Petronas Dagangan (16.08.2012)

Date announced 16-Aug-12
FYE 31/12/2012
Qtr 2
Quarter 30/6/2012
STOCK PETDAG
C0DE  5681

Price $ 22.8
Curr. PE (ttm-Eps) 26.21
Curr. DY 3.51%

Dividends   % chg Curr. FY0 80.00 -11.1% Prev FY1 90.00 5.9% Prev FY2 85.00   Curr. DY  3.51%               Risk vs Returns   Upside 0.18 16% Downside 1.00 84%       Returns     One Yr Apprec Pot.  1% Avg Yield    5% Avg Tot. Ann Return 6% (for next 5 years)         INPUT VARIABLES   Today's Share Pr $ 22.80 EPS GR %   9% Avg H. PE   18.0 Avg. L. PE   15.0 Rec. Severe Low Pr 15.80       Current PE   26.21 Signature PE 16.50 RV   159% Rational Price   14.36             Dividends     Present Dividend 80.00 Avg % DPO   90%       Present Div Yield 3.51% Present High Yield 5.06%       EPS G. RATE   9% Present Market Pr. 22.80

Topglove (11.10.2012)

Dividends		% chg
Curr. FY0	16.00	45.5%
Prev FY1	11.00	-31.3%
Prev FY2	16.00
Curr. DY	3.05%
Risk vs Returns
Upside	1.64	62%
Downside	1.00	38%
Returns
One Yr Apprec Pot.		7%
Avg Yield		4%
Avg Tot. Ann Return		12%
(for next 5 years)
INPUT VARIABLES
Today's Share Pr $		5.25
EPS GR %		8%
Avg H. PE		15.0
Avg. L. PE		12.0
Rec. Severe Low Pr		4.06
Current PE		16.06
Signature PE		13.50
RV		119%
Rational Price		4.41
Dividends
Present Dividend		16.00
Avg % DPO		49%
Present Div Yield		3.05%
Present High Yield		3.94%
EPS G. RATE		8%
Present Market Pr.		5.25

ZONING
Present Market Price of		5.25	is in the	Middle 1/3	Range
Mid-Price	=	5.63
Upper 1/3	=	6.16	to	7.20	(Sell)
Middle 1/3	=	5.11	to	6.16	(Maybe)
Lower 1/3	=	4.06	to	5.11	(Buy)

Rec. qRev	607229	q-q % chg	1%	y-y% chq	12%
Rec qPbt	67121	q-q % chg	5%	y-y% chq	92%
Rec. qEps	10.27	q-q % chg	18%	y-y% chq	143%
ttm-Eps	32.69	q-q % chg	23%	y-y% chq	79%

Disclaimer:  These data are for my own use.  It is not a recommendation. Please do your own due diligence.

"Mr. Buffett, what types of companies will you purchase in the future?"

Buffett is often asked what types of companies he will purchase in the future.

First, he says, he will avoid commodity businesses and managers in which he has little confidence.

What he will purchase is the type of company that he understands, one that possesses good economics and is run by trustworthy managers. 

"A good business is not always a good purchase,"  Buffett says, "although it is a good place to look for one."

For Buffett, the activities of a common-stock holder and a businessperson are intimately connected.  Both should look at ownership of a business in the same way.  "I am a better investor because I am a businessman," confesses Buffett, "and a better businessman because I am an investor."

The NINE most important words ever written about investing.

"Investing is most intelligent when it is most businesslike."

The most distinguishing trait of Buffett's investment philosophy is the clear understanding that, by owning shares of stock, he owns businesses, not pieces of paper.  

The idea of buying stock without understanding the company's operating functions - including a company's products and services, labour relations, raw material expenses, plant and equipment, capital reinvestment requirements, inventories, receivables, and working capital needs - is unconscionable, says Buffett.

A person who holds stocks has the choice to become the owner of a business or the bearer of tradable securities.  Owners of common stocks who perceive that they merely own a piece of paper are far removed from the company's financial statements.  These owners behave as if the market's ever-changing price is a more accurate reflection of their stock's value than the businesses' balance sheet and income statement.  They draw or discard stocks like playing cards.

Buffett: BUY OUTSTANDING BUSINESS at a significant discount to its intrinsic value.

If we make mistakes, Buffett confesses, it is either because of

(1)  the price we paid,
(2)  the management we joined, or,
(3)  the future economics of the business.

Miscalculations in the third instance are, Buffett notes, the most common.

It is Buffett's intention not only to identify businesses that earn above-average returns, but to purchase these businesses at prices far below their indicated value.  The margin of safety also provides opportunities for extraordinary stock returns.

If Buffett correctly identifies a company possessing above-average economic returns, the value of the shares of stock over the long term will steadily march upwards as the share price mimics the returns of the business.  

If a company consistently earns 15% on equity, its share appreciation will advance more each year than the share price of a company that earns 10% on equity.  

Additionally, if Buffett, by using the margin of safety, is able to buy this outstanding business at a significant discount to its intrinsic value, Berkshire will earn an extra bonus when the market corrects the price of the business.

"The market, like the Lord, helps those who help themselves."  Buffett says, "But unlike the Lord, the market does not forgive those who know not what they do."

Are you truly operating on the principle of obtaining value for your investments? Carry out the discounted-flows-of-cash calculation.

All the shorthand methods - high or low price-earnings ratios, price-to-book ratios, and dividend yields, in any number of combination, Buffett says, in determining whether "an investor is indeed buying something for what it is worth and is therefore truly operating on the principle of obtaining value for his investments...............Irrespective of whether a business grows or doesn't, displays volatility or smoothness in earnings, or carries a high price or low in relation to its current earnings and book value, the investment shown by the discounted-flows-of-cash calculation to be the cheapest is the one that the investor should purchase."  

Growth is simply a calculation used to determine value.

Value is the discounted present value of an investment's future cash flow; growth is simply a calculation used to determine value.

People who consistently purchase companies that exhibit low price-to-earnings, low price-to-book, and high dividend yields are customarily called "value investors."  People who claim to have identified value by selecting companies with above-average growth in earnings are called "growth investors."  Typically, growth companies possess high price-to-earnings ratios and low dividend yields.  These financial traits are exact opposite of what value investors look for in a company.

Investors who seek to purchase value often must choose between the "value" and "growth" approach to selecting stocks.

Buffett admits that years ago he participated inn this intellectual tug-of-war*.  Today he thinks the debate between these two schools of thought is nonsense.

"Growth and value investing are joined at the hip", says Buffett.



*Comment:  It is interesting to know that Buffett too had been through these intellectual debates and then formed his own conclusions.

Growth can either ADD or DETRACT from an investment's value/

Growth in sales, earnings, and assets can either add or detract from an investment's value.

Growth can add to the value when the return on invested capital is above average, thereby assuring that when a dollar is being invested in the company, at least a dollar of market value is being created.

However, growth for a business earning low returns on capital can be detrimental to shareholders.  For example, the airline business has been a story of incredible growth, but its inability to earn decent returns on capital have left most owners of these companies in a poor position.

Property/Casualty Insurance Accounting

Property/Casualty Insurance Accounting

Income Statement of Property/Casualty Insurance Company

Premium revenue is also known as earned premium.  This premium revenue is used to fund:

1. Claim payments (loss expense).
2. Sales commissions for insurance agents (commission expenses)
3. Operating expenses (OPEX)

Claim expenses, for example, typically consume 75% of an insurer’s net revenues.

(1)    + (2) + (3) / Premium revenue = Combined ratio

Combined ratio is an insurance company’s key underwriting profit measure.

A combined ratio under 100 indicates an underwriting profit. 

For example:  A combined ratio of 95 means that the insurer paid out 95% of its premium revenue for losses.  The 5% remaining is the underwriting profit.

A combined ratio exceeding 100 indicates an underwriting loss. 

For example:  An insurer with a combined ratio of 105 paid out 105% of its premium revenue to cover losses,  meaning that it had an underwriting loss equal to 5% of revenues.

Companies with combined ratios exceeding 105 for more than a short time have a difficult time recouping their losses via investment earnings, and this type of poor underwriting track record suggests that an insurer’s competitive position is unusually weak.  Insurers unable to earn even the occasional underwriting profit will produce the industry’s poorest returns and may be tempted to accept large investment risks to boost profitability.

Investment income of Insurance companies

Insurers also make money from investment income.  They are often reported as a ratio of premium.

Adding the investment ratio to the combined ratio yields the operating profit ratio.  In many instances, investment income is a key profit determinant because it offsets underwriting losses.

Combined ratio  + Investment ratio  = Operating Profit ratio

Balance Sheet of Property/Casualty Insurance Company 

In addition to float, most insurers invest a large portion of their own retained earnings as well.  The investment account reveals the size of an insurer’s investments relative to its asset base and details the asset allocation employed.

Investment account = Float deployed + Retained Earnings deployed.

Look at the asset allocation of this investment account.  Look for insurers with no more than 30% invested in equities (unless the company is run by Warren Buffett).

Unearned Premiums of Property/Casualty Insurance Company

Unearned premiums represent premiums received but not yet considered revenue.

This oddity reflects an accounting convention.  When an insurer receives a premium, it is deemed to earn it gradually across the year.  After all, if a customer cancels a policy, the insurer must refund that portion of the coverage not consumed.  After six months, an annual auto policy would be 50% earned, and half the premium would be considered revenue.  Before this occurs, the premiums are held in the unearned premium account, and the insurer is free to invest them.

The best property/casualty insurer is one that is able to consistently earn underwriting profits on a large, growing customer base.  In effect, this insurer would be getting paid to profit from investing other people’s money and could retain this float indefinitely (as long as it grows).  Unfortunately, for investors, these situations rarely occur.



Insurance Companies of Malaysia
Click here: https://docs.google.com/open?id=0B-RRzs61sKqRWmp5ZEFEREw4VWM

The One-Dollar Premise of Warren Buffett

There is a quick test that can be used to judge not only the economic attractiveness of a business but how well management has accomplished its goal of creating shareholder value:  If Buffett has selected a company with favourable long-term economic prospects, run by able and shareholder-oriented managers, the proof will be reflected in the increased market value of the company.

• In Buffett's quick test, the increase should, at the very least, match the amount of retained earnings, dollar for dollar.  
• If the value goes up greater than the retained earnings, so much the better.  

All in all, Buffett explains, "Within this gigantic auction arena, it is our job to select a business with economic characteristics allowing each dollar of retained earnings to be translated eventually into at least a dollar of market value.  

The Sultan of Brunei's Supercar Collection: $300,000,000 and Counting

 




Click here:
http://www.carbuzz.com/news/2012/5/19/The-Sultan-of-Brunei-s-Supercar-Collection-300-000-000-and-Counting-7708867/

Cognitive Biases That Cause Bad Investment Decisions

Henry Stimpson

Published: Tuesday, November 29th 2011

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When it comes to investing, you might think your emotions don’t play a role, but they do without you even realizing it. Everyone has emotional and cognitive biases that shape their choices, and only by spotting them can you overcome them so they don’t cause bad investment decisions, according to Ben Sullivan, a certified financial planner at Palisades Hudson Financial Group.
Sullivan recalls a number of clients who have made mistakes in the past. A middle-aged banker had more than half of his $500,000 portfolio in a few bank stocks. Another prospective client sold his business to a big consumer-goods company had almost all his money — many millions — in that company’s stock. An employee believed his 401(k) plan was diversified because he owned four funds — all large-cap stock funds.
“Investor mistakes have predictable patterns,” says Sullivan. “Our pervasive emotional and cognitive biases often lead to poor decisions.”

Overconfidence
It’s easy to overestimate your own abilities in picking stocks while underestimating risks. Even professional money managers struggle to beat index funds. The casual investor has little chance, Sullivan says.
“It’s almost impossible to have a day job and moonlight as manager of your individual-stocks portfolio,” he says. “Overconfidence frequently leaves investors with their eggs in far too few baskets, with those baskets dangerously close to one another.”

Self-attribution
This is a cognitive error leading to overconfidence. Someone who bought both Pets.com and Apple in 1999 might dismiss his Pets.com loss (it went bankrupt) because the market tanked but believe he’s an investment whiz because he bought Apple.

Familiarity
Investing in what you “know best” can be a siren song leading investors astray from a prudently diversified portfolio. That was the case with all three investors mentioned above. They were familiar with banks, consumer goods and large-cap U.S. stocks respectively, Sullivan says, and unwisely put all their eggs in that familiar basket.

Anchoring and loss aversion

Investors may become “anchored” to the original purchase price. Someone who paid $1 million for his home in 2007 may insist that what he paid is the home’s true value, even though it’s really worth $700,000 now. The same holds for securities.
“Only the future potential risk and return of an investment matter,” Sullivan says.
Inability to sell a bad investment and take a loss causes investors to lose more money as the hoped-for recovery never happens.
“You’ll also miss the opportunity to capture tax benefits by selling and taking a capital loss,” he adds.


Herd fever
When the market is hot and high, the media and everyone else say buy. When prices are low — remember March 2009 — everyone says sell. Following the herd leads investors to come late to the party so that they’re buying at the top and selling at the bottom. Following the herd is a powerful emotion.
Today, Sullivan says, the herd is buying gold and U.S. Treasuries.

Recency
According to a study by DALBAR Inc., the average investor’s returns lagged those of the S&P 500 index by 6.5% per year for the 20 years prior to 2008 largely because of recency bias. People invested in last year’s hot funds, which often turn sour next year, instead of taking a steady course, he says.
(Ed: Read about how the recency effect has been influencing the housing market.)

Counteracting your biases

Having a written plan is the key, Sullivan says.
“Create a plan and stick to it,” he says.
Hewing to a written long-term investment policy prevents you from making haphazard decisions about your portfolios during times of economic stress or euphoria. Selecting the appropriate asset allocation will help you weather turbulent markets.
All investors should invest assets they will need to withdraw from their portfolios within five years in short-term liquid investments. Combining an appropriate asset with a short-term reserve gives investors more confidence to stick to their long-term plans, he says.
If you can’t control your emotions — or don’t have the time or skill to manage your investments — consider hiring a fee-only financial adviser, Sullivan says. An adviser can provide moral support and coaching, which will boost your confidence in your long-term plan and also prevent you from making a bad, emotionally driven decision.
“We all bring our natural biases into the investment process,” Sullivan says. “Though we cannot eliminate these biases, we can recognize them and respond in ways that help us avoid destructive and self-defeating behavior.”

http://www.physiciansmoneydigest.com/personal-finance/Cognitive-Biases-That-Cause-Bad-Investment-Decisions

Is Your Financial Situation Sustainable And Renewable?

Two words that have attracted a lot of attention are "sustainable" and "renewable." These words are generally used in an environmental sense when discussing energy and natural resources, but they should also be applied to your personal financial situation. Using sustainable and renewable sources of energy, for example, can create a secure supply of energy upon which people can rely. Similarly, ensuring that your lifestyle, savings rate and income can be sustained and/or renewed will help you achieve long-term financial security.

Your Lifestyle

Let's start by examining the spending portion of your financial equation. Do you know how much money you spend each month? If you don't, there's no time like the present to take inventory.

Even if you don't know how much you spend, you should certainly know how much you earn. Starting there, do you know what you would do if your next paycheck did not arrive? How long could you continue to support your current lifestyle? Even if you can't bring yourself to create a budget, at the very least you need to stash away some cash in case you find yourself unemployed.

Your Savings Rate

Now let's look at the savings portion of your financial equation. How much do you save each month? Include all sources, from money set aside in your checking or savings account to your 401(k) plan or other employer-sponsored plan. Don't overlook the cash you stash in the cookie jar.

Now figure out how difficult it would be to save that same amount if you were unemployed or were forced to accept a lower-paying job than the one you have today. When you are saving for long-term goals, such as retirement or the cost of a child's education, the amount you end up with is significantly impacted by the amount you put away early on because of the effects of compound interest. Any interruption of the steady stream of savings could significantly reduce the likelihood of achieving your goal.
When you put your savings plan under the microscope, be sure to view it in the context of your income. Are there places where you could cut your spending if times get tough? Is there a way to cut other expenses before you reduce the amount allocated to savings?

Your Income

Now, let's examine your primary income source. If you are counting on a paycheck from your job to finance your expenses, you should put some thought into where your job ranks in terms of sustainability. Are your skills likely to be in demand five years from now? 10? 15? Is your present employer stable? If not, are your skills easily transferable to another employer? Could you earn an equal or greater paycheck if you changed jobs?

If not, are you taking action? Remember, today is the best time to start preparing for tomorrow.

Hope for the Best, Plan for the Worst

Although the future is unknown, taking inventory of your life will certainly let you know where you stand today and take the stress off your tomorrow. If your current level of income would not be easy to replace, spend some time contemplating the merits of living with less.
Simplifying your lifestyle without reducing your income is a great way to free up some cash to build up your emergency fund or give your investment plan a major boost. With a little forethought, you can be prepared for any eventuality. 


The Bottom Line

Of course, if your cash inflows are steady, your savings plan is on track and your source of income is secure, there's nothing wrong with living the good life. Just do so responsibly. Don't buy more than you can afford, keep your debt-to-income ratio low and have a backup plan in the event that life rains on your parade.

Read more: http://www.investopedia.com/articles/pf/08/personal-finance-sustainable-renewable.asp#ixzz28Je6NVlP

Evaluating Your Personal Financial Statement

Month after month, many individuals look at their bank and credit statements and are surprised that they spent more than they thought they did. To avoid this problem, one simple method of accounting for income and expenditures is to have personal financial statements. Just like the ones used by corporations, financial statements provide you with an indication of your financial condition and can help with budget planning. There are two types of personal financial statements:

• The personal cash flow statement
• The personal balance sheet

Let's explore these in more detail.

Personal Cash Flow Statement

A personal cash flow statement measures your cash inflows and outflows in order to show you your net cash flow for a specific period of time. Cash inflows generally include the following:

• Salaries
• Interest from savings accounts
• Dividends from investments
• Capital gains from the sale of financial securities like stocks and bonds

Cash inflow can also include money received from the sale of assets like houses or cars. Essentially, your cash inflow consists of anything that brings in money.

Cash outflow represents all expenses, regardless of size. Cash outflows include the following types of costs:

• Rent or mortgage payments
• Utility bills
• Groceries
• Gas
• Entertainment (books, movie tickets, restaurant meals, etc.)

The purpose of determining your cash inflows and outflows is to find your net cash flow. Your net cash flow is simply the result of subtracting your outflow from your inflow. A positive net cash flow means that you earned more than you spent and that you have some money leftover from that period. On the other hand, a negative net cash flow shows that you spent more money than you brought in.

Personal Balance Sheet

A balance sheet is the second type of personal financial statement. A personal balance sheet provides an overall snapshot of your wealth at a specific period in time. It is a summary of your assets (what you own), your liabilities (what you owe) and your net worth (assets minus liabilities).

Assets

Assets can be classified into three distinct categories:

• Liquid Assets: Liquid assets are those things you own that can easily be sold or turned into cash without losing value. These include checking accounts, money market accounts, savings accounts and cash. Some people include certificates of deposit (CDs) in this category, but the problem with CDs is that most of them charge an early withdrawal fee, causing your investment to lose a little value.
• Large Assets: Large assets include things like houses, cars, boats, artwork and furniture. When creating a personal balance sheet, make sure to use the market value of these items. If it's difficult to find a market value, use recent sales prices of similar items.
• Investments: Investments include bonds, stocks, CDs, mutual funds and real estate. You should record investments at their current market values as well.

Liabilities 

Liabilities are merely what you owe. Liabilities include current bills, payments still owed on some assets like cars and houses, credit card balances and other loans.

Net Worth

Your net worth is the difference between what you own and what you owe. This figure is your measure of wealth because it represents what you own after everything you owe has been paid off. If you have a negative net worth, this means that you owe more than you own.

Two ways to increase your net worth are to increase your assets or decrease your liabilities. You can increase assets by increasing your cash or increasing the value of any asset you own. One note of caution: make sure you don't increase your liabilities along with your assets. For example, your assets will increase if you buy a house, but if you take out a mortgage on that house your liabilities will also increase. Increasing your net worth through an asset increase will only work if the increase in assets is greater than the increase in liabilities. The same goes for trying to decrease liabilities. A decrease in what you owe has to be greater than a reduction in assets.

Bringing Them TogetherPersonal financial statements give you the tools to monitor your spending and increase your net worth. The thing about personal financial statements is that they are not just two separate pieces of information, but they actually work together. Your net cash flow from the cash flow statement can actually help you in your quest to increase net worth. If you have a positive net cash flow in a given period, you can apply that money to acquiring assets or paying off liabilities. Applying your net cash flow toward your net worth is a great way to increase assets without increasing liabilities or decrease liabilities without increasing assets. 

The Bottom Line

If you currently have a negative cash flow or you want to increase positive net cash flow, the only way to do it is to assess your spending habits and adjust them as necessary. By using personal financial statements to become more aware of your spending habits and net worth, you'll be well on your way to greater financial security.

Read more: http://www.investopedia.com/articles/pf/08/evaluate-personal-financial-statement.asp#ixzz28JcbWX2o

How To Land A Finance Job With A Bachelor's Degree

Finance is an extremely competitive profession, especially at the entry level. The desks of investment professionals' are piled high with the resumes of students who have dreams of big money, nice cars and getting on the path to being Masters of the Universe by the time they are 30. Finance is also a cyclical job market: when the stock market is booming, finance jobs boom as well, but when returns dwindle, so do the job listings. And even when the market is flush with jobs, finding a good job is key. Follow these five tips to dramatically increase your chance of landing a finance job even before hitting graduation.

Tip No.1 - Land An Internship

For entry-level positions, interviewers do not expect candidates to know much. Many companies have orientation and training programs that teach new recruits the specifics of what they need to know, but having background knowledge is still expected. An internship can help to fill in for the lack of full-time experience and is not as difficult to get as a real job. Internships do not generally require much, if any, prior knowledge. They will likely be based around grunt work, performing tasks that anyone can do, such as making copies. But they provide learning experiences, references, networking opportunities and something tangible to talk about in an interview. Doing several internships also provides a great display of work ethic, which is a sought-after quality in the finance industry. 

Tip No.2 - Start Early

If you start in the summer before your first year in college, you can have a total of four summer internships before senior year. Is it necessary to do that many? No, but why not? Many finance internships are paid, so there are no excuses. If you are going to get a summer job anyway, it is better to do something that will further your career instead of just flipping burgers. The same holds true when attending college in a metropolitan area. Instead of working part-time at the local clothing store during the school year, file papers for a local investment advisor.

Tip No.3 - Diversify Your Experiences

Don't do five internships for equity traders unless you're 100% sure you want to trade for a living. Try to switch it up a little and land internships around the industry. This will help you gain a better perspective in different areas and help you figure out what you really want to do. If you want to research bonds, an interviewer is likely to ask why. If you had an internship in fixed income and another in equities, you can give a more eloquent answer than, "I just like bonds." Also, the different branches of finance are generally interconnected somehow. Portfolio management makes use of trading and research, for example. Knowing a little about how the different sectors of finance work can give you an edge in the job market.

Finally, work hard at any internship you land. The references can be valuable no matter what, but more importantly, impressing your bosses during an internship can be a great way to open doors for a future full-time job with that company. Many of the summer analyst/internship programs at big banks are created to look for entry-level hires for the next year.

Tip No.4 - Learn to Talk the Talk

To get a job in finance, you should ideally pick a business-oriented major like finance or economics. Many companies say that this does not matter, and it is very common to hear, "We hire all majors - we even have art history majors working at XYZ Company." All is not lost for the art history majors, but it is still certainly better to apply for finance jobs with a finance degree.

Another great way to learn is to make reading the financial news part of your regular routine. Pick up a subscription to The Wall Street Journal and/or the Financial Times and read it every day. As a student, you can normally get discounted subscriptions for these publications. Picking up a weekly magazine like The Economist orBarron’s will help expand your knowledge as well.

Immersing yourself in financial reading will help you get used to the terms and jargon of Wall Street, which is one of the biggest hurdles to cross. Do you know what MBS, CDS, BPS, EBITDA and federal discount rate mean? Regularly reading the financial news throughout college will help you pick up all the basics in due time. Even if you are studying this vocabulary in your courses, reading more about finance will help you to solidify that knowledge and feel more comfortable discussing it. Other ways of picking up financial knowledge are reading investing books, from basic to advanced topics, and reading tutorials and guides from financial websites (looks like you're already on the right track there). Treat learning the financial language the same as learning a foreign language. Instead of ignoring words that you don't understand, look those terms up to help broaden your knowledge.

Tip No.5 - Start Your CFA

As stated earlier, the job market in finance is always very competitive. Many applicants will have high GPAs and degrees from good schools and will have done the things listed above. It is always good to go above and beyond to differentiate yourself from the pack. One way of doing this is to take the Chartered Financial Analyst (CFA)Level 1 exam. The CFA designation is well respected in the financial industry. You'll need to pass three exams and have four years of eligible work experience to obtain the designation, but the first exam can be taken in the final year of a bachelor's program, either in December or June.

Financial professionals know the amount of time and dedication that the program entails (a minimum of 250 hours of study is recommended per exam), so coming out of an undergraduate program having passed the first exam will certainly make you stand out among other job candidates. The commitment to the program will display your work ethic and dedication to finance.

The Bottom Line

In both good and bad times, it is difficult for undergraduates to land a good entry-level position. Your resume is going to get lumped in with hundreds of others from candidates with strong credentials. The competitive nature of the finance job market means that focusing early, gaining experience with internships and gaining knowledge from following the news and reading will help you stay at the front of the pack. Finally, doing something to break off from the pack, like entering the CFA program in your final year of college, can better your chances of landing a good job. Work hard and good luck!

Read more: http://www.investopedia.com/articles/financialcareers/08/five-undergrad-tips.asp#ixzz28JbtpWhc

4 Ways To Get A Head Start On Your Financial Career

In the 1970s, financial planners essentially had two career choices: they could become stockbrokers or insurance agents. Their paths were set, and the expectations were simple. Much has changed since then. There are many more choices available, but this also means that students are expected to know more and do more than ever before in fierce competition. Preparing for a career in financial planning requires a great deal more training in areas that were traditionally relegated to other professions, such as accounting and psychology.

In this article we'll explore things that recent and soon-to-be graduates can do to decide where they want their financial planning career to go and to then get a leg-up on the competition.

Prepare Before You Graduate

Perhaps the first and most obvious course of action is to simply choose an appropriate major. These include business, economics, finance or accounting. Personal financial-planning programs are being offered at more universities, both at the graduate and undergraduate levels. These programs can be especially helpful because they also often touch upon a number of topics that other programs fail to cover. These topics include consumer rights, the dynamics of finance within the family and the psychology of retirement.

Traditional financial-planning curricula will only cover material that is directly relevant to the Certified Financial Planner (CFP®) Board exam, such as investments, insurance and taxes. Therefore, choosing financial planning as a major will provide students with a much broader base of knowledge from which to begin their careers. Understanding the psychology of finance and investing will be an invaluable aid when dealing with clients, and is in fact a skill that all financial planners must master to some extent. 

Extracurricular Activities

Of course, choosing the correct major is only one step that students can take to further their careers before graduation. There are a number of other options available to students that will look good on a resume to prospective employers. Here are some examples.

• Preparing Income Tax Returns - This is a good, practical skill that can greatly benefit the student in a number of ways. In addition to providing solid, hands-on experience with customers in the financial industry, it will also teach the student basic tax information that will be tested on the CFP® Board exam.
  
• Working at a Bank - Student planners often find that working at a bank provides multiple career benefits. It's a job that easily fits around an academic schedule. The pay is better than many other after-school jobs. It looks good on a resume, gives practical work experience and shows that you are a responsible person.
  
• Sitting for the Enrolled Agent Exam - This exam is administered by the IRS every September. The test covers virtually all of the tax material found in the CFP® Board exam. Passing this test and earning this designation will be an impressive credential to present to prospective employers in any field of financial practice. You'll also gain a tremendous advantage over CFP® applicants that have had no previous tax training.
  
• Internships - Working as an intern at a financial planning firm will provide obvious benefits for any student. However, while any internship can be beneficial, working at a smaller company will likely provide more hands-on experience with clients and the financial planning process than a larger firm, where interns are often relegated to administrative support or marketing roles.

Finding a Job

Graduates have a number of tools at their disposal that can greatly increase their exposure to the financial community. Obviously, a graduate who completed an internship at a local company has a substantial advantage over an unknown competitor in the job-selection process.

For those who do not have this luxury, the Internet can be an indispensable resource. Websites such as brokerhunter.com continually list all available postings from many companies. Those who prefer to take a face-to-face approach and network themselves (and even those who don't) would be wise to join the local chapter of a financial planning organization, such as the Financial Planning Association or the National Association of Insurance and Financial Advisors. These groups offer many resources to both rookie and veteran planners and are well worth the cost of membership. Their websites often contain job postings, too.

After Graduation

Knowing what job is the best fit for you can be a challenge. Here are some more items to consider when choosing your career path:

• There are a number of different business models being used in the financial planning industry today. Stockbrokers and insurance agents generally work on commission, while Registered Investment Advisors tend to charge either an hourly fee or a percentage of assets under management as compensation.
  
• The size of the company matters. Large companies will provide such amenities as office space, business cards and letterhead. However, larger companies may also have stiff production quotas, lower payouts on commissions and a highly regulated environment.
  
  In turn, small financial companies offer a more relaxed atmosphere and a more comprehensive array of products and services. Working at a smaller firm can also provide a much broader range of experience for new representatives, who may have the freedom to implement a well-rounded financial plan for a client. This plan could include such things as mortgage planning and income tax preparation. It's doubtful you would have this kind of responsibility at a large company.
  
• Training and support differ from company to company. Financial firms such as Smith Barney or Northwestern Mutual will provide their employees with all the necessary education and training that they need in order to pass the requisite tests, as well as thorough sales and product training. Many new advisors will benefit from the training programs offered by the large companies. Even if you ultimately lose out to the competition at a large firm, you will still have marketable skills that are attractive to small firms that can't provide the kind of training and licensing you've received.
  
• Finally, regulations from the Financial Industry Regulatory Authority require sponsorship by a broker/dealer in order to sit for any securities licensing exam.

The Bottom Line

College students have many things that they can do to improve their marketability before graduation. Once you're out in the real world, remember that the initial key to success in the financial planning business is persistence. Some graduates will find their place in the field immediately, while others may have to try a few different working environments to find the one that best suits them. Hard work and perseverance will always pay off for those who are willing to risk failure to achieve their dreams.

Read more: http://www.investopedia.com/articles/financialcareers/07/student-advice.asp#ixzz28JX7DuSu

5 Ways To Fund A College Education

According to CNNMoney, the average tuition cost at the average public university rose over 8% in 2011. The following tips are designed to dissuade you from skipping college because you think you can't afford it, and to show you some strategies for making higher education expenses fit into your budget.

Choose Your School 

Go to an in-state public school or a public school in a surrounding state that has reciprocity for reduced tuition, which will be much lower than rates at a non-reciprocal out-of-state public school or a private school. If you are not satisfied with the quality of the state schools where you live, consider moving to a state with schools you like and establishing residency.

To establish residency, you will have to meet strict requirements that vary by state and sometimes even by school - but for the savings, it may be worth it. Most states require you to live in the state for at least one year in order to be eligible, but there are other criteria to meet as well. In California, for example, it is very difficult for students who don't have a parent living in California to establish residency before their mid-20s. In addition to living in-state for 366 days immediately prior to requesting resident status, potential students must provide objective documentation demonstrating an intent to make California their permanent state of residence, such as a driver's license, ownership of property or steady employment, as well as financial independence.

If you can wait it out and meet these criteria, then you can attend quality schools at in-state rates. 

Another money-saving strategy that doesn't involve postponing college is to apply to schools that have a shortage of people like you. People like you could be people interested in your major, people from your state, people with your ethnic background, people who are as smart as or smarter than others applying to the school, people who play the unusual instrument you play or any other number of traits. Schools where you'd be a unique addition may give you scholarships.

Think About Cost of Living

Keep in mind that housing and other living costs will vary by location, especially if you choose to live off campus. An apartment in New York City will be much pricier than an apartment in the Midwest. Also, the college where you obtain your undergraduate degree can sometimes influence where you will end up working and living after school. If possible, choose a location where you'd actually want to live, where the cost of living is affordable, and where your school will be a recognizable name that will allow you to get more mileage from your diploma. UCLA may be considered a good school in the West, but may not be held in the same high regard in New York.

Don't Get Just Any Job to Pay for School

Make your job count by sticking to high-paying work. To find high-paying work, especially for summer jobs when you'll be free during business hours, seek out office jobs through temp agencies. Temp agencies do most of the job hunting work for you, and the office jobs they offer tend to pay above minimum wage, provide work experience closer to the situations you'll encounter post-college, and may give you connections that will help you land a meaningful internship or your first salaried position. Also, despite what the name implies, you can find both short and long-term jobs through temp agencies.

If you can't get a high-paying job, get a job that will keep your living expenses down, such as working in a restaurant where you get free food. If you work at a bakery, for example, any unsold goods at the end of the day may be fair game for employees since the business can't sell day-old bread. Another possibility is to find a campus job that offers perks. If you can get a job in your school's residential life office, you may be able to get a discount on housing during the school year or the summer.

If you're still in high school, start working now and save all your paychecks for college. You're still living at home; you probably don't have high living expenses chomping into your earnings like you will later on. Also, see if your high school has a program that will allow you to leave school at noon every day to go to work during your senior year. This will increase your job options, including opening up the possibility of the aforementioned office job, and allow you to work more hours.

Be Flexible with Your Schedule

Some college programs, such as engineering, are more intense than others, making it quite difficult to work while in school. For these programs, consider attending school part-time so you can still work part-time. Even if you're not in an overly demanding program, attending school part-time can help you spread out tuition costs and free up more time to work. However, part-time students may not have the option of living on campus, which can make it more difficult to be involved in the social aspects of college.

Wait

Another option is to take a year or two off after high school to work full-time so you can save up enough money to make school affordable. If you don't want to postpone college, you could take your classes during evenings and weekends in order to work full-time during the week. This strategy may take more than four years to complete, but it can be easier to budget. One argument against this approach is that many people find it easier psychologically to go straight from high school to college because study habits are still ingrained.

With education costs as high as they are and certain financial situations that fall outside the norm, even some middle-class parents may not be able to make significant contributions to a child's higher education costs despite what the formulas insist.

If you have a lot of patience, you can wait until you become an independent student as defined by the Higher Education Act, which has a different definition of "dependent" than the Internal Revenue Service (IRS). If you identify with some of the following you may qualify as an independent student.

• 24 years or older by December 31 of the award year
  
• Orphan or ward of the court
  
• Armed Forces Veteran or serving actively
  
• Graduate or professional student
  
• Married
  
• Dependents other than a spouse
  
• Student for whom a financial aid administrator makes a documented determination of independence by reason of other unusual circumstances

Being an "independent student" under the Higher Education Act could make you be eligible for more financial aid because the financial aid formulas applied to this group won't take parental contributions into account.


The Bottom Line

Some of these measures are purely practical and don't take into account many of the intangibles of the college experience, such as the learning experience of freshman dorm life. Before you start on your college plan, consider everything you want to get out of college so that you don't have regrets later. Although you may have to make some sacrifices that your peers don't, such as starting school later or staying in the state, you can still have the experience you want and attain a degree that will lead to a financially successful and stable future.

Read more: http://www.investopedia.com/articles/pf/08/affordable-college-education.asp#ixzz28JV1tjSu

Print Textbooks Vs. E-Textbooks

For college students, deciding on what textbooks to buy can be a tough decision. The emergence of e-textbooks has only made that decision more difficult to make. Now students must decide whether they want to buy a traditional paper textbook or an e-textbook. Students should use criteria such as cost, efficiency and personal comfort before making their purchases.

Price

Price will be the most important factor for many students. There is no doubt that college is expensive and the costs of a post-secondary education will only continue to rise. After paying for tuition, fees and various other expenses, there might not be enough money left to allocate towards traditional textbooks.

Even when you consider that certain sites sell textbooks at a much cheaper price, e-books still will be the more affordable option. A quick review of a textbook retailer will show that the online version of a textbook can be up to 60% cheaper than its print equivalent, but that is not the only factor to consider. If you already own a laptop, then there will be no extra costs necessary, as your laptop will be compatible with the e-book. Nevertheless, if you don't own a working laptop, then you will more than likely have to buy a tablet.

e-book Readers	Price Range
Kindle	$70 to $499
Android Tablet	$50 to $350
Netbook computer	$300 to $500
iPad	$500 to $900
Laptop computer	$500 to $2000

A review of the leading tablet retailers will show that you will be paying up to $900 for a tablet. That high of a price may not be necessary for a student, but depending on how many e-books you will be buying, one of the cheaper ones may not be an option, as they tend to have less storage space and may not be able to hold all of your books. At the end of the semester, you can always try to sell your paper textbooks in order to get some of that money back. When you buy an e-book, it cannot be returned.

There are also several miscellaneous costs to consider, including insurance and maintenance of your laptop/tablet. If you damage the book or leave too many annotations, then you may not be able to sell it back. There's also the possibility that you may not be able to use the book for more than one semester as a new edition may be released, rendering your version obsolete.

Here are some additional factors to consider:

Weight

If you have multiple classes in one day, then traditional textbooks may present a problem for you. Textbooks are heavy and typically contain thousands of pages, so carrying multiple books in your bag might put a strain on your back. With e-books, you would only need to carry one device that will house all of your books.

Notes

When you are in class listening to a professor's lecture, writing notes and highlighting important text can help you study efficiently. With traditional textbooks, this is always an option as all you would need to do is own the book. Only some e-books allow you to highlight and write notes.

Extra Features

This is one category that the e-book absolutely dominates. If you're buying a textbook, especially a used one, you are getting the book and the book alone, whereas e-books typically come with a myriad of extra features which can range from an integrated dictionary, online and media tie-ins that go over sections of the book, and a text-to-speech reader.

The Bottom Line

When deciding between buying a print textbook or an e-textbook, a good idea would be to create a list of pros and cons for each option and rank them based on importance.

Read more: http://www.investopedia.com/financial-edge/0912/print-textbooks-vs.-e-textbooks.aspx#ixzz28JUOvbnb