9 Tips To Avoid Financial Fraud

Investment fraud is as old as the world itself. From the day we stopped trading livestock and produce and began using money as a means of exchange, dishonest people have been trying to cheat and swindle it away. Though it is an old problem, recently Bernie Madoff and now (allegedly) Allen Stanford have brought it back to our attention in a big way.

As an investment professional as well as a consumer, it is an outrage that both inexperienced and savvy investors alike get taken advantage of by con-men and charlatans. So in an effort to battle these wrongs and protect you from being a victim yourself, I offer these guidelines to reduce the risk of imprudent investment as well as fraud.

1. Educate yourself.

Buy a basic investment primer if you don't know the basic nature and risk vs. return characteristics of traditional stock, bond, money market, CD & mutual fund investments. Double digit returns invariably mean higher volatility. Annuities and retirement plans are long term investments. If an investment sounds "too good to be true", it probably is! Avoid the seduction of "alternative investments" except as a minor piece of a diversified portfolio.

2. Map out your goals before shopping or investing.

What is the purpose and time horizon for the planned investment and your need for liquidity?

3. Who are you considering investing with?

Never do business with a stranger you've only met over the phone or internet. You have been detecting clues about liars all your life by looking people in the eye and watching their response to impromptu questions! Get their business card It should show evidence of regulatory oversight and ideally professional designations (such as CFP®, CHFC or CPA PFS) which show evidence of continuous training and ethics reviews. Almost all investments are regulated either as securities or insurance and you can check out the investment advisor at http://www.finra.org/brokercheck or verify insurance licensing with the state. For Texas go to http://www.tdi.state.tx.us.

4. Be careful mixing business with pleasure.

Affinity fraud occurs when investors relax their investment scrutiny because they know or know of the salesperson from church, civic or social organizations. Con-men frequently depend on this approach!

5. Beware of "edutainment".

Radio, TV and newspaper commentators are not legally responsible for their stated views and some program formats promote audience interest by featuring two radically different viewpoints. Merely writing a popular book or appearing on Oprah does not make someone an investment expert or appropriate investment advisor!

6. Ask tough questions.

How is the salesperson compensated? Does he or she have an incentive to promote "new issues" or proprietary products? Will there be regular written performance reports and is online look up available?

7. Don't be rushed - check it out.

Say no to any salesperson that pressures you to make an immediate decision. Get an independent research report on any stock or bond and a prospectus on mutual funds or variable annuities. Be suspicious of "hot tips" or "one time offers".

8. Benefit from internal controls.

Never make investments in cash or payable to the salesperson. Most investments can be held within a SIPC insured brokerage account and initial investments should be payable by check to the brokerage firm (or insurance company).

9. Limit your exposure.

Limit the amount you invest in any one security to 5 - 10% of your investment capital. Diversification is your friend!

Raise Your Credit Score Now To Take Advantage of Mortgage Opportunities

A great credit score could be all that stands between you and your dream home - with a payment that will keep you smiling for the next 30 years.

Right now could be the best time in history for first-time buyers to achieve the American Dream of home ownership.

Prices are falling like dominos as mortgage companies seek to liquidate their repossessed homes, and that liquidation always affects the consumer-owned homes in the vicinity as well. This could continue until the majority of REO (real estate owned) homes are back under the ownership of individual consumers.

Because they're still falling, some wary consumers think they should wait, but they shouldn't. The best of the bunch will be sold first - meaning the homes in the best condition, in the best locations, and with the greatest potential for appreciation in the coming years.

To make it even better, interest rates are at historically low figures - and when you lock into that low fixed rate now, you'll enjoy the savings until the home is paid in full.

For example: A home that might have sold for $200,000 a year or two ago could be a repossessed home selling for $170,000 today. And a year or two ago you might have paid 7% interest, while you could pay 5% today. Your payment, without taxes and insurance, would have been $1,330 per month. But when you buy at $170,000 and 5% interest, the payment drops to $912. This is, of course, a rough example and doesn't reflect the down payment.

Then, as they say in late-night commercials, "But wait! There's even more!"

The first-time buyer tax credit included in the stimulus bill gives you a tax credit of up to $8,000. That's money that can go back into savings to replace your down payment, or can be used for any necessary repairs on your new home.

Homes owned by Fannie Mae offer even more incentives to buy - and an opportunity for consumers who can't get their credit scores up to the 700+ range required by most lenders today. If you do an internet search for Fannie Mae owned homes you'll find what's available in your vicinity, along with the name of the real estate broker in charge of the listing.

Right now, check your credit scores, take steps to raise them as high as possible, and start shopping, because this could be a once-in-a-lifetime opportunity. If your scores are low find ways to raise your credit score before Fannie Mae increases the minimum requirements again.

Financial Crisis - Dynamics and Causes

A financial crisis has happened with regular intervals throughout the last century, it happens again in the year 2008, and probably will happen in the future in much the same way. There is no fundamental differences between such crises in our time and former crises, except perhaps that they occur faster, occur more frequently, but fortunately also heal faster.

THE TYPICAL SITUATION BEFORE THE CRISIS

The crisis often occurs after a long period of economic growth, high employment and high activity. The situation for companies and individuals are typically as follows:

• The economic activity in the whole society is very high after a long period of growth, but is beginning to decline.
  
• Stocks are traded for historically high quotes after a long period of rise of 300% or more, they have reached an all time high level, but they are beginning to decline again.
  
• The prizes of real estate properties are also high after a long period of growth, 300% or more, but they also are beginning to decline after an all time high level.
  
• Companies are often over-established after aggressive investments for borrowed money. The investments have not yet shown profitable, but the companies estimate great profits from the investments because they think the general growth will continue uninterruptedly.
  
• Also the average individuals have high debts after having invested massively in their homes and in luxury objects. They have some beginning problems with payment on their debts, but think these problems soon will go away with an anticipated further rises of personal income.
  

THE INITIAL STAGES OF THE CRISIS

The crisis usually has a slowly developing initial face. During this face the situation can reverse and the economy recover without great damages. In this initial period one can observe the following process:

• Steadily more companies realize that their massive investments do not pay back with the expected revenues and they have problems paying on their loans. They abruptly reduce further investments and begin selling off assets.
  
• Steadily more individuals also realize they have a too great debt to handle with their private income. They reduce their consume and sell off properties and luxury objects.
  
• Companies are getting steadily less orders, are selling less and have less to do because of reduced consume and investments.
  
• Earnings of companies and individuals are declining and many are downright loosing money.
  
• The stock market values are sharply declining, often 20-30%.
  
• The property prizes are sharply declining, often 20-30%.
  

THE FURTHER STAGES LEADING TO A FULL-BLOWN CRISIS

At some time there can be a critical turning point leading into the development of a full blown crisis that it is impossible to recover from in an easy way. This turning point occurs when a certain percentage, for example 10%, of individuals and companies realize that they do not have enough income to handle their debt, and that sell-off of properties and stocks will not nullify the debt. The full-blown crisis has these properties:

• The activity and earnings of companies are abruptly declining.
  
• Many companies experience massive losses.
  
• The number of companies and individuals with debt trouble is abruptly rising.
  
• The number of bankruptcies is abruptly rising.
  
• The unemployment level rises abruptly.
  
• Banks get into serious squeeze due to customers unable to pay on their debts and due to the decline in the value of properties serving as security for the loans.
  
• The troubled banks have to rise the interest rates by many percent to counteract the losses. But this act only increases the problems for other banks, individuals and companies and accelerates the crisis.
  
• A high percentage of the banks get unfunctional and bankrupt
  
• Now there will be massive sell-offs of properties and stocks. The sell-offs are exerted by individuals trying to free themselves from some of their debts and by banks trying to stop losses on loans.
  
• The stock market cracks down by an new 50% or more driven by the massive sell-offs.
  
• The real estate market also cracks down a new 50% or more due to massive sell-offs, but usually somewhat slower than the stock market.
  

THE CHARACTERISTICS OF AN ULTIMATE CRISIS

The ultimate stage of the crisis is seldom reached, because the governments will at some point take control of the financial systems and secure a minimum functionality.

In the ultimate crisis the production of goods and services in the society has fallen 30% or more and continue to fall. Investments or building activities have totally halted. There is mass unemployment, 30% or more.

The financial system has nearly totally collapsed, and is only able to support the daily payment for food, energy and other necessities. The production facilities and organizations of the society have fallen apart 30% or more due to lack of maintenance, which means that the society is not able to recover in a short time.

THE END OF THE CRISIS

Before the crisis can end, all sell-offs to pay back on loans must be fulfilled. Then every actor in the society has to accept their losses. Debts that actors are not able to pay back must in some way be nullified. Then all the pieces remaining of the former companies must be fixed together again into new functional units. Then the society can slowly rebuild its strength.

THE CAUSES OF THE CRISIS

An important cause of the crisis are over-optimistic companies and individuals during the foregoing period of economic growth. They tend to believe that the general growth will continue forever without interrupting periods of economic decline. They also tend to overestimate themselves and think they will be a winner in the competition against other companies or persons, not a looser, not an average performer, but the winner.

This optimism, which is a general human property, make all actors borrow massive amounts of capital and invest them in homes, luxury objects and expansion of their business. This expansive behaviour tend to accelerate for quite a long time untill in meets the wall.

Another cause are executives in banking companies tempted to lend out as much money as possible to the borrowers, regardless of the consequences for the bank and the borrowers, because this behaviour gives the executives an enormous short term personal gain.

HOW TO AVOID FINANCIAL CRISES

Future crises can only be prevented by hindering financial institution lending out more money to anyone that the borrowers can pay back in a comfortable way. This can only be done by governmental regulations that set clear criteria that must be fulfilled when a certain amount of money is lent out.

Also banks must be forbidden to establish employment contracts for their executives that reward them directly for the amount of mortgages they establish.

Mind over Money

Success in America means different things to different people but generally comes down to achieving our desires, or how much control we have over the important things in our life, whether it is acquiring real estate, spending time with family or the freedom to pursue your dreams. To quote a very successful author,

“There is no desire that anyone holds for any other reason than that they believe they will feel better in the achievement of it. Whether it is a material object, a physical state of being, a relationship, a condition, or a circumstance—at the heart of every desire is the desire to feel good. And so, the standard of success in life is not the things or the money—the standard of success is absolutely the amount of joy you feel.” - Esther Hicks, Ask and it is Given

A study of thousands of financially successful and unsuccessful individuals revealed that the difference between them derived more from the difference in their personal financial philosophy than from the work they did or the particular investments they made. So, what is a personal financial philosophy? The definition of philosophy is a love and pursuit of wisdom by intellectual investigation and moral self discipline. A personal financial philosophy then is our personal relationship to money and how we intend to use it to achieve the things or situations we desire, or that make us feel good.

From birth we have been preoccupied with acquiring wealth, from toys to houses, helping define our current financial philosophy. For example, you may have been raised with all the money and possessions one could want, or maybe you came from a single-parent home where money was tight and you had less than most of your peers. You may have injured someone using the power that money and wealth can give, or you may have been injured by someone using financial advantage in a ruthless or unprincipled way. All of these experiences have helped define your personal financial philosophy. Other common beliefs that may have helped shape your philosophy are: money is the root of all evil, money doesn’t grow on trees, he who has the GOLD makes the rules, it is easier for a Camel to fit through the eye of a needle than for a rich man to enter heaven and so on.

Each of us has a unique financial philosophy either because we were given one by our parents or developed one through our personal life situations. Regardless of how our philosophy evolved, each of us has the personal responsibility to identify what our personal financial philosophy is, and then ask ourselves if our current philosophy is inline with our goals and desires. Gandhi stated, “A man is but a product of his thoughts, what he thinks he becomes.” It is our responsibility to project the feelings, emotions and thoughts that reflect the results we desire in life—this is how to put mind over money.

The author Chad Sunyich writes about how can you control your Money and how much control you have over the important things in your life, whether it is acquiring real estate, spending time with family or the freedom to pursue your dreams. He also writes about different strategy of financial investment in different situation like, from birth we have been preoccupied with acquiring wealth from toys to houses, helping define our current financial philosophy. Find more information on cash, wealth, cash flow athttp://www.onlinecashflowmanagement.com

Core Banking Solutions vs Pricing and Billing Solutions

Banks have started realizing the importance of pricing as a banking enterprise entity. Core banking solutions fit well as technology solutions for banks' day-to-day business.

However, the core banking solution itself cannot cater to all the fee-income needs of a bank. This is attributable to the complex nature of each bank with regard to its independent departments or business silos and their disparate systems. Over a period of time, what results is a severe inability to visualize the fee income or pricing of charges at the enterprise level.

How a Core Banking Solution Works
A core banking solution, often referred to as a CBS, typically has a GL subsystem at its core with plug-in satellite modules catering to the various divisions of the bank. The satellite modules, referred to as "modules," cater to the business functionalities of the various lines of business of the bank. Typical CBS modules include but are not limited to:

Non-financial modules:

• Customer definition and accounts
• Customer limits definition, lines of credit, a central bank reporting structure
• Messaging and advice
• End-of-day processing modules, etc.

Financial modules:

• Loans, deposits, money markets
• Letters of credits and bills
• Treasury
• Liquidity management
• Local payments and cross-border payments
• Nostro reconciliations
• Interest and charge definitions, etc.

Each silo or line of business employs one or more of these modules to run its business. The modules are used to create contracts with customers at the branch level for various products. For example, a short-term, fixed-rate loan contract for the account of a large corporate customer has multiple components associated with it, such as the contract-principal component, tax component, interest component, product-preference component,
charge component, etc.

Transactions are generated at the component level during various events of the contract life cycle, such as contract initiation, booking, accrual, liquidation, rollover, advice generation, contract cancellation, etc. Such dollar (or any other currency) transactions hit the accounting and GL subsystem at the core. Thus, the core GL and accounting system ties the various silos together.

As we have seen, the CBS and its modules are used by the lines of business to manage customer contracts and their life cycles as well as most income classified as non-fee income.

Core Banking and Fee Income

The modules in a CBS have a charge component associated with a customer contract that allows the bank to charge fees. This charge component can generate transactions during various events. The charges, however, are only basic charges that could be required at an account-contract level.

In practice, there are multiple other fees and charge components that banks capture using multiple fringe systems in each silo.

The Limitations of Core Banking Solutions for Fee-Based Income

Fee-based income plays a significant role in the overall profitability of a bank. Limitations on the growth of traditional spread-based income have only led to an increase in the weight of fee-based income.

Hence, banks are looking for a way to view charge income at the enterprise level-i.e., a single-customer view of all of a bank's fee-based income. This means there is a need for the ability to develop enterprise-level pricing strategies, charge the customer at the relationship level, give a bundled fee offering to the customer, etc. A CBS and its modules are not designed to cater to a need for enterprise-wide pricing and billing.

Conclusion

A core banking solution is mainly used to manage the spread-based income of a bank. The fact that the fee income of a bank is a key differentiator in terms of profitability only increases its importance in the current scenario.

Having an enterprise entity and pricing strategy is important to the fee-based income of a bank. A pricing and billing solution helps manage the fee income of a bank by providing a single-customer view of all charges across the bank's product silos. A pricing and billing solution, hence, brings to the table a unique value addition to a bank by helping it maximize its fee income.

Green Accounting: Environmental Accounting

As we all know, businesses are formed to deliver services or produce products in order to earn a profit. In the 21st century accounting goes beyond the bottom line of black or red – – it includes “green”, too. With the growing green consumer awareness, companies are more than ever expected to align its business strategies with environmental initiatives. Environmentally conscious companies have already discovered that they can generate business strategies to help them reduce their carbon footprint, minimize their environmental impact, make the best use of natural resources, become more energy efficient, reduce costs, and exhibit social responsibility – all at the same time.

Companies who are ready to become an integral part of President Obama’s Green Economy through governmental initiatives will need to expand their accounting staff by hiring accountants who specialize in “green” or environmental accounting.

Green Accounting Definition
The term, green accounting, has been around since the 1980s, and is known as a management tool used for a variety of purposes, such as improving environmental performance, controlling costs, investing in “cleaner” technologies, developing “greener” processes and products, and forming decisions related to their business activities.

Green Management Accounting
According to the EPA, green or environmental management accounting is “the identification, prioritization, quantification or qualification, and incorporation of environmental costs into business decisions.” Green Management Accounting uses “data about environmental costs and performance for business decisions. It collects cost, production, inventory, and waste cost and performance for business decisions. It collects cost, production, inventory, and waste cost and performance data in the accounting system to plan, evaluate, and control.”

Environmental management accounting thus represents a combined approach which provides for the transition of data from financial accounting and cost accounting to increase material efficiency, reduce environmental impact and risk, and reduce costs of environmental protection.

Green or Environmental Accountants
Green accountants are held responsible to identify and track green costs often times working with site, research and development, and production managers when planning their budgets. In the past, such costs were buried in overhead preventing a clear picture of the cost savings and benefits to the product, process, system or facility responsible for the green initiatives.

Green accountants help management recognize that the tax benefits, rebates and lower costs of being environmentally friendly add up to a real bottom-line reward for doing the right thing.

"Public environmental, social and sustainability reporting is the main route through which corporate accountability and integrity can be demonstrated," claims the London-based Association of Chartered Certified Accountants in its report, "Environmental, Social and Sustainability Reporting on the World Wide Web."