Owning Is Riskier Than Lending But More Rewarding

Approaching your retirement means shifting your investments more towards income-based investments and away from equity-based investments. You've less time to recover from equity losses and need to rely on investment income. Here's why...

At the heart of income-based investments are loans. The most prevalent income form is interest payments for the use of your fixed dollar-denominated loan to some institution. Examples of such investments are savings accounts, CDs, newly issued bonds, and the like. You loan your $1,000 to some savings institution or company and they promise to give you back that fixed dollar amount - $1,000 - in addition to paying you interest for the use of your money.

These are essentially contract arrangements; and being so, tends to suppress risk. Getting your money back to you with interest for its use are both critical concerns to you and the institution or company.

At the heart of equity-based investments is ownership. You buy 'into' some enterprise - as a shareholder. Companies and their shares are dollar-valued investments. By that I mean whatever the company - or your shares- is worth is 'valued' by people bidding to buy it. And that amount of dollar bid for its value changes with time.

Growing value of an equity-based investment - a company - is the chief concern of the company owners. Its value will increase because of better production, better services, or more demand by buyers for its goods and services for a variety of reasons. But lack of demand can also quickly decrease its 'dollar value' giving a loss to owners and shareholders.

Equity-based investments offer the opportunity for large increases in value (your reward) but often at large increases in loss of value (your risk).

So, generally equity-based investments are riskier than income-based investments. Higher rewards come with higher risk. Of course each of these two categories of investments has a sliding scale of riskier and more rewarding examples within them.

Inflation is the bane of fixed dollar-denominated investments (income investments). It's almost an assured risk - or rather loss. That's because the 'value' of a dollar - i.e. its purchasing power - generally decreases with time.

But by the same token, dollar-valued investments (equity investments) tend to automatically adjust for inflation. If a company maintains its same 'real' value, its dollar value will necessarily be greater if a dollar's value decreases.

Income-investments tend to offer less reward but at less risk then equity-investments. To grow wealth - i.e. growing value - you need equity investments. Equity markets have always increased over the long run. But you must be able to sustain yourself through market downturns.

Income-investments tend to preserve wealth when markets turn down. But they do so at the expense of growth. Because of that, retirees should shift to a higher fraction - perhaps 60% at least, of their portfolio to income-investments during retirement.

PCI Compliance: What Your Business Needs To Know

Accepting credit and debit cards for a business is a great way to open up revenue streams for a company. However, this doesn't come without risks. From hackers, to malware, to dishonest employees, merchants face a number of threats when it comes to the credit and debit card information they use from their customers. However, merchants need not fear when it comes to identifying safety precautions to keeping their customers financial information safe.

Known as Payment Card Industry Data Security Standard (PCI DSS), these standards were developed to help merchants, as well as those who help in processing payments like banks and merchant service providers, set up a first line of defense against unwanted data breaches. These standards were formed to provide basic security precautions by establishing policies, procedures, network and software architecture, as well as additional measures to minimize the risks of your customers financial information from being compromised. So what does a merchant actually have to do to become PCI compliant?

Depending on the amount of transactions a merchant conducts, the requirements to become PCI compliant can vary placing you on a specific level of compliance. They are:

• Level 4 - If your business does less than 20,000 eCommerce or less than 1 million physical transactions, you simply need to complete an annual risk assessment usaing an SAQ or conduct quarterly PCI scans.


• Level 3 - If your business does 20,000 - 1,000,000 transactions per year, you will need to complete an annual risk assessment using an SAQ and conduct quarterly PCI scans.


• Level 2 - If your business does 1 - 6 million transactions per year, you will need to complete an annual risk assessment using an SAQ and conduct quarterly PCI scans.


• Level 1 - If your business does in excess of 6 million transactions per year, you will need to conduct an annual internal audit and conduct quarterly PCI scans.

Even when your business becomes PCI compliant, it is still an ongoing process. However, think of it like a 3 step process in the following manner:

1. Analyze for any vulnerabilities your business may have that could make it vulnerable to a data breach.


2. Fix any vulnerabilities your business may identify. If needed, do not store any cardholder data unless necessary until these issues have been fixed.


3. Report any vulnerabilities to your merchant services provider and card brands by submitting compliance reports and any required validation records.

Even though at times it may be overwhelming for a merchant to combat the theft of cardholder data, security standards like PCI are available to help businesses like yours. But remember that PCI compliance is not just smart but also required.

Top 10 Tips to Choose a Reliable Moneylender

In case you feel that you are running short of money in your quest to invest in a huge deal like a home, you might need the services of a seasoned expert. In this context, you may need some short-term loans too. But irrespective of the kind of loan you are seeking, you should exercise care and caution while setting out to search a moneylender.

As you are about to invest a huge amount of money, you need to be proactive in following certain guidelines while choosing a moneylender or company.

a) Firstly, you need to inquire about their reputation

You can do this by interacting with the present customers (or the past ones) that have engaged them for some sort of loan deals. These feedback and opinions you get are trustworthy enough and also indicate the reliability of these companies.

b) Check if they offer reliable, high-quality and round-the-clock customer services

You should be able to contact them anytime you need an urgent solution.

c) Stay away from fraudulent companies or individuals

At the same time, make sure you are not carried away by any type of false promises put forth by dubious moneylenders; there may be several evil motives hidden in some cases.

To avoid falling into their trap, it is better to approach a professional financial advisor that can guide you clearly, using their diverse and dependable experience in handling various negotiations and investment deals.

There are a few other selection criteria to choose a reliable money lending company or individual, such as:

a) Analyzing their credibility in the related industry

b) Determining their success rate

c) Assess their track record by analyzing their client testimonials

d) Carefully assessing their professional qualities like sincerity, dedication, hard work and reliability

e) Determining their level of commitment in terms of customer satisfaction, level of operation, availability, accessibility and proficiency

f) Assessing their interest rates and comparing them to those offered by the other local moneylenders. In addition, try to gather more information about the current market conditions to get a rough idea of how your deal will proceed.

g) Checking the areas of their operation and knowledge about the market conditions

Once you have analyzed the lender based on the above criteria, you can discuss the other elements of the deal elaborately. During this meeting, be clear while putting forth your requirements, such as the amount you require, your repayment capacity, etc.

Based on your budget and other specifications, you can rest assured to get a suitable solution from the lender, which is in your favor.