V is for Venture Capital

Venture capital is a bit misunderstood due to the press venture investments often receive. It seems like every week or so the news is covering some start-up that raised an inordinate amount of venture capital for an idea that sounds, at best, a bit shaky. 

But that tenuous relationship between a business idea and its application is what turns an investment into an injection of venture capital. Venture capital is, in a nutshell, the money that is invested into an early-stage, high-risk company that is believed to have the potential to yield huge returns, if it succeeds.
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Guest Post: Where Do You Get Stuck With Money?

As a Certified Financial Planner™ practitioner, new clients come to me because they want advice on specific issues like:

What can I do to get better control of the cash flow in my business?
How can I develop a budget that allows me to spend and save?
Can I afford to get office space?
Am I on track to retire?
How should I invest my portfolio?
How can I get ahead in my financial life?

I bring up the definition of insanity – doing the same thing over and over and expecting a different result. As I begin to answer these questions, my clients realize that most financial decisions they must consider somehow relate to making a change. They become more aware of what’s getting in their way and begin to reflect on the notion that something has to change. Continue reading

Guest Post: Can Your Small Biz Use Crowdsourcing With the JOBS Act?

Recently, the Jumpstart Our Business Startups Act (JOBS Act) passed amid much hoopla about how this legislation would be the stimulus that jumpstarts the economy and enables people like you and me to invest in all of these startups without becoming accredited investors, as was previously required by the Securities and Exchange Commission.

Now if you’re a small business owner, the floodgates will open, and you’ll be able to raise tons of money to accelerate your business, right? Probably not. While the SEC is still in its evaluation stage and the actual regulations have not been written, some things are already clear from the text of the JOBS Act bill itself. First, you will only be able to raise a total of $1 million in the course of 12 months, and individual investors will only be able to contribute the greater of $2,000 or 5% of net income if they make less than $100,000 per year or have a net worth of less than $100,000, and they will only be able to contribute the greater of 10% of the net income or net worth of the investor if the investor makes or is worth more than $100,000 and not to exceed $100,000 (see Section 302(a) of the text of the bill for details). So, raising $1,000,000 will require either at least 10 high income/net worth investors or at least 500 lower net worth investors, and probably many more than that.

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5 Things Employers Should Consider When Offering a 401k

Starting this July, 401k participants will receive more disclosures about the fees they are paying inside their 401k plans.

The Department of Labor wants more transparency and disclosure on what kind of fees employees are paying inside their 401k plans. Why? Because many employees have no idea how much they are paying in mutual fund fees. A recent survey by AARP said that 71% of people saving for retirement thought they didn’t pay any investment fees whatsoever. Continue reading