Thursday, 14 February 2019

9 Ways You Can Pay Off Your Mortgage, Faster, And Increase Your Net Worth

The post 9 Ways You Can Pay Off Your Mortgage, Faster, And Increase Your Net Worth appeared first on Oak Laurel.

Your home is probably your most valuable asset.

Trouble is? It’s also likely your largest debt.

Don't add debt to your mortgage

In order to increase your net worth, and ensure your home is freehold before retirement, paying off your mortgage should be your top priority. With the average mortgage term being 30 years and the ABC reporting that Australians are increasing “…paying down their mortgages later in life“, reducing this timeframe can seem an insurmountable task.

While it may feel insurmountable, that doesn’t mean it’s impossible.

To help, here are a few ideas you can use to reduce your mortgage debt faster.

Compare fees and flexibility

When shopping around for a mortgage lender, make sure you’re comparing apples with apples.

This means you don’t just compare interest rates, but also any fees as well as flexibility around the terms of the mortgage. There can be a huge variance between lenders, so make sure you’re getting the best deal for your situation.

Don’t forget to take into account future scenarios – it’s highly likely you’ll want to upgrade your house within the 30 year loan timeframe, so check out what fees you’d attract when this happens. (In this case, you should be looking for ‘loan portability‘, so if you buy a new home you don’t have to pay exit and establishment fees).

When checking for fees, keep an eye out for:

  • Establishment fees.
  • Lenders mortgage insurance (LMI).
  • Exit discharge fee (when you pay your mortgage in full).
  • Early discharge fees (if you pay out your home loan in full).
  • Exit penalty interest (payable on fixed loans for early discharge).
  • Ongoing fees such as account and transaction fees on the home loan account.
  • Late payment fee (if you make a required repayment later than the due date).
  • Switch or break fees (If you switch loans e.g. variable rate to fixed rate home loan).

Cut back on your spending

Pay off your mortgage quicker

Whether it’s that takeaway coffee each morning on the way to work, attending that concert, or that impulse shoe purchase your just had to have, a little spending here and there can all add up.

Reign in those impulse buys, be a little more financially responsible, and focus on channelling that cash towards paying down your mortgage:

  • Take a list with you when you’re out shopping and only buy what’s on the list.
  • Try out the 30-day rule. Wait 30 days before buying something to control any impulse buying habits!
  • Take the Project 333 fashion challenge and dress with 33 items or less for three months.
  • Be creative and recycle, repurpose, and reuse household items wherever you can.

Pay fees separately

Pay off your home mortgage faster

Establishing a mortgage incurs a number of fees, for example an establishment fee, Lenders Mortgage Insurance (LMI), account and valuation fees. Pay these up front rather than adding them to your mortgage to avoid paying additional interest on these over the longer term.

Avoid adding debt to your mortgage

Buying a new car and considering adding the car loan to your mortgage?

You might be thinking that with home interest rates being so low, a mortgage top-up is the cheaper option than car finance options. But think again!

The extra amount you loaned to pay for your car increases the amount of interest on the repayments you make over the term of your mortgage, as opposed to paying off the vehicle loan quicker. Say, in five years.

It’s a long-term cost for a very short-term gain.

Pay a bigger deposit

The more you can pay up-front, the less interest you’ll pay in the longer term.

Empty the piggy bank, start a side hustle, and do whatever it reasonably takes to maximise your deposit amount.

You’ll be thankful in the future!

Maintain payment levels

If interest rates drop, don’t be tempted to let your home loan repayments lower to the minimum required payments so you can stash the difference.

Instead, keep your mortgage repayments at the same amount and pay off more interest, faster.

Make payments fortnightly

Choosing to make payments weekly or fortnightly rather than monthly can result in savings on your mortgage. How does it work? There are 52 weeks in a year, so if you pay 26 fortnightly payments, that’s in effect 13 monthly payments – a whole extra month of home loan repayment in a year!

Increase your regular payments

Think of your home loan repayments as a minimum payment. Spending less or earning more income can help you find extra cash to put towards your mortgage as additional payments. These extra payments directed toward your mortgage can help you repay your home loan faster. You’ll be debt free in no time!

Consider offset facilities

An offset loan is where the cash in your savings account offsets the amount you owe on your home loan. Mortgage interest is calculated only on the net balance of the loan, minus the savings account.

This type of loan can significantly reduce the amount of interest you have to pay on your mortgage.

Your home, all yours, faster

By being smart with your cash and understanding the ins and outs of your mortgage terms, you can stand to make significant savings on your home loan. Take advantage of these opportunities, and you’ll be debt-free faster and able to reap the rewards of home ownership sooner!

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Friday, 12 October 2018

Accounting Tips for Freelancers

The post Accounting Tips for Freelancers appeared first on Oak Laurel.

Setting up as a freelancer is an exciting time – working as your own boss and doing what you like best to your own schedule. However, being a freelancer means running your own business so there is a lot more to it than just working to your own tune.
As a freelance you need to keep track of your work, your income, invoicing, sales and purchases – in other words you are suddenly responsible for all your own business accounting, which is something that might be quite a foreign concept.

It’s important to keep on top of your business finances and know how to record and manage your numbers, so here are our top accounting tips for freelancers:

1. Create a separate business account

To make life easier when it comes to tax returns and financial reporting, you should create a separate business bank account, away from your own personal finances. That way you can record your income and expenses which are business-related, fare more easily.
If need be, use an accounting software to help you to keep track of all your financial business transactions – there are plenty out there and most can be linked to your business bank account to make it easy to record and keep track of everything.
Shop around before deciding on a business bank account – you need to check on business rates, business bank charges and any other account conditions before you sign on the dotted line. Check and compare different offers from different banks before making a commitment.

2. Register for tax

As soon as you have set up your freelance business you need to register for your tax obligations. What you are liable for will depend on how you have set your business up – tax requirements change depending on whether you are operating as a sole trader or a limited company.
You can register online and the good news is there are lots of online webinars and advice to help you make sure you sign up for the appropriate tax requirements. If you have any doubts or concerns about your taxes then seek help from an accountant or tax specialist. It’s important to get this right from the very beginning of your business.

3. Get your invoices set up

When you need to charge for your services you will need to have an invoice system set up so that you can send professional paperwork through to your clients. You need to set these up correctly with client information and reference numbers so that you can keep track of your transactions and make sure payments are set up and received on time.

4. Use accounting software

Book keeping and tracking receipts, transactions and sales can feel like a full-time job in itself but it needn’t be. Nowadays there are plenty of online software programmes which freelancers can use to make life easier.
These programmes connect to your bank account and allow you to file transactions and expenses online instantly. You can also scan receipts to record them electronically and many of them allow you to set up your invoices as well. Some also provide accountancy services for freelancers as well as software.
As the business grows you can move to a full-time accountant to help you keep track of all the finances but as a starting point online software can really help to make life easier and take the pressure off.

5. Create your own business profit and loss record

Creating a record of your business profit and loss can be a really good asset to demonstrate the performance of your business. It’s the perfect way to understand exactly how well your business is doing at any time of the year.
It will also show you any areas of the business which aren’t working as well as they should, allowing you to take action and amend your business approach if required.

6. Have an income projection plan

While none of us can predict the future, if you have steady work coming in to your business, and a pipeline of potential new customers, you should be able to create an income projection sheet, looking ahead at what your predicted earnings will be in the future.
If you need to go for a business loan or other finance to support business growth going forward, an income projection will help to support your case.

7. Seek professional accountancy advice

If you ever find the accounting side of your business getting the better of you, or find the work is growing so much you just don’t have the time to dedicate to recording all of your receipts and transactions, make sure you seek professional accountancy advice straight away.
The last thing you want is to get to the end of the tax year, be facing a looming tax return deadline only to face a drawer full of old receipts and no strong record of your transactions for the past year of being in business.
The best way to avoid this problem is to put aside a monthly date in your diary to sort out all your transactions and receipts on a regular basis. That way you will get to the end of the year with an orderly record of all the figures you need. If you can’t do it yourself, pay a book keeper to help you out.

8. Have a process in place for non-paying clients

One of the downsides of becoming a freelance is the unreliability of income which can occur, particularly if you end up dealing with non-paying clients. You need to have a legitimate process in place for chasing up non-payers and late payers.

Becoming a freelancer is an exciting prospect so don’t let a fear of accounting or numbers get in the way of running your own successful business. There is a lot of help and guidance out there for new businesses so if you need help don’t hesitate to ask for it. You want your business to have a solid foundation from day one so make sure your numbers are in order.

Accounting Tips & Hacks for Freelancers

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Tuesday, 10 July 2018

The Most Popular Renovation Loans for House-Flippers

The post The Most Popular Renovation Loans for House-Flippers appeared first on Oak Laurel.

More and more people are getting into renovating homes and flipping them for a profit. One woman quit a well-paying marketing job to flip houses full-time, making as much as $135,000 in profit in just a few months. You can also flip houses on the side, while working a full-time job.

However, to get into house-flipping in the first place, you must secure the capital to purchase a home and renovate it. That isn’t as easy as it sounds, but even if you’re just getting started, there are some specific ways you can secure the funds you need to get started and build your flipping business.

Related: Residential Property development finance

1. Secure Bank Financing

For most people, bank financing is a good option to secure the necessary funds to buy and renovate a home. You may need a decent down payment if you don’t have any collateral to offer, but different banks will have different requirements. Your goal is to get a loan on the home you’re buying. The key to getting enough financing is to find a property listed below market value.

Make sure you can afford the monthly payments if the house doesn’t sell for a while. Some flips sell quickly, while others sit for months, depending on the time of year and the current realty market. You can borrow up to 80 percent of the value of the property for major renovations. Have a plan for making payments for a minimum of six months to be on the safe side.

2. Get Investors

Another option to get a loan for house-flipping is to bring investors on board. Investors offer funding for your project, but they also get a cut of the profits without doing any of the work. It’s a good idea to sign a contract to ensure there are no misunderstandings of the terms, especially if you’re working with friends or family.

Angel investors are unlikely to come on board, as the profit margin isn’t big enough to attract them. You’re most likely to gain investor financing via friends, family or local small business owners. Having a written contract in place keeps those relationships intact for future projects and from a personal perspective.

3. Use Your Savings

There are several advantages to saving money and using your funds to renovate a house and flip it. First, you won’t owe anyone money, so if it takes a while to sell the home, you won’t be paying out high payments or interest fees. You also will have complete control and total say in the choices you make, as you’ll have no one to answer to but yourself.

One drawback is that you may risk your hard-earned savings if things don’t go well, but at least you won’t be on the hook to a bank or investors. Perhaps you use more than one of these options, such as securing bank financing to purchase the home and using your savings to pay for the renovations.

4. Refinance a Current Mortgage

Perhaps you want to renovate the home you live in and then flip it, rinse and repeat. That’s a smart way to start flipping houses, because it saves you on your mortgage payment and allows you to take the time you need to upgrade your home before listing it for sale. It is also a way to keep getting a more valuable home without increasing your house payment.

Most banks will help you decide if a refinance is the best choice for your situation. They’ll look at the value of your property, the renovations you plan and the potential value of your property after said renovations. If a refinance isn’t right, they will guide you to the best loan option for your needs. Be sure to read all the terms to ensure you’re getting the best interest rate and repayment terms possible.

5. Home Improvement Loan

You have an option to take out a loan specifically to help you cover the cost of home improvement. If you’re living in the residence while you renovate, this is an excellent option to help you gain the loan you need to flip that house and move up to one that is higher in value. There are several options to help secure this type of loan, including an unsecured personal loan or a secured personal loan.

6. Fix-and-Flip Hard-Money Loan

Lenders specifically created this type of loan for the house-flipper. This loan is usually for the term of a year. It gives you the hard money you need to invest in a property and flip it, but you have to complete the work on a timeframe. These are sometimes called rehab loans, and the qualifications are lower than on a typical home purchase. It gives you the funding you need quickly, but the property must be worth what you’re borrowing, so you’ll need to find a property you can buy below market value to pull out enough funds to buy it and fix it up.

If you’re a seasoned flipper, then the loan may allow you to do the renovations yourself. For those new to the home renovation world, you may be required to hire a licensed contractor. If this is the case, budget the expenses even further by asking your hired contractor for a line-item estimate and account for his or her 15 to 20 percent profit margin.

7. Cash out Refinance

If you own an existing property that has some equity in it, you can refinance and pull that cash out. You have the option to use the money you’ve pulled out of your existing property for any purpose you’d like, including rehab costs on an investment property. Such a refinance will raise the house payment on your primary residence, so be sure you can afford the dent in your monthly budget. You can always pay your mortgage back down or refinance again after selling the investment property.

Flipping Houses

There are few things as rewarding as taking a home that is a diamond in the rough and turning it into something shiny and beautiful. Flipping houses takes business savvy, vision and determination, but there is still decent money to be had from the effort. Whether you’re already flipping houses or just considering dipping your toes in, there are many ways to secure the money needed to complete a successful flip.

Related: 3 Ways You Can Finance Home Remodelling Project Without Going Broke

Holly Welles is a real estate writer passionate about sharing finance tips for those diving into the market. You can read her latest tips on real estate and home improvement on her blog, The Estate Update, and follow her on Twitter @HollyAWelles.

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Friday, 22 June 2018

3 Ways You Can Finance Home Remodelling Project Without Going Broke

The post 3 Ways You Can Finance Home Remodelling Project Without Going Broke appeared first on Oak Laurel.

Here is a topic that is always considered “hot” in the Land Down Under. Surely everybody loves the idea of remodelling their home, either because they wish to enjoy it more, or they have a future sale in mind. Be that as it may, no other nation is more prone to house renovation projects than the Aussies.

It appears that home makeover shows have changed the awareness of home owners quite a bit. The figures speak for themselves. Currently, the home improvement market is worth $43 billion, and it’s expected to reach $50 billion in the next 10 years. If this doesn’t sound too impressive, how about the fact that there has been an increase of 147% in home renovations since 2010? Australia has 49 hardware or home improvement stores per 1 million people, which is much bigger ratio than in the UK or the USA. According to a survey, 72% of Aussies would rather spend $15,000 on a home reconstruction project instead of going on holiday.

With so many avid and keen home owners, the demand for home renovation projects is met with a myriad of options for borrowing the necessary funds. Depending on the renovation plan, the amounts may vary. Personal loans such as borrowing from a friend or a family member aren’t the issue here, and neither are the options on how to limit your spending. If it were that simple, you wouldn’t be reading this, would you? Instead, we are going to take a look at two types of loans which you could use for bigger projects, such as a kitchen or bathroom makeover, and suggest some creative ways how to earn the extra cash you need without going into debt.


HELOC (Home Equity Line of Credit)

Home Equity Line of Credit, or HELOC, is renowned for offering the lowest rates in comparison to the other options. Of course, they vary depending on a lender, but generally speaking, these rates are much better than what you could expect with a credit card. This is an option you can consider even if your redecorating costs exceed $50,000, and your home is the factor which guarantees you will repay the full amount. Actually, that is the reason why the interest rate is so low – you are betting it all on your home. Let’s take a look how it works.

Say you have equity in your home. Even though you are still paying off the mortgage, it’s perfectly possible to qualify for this type of loan. For instance, if your home is estimated to cost $200,000 and your mortgage at this moment is $150,000, that means you have $50,000 in equity. However, normally lenders secure themselves by limiting the amount you can borrow to around 85% of the property value. Therefore, since 85% of $200,000 is $170,000, and we subtract the total mortgage (those $150,000), we are left with $20,000, which is the amount that can be approved.

Home Equity Line of Credit is often compared to credit cards due to the reason you don’t get the whole amount at once. Even though you borrow the total sum, you can access it periodically.

If you like the sound of this, it would be a good idea to apply. As we have mentioned earlier, the interest rates are low, but not the same for everyone. Normally, they are adjustable, though there are still instances when they can be fixed (even on your own demand if you prefer). The good news is some amounts can be tax deductible, but it’s best to check in advance.

HEL (Home Equity Loan)

The spelling may not necessarily give you any hints about this loan. As the name suggests, your home equity is the reason why you are being approved. It has some similarities with the previous one, but it’s not exactly the same, as we shall explain.

For instance, this is a fixed rate loan, and the rate is usually higher than it is the case with HELOC. On the plus side, interest rates are lower compared to credit card or personal loans. There is also an interesting option of paying wages into your account to decrease the interest rates. In case when you can pay extra in addition to your fixed monthly repayment, that decreases your loan term, too.

Also, you can have the whole amount immediately instead of waiting for another month or year to pass. If you need to invest the money all at once, this would be the way to go. Of course, provided that you are able to make the payments later in the years to come.

Typically, the process of getting a HEL loan is very fast, which is ideal in cases when you have an excellent offer from a builder that you don’t want to miss out on. Should you need some extra cash, you can apply for that, too.

By the way, if anyone starts recommending you the “second mortgage” loan, this is actually what they are talking about. HEL loans are known as second mortgages, too, because people usually add them to their first mortgage. In addition, transaction fees and closing costs are what makes it similar to the first mortgage. Nevertheless, that does not mean you need to have a first mortgage to qualify for Home Equity Loan.

Finally, one thing these two loans have in common is the equity, and you mustn’t forget about it. They are provided based on your home value, so you have to make the home loan repayments on time in order not to lose it. On the bright side, there are usually lots of options how to best adjust home loan repayments to suit you and your current financial state, so they’re worth looking into.

Earn extra cash

If you have some minor alterations in mind, you could consider earning extra cash as opposed to applying for loans or using your precious credit card. Surely, it will take some time to add up, but it’s definitely worth it. There are no interest rates of debts, but you had better be very responsible when it comes to saving and spending. Patience is a virtue, too, since this process takes some time.

Therefore, let’s see some suggestions on side hustles you could add to your 9-5 routine.

  • Renting – if there is an extra room you aren’t using, thing about getting a roommate. Another option is or putting it on a website offering accommodation to travellers. You will meet some interesting people, and still be able to keep your privacy since you can choose the times when your home is accepting guests. Besides this, you could rent a parking space or a garage. There is probably someone in the overcrowded neighbourhood who is willing to pay good money for it.
  • Pet sitting – This is an ideal job for all animal lovers. Actually, you could easily be reading a book, chatting on the phone, or watching TV comfortably at your work. Dog walking is also recommendable, especially if you already have a pet which enjoys canine company.
  • Online surveys – You have already heard of them, and now is the time to start clicking. Do a bit of research and find the most profitable surveys. The internet is full of simple enquiries which can bring you extra money.
  • Online lessons – The mere fact that you are a native speaker of English language makes you eligible for earning over $20 per hour. There are massive numbers of websites, mobile apps and online schools which you could use to increase your monthly revenue. The hours can be very flexible, so you can do it at your own pace. What is more, you needn’t be an English teacher or have any previous experience. If you enjoy working with people and making small talk, this could be your perfect side hustle.
  • Car sharing – Driving to work every day can be used to earn the money needed for simple redecorations. Your commute will be more enjoyable if you make it your job. Since you have to travel to work anyway, why don’t you sign up for a car share app, and offer a ride to the others? For a nice compensation, of course.

There you have it. These are the ways you should consider if you’re thinking about remodelling your home. If you’re Australian, the thought has certainly crossed your mind on more than one occasion. Home Equity Loans and Home Equity Line of Credit are definitely the best options when it comes to borrowing from a lender. As for the minor alterations, we have provided you with simple, but effective solutions.

The last word of wisdom: whichever option you go for, you should carefully consider all the factors before making the final decision. Be honest to yourself about your money management abilities. When you decide on the renovation project, make sure you include all the possible additional costs into the equation. Only then will you have a clear picture of how big an investment you have to make, and be able to act according to it.

Author bio: Sofia Lockhart

Sofia is a passionate writer from Sydney. She also enjoys decorating houses and engaging in home renovation projects. That is why she loves sharing her experience and advice with other people through her writing. Besides this, she loves technology and gadgets which can help us get through a busy workday.


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Saturday, 26 May 2018

The Influence Of Blockchain On The Financial Sector And Trading

The post The Influence Of Blockchain On The Financial Sector And Trading appeared first on Oak Laurel.

If you are a small business owner and you’re interested in the financial world or the world of investing, chances are you haven’t been able to go a day without hearing the word “blockchain”.

But whether you think that cryptocurrencies like Bitcoin and Ethereum are the future of investing, or you think that they’re a runaway train doomed to crash, they have brought a number of innovations to the financial sector, and the world of trading and investing. And, paramount on this list is the blockchain.

The blockchain is the building block of every cryptocurrency like Bitcoin – but its usefulness does not end there. As many companies have learned, distributed public ledgers built on blockchain technology could have a number of uses.

In this article, we’ll take a look at the blockchain, explain the basics, and help you understand the impact that this disruptive and innovative technology may have on the financial sector. Let’s get started!

Understanding Blockchain – The Basics

To begin discussing the blockchain, it’s important that you understand exactly what it is – and what it’s not. Here’s a quick, high level overview of a blockchain and how it works.

You may have heard blockchain referred to as a “distributed ledger” technology. If you want to simplify things, you can think of any blockchain as a large, decentralized spreadsheet – one that’s hosted across millions of computers and has millions of duplicates.

In this spreadsheet, transactions of any type can be securely recorded. Everyone who uses the blockchain owns their own copy of the ledger. Each transaction, along with details about ownership, timestamps, and other information is recorded in a data block. These data blocks are then secured with advanced cryptography to prevent tampering.

Finally, these “blocks” are written and linked to each other like a chain – hence the term “blockchain”. Because each individual block is secured with encryption algorithms, and they are all linked together, transactions cannot be tampered with.

If a transaction is falsified, for example, it will simply be compared to the existing blockchain that is spread across millions of computers. If the majority of blockchain copies don’t “agree” on that version of the blockchain, it’s simply rejected.

What Are The Benefits Of A Blockchain?

Now that you understand how a blockchain works, you may be wondering what advantages it has over a traditional database, especially in the financial sector. Let’s discuss a few of the benefits of a decentralized, distributed ledger on the blockchain now.

  • No need to rely on trusted third parties – This has especially major ramifications for the world of trading and banking. A blockchain ensures that transactions are recorded publicly and with full transparency, and because the ledger is public, there is no need to rely on a third-party when signing a contract or making a trade.This could mean that user-built, crowdsourced trading platforms could eventually be built on the blockchain, even for the trading of financial instruments like ETFs, stocks, and bonds.
  • No centralized server or database which can be attacked – Because the blockchain ledger is distributed to such a massive degree, it’s essentially impossible for it to be hacked, destroyed, or breached by a cyber-attack. Unless a hacker somehow manages to modify or take down millions of copies of the blockchain at once, it’s completely safe from any kind of hack or intrusion.
  • Permanent public log of transactions – This may make conflict resolution and financial settlement much more simple. All transactions are recorded in a blockchain, and they can be viewed by anyone. This could impact the financial industry – and even other areas of business like contract and tort law.

With a secure design, permanent record of transactions, and a robust design built to resist hacking, blockchains could be a valuable tool.

This is especially true for banks and financial companies. The slow adoption of technology in the financial sector means that quite a few financial institutions are relying on technology that’s decades-old, and settlement processes that have not been changed for years.

If blockchain technology becomes widespread, there is a huge potential for it to completely revolutionize the way that we do business with banks and trading platforms worldwide.

The Potential Disruptive Potential Of Blockchain – 5 Use Cases

Now that we’ve discussed a few of the benefits of blockchain, as well as the basics about how blockchains work, we can discuss a few of the most disruptive potential use cases for blockchain in the financial and banking industry.

  1. Trade and share settlement – The current process of trading shares on major exchanges can be quite lengthy, as is the time it takes to settle transactions and receive a payout. In addition, the exchanges and trading platforms used often charge a fee for this service.Blockchain-based trading could eliminate these fees and decentralize stock trading for everyone. Settlement and trades would be lightning-fast and require no third-party authentication, due to the secure and public design of the blockchain.
  1. International money transfers – Despite so many advances in financial technology, transferring money between countries and banks is still slow and incredibly expensive. Wire services like Western Union often charge up to 10% of the transaction in fees, in some cases, and the money could take a long time to process.Blockchains could help reduce the time and complexity of sending money internationally. Whether using cryptocurrencies or fiat, a blockchain provides a secure method of authenticating a transaction or transfer and could easily be repurposed by a bank for use as an international exchange medium.
  1. Smart contracts – Smart contracts are one of the most unique aspects of blockchains. Essentially, they allow for a certain action – such as a release of funds – to occur once completion of another action has been completed on the blockchain.Smart contracts are written into the code of the blockchain, making them public and easy to verify – and automatic funds disbursement could make them a very handy way for corporations and banks to conduct business.
  1. Online identity management – The blockchain could have serious potential as an identity management platform. Currently, users of the internet have to trust dozens – or even hundreds – of different websites and corporations with their data, including secured information like Social Security numbers, credit card information, and banking information.Blockchain could change this – and help protect investors and bank users from fraud. Essentially, if our information was logged and encrypted on the blockchain, we could simply present information about that “block” to verify our identity, without having to share our actual personal information.This would help ensure that people using online banking and trading platforms are protected from having their identities stolen, or from serious privacy breaches.
  1. Changes in fundraising and investing – We have already seen the impact that blockchains and cryptocurrencies have made in the world of investing and fundraising. Instead of seeking Series A and B investments from institutional investors, angel investors, and venture capital firms, many companies are using ICOs, or “Initial Coin Offerings” to raise funds.In exchange for a set number of cryptocurrency “tokens”, investors pay into the project, allowing for decentralized funding of startups, financial platforms, and more. This could have a significant effect on how companies raise money, and how stakeholders buy into companies. The democratization and decentralization of the blockchain mean that just about anyone can buy into a project that they care about, or that they think has potential – institutional investors no longer have the first opportunity to invest in a company.

It’s hard to know exactly what effects the blockchain will have on the financial industry, especially since the technology is quite new. But the advantages of using the blockchain are numerous – and there are dozens of reasons that financial companies and banks should be exploring it.


What’s Next – When Will Banks Take Advantage Of The Blockchain?

As mentioned, the financial and banking industries are extremely slow when it comes to change and innovation. Given the trillions of dollars managed by major exchanges and banks, this is understandable – as any glitch or other issue could be completely catastrophic.

Because of this, we shouldn’t expect the blockchain to revolutionize the entire financial sector anytime soon. But given the power of this disruptive technology, it’s no surprise that some cutting-edge companies are already exploring it.

For example, six giant international lenders – Barclay’s, HSBC, Canadian Imperial Bank of Commerce, MUFG, and State Street have joined forces with Swiss bank UBS to develop a blockchain-based digital coin for the settlement of financial transactions.

This is far from the only example. There are hundreds of banks and other institutions exploring how blockchain can be used – and while it will likely take a long time for it to be adopted worldwide, its disruptive potential simply cannot be ignored.


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Wednesday, 23 May 2018

5 Non Traditional Methods of Raising Money for Your New Business

The post 5 Non Traditional Methods of Raising Money for Your New Business appeared first on Oak Laurel.

You´ve got the great idea, a sound business plan on paper, a few employees ready to leave their jobs to follow you, and an excess of motivation and enthusiasm. Unfortunately, you don´t have the capital to get your entrepreneurial vision off the ground, and without money, your vision isn’t going anywhere.

Raising money for a new business used to be a simple and straightforward. You would schedule an appointment with your local bank, explain your business plan and finances, and hopefully get a loan to get started. Today, however, banks only fund 23 percent of the small business funding requests that they receive.

With such low approval numbers, you would think that small businesses would be on the way out, making way for the global conglomerates that increasingly dominate our global economy. However, 97 percent of all businesses in Australia are considered to be small and medium sized. Despite a relatively high failure rate, small business owners in Australia continue to function and open regularly.

The rise of ecommerce websites, online freelance platforms, and other innovations in the world of how businesses are organized in a world dependent on the internet have combined to reduce some of the startup costs of running a business. While you might not necessarily need to purchase or rent an expensive business locale in a prime real estate area, there are other startup costs that can be prohibitive.

The smart entrepreneur and small business owner today is one who explores alternative financing options to help get a business of the ground. Below, we look at five non-traditional methods and tips for how to secure funding for your future business.

small business person doing banking

Know Who to Target

Perhaps the word “target” might sound a bit aggressive, but when it comes to raising money for your business, making the right connections is by far one of the most important parts of the planning process. Even for companies with a proven track record of financial success and stability, only between 1 and 2 percent of potential investors will actually invest any sort of capital into a given business. The main reason for this relatively low conversion rate of receiving investment capital is due to the personal nature of investing.

Obviously, you need to target potential investors who have sufficient financial liquidity to make an investment decision. That means that it is probably a waste of your time to target people (even family members) who are short on cash or who are currently involved in financial struggles of their own.

Furthermore, unless you have a business proposal that absolutely clicks with a potential investor´s interests and attention, you will most likely want to exploit relationships wherein the investor personally knows the leadership behind the business plan. The closer they are to the leadership team, the better the chance that they will know and understand your business plan and get excited enough about the possibilities to invest their own money.

When searching for business loans outside of the traditional banking system, then, it is important to sit down with your team and make a list of potential investors that fit the following criteria:

  • Has sufficient financial liquidity to make an immediate investment (promises of help down the road aren’t usually helpful to people trying to get a business idea off the ground).
  • Knows you and your leadership team on a personal level, or is willing to sit down and spend time to get to you on a level that takes your business proposal beyond the phase of a bunch of documents on paper.
  • Has an investment portfolio that fits with your overall business plan or strategy.
  • Has a personal interest in the area of business that characterizes your entrepreneurial vision.
  • Has a proven history of investing in small businesses, especially during the past 12 months. It is important to do your own research on potential investors, just as they will also do their research on you.

Small business finance

Don’t Underestimate Small Banks

We mentioned above that less than one out of every four business loans are approved by the general banking system. However, the vast majority of those “rejects” are from the large banking corporations that operate purely on the basis of statistics on inadequate cash flow, limited collateral, poor credit scores, or simply because your business is an early stage startup that represents to much of a risk.

While the procedures and regulations standardizing the operation protocols of larger banks are usually rigorous and inflexible, smaller banks tend to have more leniency in how they manage loan requests. Local banks, especially, might be able to identify with your business proposal on a more personal level, and thus understand your vision beyond the hard numbers and statistics.

Whereas larger banks will focus on your current debt and cash flow limitations, smaller banks might be willing to listen to your explanations about why you believe that your business plan is sound and how you plan to make it succeed.

If you are not on good standing with your local bank, today there are also several online bank lenders that finance small business ideas. You can check out this guide to getting a small business loan to discover the wealth of financing options that are open to you and your business.

Contact Private Investment Firms

Let´s imagine that the banks (both big and small) have closed doors on your business proposal and you don’t have a wealthy uncle willing to throw money at his favorite nephew´s business plan. Private investment firms are another way to gather investment capital for a business idea. While you will certainly need to have a solid business plan that demonstrates your knowledge of market trends, potential risks, and solid cash flows, private investment firms and networks will usually be more willing to invest in what banks might consider to be too high of a risk.

For private investors, small businesses can represent a high-risk, high-reward investment opportunity. The opportunity to invest in the next PayPal or other startup that literally exploded onto the global economy is certainly an enticement that many investors don’t want to pass up on.

Furthermore, even if you don’t get funding from the private investor you originally sought out, you might be able to garner valuable contacts and business advice. These investors tend to understand the nature of business, and might be able to either give you valuable advice to improve your business proposal or to put you in contact with other investors who they think might be interested in your idea.

Crowd Funding

In recent years, thousands of artists, entrepreneurs, musicians, and more have successfully raised millions of dollars through crowd funding platforms. In Australia, two of the most popular crowd funding websites include Pozible and OzCrowd.

According to Australian Securities and Investment Commission, crowd funding allows people who are not professional financiers to pool together their money to support a specific project. One of the unique aspects of crowd funding for a small business proposal is that these platforms are specifically oriented towards businesses with relatively small startup budgets.

While you most likely will not be able to raise a million dollars on Pozible, you might very well be able to secure the minimum financing to get your project up and running. This can be important if you are searching for ways to get your business started to show initial financial success and positive cash flow statistics that will subsequently allow you to apply for more significant funding down the road.

Lastly, if cold calling potential investors to ask for funding is not your thing, crowd funding proposals work well when publicized through social media platforms and even through word of mouth.

Pledge Future Earnings

For many small business owners, the idea of pledging a part of your future lifetime earnings to an investor or group of investors can seem like a difficult idea to swallow. While for some people this might seem like a new form of indentured servitude, for others it represents an exciting opportunity in venture capital.

Essentially, you agree to give a percentage of the future lifetime earnings of your business in exchange for an agreed upon sum of capital up front. One of the benefits of this type of innovative funding is that it most likely frees up your immediate cash flow. Instead of focusing on trying to pay employees while not defaulting on your bank loan, this type of financing can allow you to focus your energy on growing and expanding your business during those crucial first years.

Obviously, when pledging your future earnings to a group of investors, it is important to plan ahead in the event of the failure of your business. If you feel okay about sacrificing some of your long-term earnings for immediate startup capital, this might be the option for you.

Final Words

The big banks are no longer the only option when it comes to securing financing for your business proposal. Knowing who to target, checking on smaller banks, private investment firms, crowd funding platforms, and even pledging future earnings are all innovative strategies that can help small business owners get the capital they need to become their own boss.

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Why Should You Consider Buying a Home at a Young Age?

The post Why Should You Consider Buying a Home at a Young Age? appeared first on Oak Laurel.

You might have heard the saying: “The best time to plant a tree was 20 years ago, the second-best time is right now”. That lesson doesn’t just apply to horticulture. Investing in your future is a long-term strategy. The earlier you get started, the easier it will be to build a substantial nest-egg for your senior years.

Real estate is still one of the most valuable investments any person can make. For instance, consider the fact that house prices in Australia went up by 11.1% between 2016 and 2017. That means that a home you bought for $100,000 would be worth $111,100 just one year later. The question is, how early is too early to start investing?

The sooner you can make your mark on the real-estate map, the better off you could be. After all, owning a home is often far more lucrative than renting, and it also means that you set yourself up with an asset for the future. If you’re in the right place for it, buying a home can be one of the most financially responsible things anyone can do, regardless of whether you’re 21, or 45. The only difference is, the sooner you get started, the longer you have to reap the rewards.

Here we’ll look at some of the reasons why young investors should consider buying property as early as possible, and what you can do to improve your chances of a successful loan application.


  • Real Estate is an Investment in Your Future


Perhaps the most obvious benefit of buying or building a property early is the fact that it allows you to start cultivating powerful investments for your future. A house is one of the most valuable things any person can own. In most cases, real estate will consistently increase in value over time. Even if your home loses some of its value during a down period, that problem won’t last long when you make a wise decision with the home you purchase.

Buying a home when you’re still young allows you to invest in your future by providing you with something you can sell for a lot more money when you’re ready to move on to a different property. You may find that your first home gives you a fantastic down payment on your next property, or your family home sets you up for retirement.

Additionally, because buying a home can be more lucrative than renting with time, you should find that you have enough cash left over in your budget to put towards things like retirement savings and future expenses.


  • Property Appreciation Happens Over Time


The value of a home can move up and down over time. However, the longer you hold onto a property before you want to sell, the more time that structure has to appreciate in value. Although Australia’s property market has cooled down in recent years, most properties will still see an increase in worth of over 3% per year. This means that you’re earning money for your future just by living in your dream home.

Ultimately, to improve your chances of a wise and sustainable investment, it’s a good idea to have a plan early, run the numbers, and make sure that you’re investing in the right neighbourhood at the right time. Contacting a realtor or mortgage broker will make it easier to determine which property is right for you.

Importantly, some areas of the country are more volatile than others when it comes to real-estate investment. If you’re getting started in the property market early, you’ll have more time to weather the ups and downs of the marketplace. This means that it’s less likely you’ll have to sell when the market is in a downturn. Over the years, your home will continue to appreciate, as you continue to enjoy the freedom of owning your own property.


  • Improve your Credit Score


Credit can be a common concern for youngsters hoping to enter the housing market for the first time. After all, your lender will want to be able to see that you can be trusted with the money they’re giving you. If your credit rating is poor, then you won’t be able to get the best interest rates. Unfortunately, when you’re still young, the chances are that you won’t have much of a credit history to speak of.

If you’re in a stable enough place that you can achieve a reasonable mortgage rate, then choosing to take out a home loan should ensure that you can begin to build your credit rating rapidly. The longer you spend as a homeowner, paying your mortgage, and setting up direct debits for other monthly expenses, the more impressive you’ll look to future lenders.

After a few years with your first mortgage, you might find that you can even switch to a better rate because your rating has changed significantly since the day you first applied for your loan.


  • Additional Sources of Income


There are plenty of ways that owning real estate can put you in a better place financially. As mentioned above, as your home appreciates in value, your net worth will grow with it. Additionally, if you can purchase a home that’s large enough, you might even consider renting a room out to someone else for a source of passive income.

Renting out a room in your property is a great way to make some additional money. On the other hand, you could even think about offering your home up as a vacation destination during periods when you might be away yourself. This is a great way to ensure that you continue to earn on the value of your home, even when you’re out exploring the world.

Some young investors may even choose to purchase a secondary property that they can rent to tenants. This isn’t just getting another source of income, it’s also an opportunity to start your own side business – something that continues to contribute to your finances no matter what happens to your day job.


  • Learn Better Spending Habits


While you don’t necessarily need to buy a home to learn how to be responsible for your money, you can rest assured that you’ll uncover some important habits when you become a homeowner. Although budgeting can seem tough at first, it’s something that all responsible homeowners need to do. While other people your age might fall into the trap of constantly spending their money on frivolous things, you’ll be forced to think more carefully about your expenses, so you can continue to pay your mortgage.

Learning how to afford a home and the added extras that come with it is an important lesson. The good news is that the money you put into your home in the form of mortgage payments isn’t just outgoing expenses, it’s cash that’s going back into your pocket in the future.

When you own a home at a young age, your decision-making process begins to change. You become less likely to make irresponsible choices because you know you have bills to pay. Ultimately, it sets you up for a life of success.


  • It’s an Automatic Savings Account


If you’re aware that you have a problem with spending or saving, a home can even act as a kind of savings account. It gives you an additional way to prepare yourself for retirement. For instance, if you purchase a home for $100,000 when you’re 20 on a 30-year term, and it appreciates in value by 3.5% each year, by the time your term is up, your home could be worth an additional $105,000. In other words, you’ve made more than you spent in the first place.

Real estate, when chosen properly, can be a powerful way to develop your wealth. Over time, your home will become your largest asset, and the thing you can rely on to keep delivering value no matter what else happens in the marketplace. After all, while stocks might go up and down, people are always going to need a roof over the head.


  • Freedom to Live in the Home of your Dreams


Finally, one of the biggest benefits of buying property when you’re young is that it gives you absolute freedom over how you live. When you live in a rental property, you’re at the mercy of a landlord, and the demands that he or she makes about how you decorate the home you live in. You might not be able to build onto your home, create the garden you’ve always wanted, or even paint rooms specific colours.

On the other hand, when you live in your own home, you’re completely free to make decisions according to your own style and preferences. There’s no-one that you need to run your ideas by because the property you’re decorating belongs to you.

If you’ve always wanted a stunning backyard with a fence, you can go ahead and build it. So long as you have the right planning permission, you can essentially do whatever you like with your property.

Buy a house

Are You Ready to Invest in Real Estate?

Deciding to invest in the real estate market when you’re still young can be a nerve-wracking decision. To make sure that you’re getting the most out of your investment and reduce the risks of one of the biggest purchases you’re likely to make, it’s important to make sure you’re prepared. Remember, before you get started:

  • Educate yourself: Research property prices in your local area, consider local tax charges and government costs. Subscribe to online forums and learn as much as you can about the appreciation of different neighbourhoods that you might want to buy in. The more you educate yourself about the investment opportunities that are available to you, the more likely you are to make the right decision on your purchase.


  • Seek advice: Make sure that you have the right support from a pool of qualified professionals in your local area. Some younger investors might want to seek out the help of a mortgage broker, whereas others will simply want to work with a real estate to help them find the best property for their budget.


  • Start saving early: If you want to invest in a property, then you’re going to need a down payment. When you’re still young, you might not be able to save as much back as you’d like for this initial deposit, but the faster you get started, the better off you’ll be. It’s also worth looking into government schemes that might help you to place a lower deposit down for your new home if you’re a first-time buyer.


  • Consider different borrowing options: As a young investor, you might want to consider a range of different borrowing solutions, including investing with someone else. However, if you do decide to take out a joint loan with someone, it’s important to make sure that you’re both on the same page and have the same financial goals. A joint loan is not something to be entered lightly.


It’s Never to Early to Prepare for your Future

Ultimately, it makes sense to buy real estate as early as you can. As well as giving yourself a new way to make money and appreciate in wealth over the long term, you also ensure that you’re on track to learn fiscal responsibility as soon as possible.

Investing in real estate when you’re still young gives you the freedom that you’re looking for when you’re just starting off in life, combined with the comfort and stability you need for the future. Whether you invest in real estate to rent out while you’re still exploring the world, or you purchase your very first home, a property is one of the best things you can buy – regardless of how young you are.

Just remember to do your research and learn as much as you can about the buying market before you jump in. Buying early doesn’t mean rushing into real estate. It’s all about walking into a good investment with plenty of background knowledge, and your eyes wide open.

The post Why Should You Consider Buying a Home at a Young Age? appeared first on Oak Laurel.

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