business to hold on the long-term? Your chances of succeeding depend on how and where you put your money on the market.
2. Think independently and avoid becoming a market lemming. The thing that draws the crowds is not always the wisest thing to follow. This particular bandwagon syndrome that focuses on short-term results makes investors “act like a herd of crazy lemmings.” It pays to be independent in making decisions. Take Warren Buffett’s example. During the tech boom, almost everybody placed bets on short-term tech companies while Buffett stuck to his long-term investment methods on “boring” companies like Gillette. Rookie investors criticized Buffett for his “relic” style. Eventually, the tech bubble burst and Buffett proved them all wrong.
3. Do not rely too much on stock tips. Sure, stock tips can help point you in the right direction, but it is wiser to research on a stock first and buy it for a good reason.
Investment takes practice. Eventually, you will get better at it, especially when you unfailingly consider these 3 essential tips in your decision-making.
1. Know what kind of an investor you are and make sure your investments are consistent with that. Is your personality fit for a “speculator,” looking to maximize on short-term movements? On the other hand, are you the “investor”; more interested in buying stocks off a great business to hold on the long-term? Your chances of succeeding depend on how and where you put your money on the market.
2. Think independently and avoid becoming a market lemming. The thing that draws the crowds is not always the wisest thing to follow. This particular bandwagon syndrome that focuses on short-term results makes investors “act like a herd of crazy lemmings.” It pays to be independent in making decisions. Take Warren Buffett’s example. During the tech boom, almost everybody placed bets on short-term tech companies while Buffett stuck to his long-term investment methods on “boring” companies like Gillette. Rookie investors criticized Buffett for his “relic” style. Eventually, the tech bubble burst and Buffett proved them all wrong.
3. Do not rely too much on stock tips. Sure, stock tips can help point you in the right direction, but it is wiser to research on a stock first and buy it for a good reason.
Investment takes practice. Eventually, you will get better at it, especially when you unfailingly consider these 3 essential tips in your decision-making.
Wednesday, August 26, 2009
Warren Buffett: The World’s Richest Success Story
The success story behind Berkshire Hathaway’s Warren Buffett---who is also the company’s largest shareholder and CEO---spans back to his years packing groceries at his grandfather’s grocery store. Buffet showed maturity beyond his years when he decided that he would rather make money than play games with the other children his age.
Born Warren Edward Buffett on August 30, 1930 to a stockbroker-turned-Congressman, it is no wonder that Buffett showed an amazing flair for business and numbers at such an early age. At 11 years old, he jumped into the world of high finance by buying three shares of Cities Service that he later sold. He immediate regretted the decision as the numbers for Cities Service soared. Buffett learned his lessons earlier than most, paving the way for the plethora of critical real-world decisions he was going to make.
Warren Buffett was educated at Woodrow Wilson High School, Washington, D.C. after his father was elected into Congress. He received his college eduation at The Wharton School, University of Pennsylvania then later at the University of Nebraska where he received a B.S. in Economics. Choosing to further his education, Buffett enrolled at the Columbia Business School where he graduated in 1951 with an M.S. in Economics.
Warren Buffett experienced a variety of jobs before he landed himself at Berkshire Hathaway. Fresh out of school, he worked as an investment salesman at Buffett-Falk & Co., Omaha until 1954. From 1954 to 1956, Buffett served at Graham-Newman Corp., New York as a Securities Analyst. From 1956-1969, he sat as a General Partner at the Buffett Partnership, Ltd. Since 1970, Buffet has served at Berkshire Hathaway Inc., Omaha as its Chairman and CEO.
Berkshire Hathaway Inc. is a conglomerate holding company that oversees and manages a number of subsidiary companies. Since coming onboard, Buffet has been instrumental in driving the company to the colossal status it stands at today.
In 2008, Warren Buffet was ranked number one on Forbes list of World’s Billionaires making this the richest success story in the world.
Born Warren Edward Buffett on August 30, 1930 to a stockbroker-turned-Congressman, it is no wonder that Buffett showed an amazing flair for business and numbers at such an early age. At 11 years old, he jumped into the world of high finance by buying three shares of Cities Service that he later sold. He immediate regretted the decision as the numbers for Cities Service soared. Buffett learned his lessons earlier than most, paving the way for the plethora of critical real-world decisions he was going to make.
Warren Buffett was educated at Woodrow Wilson High School, Washington, D.C. after his father was elected into Congress. He received his college eduation at The Wharton School, University of Pennsylvania then later at the University of Nebraska where he received a B.S. in Economics. Choosing to further his education, Buffett enrolled at the Columbia Business School where he graduated in 1951 with an M.S. in Economics.
Warren Buffett experienced a variety of jobs before he landed himself at Berkshire Hathaway. Fresh out of school, he worked as an investment salesman at Buffett-Falk & Co., Omaha until 1954. From 1954 to 1956, Buffett served at Graham-Newman Corp., New York as a Securities Analyst. From 1956-1969, he sat as a General Partner at the Buffett Partnership, Ltd. Since 1970, Buffet has served at Berkshire Hathaway Inc., Omaha as its Chairman and CEO.
Berkshire Hathaway Inc. is a conglomerate holding company that oversees and manages a number of subsidiary companies. Since coming onboard, Buffet has been instrumental in driving the company to the colossal status it stands at today.
In 2008, Warren Buffet was ranked number one on Forbes list of World’s Billionaires making this the richest success story in the world.
Tuesday, August 25, 2009
Six Mutual Fund Investing Tips You Need Now
Mutual funds are great investment vehicles. They combine money from hundreds and thousands of investors to create a financial portfolio of stocks, bonds, and real estate, among others. Moreover, every investor gets a slice off the total profits. In order to succeed in mutual fund investing, here are six important tips:
1. Keep ongoing expenses as low as possible. Closely monitor sales charges and other fees of your mutual funds. This is crucial for newbie investors who want to keep their own money working for them as much as possible.
2. Be wary of short-term performance. Do not be overwhelmed by spectacular one-year performance figures. In evaluating funds fit for long-term investment, look at past performance in terms of return, within three, five, or ten years. Moreover, you also need to assess how consistent the return is comparatively to similar funds, as well as to the overall market.
3. Evaluate your manager’s track record. Check the track record of your fund’s manager. Pick a manager with experience of five years or more who has worked on a particular fund, follows a consistent strategy, and has delivered impressive returns for long periods.
4. Develop automatic plans. Set up a mutual fund using an automatic plan with your fund company or employer. If you can, use your 401(k) plan to have automatic deductions on your paycheck before taxes.
5. Monitor your fund's performance. Monitor your mutual fund’s performance monthly, or at the least, quarterly. This will enable you to make decisions such as whether to increase your investment or to sell. Compare your fund’s performance with other funds as well as with the overall market.
6. Diversify. One of the most attractive features of mutual funds is that they are usually diversified. Based on economic and historical data, it is wisest to diversify by using asset allocation (as stocks, bonds, and cash equivalents).
1. Keep ongoing expenses as low as possible. Closely monitor sales charges and other fees of your mutual funds. This is crucial for newbie investors who want to keep their own money working for them as much as possible.
2. Be wary of short-term performance. Do not be overwhelmed by spectacular one-year performance figures. In evaluating funds fit for long-term investment, look at past performance in terms of return, within three, five, or ten years. Moreover, you also need to assess how consistent the return is comparatively to similar funds, as well as to the overall market.
3. Evaluate your manager’s track record. Check the track record of your fund’s manager. Pick a manager with experience of five years or more who has worked on a particular fund, follows a consistent strategy, and has delivered impressive returns for long periods.
4. Develop automatic plans. Set up a mutual fund using an automatic plan with your fund company or employer. If you can, use your 401(k) plan to have automatic deductions on your paycheck before taxes.
5. Monitor your fund's performance. Monitor your mutual fund’s performance monthly, or at the least, quarterly. This will enable you to make decisions such as whether to increase your investment or to sell. Compare your fund’s performance with other funds as well as with the overall market.
6. Diversify. One of the most attractive features of mutual funds is that they are usually diversified. Based on economic and historical data, it is wisest to diversify by using asset allocation (as stocks, bonds, and cash equivalents).
Monday, August 24, 2009
Going Green and Saving Money in 10 Simple Steps
Switching to simple and doable initiatives can save you money and reduce carbon emissions at the same time – approximately $2500 and 19,419 pounds of CO2 for a year. Patti Prairie, CEO of Brighter Planet tells us how.
1. Be frugal: Be wary of what you buy. If you must buy items, purchase them at little or no cost. Trade in what you don’t need or donate them to thrift shops or charities. Savings: $564, 2902 lbs.
2. Change driving habits: A few driving tips - drive smoothly; keep tires inflated; avoid idling; drive below 55 mph - to help your pocket and the environment. Savings: $385, 2822 lbs.
3. Save up on travel: If you must fly, choose direct non-stop flights. Fly economy class and book daytime flights to reduce your share of emissions. Use the Internet, phone, or video conference in lieu of air travel once a year. Savings: $347, 2492 lbs
4. Adjust laundry: Washing and drying eight laundry loads weekly is costly. Wash half of that load with cold water and hang them to dry, and you will cut costs. Savings: $287, 3211 lbs.
5. Reduce meat intake: Limiting your intake of meat to three times a week can save you money and reduce methane gas. Savings: $285, 1107 lbs.
6. Commute or carpool: Commute, take public transportation, or carpool two days a week to save up. Savings: $276, 1177 lbs.
7. Save water: Shift to shorter showers, or inexpensive low-flow shower heads that consume only half of the water compared to profligate counterparts. Savings: $194, 2123 lbs.
8. Use CFLs: Outfit your home with compact fluorescent and other energy-saving bulbs. Savings: $188, 1429 lbs.
9. Intelligent heating and cooling: Have a programmable thermostat installed to avoid heating/cooling when your house is empty or when you are asleep. Savings: $131, 1413 lbs.
10. Power down: Use power strips, power management settings for computers, and unplug chargers to prolong the life of your appliances and reduce emissions. Savings: $64, 743 lbs.
1. Be frugal: Be wary of what you buy. If you must buy items, purchase them at little or no cost. Trade in what you don’t need or donate them to thrift shops or charities. Savings: $564, 2902 lbs.
2. Change driving habits: A few driving tips - drive smoothly; keep tires inflated; avoid idling; drive below 55 mph - to help your pocket and the environment. Savings: $385, 2822 lbs.
3. Save up on travel: If you must fly, choose direct non-stop flights. Fly economy class and book daytime flights to reduce your share of emissions. Use the Internet, phone, or video conference in lieu of air travel once a year. Savings: $347, 2492 lbs
4. Adjust laundry: Washing and drying eight laundry loads weekly is costly. Wash half of that load with cold water and hang them to dry, and you will cut costs. Savings: $287, 3211 lbs.
5. Reduce meat intake: Limiting your intake of meat to three times a week can save you money and reduce methane gas. Savings: $285, 1107 lbs.
6. Commute or carpool: Commute, take public transportation, or carpool two days a week to save up. Savings: $276, 1177 lbs.
7. Save water: Shift to shorter showers, or inexpensive low-flow shower heads that consume only half of the water compared to profligate counterparts. Savings: $194, 2123 lbs.
8. Use CFLs: Outfit your home with compact fluorescent and other energy-saving bulbs. Savings: $188, 1429 lbs.
9. Intelligent heating and cooling: Have a programmable thermostat installed to avoid heating/cooling when your house is empty or when you are asleep. Savings: $131, 1413 lbs.
10. Power down: Use power strips, power management settings for computers, and unplug chargers to prolong the life of your appliances and reduce emissions. Savings: $64, 743 lbs.
Thursday, August 20, 2009
Top Ten Investment Strategies from Warren Buffett
Readers get a glimpse of how Berkshire Hathaway’s Warren Buffett generates wealth in John Train’s book “Midas Touch.” The following are the top ten investment principles used by Buffett himself.
1. Buy a share as though you were buying the whole company. Determine how an enterprise is worth but do not rely on formal financial projections or mathematical formulae. Invest in “a business you understand, favorable long-term economics, able and trustworthy management, and a sensible price tag.”
2. Volatility does not create risk. A serious investor sees opportunity in volatility.
3. Value should include “growth at a reasonable price” or GARP. The ideal companies have a business “moat” that has steady and reasonably predictable growth. In the long run, these businesses are more tax-efficient and more convenient than one bought at a bargain.
4. Invest on what you know best. Refrain from seeking the “newest” thing because it is too risky. Buffett's biggest investments are firms founded in the 1800s, such as American Express, Wells Fargo, Procter & Gamble, and Coca-Cola. Said Buffett: “Startups are not our game.”
5. Avoid investing in bad industries, or turnarounds. It is not sound to invest in a business that requires a revival.
6. Seek out businesses that can reinvest at high rates of return over long periods. Avoid investing in low-margin businesses that require cash from you periodically and can expect only modest rates of return.
7. Do not sell a great stock just because it has doubled. Its value could go up when you least expect it, sometimes going up 20 or even 100 times during the next generation.
8. Never offer your own underpriced stock for the fully valued stock of an acquisition candidate. You will end up on the losing end of the bargain.
9. Avoid long-term bonds. Given how easy it is to inflate currencies, this is not a wise move.
10. Invest like a fanatic. Concentrate relentlessly on how you can transfer wealth to your own pocket.
1. Buy a share as though you were buying the whole company. Determine how an enterprise is worth but do not rely on formal financial projections or mathematical formulae. Invest in “a business you understand, favorable long-term economics, able and trustworthy management, and a sensible price tag.”
2. Volatility does not create risk. A serious investor sees opportunity in volatility.
3. Value should include “growth at a reasonable price” or GARP. The ideal companies have a business “moat” that has steady and reasonably predictable growth. In the long run, these businesses are more tax-efficient and more convenient than one bought at a bargain.
4. Invest on what you know best. Refrain from seeking the “newest” thing because it is too risky. Buffett's biggest investments are firms founded in the 1800s, such as American Express, Wells Fargo, Procter & Gamble, and Coca-Cola. Said Buffett: “Startups are not our game.”
5. Avoid investing in bad industries, or turnarounds. It is not sound to invest in a business that requires a revival.
6. Seek out businesses that can reinvest at high rates of return over long periods. Avoid investing in low-margin businesses that require cash from you periodically and can expect only modest rates of return.
7. Do not sell a great stock just because it has doubled. Its value could go up when you least expect it, sometimes going up 20 or even 100 times during the next generation.
8. Never offer your own underpriced stock for the fully valued stock of an acquisition candidate. You will end up on the losing end of the bargain.
9. Avoid long-term bonds. Given how easy it is to inflate currencies, this is not a wise move.
10. Invest like a fanatic. Concentrate relentlessly on how you can transfer wealth to your own pocket.
Monday, August 17, 2009
KKR’s Ken Mehlman and the EDF: Green Portfolio Project
You don't normally associate tree huggers and green activism with pinstripe suits and private equity financing, but Kohlberg Kravis and Roberts (KKR) is breaking stereotypes with its innovative Green Portfolio Project. KKR, led by the legendary financial wizard Henry Kravis, understands the Environmental Movement is not some momentary fad; recycling, renewable energy, energy efficiency, air pollution and waste reduction are fast becoming the normal way of life rather than an "alternative" way of doing things. Think of it this way...we don't think twice about women having the right to vote, or that the FDA ensures food and drugs are safe. But in their time of their implementation, these normal standards were considered radical and revolutionary. So it will be with Environmentalism. And KKR recognizes this<.a>.
KKR's Green Portfolio Project is a joint effort between KKR, the Environmental Defense Fund, and the companies in KKR's portfolio to adopt environmental best practices. Ken Mehlman, the Head of Global Affairs for KKR, recently announced how KKR is working towards a greener planet. KKR and the EDF have set up a series of environmental measuring tools to The first phase of the Green Portfolio project involved three companies: US Foodservice, Primedia, and Sealy Mattresses. US Foodservice saved $8.2 million in fuel costs and cut 22,000 metric tons of carbon dioxide emissions in 2008 by simply improving the efficiency of their truck fleet. Primedia, a publishing company, saved $2.9 million by reducing its paper use by 3,000 tons.
Ken Mehlman said these Green Portfolio initiatives were "good examples of how smart companies can cut costs and support the environment."
The Green Portfolio Project is still rolling along. Five more companies have joined the Green Portfolio: Accellent, Biomet, Dollar General, Hospital Corporation of America (HCA), and SunGard. (You can click on each company logo to get the details of their environmental initiates).
KKR's push for Green Investment was inaugurated in its surprising takeover of TXU, the Texas Utilities company. Cooperating with the EDF, Henry Kravis made sure TXU adopted several environmental principles, including reducing the number of coal-fired plants that company wanted to build. From that PR success, KKR saw the long-term wisdom of adopting green best practices. That's possibly why they hired on Ken Mehlman, former Republican Party Committee Chairman and an experienced environmental lawyer. You may or may not agree with Ken Mehlman's politics, but his organizational skills and environmental credentials can't be denied. Whether you're a Republican, Democrat, or independent, the future definitely hold stricter environmental standards, and Ken Mehlman will be the voice promoting this new movement in environmentally responsible investment.
So you want to make a surefire investment? I'd bullish on KKR and its Green Portfolio companies...and I bet Mother Nature is, too!
Recommended Reading: Private equity – Easing the barbarians through the gate: An excellent overview of KKR's ethical practices and new attitude towards responsible investing.
Ken Mehlman will be speaking at the Fortune Brainstorm Green 2010 conference.
Check out this video about the Green Portfolio Project entitled "Ken Mehlman of KKR and EDF Members Discuss Partnership"
KKR's Green Portfolio Project is a joint effort between KKR, the Environmental Defense Fund, and the companies in KKR's portfolio to adopt environmental best practices. Ken Mehlman, the Head of Global Affairs for KKR, recently announced how KKR is working towards a greener planet. KKR and the EDF have set up a series of environmental measuring tools to The first phase of the Green Portfolio project involved three companies: US Foodservice, Primedia, and Sealy Mattresses. US Foodservice saved $8.2 million in fuel costs and cut 22,000 metric tons of carbon dioxide emissions in 2008 by simply improving the efficiency of their truck fleet. Primedia, a publishing company, saved $2.9 million by reducing its paper use by 3,000 tons.
Ken Mehlman said these Green Portfolio initiatives were "good examples of how smart companies can cut costs and support the environment."
The Green Portfolio Project is still rolling along. Five more companies have joined the Green Portfolio: Accellent, Biomet, Dollar General, Hospital Corporation of America (HCA), and SunGard. (You can click on each company logo to get the details of their environmental initiates).
KKR's push for Green Investment was inaugurated in its surprising takeover of TXU, the Texas Utilities company. Cooperating with the EDF, Henry Kravis made sure TXU adopted several environmental principles, including reducing the number of coal-fired plants that company wanted to build. From that PR success, KKR saw the long-term wisdom of adopting green best practices. That's possibly why they hired on Ken Mehlman, former Republican Party Committee Chairman and an experienced environmental lawyer. You may or may not agree with Ken Mehlman's politics, but his organizational skills and environmental credentials can't be denied. Whether you're a Republican, Democrat, or independent, the future definitely hold stricter environmental standards, and Ken Mehlman will be the voice promoting this new movement in environmentally responsible investment.
So you want to make a surefire investment? I'd bullish on KKR and its Green Portfolio companies...and I bet Mother Nature is, too!
Recommended Reading: Private equity – Easing the barbarians through the gate: An excellent overview of KKR's ethical practices and new attitude towards responsible investing.
Ken Mehlman will be speaking at the Fortune Brainstorm Green 2010 conference.
Check out this video about the Green Portfolio Project entitled "Ken Mehlman of KKR and EDF Members Discuss Partnership"
Friday, August 14, 2009
The Procrastinator’s Guide to Budgeting
When it comes to budgeting, there are two camps: those who keep track of what they spend and balance their checking accounts promptly, and those who keep putting off these tasks until tomorrow. Dayana Yochim of Fool.com wrote an easy-to-follow and systematic guide to govern everyday spending for the procrastinator.
Step 1: Take a snapshot of your spending
Be aware of your own spending habits. People who spend using their credit or debit card may review raw data from monthly statements. Those who pay in cash can write down their daily expenses. Using a spreadsheet, categorize your expenditures and be shocked at how much money you are throwing away.
Step 2: Plan your next shopping spree
Once the initial shock recedes, start working on your “spending plan.” Make a list of all the important purchases you need to make in the next three to six months, including physical purchases or financial plans. This simple list will serve as a tangible reminder of your money goals and keep you focused on what to spend on.
Step 3: Do some simple division
Identify what items on the list will run you on a monthly basis. Divide the total amount for that item by the number of months until you need them.
Step 4: Set up a no-brainer savings system
Keep your cash out of your spending reach. Create a separate savings account from the one you use for daily expenditures. In Step 3, you already computed how much you need to set aside monthly. Get help from your bank and set up automatic recurring cash transfers from your main account to the separate savings account.
Step 5: Stop mindless overspending
Use the “envelope” method of budgeting. Compute a reasonable weekly amount you will allow yourself to spend on (food, transportation, housing, entertainment). Create envelopes for each category and put the allotted weekly amount per envelope. Once the cash on that envelope is depleted, so is your stipend for the week.
Step 1: Take a snapshot of your spending
Be aware of your own spending habits. People who spend using their credit or debit card may review raw data from monthly statements. Those who pay in cash can write down their daily expenses. Using a spreadsheet, categorize your expenditures and be shocked at how much money you are throwing away.
Step 2: Plan your next shopping spree
Once the initial shock recedes, start working on your “spending plan.” Make a list of all the important purchases you need to make in the next three to six months, including physical purchases or financial plans. This simple list will serve as a tangible reminder of your money goals and keep you focused on what to spend on.
Step 3: Do some simple division
Identify what items on the list will run you on a monthly basis. Divide the total amount for that item by the number of months until you need them.
Step 4: Set up a no-brainer savings system
Keep your cash out of your spending reach. Create a separate savings account from the one you use for daily expenditures. In Step 3, you already computed how much you need to set aside monthly. Get help from your bank and set up automatic recurring cash transfers from your main account to the separate savings account.
Step 5: Stop mindless overspending
Use the “envelope” method of budgeting. Compute a reasonable weekly amount you will allow yourself to spend on (food, transportation, housing, entertainment). Create envelopes for each category and put the allotted weekly amount per envelope. Once the cash on that envelope is depleted, so is your stipend for the week.
Thursday, August 13, 2009
The Investment Phases of LIfe
Peter Freeman of Money Magazine summarizes the status, characteristics and investment strategies for different age groups. While there are differences in every group, all are bound to the same economic and investment climate. In the end, financial success depends on how we make decisions based on our assessment of risk and opportunities present.
The 20s: People are relatively new to the workforce and are semi-permanent, relationship-wise. The main concern is saving up for a home deposit or an appealing investment. Before they can start building wealth, the first step is to control or eliminate credit card debt. Building a deposit through investment in equity funds may be a good strategy.
The 30s: Most people in their 30s have settled down, have children and bought a home. The focus is how to reduce mortgage, do renovations, or upgrade to a better property. They are recommended to take out income insurance to counter the threat of downsizing. Moreover, they must save enough for emergency expenses. Single people in their 30s may engage in aggressive investments, including geared share funds or direct share or portfolio investments, with a great deal of caution.
The 40s: Financial comfort at this age group is reflective of how restrained spending was for the past decade. The 40s are a difficult time financially because the kids are grown and education is more costly. Budgeting is crucial. Those who have high incomes may, however, gear up for expanding their investment portfolio.
The 50s: At this time, the children are financially independent, family costs are reduced and salaries are higher. Wealth creation at this period is advantageous and favorable for establishing your own business.
The 60s and later: The 60s is a time to invest one’s savings to generate income during retirement, or to maximize age pension. Investments are usually built around how to allocate pension in order to maximize tax and social security efficiency.
The 20s: People are relatively new to the workforce and are semi-permanent, relationship-wise. The main concern is saving up for a home deposit or an appealing investment. Before they can start building wealth, the first step is to control or eliminate credit card debt. Building a deposit through investment in equity funds may be a good strategy.
The 30s: Most people in their 30s have settled down, have children and bought a home. The focus is how to reduce mortgage, do renovations, or upgrade to a better property. They are recommended to take out income insurance to counter the threat of downsizing. Moreover, they must save enough for emergency expenses. Single people in their 30s may engage in aggressive investments, including geared share funds or direct share or portfolio investments, with a great deal of caution.
The 40s: Financial comfort at this age group is reflective of how restrained spending was for the past decade. The 40s are a difficult time financially because the kids are grown and education is more costly. Budgeting is crucial. Those who have high incomes may, however, gear up for expanding their investment portfolio.
The 50s: At this time, the children are financially independent, family costs are reduced and salaries are higher. Wealth creation at this period is advantageous and favorable for establishing your own business.
The 60s and later: The 60s is a time to invest one’s savings to generate income during retirement, or to maximize age pension. Investments are usually built around how to allocate pension in order to maximize tax and social security efficiency.
Wednesday, August 12, 2009
Tax Advice from Roni Lynn Deutch
I ran across this interesting video on the Wall Street Journal. It's an interview featuring the remarkable "Tax Lady," Ms. Roni Lynn Deutch. (I'm linking to her amazing blog, which has a plethora of great tax and financial advice.
In addition, Roni Lynn Deutch offers six options for the tax-wary Americans indebted to the IRS. Roni Deutch suggests resolving tax debts immediately in order to avoid burdensome penalties and interests that go with delays. After checking the numbers on the tax bill, one may choose from among these six options:
1. Pay in Full. Deutch says this is better than “IRS collections hounding you day and night, putting liens and levies on everything you own.”
2. Offer in compromise. If full payment is not doable, an offer in compromise, or paying a lump sum for a smaller amount than was originally owed, could help.
3. Installment agreement. The IRS will calculate based on your income less your “allowable expenses” to determine how much your monthly payment will be.
4. Streamlined installment agreement. Streamline installment agreements apply to tax bills under $25,000 and based on the amount to pay off taxes within five years or less.
5. Currently not collectible. The IRS will stop squeezing money out of you if you prove your money is exhausted on “living expenses.”
6. Wait it Out. Although tax debts expire 10 years from the date of assessment, this might be a gamble on your part since the IRS is shrewd and may extend the life of your tax bill.
Roni Lynn Deutch has written several articles in Women Entrepreneur, including how to prepare audit-ready tax returns and keeping good tax records.
And did you know Roni Lynn Deutch was the first girl to play in an all-boy's Little League in California? No kidding!
In addition, Roni Lynn Deutch offers six options for the tax-wary Americans indebted to the IRS. Roni Deutch suggests resolving tax debts immediately in order to avoid burdensome penalties and interests that go with delays. After checking the numbers on the tax bill, one may choose from among these six options:
1. Pay in Full. Deutch says this is better than “IRS collections hounding you day and night, putting liens and levies on everything you own.”
2. Offer in compromise. If full payment is not doable, an offer in compromise, or paying a lump sum for a smaller amount than was originally owed, could help.
3. Installment agreement. The IRS will calculate based on your income less your “allowable expenses” to determine how much your monthly payment will be.
4. Streamlined installment agreement. Streamline installment agreements apply to tax bills under $25,000 and based on the amount to pay off taxes within five years or less.
5. Currently not collectible. The IRS will stop squeezing money out of you if you prove your money is exhausted on “living expenses.”
6. Wait it Out. Although tax debts expire 10 years from the date of assessment, this might be a gamble on your part since the IRS is shrewd and may extend the life of your tax bill.
Roni Lynn Deutch has written several articles in Women Entrepreneur, including how to prepare audit-ready tax returns and keeping good tax records.
And did you know Roni Lynn Deutch was the first girl to play in an all-boy's Little League in California? No kidding!
Ten Best Nuggets of Financial Wisdom Ever
Some of the world’s experts, money managers, and ordinary folk who have had experience share some of the best financial tips ever on saving money, spending money, and building wealth. I found these words to live by on MSN's Money Central site at http://articles.moneycentral.msn.com/SavingandDebt/SaveMoney/TheBestFinancialAdviceEver.aspx. Enjoy!
“No matter how much or how little you make, always save a little bit.” Whatever money comes your way, you should make sure to set some aside. You can never be too broke to save.
“Live like a broke college student.” Young people tend to find the most affordable ways to live. Do with less in order to save money.
“Know the difference between needs and wants.” Control your spending. Distinguish real needs and mere wants. Ask yourself “What do you need that for?” before you spend your money.
“Think of the true cost.” Before purchasing an item, think of the true cost – the price tag plus time and energy you will expend over the item.
“Don’t co-sign a loan.” Co-signing a loan puts your good credit in the hands of someone who could smear it by with a single late payment.
“If you need more money, then go out and make more money.” The fastest way out of debt and into building wealth is to generate more income.
“You pay in advance for capacity.” Don’t drive yourself crazy. Hire and pay someone to help you out to make your small business grow.
“Own your own business - including the building it's in.” Money manager David Bach learned that the wealthiest owned their own businesses, including the buildings, which eventually ended up valuing more than the business.
“Don't gamble more than you can afford to lose.” Control risk whenever you can. Be realistic when you do take it.
“Prince Charming isn't coming.” Don’t rely on other people to save you from financial woes. In order to achieve financial security, your only armor of protection is you.
“No matter how much or how little you make, always save a little bit.” Whatever money comes your way, you should make sure to set some aside. You can never be too broke to save.
“Live like a broke college student.” Young people tend to find the most affordable ways to live. Do with less in order to save money.
“Know the difference between needs and wants.” Control your spending. Distinguish real needs and mere wants. Ask yourself “What do you need that for?” before you spend your money.
“Think of the true cost.” Before purchasing an item, think of the true cost – the price tag plus time and energy you will expend over the item.
“Don’t co-sign a loan.” Co-signing a loan puts your good credit in the hands of someone who could smear it by with a single late payment.
“If you need more money, then go out and make more money.” The fastest way out of debt and into building wealth is to generate more income.
“You pay in advance for capacity.” Don’t drive yourself crazy. Hire and pay someone to help you out to make your small business grow.
“Own your own business - including the building it's in.” Money manager David Bach learned that the wealthiest owned their own businesses, including the buildings, which eventually ended up valuing more than the business.
“Don't gamble more than you can afford to lose.” Control risk whenever you can. Be realistic when you do take it.
“Prince Charming isn't coming.” Don’t rely on other people to save you from financial woes. In order to achieve financial security, your only armor of protection is you.
Tuesday, August 11, 2009
Five Things to Learn From the Rich
Many of us may not live to be as wealthy as George Soros or Donald Trump, but there are habits that we can learn from affluent people in order to achieve financial freedom, and possibly, become millionaires as well.
1. They give back to charity. The wealthy tend to give away more, as a way of paying it forward for the financial success they reaped. Households with assets worth at least $500,000 donated 6% of their incomes in 2004, while those having a net worth of more than $5 million gave away 6.1%.
2. They own businesses. Surprisingly, the Federal Reserve estimates that over 12% of American families own all or part of a privately-held enterprise. The wealthy tend to own closely-held or family-owned businesses, and go forward with diversification once their wealth becomes too concentrated in a single investment.
3. They borrow strategically. The extremely rich tend to owe less money than the average person or owe installment debt. They are more likely to have mortgages than average households and carry more real estate loans than the general population. Although most of them own their homes, they nonetheless invest in real estate expecting higher rates of return.
4. They do not blow a lot of money on cars. With a few exceptions, the rich spend only a small proportion of their wealth on vehicles, roughly 2.4% of their net worth according to the Federal Reserve.
5. They are almost always homeowners, and many own investment property, too. Almost all people in the upper 10% own their homes. Almost 40% of them invest in real estate, but the bulk of their wealth comes from investments. The rich apportion their wealth as thus: 46% (stocks and bonds, managed accounts, IRAs, mutual funds, deposits and alternative investments); 10% (pensions and defined-contribution plans like 401(k)s); 6% (insurance and annuities).
To achieve a richer life, one must take strategic risks, give back, live within your means, and invest.
You can read up on other prominent financial leaders in my other site, Private Equity and Finance News.
1. They give back to charity. The wealthy tend to give away more, as a way of paying it forward for the financial success they reaped. Households with assets worth at least $500,000 donated 6% of their incomes in 2004, while those having a net worth of more than $5 million gave away 6.1%.
2. They own businesses. Surprisingly, the Federal Reserve estimates that over 12% of American families own all or part of a privately-held enterprise. The wealthy tend to own closely-held or family-owned businesses, and go forward with diversification once their wealth becomes too concentrated in a single investment.
3. They borrow strategically. The extremely rich tend to owe less money than the average person or owe installment debt. They are more likely to have mortgages than average households and carry more real estate loans than the general population. Although most of them own their homes, they nonetheless invest in real estate expecting higher rates of return.
4. They do not blow a lot of money on cars. With a few exceptions, the rich spend only a small proportion of their wealth on vehicles, roughly 2.4% of their net worth according to the Federal Reserve.
5. They are almost always homeowners, and many own investment property, too. Almost all people in the upper 10% own their homes. Almost 40% of them invest in real estate, but the bulk of their wealth comes from investments. The rich apportion their wealth as thus: 46% (stocks and bonds, managed accounts, IRAs, mutual funds, deposits and alternative investments); 10% (pensions and defined-contribution plans like 401(k)s); 6% (insurance and annuities).
To achieve a richer life, one must take strategic risks, give back, live within your means, and invest.
You can read up on other prominent financial leaders in my other site, Private Equity and Finance News.
Monday, August 10, 2009
Hottest Stock Tips
The market is seriously volatile as we enter the latter stages of the Great Recession. I say "latter stages" because I'm confident our economy will eventually recover. There is just too much innovation and wide open markets for the market not to recover.
But the world of finances is going through a massive shift right now. I would say the markets are going through the biggest shift since the mid 1980s, when technology stocks starting coming to forefront and changing the way private equity flows. There are several industries to watch out for, and the sky's the limit on these growth markets.
1. Green/Renewable Energy: President Obama has called on massive government investment in green energy, including wind, solar, and geothermal options. So I would say "buy" for established companies that are expanding green energy, such as GE, First Solar, and Siemens. There are some excellent websites that are devoted to the subject of green energy, such as Seeking Alpha and Green Chips Stocks. Electric cars are hot commodities, too. Check 'em out!
2. Private Equity Companies. After the economy bottomed out last year, private equity firms such as The Blackstone Group, Carlyle, and Berkshire Hathaway took a serious hit. But now as the stock market is recovering, private equity firms are part of America's return to prosperity. For example, The Blackstone Group, led by Wall Street legend Stephen Schwarzman stumbled to an all-time low of 3.55...and now it's trading for nearly $15. And it's still proably going up. Even investment firm villain AIG, now helmed by Robert H. Benmosche is not doing too doing too badly. From a low of $3, it's now at a robust $28. Keep looking for private equity firms to make big gains in the year.
3. Technology Stocks: Companies like Dell, Microsoft, and Intel took a big hit during the Great Stock Crash. The companies remain profitable and stable, and were only innocent passerbys as their worthy stocks were dragged down. Now their stocks are recovering, and are still are a bargain.
In conclusion, I feel the stock market will continue to regain as the economy slowly gets back on its feet.
But the world of finances is going through a massive shift right now. I would say the markets are going through the biggest shift since the mid 1980s, when technology stocks starting coming to forefront and changing the way private equity flows. There are several industries to watch out for, and the sky's the limit on these growth markets.
1. Green/Renewable Energy: President Obama has called on massive government investment in green energy, including wind, solar, and geothermal options. So I would say "buy" for established companies that are expanding green energy, such as GE, First Solar, and Siemens. There are some excellent websites that are devoted to the subject of green energy, such as Seeking Alpha and Green Chips Stocks. Electric cars are hot commodities, too. Check 'em out!
2. Private Equity Companies. After the economy bottomed out last year, private equity firms such as The Blackstone Group, Carlyle, and Berkshire Hathaway took a serious hit. But now as the stock market is recovering, private equity firms are part of America's return to prosperity. For example, The Blackstone Group, led by Wall Street legend Stephen Schwarzman stumbled to an all-time low of 3.55...and now it's trading for nearly $15. And it's still proably going up. Even investment firm villain AIG, now helmed by Robert H. Benmosche is not doing too doing too badly. From a low of $3, it's now at a robust $28. Keep looking for private equity firms to make big gains in the year.
3. Technology Stocks: Companies like Dell, Microsoft, and Intel took a big hit during the Great Stock Crash. The companies remain profitable and stable, and were only innocent passerbys as their worthy stocks were dragged down. Now their stocks are recovering, and are still are a bargain.
In conclusion, I feel the stock market will continue to regain as the economy slowly gets back on its feet.
A Scientific Way of Saving Money
A Scientific Way of Saving Money
Understanding the fundamentals of how money behaves can help us control and accumulate it. One way to do this is to view money as nothing but a form of energy. Using principles of energy, there is a scientific way of ensuring personal savings.
Rule 1: Energy attracts more of itself. If you are currently in debt, there is a possibility of attracting more debt. Similarly, if you have money, you will attract more of it. In order to attract more money, you must first accumulate it. This will start a chain reaction and allow you to accumulate more wealth.
Lesson 1: Open a savings account. This is an important step to building wealth because it gives the money somewhere to go.
Rule 2: Energy follows the path of least resistance. This means that money naturally flows to the areas that are of immediate need. Essentially, it is you who decides where the money goes and how much needs to be allocated. The more needs you identify, the more money is expended. Wealth is accumulated only when inflow exceeds outflow. Thus, in order to accumulate wealth, fewer needs should be identified.
Lesson 2: Prioritize your needs. People have varying needs, but those who tend to accumulate more wealth are those with very few needs. Those who live beyond their means tend to end up broke or bankrupt.
Rule 3: Energy requires exchange. In order to receive something, something must be given in exchange. You simply cannot gain from nothing. This may explain why people who are banking on the quick way to earn the buck, such as lottery tickets or slot machines, invariably end up broke. Those who do win in the lottery also tend to lose them all back. Accumulating wealth by chance is not sustainable.
Lesson 3: Invest and manage your money well. Wealth is acquired by employment, savvy investments and good management. The more you give, the more you will receive.
Understanding the fundamentals of how money behaves can help us control and accumulate it. One way to do this is to view money as nothing but a form of energy. Using principles of energy, there is a scientific way of ensuring personal savings.
Rule 1: Energy attracts more of itself. If you are currently in debt, there is a possibility of attracting more debt. Similarly, if you have money, you will attract more of it. In order to attract more money, you must first accumulate it. This will start a chain reaction and allow you to accumulate more wealth.
Lesson 1: Open a savings account. This is an important step to building wealth because it gives the money somewhere to go.
Rule 2: Energy follows the path of least resistance. This means that money naturally flows to the areas that are of immediate need. Essentially, it is you who decides where the money goes and how much needs to be allocated. The more needs you identify, the more money is expended. Wealth is accumulated only when inflow exceeds outflow. Thus, in order to accumulate wealth, fewer needs should be identified.
Lesson 2: Prioritize your needs. People have varying needs, but those who tend to accumulate more wealth are those with very few needs. Those who live beyond their means tend to end up broke or bankrupt.
Rule 3: Energy requires exchange. In order to receive something, something must be given in exchange. You simply cannot gain from nothing. This may explain why people who are banking on the quick way to earn the buck, such as lottery tickets or slot machines, invariably end up broke. Those who do win in the lottery also tend to lose them all back. Accumulating wealth by chance is not sustainable.
Lesson 3: Invest and manage your money well. Wealth is acquired by employment, savvy investments and good management. The more you give, the more you will receive.
Wednesday, August 5, 2009
Seven New Tips Toward Financial Security
How can you become financially secure considering the current chances in economic climate? Money Magazine keyed in tools on understanding the risks that the new economic climate poses including tips on adjusting to them in order to attain financial security. The article challenges people to get rid of old assumptions and take in new ones. It highlights seven new ways to achieve financial security.
Risk tolerance is about making or missing an important goal. Analyst T. Rowe Price suggests that relying on the volatility of the markets is not a wise move. The market lesson is: weigh the amount of risk you can lose and still meet your basic goals.
Save and rely on cash more. Analysts recommend redefining the scope of savings to include significant expenses such as tuition, a wedding, or a down payment on a house. Build an emergency fund before anything else. Consider your earnings potential. Instead of focusing on stocks and investments, think about human capital, or your capacity to earn while working on a job. Evaluate how secure your human capital is and make adjustments. Borrow cautiously. Be very conservative in borrowing for a mortgage or for college. Get a mortgage you can afford and put a 20% downpayment. Be wise about owning a home. Face the fact that owning a home will not make you rich but it has advantages. Have modest expectations when you do decide to purchase a home. Diversify. The best way is to go out and buy 16 new mutual funds that can kill two birds with one stone. T. Rowe Price recommends investing 20% of assets in emerging markets and the remainder in developed countries. Do not retire early. Delaying retirement for one year can increase your retirement income by 9%.
Risk tolerance is about making or missing an important goal. Analyst T. Rowe Price suggests that relying on the volatility of the markets is not a wise move. The market lesson is: weigh the amount of risk you can lose and still meet your basic goals.
Save and rely on cash more. Analysts recommend redefining the scope of savings to include significant expenses such as tuition, a wedding, or a down payment on a house. Build an emergency fund before anything else. Consider your earnings potential. Instead of focusing on stocks and investments, think about human capital, or your capacity to earn while working on a job. Evaluate how secure your human capital is and make adjustments. Borrow cautiously. Be very conservative in borrowing for a mortgage or for college. Get a mortgage you can afford and put a 20% downpayment. Be wise about owning a home. Face the fact that owning a home will not make you rich but it has advantages. Have modest expectations when you do decide to purchase a home. Diversify. The best way is to go out and buy 16 new mutual funds that can kill two birds with one stone. T. Rowe Price recommends investing 20% of assets in emerging markets and the remainder in developed countries. Do not retire early. Delaying retirement for one year can increase your retirement income by 9%.
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