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Is Dividend Investing Safe?
What is Dividend Investing?
Dividend investing is a strategy in which investors buy stocks or other securities that pay regular dividends, with the goal of earning income from the dividends. Dividend investing is a popular investment strategy, especially among investors who are looking for a regular and predictable source of income.
Dividend-paying stocks are stocks that pay regular dividends to their shareholders. The dividends are typically paid on a quarterly or semi-annual basis, and they are a portion of the company’s earnings that are distributed to shareholders. Dividend-paying stocks are generally considered to be less volatile than non-dividend-paying stocks, and they can provide investors with a steady stream of income, even if the stock price fluctuates.
Dividend investing involves buying stocks or other securities that pay regular dividends, and holding them for a period of time in order to earn income from the dividends. This can be a long-term investment strategy, and investors may hold the stocks for several years or even decades in order to maximize their income from dividends.
Dividend investing can be a safe and potentially profitable investment strategy, but it is not guaranteed to be safe or profitable. Like any investment, dividend investing carries some risk, and investors should carefully research and evaluate the risks and potential rewards before making any investment decisions.
Is Dividend Investing Safe?
Dividend investing is a strategy in which investors buy stocks or other securities that pay regular dividends, with the goal of earning income from the dividends. Dividend investing can be a safe and potentially profitable investment strategy, but like any investment, it carries some risk and it is not guaranteed to be safe or profitable.
Dividend investing can be considered safe in some ways because it provides a regular and predictable source of income. Dividend-paying stocks are generally considered to be less volatile than non-dividend-paying stocks, and they can provide investors with a steady stream of income, even if the stock price fluctuates. This can be especially beneficial for investors who are looking for a source of regular income, such as retirees or those who are approaching retirement.
However, dividend investing also carries some risks, and it is not guaranteed to be safe. The dividends that investors receive are not guaranteed, and they can be reduced or eliminated at any time, depending on the financial performance and circumstances of the company. For example, if the company experiences financial difficulties or declines in earnings, it may decide to reduce or eliminate its dividends in order to conserve cash and maintain its financial stability.
In addition, the stock price of a dividend-paying company can still decline, and investors can lose money if they sell their shares at a lower price. This is a risk that is inherent in investing in stocks, and it is not specific to dividend investing. The stock market can be volatile, and stock prices can fluctuate based on many factors, including economic conditions, market trends, and company-specific events.
Another risk of dividend investing is that the dividends may not be sufficient to compensate for the risks and potential losses associated with investing in stocks. The dividends that investors receive are typically a small portion of the stock price, and they may not be enough to offset the potential loss of the stock price. For example, if the stock price declines by 10%, the dividend income may not be enough to offset the loss in the stock price.
In addition, the tax treatment of dividends can also affect the safety and profitability of dividend investing. Dividends are generally considered to be taxable income, and investors may have to pay taxes on the dividends that they receive. This can reduce the net income that investors receive from their dividends, and it can also affect the overall return on their investment.
Dividend investing can be a safe and potentially profitable investment strategy, but it is not guaranteed to be safe or profitable. As with any investment, it is important to carefully research and evaluate the risks and potential rewards before making any investment decisions. This can help investors make informed and responsible investment choices, and it can help them manage and mitigate the risks associated with dividend investing.
Munger’s #1 Investing Rule : Fish Where the Fish are
Charlie Munger’s #1 Investing Rule : Fish Where the Fish are
Fish where the fish are
Warren Buffett is undoubtedly the greatest investor to have ever lived, but is his success ever going to be replicated?
This is an exciting question and one that deserves plenty of attention. Warren Buffett has achieved an outstanding record, but what percentage of this record is due to his genius, and what portion is due to a favorable backdrop?
All just luck?
In Malcolm Gladwell’s book, “Outliers,” the author speculates that many successful people have only become successful because of the environment they were born into. Their intelligence and focus have helped accelerate their success and enabled them to make the most of the opportunities offered, but for the most part, luck was the standout factor.
So, does this mean that there will never be another Buffett? As always, it’s impossible to answer a question like that with accuracy, as there are so many different moving parts. However, at the Daily Journal Annual Meeting, Warren Buffett’s right-hand man, Charlie Munger, voiced his thoughts on the matter.:
“Another place that’s threatened. Suppose you’re charging say 1 and 20, one percent off the top and twenty percent of profits…or even worse, two percent off the top and twenty percent of profits…and you’ve got $30 billion or so under management and an army of ambitious young people, all of whom want to get unreasonably rich very fast. What are your chances of doing better for your clients? Well, the average entity that charges those fees, the chances the clients will do well is pretty poor. That’s the reason Warren won that bet against the hedge funds. Where he bet on the S&P averages and they bet on a carefully selected bunch of geniuses charging very high fees. And of course, the high fees will just kill you. It’s so hard in a competitive world to get big advantages just buying securities, particularly when you’re doing it by the billion, and then you add the burden of very high fees and think that by working hard and reading a lot of sell-side research and so forth, that you’re going to do well. It’s delusional. It’s not good to face the world in a delusional way. And I don’t think, when Berkshire came up, we had an easier world than you people are facing this point forward, and I don’t think you’re going to get the kind of results we got by just doing what we did. That’s not to say what we did and the attitudes that we had are obsolete or won’t be useful, it’s just that their prospects are worse.
There’s a rule of fishing that’s a very good rule. The first rule of fishing is “fish where the fish are,” and the second rule of fishing is “don’t forget rule number one.” And in investing it’s the same thing. Some places have lots of fish, and you don’t have to be that good a fisherman to do pretty well. Other places are so heavily fished that no matter how good a fisherman you are, you aren’t going to do very well. And in the world we’re living in now, an awful lot of places are in the second category. I don’t think that should discourage anyone. I mean life’s a long game, and there are easy stretches and hard stretches and good opportunities and bad opportunities. The right way to go at life is to take it as it comes and do the best you can. And if you live to an old age, you’ll get your share of good opportunities. It may be two to a lifetime, that may be your full share. But if you seize one of the two, you’ll be alright.”
It seems that Munger believes that there are still opportunities out there, you just have to keep your eyes open. As value investing has grown significantly since Warren Buffett first set out, and today there are thousands of investors chasing ever fewer opportunities, it is unlikely any investor will be able to replicate Warren Buffett’s success in the same way he did.
However, that does not mean that the world is devoid of opportunities, and you only need to find one or two of these opportunities to have a transformational effect on your wealth.
It seems that Munger believes that there are still opportunities out there, you just have to keep your eyes open. As value investing has grown significantly since Warren Buffett first set out, and today there are thousands of investors chasing ever fewer opportunities, it is unlikely any investor will be able to replicate Warren Buffett’s success in the same way he did.
However, that does not mean that the world is devoid of opportunities, and you only need to find one or two of these opportunities to have a transformational effect on your wealth. Four Reasons to Consider Investing in Real Assets (like franchises)
Why should you consider investing in real assets like franchises?
In short, investors who diversify with real assets, like franchises, tend to enjoy better investment performance than those who do not.
But the long answer is that real assets can provide…
1. Intrinsic value
Real assets like franchises create and retain value by being in business each and every day – meaning, the value is not derived from the market, but rather, from the productivity of the asset.
2. Passive income
Unlike most stocks, real assets like franchises generate significant income on a predictable basis that is paid out quarterly.
3. Stability in the storm
The stock market’s values can swing wildly on a whim – or even a tweet. Meanwhile, the uncorrelated, illiquid nature of real assets like franchises means they can act as a stabilizing force for the rest of your portfolio.
4. Inflation hedge
When inflation rises, so do the prices of goods and services that franchises sell, leading to higher profitability and investor distributions. A more profitable business also appreciates faster, providing both a short and long-term hedge against inflation.
However, if you have not invested in our TNT Franchise Fund Inc. offering yet, there is still time!
Accredited investors can review all offering documents and watch our offering deep dive by visiting the TNT offering page. Also, although this offering is available to accredited investors only, we’re currently building a similar offering that will be available in August and open to everyone.
Gold, Silver and More – Best Precious Metals ETFs
1- SPDR Gold Shares (NYSEMKT:GLD)
AUM : $56 billion
An ETF that holds physical gold. SPDR Gold Shares is the largest gold ETF.
2- iShares Silver Trust (NYSEMKT:SLV)
AUM : $11.9 billion
An ETF that holds physical silver. iShares Silver Trust is the largest silver ETF.
3- Aberdeen Standard Physical Platinum Shares ETF (NYSEMKT:PPLT)
AUM : $1.1 billion
An ETF that holds physical platinum.
The Aberdeen Standard Physical Platinum Shares ETF lets investors directly invest in platinum, a key precious metal used primarily to make catalytic converters for the auto industry. The ETF holds physical bars stored in bank vaults.
4- Aberdeen Standard Physical Precious Metals Basket Shares ETF (NYSEMKT:GLTR)
AUM : $950 million
An ETF that holds physical gold, silver, platinum, and palladium. The Aberdeen Standard Physical Precious Metals Basket Shares ETF gives investors direct exposure to several precious metals.
5- Aberdeen Standard Physical Palladium Shares ETF (NYSEMKT:PALL)
AUM : $335 million
An ETF that holds physical palladium. The Aberdeen Standard Physical Palladium Shares ETF allows investors to directly invest in palladium. Like platinum, the primary use of palladium is for catalytic converters in cars. Palladium’s other uses include jewelry and some dental fillings and crowns.
6- Wheaton Precious Metals Corp (NYSE:WPM)
AUM: N/A
Wheaton Precious Metals Corp. is one of the most prominent precious metals streaming companies in the world. Founded in 2004, and based in Vancouver, Canada, the company operates across the globe. It product range includes gold, silver, palladium and cobalt. In August 2020, the company held streaming agreements for 20 operating mines and nine other projects in the development stage.
Wheaton Precious Metals Corp is listed on the New York Stock Exchange under ticker NYSE: WPM and also on the Toronto Stock Exchange under ticker TSX: WOM.CA. As of August 2020, the company had a market cap of $30.13bn, with a price to earnings ratio of 185.05. The firm pays a dividend to shareholders, and the yield in 2019 was 0.83%. The WPM share price all-time high price of $53.62 was recorded in July 2020.
With a portfolio of low-cost, long-life, precious metal assets, the organisation aims to be the world’s premier precious metals investment vehicle for global investors. The firm strives to provide excellent value for its shareholders via a unique business model. The emphasis is on continuing expansion through the acquisition of new streams, alongside delivering a dividend yield and the potential for long-term growth.
Should You Buy Stocks When Their Price is Decreasing and Their Dividend Yield is Increasing?
It’s a great uh and very hectic time to decide whether tests whether or not in west you are one of the well-known strategists in turkey because you are with us please tell me the way that you are thinking about investment what is the main theme meaning should they sell their stock holdings because they’re worried about a bear market and recession around the corner or because most of the uncertainty has already been factored into stock prices that now is the time to be buying i still think that there are challenges ahead as it relates to the geopolitical situation in ukraine as well as what the fed is likely to do at its mid-march meeting so one thing is certain and that is that volatility will remain elevated okay uh as long as the politics is concerned what is the next episode of uh this political problem i mean for example if uh china uh decides to invade taiwan or something like that or the this is just uh story uh just uh speculated by the markets it is markets because china has mentioned that it does feel that taiwan is a part of mainland china um and so because of the uh situation in ukraine uh the the worry is that that could give china an increased reason to invade taiwan um at this point we don’t think that that is a likelihood but it is a situation that has increased in probability since the russian invasion of ukraine also we see that north korea has sent up several more uh test rockets so we just find that there is an awful lot of uncertainty from a geopolitical perspective around the globe okay one or another i think there will be more volatility in terms of geographical uh problems the other one is the policy making or the uh interest rate decisions of the mpc uh what what are you uh expecting to see from the fed side well i expect to see a one quarter of one percent rate increase so a 25 basis point rate hike when they meet in the middle of march um we have had five rate tightening cycles since 1990 and every one of them has started with a 25 basis point increase the fed likes to start slowly they tend to then increase rates by 25 basis points at the second meeting third meeting and it’s usually at the fourth meeting or so that if they feel they need to speed things up then they raise rates by 50 or 75 basis points so our belief is that they will have three 25 basis point increases by mid-year and then possibly two more by the end of this year so five in total but we don’t see a 50 basis point hike initially and we don’t think that they will need to go seven this year as some strategists are calling for okay as far as i know uh errors like uh those inflation expectations are writing it’s not bad for the stock market as far as i know but on the other hand there is the liquidity which will be i mean raccoon by the fed on the other side what is going to be the impact as long as the uh global stock markets are concerned do you expect to see a decapitalization uh between uh developed markets or developing markets well i think first off that’s multiple part question but in terms of inflation that is certainly a concern for investor today for cpi uh we’re only going to be getting the february data uh this coming week in which we likely to see seven point eight percent year on year increase but that will come up to an 8.0 percent year-on-year rise with the march data so that is a concern because there is a direct correlation between inflation and interest rates if you take a look at the 1970s we started that decade at a 5.4 percent year-on-year rise in inflation and ended the decade at 12.4 and for that whole 10-year period we only posted a compound annual growth rate of one and a half percent for the s p 500. so higher inflation leads to higher interest rates which then leads to lower stock prices in terms of what might be more adversely affected uh our belief is that we probably will see more pressure from the emerging market side than we will on the develop side at least as it relates to interest rates our expectation is from a a global gdp perspective that emerging countries could see about a 4.4 percent gdp rise in 2022 but that’s down sharply from the 6.4 rise that we saw in 2021 what about china how is china economies performing chinese economy is doing very well uh up 8.1 in 2021 and expected to be up four and a half percent in 2022 so it’s still one of the stronger economies out there and recently china had indicated that its goal is for a five and a half percent increase in gdp this year so still china is a strong economy but certainly not as strong as it has been in past many years what about the us because i’m asking this question because most of the people think that the real conflict is not just between uh us and russia or u.s uh ukraine between russia but uh you know uh one of the biggest uh challenging economy i mean the telling the u.s economy is china at the same time how is u.s performing and what is going to be the impact of this kind of i mean uh geographical problems uh over uh u.s economy china economy and of course the uh global economy well we have certainly seen a reduction in earning in expectations for the global economy at the beginning of the year it was expected that we would see a five and a half percent rise uh in gdp uh in 2022 now that number is closer to 4.1 percent uh so certainly expectations are for weaker economic growth across the globe um the biggest declines are likely to occur in the advanced economies we were likely to see about a 4.3 percent gain now looking for 3.7 i think that the real worry that investors have around the globe is will the us be losing its military might if you will or its uh geopolitical standings if we don’t in a sense stand up to the bullies around the world uh does that mean that we lose our stature uh in terms of defending uh our nato alliances so i i think that uh the us is is obviously playing it very carefully because we are dealing with two superpowers with nuclear capabilities so trying to assist the ukrainians uh through pretty creative measures uh financially in particular uh but also by sending uh migs from poland to ukraine in order to fight the russians on their own so it looks as if the longer that the ukrainians can hold out uh and because of the impressive um uniform response by the western world i think that has caused people to feel a little bit better about how the us can lead such a coalition okay um turkey is one of the most important ally i don’t know if it still saw like that but uh um correct me if i’m wrong but uh your ex uh president trump uh said uh uh sending uh clear message with or without me i think it’s still uh on the uh desk that it’s clear that you you should have to decide whether you are with the nato nato allies or without them uh do you think that turkey might be or loser or winner uh in terms of investment because you know uh if uh nato or us want to send a clear message to the bullies it means that you have to be with the your allies and uh one of the uh most suffered i mean country is turkey in terms of trees them in terms of uh fx market in terms of energy prices in terms of grain i mean uh buying from abroad do you think that this kind of i mean uh problem has a very very different meaning for turkey or the investment in turkey well i think that certainly you cannot uh look toward the prior president you have to look exclusively at the current president the current administration and the current policies and i think that not being a political expert that the us’s stance is one of embrace uh accepting uh the members who want to work with the united states but i don’t think it is a binary situation where you’re either with us or you’re against us uh i think the us is simply trying to put together a coalition to help stave off the russian invasion of uh ukraine um but i think that we all realize how important uh the trading partners are around the globe and we would rather have that uh continue and actually increase rather than trying to set up walls between ourselves and other trading nations okay as the last question uh what i understand is that it’s going to have uh some more time to settle down this kind of uh i mean conflicts between countries russia ukraine china and others uh but on the other hand the turk uh all the global economy will suffer uh i mean growth rate will diminish uh and inflation is going to be still high.
What do you recommend your investors to invest in order to keep their savings against the inflation?
Well, the first thing that they should do is to protect their portfolios from their own emotions, because it’s usually the worst time when investors feel the most panic that over the long term the best investment out there to beat both inflation and taxes is stocks so typically you know you’re better off looking for reasons to buy stocks at depressed prices than you are to sell your stocks at these depressed prices especially if you happen to be somebody who’s approaching retirement. You want to be focusing on those companies that now are offering a very attractive dividend yield because of the lower prices. Think like a landlord not like a trader, focus on dividend yields as if they were tenants within your rental apartments, look for those that consistently pay a good dividend and have no problem with annual increases so like a tenant to make sure that they continue to pay and they don’t want to leave should you want to raise their rent; so same goes for the stock prices. Look for those that represent a good opportunity now that prices have come down so much.
How to Build Your Credit Score, the Do’s and Don’ts
How to Build Your Credit Score, the Do’s and Don’ts
With the advent of urbanisation and globalisation, the economy has witnessed several breakthroughs like changes in shopping trends which has consequently eased and established new modes of payment to a great extent.
A credit score, also referred to as a credit rating is one of the methods used by Credit Referring Agencies (CRAs) to check the potential of an individual in terms of money lending and crediting. These agencies are responsible for your credit scores which are emanated from your financial records and added to your credit file.
It is necessary to know how to build your credit score as it could benefit you when in need of loans, mortgages, or credit. A good credit score plays a paramount role in creating your image as a good financier in front of your lenders.
What Qualifies as a Good Credit Score?
Each CRA has a different credit score requirement according to their respective systems and methods.
- Transunion defines 4 as a good rate from an overall 5
- Experian defines 880 as a good rate from an overall 900
- Equifax defines 420 as a good rate from an overall 700
- You are not registered as a voter. This may perceive you to be an unreliable citizen because of your non-verified address and identity.
- You have only one credit card and have exceeded the credit limit for that card while making payments.
- You are still in an association with an ex-business partner or relative with a low credit score.
- Your CCJ mark has not been removed by your lender even after 6 years.
- You have blundered in the personal information section of your credit report.
- You have applied for a new credit card or loan recently. Having more than one credit application can result in the unreliability of timely payments.
Credit Card Eligibility Checkers For First-Timers
Credit Card Eligibility Checkers For First-Timers
Credit cards have become the lifeblood of the financial markets. The statement holds more value when it comes to the UK, for it has over 159 million credit card users. The British people are always on the go and opt for convenient methods of payment like credit cards. Apart from that, the security of transactions and benefits that come with it make credit cards an effective way to avail credit that they can repay the bill along with the predetermined interest charges every month. Taking into account their incomes and expenditure pattern, and the results of the credit card eligibility checker, anyone can apply for the credit card.
When to get a credit card?
A credit card can be instrumental in shaping the credit history and the credit score of the user. A delay in payments or rejection by the lender can hamper the creditworthiness and hence, it becomes vital to know when to get a credit card. Taking help from a credit card eligibility checker can ensure if you are ready for a credit card. The following points can help decide when a person can apply for the first credit card:
- The applicant is over 18 years of age when applying for the credit card. They can get a student credit card and establish a strong credit history. In a few cases, the lenders might have 21 years as the minimum age.
- The applicant is either earning or has other sources of income to repay the monthly bill. Failure to do so can impact the credit score and reduce the chances to avail credit in future.
- The applicant should have a savings bank account.
- An applicant has no credit history and needs to establish a good credit score for any other form of credit, like loans.
- The applicant has taken a test on the credit card eligibility checker and gotten positive results.
- Annual Percentage Rate or APR
- Additional fees charged by the lender
- Introductory period
- Benefits
- Total amount due every month
- M&S Bank Shopping Plus Credit Card
- Sainsbury’s Bank Credit Card
- British Airways Credit Card
- Vanquis Bank Ltd Classic Credit Card
- American Express Platinum Credit Card
A Complete Credit Builder Guide to Enhancing Credit Scores
A Complete Credit Builder Guide to Enhancing Credit Scores
Credit is something that you take from a lender at an agreed rate of interest. It could be taken for various purposes but it is not always that banks will approve your credit. The chances of getting credit depend more or less on your credit score.
The quality of your credit score is defined by your bank account and financial transactions among other things. A credit score is the score or rank given by credible companies or financial institutions wherein they analyze the client’s credit history. Based on this, a customer gets a credit score and helps the lender know the creditworthiness of the borrower.
Consequently, this score determines the level of difficulty that you might face in availing a loan in the future. The better the credit score, the better the chances of getting your loan cleared with ease. Additionally, a bad credit score can keep you from accessing a line of credit to buy your dream home, finance your education or even land a good job. Therefore, it is mandatory to build a good credit score.
Herein, we are trying to help you by giving a comprehensive credit builder loan guide because getting a good credit score requires time to build. This credit builder guide seeks to provide you a glimpse of how credit scores are determined, what is credit building, what are the different things to keep in mind to build a credit score, some quick tips to evaluate your credit history and many more.
How is a credit score determined?
A credit score is determined by factoring in multiple variables. Some of them are as follows:
- It takes into consideration how well you are able to repay or have repaid your debt.
- Analyses the credit discipline that you maintain in your financial books.
- Go into your credit card history and look for patterns.
- Banks or financial institutions can outrightly deny your claim for the loan due to a low credit score.
- A high-interest rate is charged from the person as the chances of non-repayment increases due to low credit history. This is charged to keep a safety buffer.
- A long gestation period loan is denied to the person due to the bank’s own safety policy.
- The first step to getting a credit score is to apply for a credit and then build the profile accordingly. In this, credit builder loans can be used to start the credit journey and then make timely repayments of it to score better.
- Stay within your credit card limit. Be it your credit card or any loan taken, it is better to avoid spending more than the limit. This depicts that you are not “credit hungry” and are a responsible user. As sometimes expenses done beyond the limit can lead to a mismatch between income and repayment capacity.
- Repay your loan and do not default on them to build your credit score. Moreover, it also defines your credit discipline and future chances of surviving a credit.
- Monitor your joint accounts as any default by one of the members can hamper your credit score too.
- Not using the credit card that you have recently taken can be a problem because once you have a credit card, it goes without saying that it needs to be used. It helps in showcasing that you are capable of meeting your credits.
- Don’t apply for a high amount of loan when in need and keep it in moderation. Because a loan of the high amount can depict that your income is not sufficient to manage your expenses. Make an informed decision before deciding the loan amount.
- Keep a constant and timely check on your credit profile. Any negation in this step can affect the credit score poorly.
How to Improve your Credit Score in UK?
Tips on How to Improve your Credit Score in the UK
Before we discuss how to improve your credit score in the UK, we will begin by explaining what loans are and why people need them.
Why do people need loans and how do they go about it?
Most people generally go to a bank for a loan. When they do so, they ask for a specific loan amount that they require. People acquire loans from banks because banks can cater to a variety of expenses. These expenses include getting a new car, an education, home improvements, buying a new house, spending on a vacation, and so forth. While asking for the loan, the customers will be asked to submit a few critical details. These details include the account number, driver’s license or passport, a recent bank, property details, and tax filings. These are all documents that you ought to carry when you approach the bank. Once you submit your details to the bank, a credit check will be performed. When the credit check is complete the bank returns with your credit score, a number between 0 and 999. Knowing what your credit score is and understanding how to improve your credit score in the UK is very crucial.What is a Credit Score and why is it Important?
When applying for a loan in the UK, banks take a look at your creditworthiness and decide if you are worthy of the investment, i.e. they check to see if you are a default risk or not. They find out your creditworthiness from different Credit Rating Agencies (CRA), Examples of CRAs are Experian, TransUnion or Equifax. This information comes in the form of a score known as your credit score. To create your credit scores, Credit Rating Agencies need a legitimate source of data or history. The data that CRAs use to make your credit scores include your payment history, credit usage, credit mix and information such as missed credit payments, foreclosures, and so forth. Therefore, it is safe to say that CRAs know how to help you improve your credit score in the UK. Different companies have different ways of assigning you a credit score. For example, Experian’s credit score varies from 0 to 999 with 0 being the lowest, TransUnion’s credit score typically ranges between 300 and 850—the higher the number, the better and an Equifax score ranges from 0 to 700. Using the information that credit rating agencies like Experian and Equifax share with them, banks offer you deals on loans. If you have what is considered a good credit score, you will get a loan at a relatively low interest. In addition to this, banks will permit you to take out a larger loan amount. If you have a poor credit score, you will probably get a loan at a very high, sometimes unaffordable interest rate. These loans will be in smaller amounts because the bank will be worried about your high chances of being a default risk. In some extreme credit cases, the bank will not give you a loan at all. Successfully applying a loan is more likely if you are working on how to improve your credit score in the UK.How can I improve my credit score in the UK?
Be on time with Payments
One of the easiest and most effective ways to improve your credit score is to clear credit card debt on time. This is a strong way of conveying to your bank that you have strong creditworthiness.Do not perform multiple credit checks
As mentioned earlier, loans in the UK require loan applicants to have a credit score that meets the loan criteria set by the bank. An important thing to consider before going to a bank for a loan is to make sure that you have a reasonable credit score. A low credit score can attract a very high interest rate or make getting loans very hard for you. Every time a bank checks your credit score, there is a slight effect on your credit score. If you repeatedly go to different banks, it will appear as though you are desperate for a loan. This will significantly affect your credit score.Close accounts and cards you no longer use
If you have any bank accounts that you do not use anymore, close them. If there are any balances left in your old accounts, do note that CRAs have access to this information. When needed, they will take this into consideration before making your final score.Build your Credit through a Prepaid card from Credit Builder
Credit Builder is a service designed to help people by showing them how to improve their credit score in the UK. These cards constitute one of the easiest answers on how to improve your credit score in the UK. Customers pay a monthly fee which is automatically deducted from their bank accounts. This fee that you pay is reported to CRAs every month for twelve months as an interest payment. During this period, your credit rating will have improved.Get your name on the Electoral roll
An easy solution for how to improve your credit score in the UK is by getting listed on the electoral roll. This is because lenders and CRAs check to see if you and the details you provide are authentic. It also helps if you are living at the same address, have had the same job and bank account for a while without change.Is Coca Cola Stock a Buy in 2022? – Coca Cola (KO) Stock Analysis
Is Coca-Cola Stock a Buy Now!? | Coca Cola (KO) Stock Analysis!
One of Warren Buffett’s favorite investments of all time is Coca-Cola (KO). Coca-Cola has paid out over nine billion dollars in dividend income to Warren Buffett. In total, Buffett’s Berkshire Hathaway owns 400 million shares of coca-cola which is projected to generate 672 million dollars in annual dividend income that comes out to roughly 1.8 million in dividend income per day 76 000 in dividend income per hour and 1 278 dollars in dividend income for Berkshire Hathaway every single minute.
Buffett has always been pretty public with his thoughts on coca-cola stock too,
Okay so we are currently looking at my stock valuation spreadsheet in google sheets and on this spreadsheet we have four different valuation models we have grams valuation a discounted cash flow analysis a multiples valuation and a dividend discount model which will all roll into our output tab so that we can find the intrinsic value of coca-cola stock so let’s go ahead and start with grams valuation we can see here graham’s valuation was invented by benjamin graham he was one of warren buffett’s mentors and we can see exactly what his formula was right here to calculate the intrinsic value of stocks so we can see in order to do this the first thing we need is our earnings per share so i have that listed for coca-cola right here we then take seven which is the price to earnings of a company with no growth and we’re going to multiply or excuse me we’re going to add that to the projected growth rate for coca-cola which is currently 10 for most analysts we are then going to take the average yield of aaa corporate bonds which is 4.4 so we then multiply all these together and then we have to divide it by y which is the current yield of aaa corporate bonds which is currently 3.3 so we can see based off of graham’s valuation we come to an intrinsic value for coca-cola of 51.23 per share so let’s go ahead and jump over to our discounted cash flow analysis and in order to perform a discounted cash flow analysis we need to find the growth rate for the future free cash flows for coca-cola so in order to do this i looked at the historical free cash flows for coca-cola and found that they had an average growth rate of about 10 percent so i decided to use a growth rate of 10 for this scenario based off of this i then projected for the future free cash flows and calculated the terminal value which is a combination of all the future free cash flows past the year 2030. i then found the present value of these future free cash flows and added them all together which you can see right here the next step was to add all of coca-cola’s cash and cash equivalents and then i subtracted their total debt and this allowed me to find the equity value of coca-cola the final step was to take the shares outstanding and then take the equity value and divide it by the number of shares outstanding so we can see based off of our discounted cash flow analysis coca-cola had an intrinsic value of 54 dollars per share so let’s go ahead and jump over to our multiples valuation model now and for the multiples valuation model there were only a couple of companies that i felt comfortable comparing to coca-cola but essentially in order to perform a multiples valuation what we’re going to do is we’re going to take companies that are similar to coca-cola which you can see in this scenario is pepsi and monster beverage corporation we then take their earnings per share and we’re going to take the stock price and divide it by the earnings per share to find the price to earnings multiple we then take the average price to earnings multiple which in this scenario was 28 and we then multiply it by coca-cola’s earnings per share which leads us to a stock price of 63.62 which should be the intrinsic value based off of our multiples valuation model so let’s go ahead and jump over to what everyone wants to see for this valuation of coca-cola which is the dividend discount model and this is a very popular way to value dividend stocks so for coca-cola this is obviously a very important valuation model so essentially the idea behind the dividend discount model is that we can find the intrinsic value of a stock based on how fast they grow their dividends and how much they’re paying out in dividends so essentially what i did is i took the historical dividend data for coca-cola and i then found what their yearly dividend payout was this allowed me to see what the growth rate was year over year and their average growth rate over the past few years was about 3.23 percent so i projected a growth rate for their dividends of 3.3 percent after applying a discount rate of 8 we can see that based off of our dividend discount model their intrinsic value was 36.92 cents per share so let’s go ahead and jump over to our output tab.
Here on our output tab you can see exactly what our valuation models projected for graham’s valuation 51 multiples valuation 63 discounted cash flow 54 dividend discount model 36.92 i then take the average of all these valuations which we can see was about 51.46 and so when we look at the current price of coca-cola it’s currently trading at a price of about 58 dollars per share that’s a different of about 14 between the two and so it really doesn’t matter what our margin of safety is in this scenario because we can clearly see our current price is higher than the intrinsic value let’s go ahead and say we wanted to apply a 10 margin of safety we can see that based off of our valuation our acceptable buy price would be about 46.31 now full disclaimer i do own a fair amount of coca-cola stock but i wouldn’t want to buy in at its current price i’m up about 500 in my own personal portfolio which you can see in my monthly updates but i was able to buy into coca-cola at a much better price than it’s currently priced at and if we jump back over to our stock screener one other thing to take note of is coca-cola is starting to get a pretty high payout ratio i do love the dividend yield it’s a pretty solid yield at 2.86 percent and they have been very consistent with increasing their dividend payouts but it is worth noting that that payout ratio is getting a little bit high so really again i do love coca-cola stock but at this price i don’t know if it’s the best option for dividend investors let me know your thoughts on coca-cola stock in the comments below i know for me personally if it does dip back down into this acceptable buy price of about 46 dollars i will likely be adding more to my.
those are the kind of businesses I like, wonderful brands you got to take care of them and but if you take care of an of a great brand you know it’s forever and those are the businesses I like we own 400 million shares of coca-cola stock as you know we’ve never sold a share and I wouldn’t think of selling a share.As a value dividend investor myself, any time the greatest investor of all time speaks so highly of a company it’s worth taking the time to take a deep dive into the intrinsic value of coca-cola in order to find Coca-Cola’s intrinsic value we’re going to jump into my stock valuation spreadsheet
Okay so we are currently looking at my stock valuation spreadsheet in google sheets and on this spreadsheet we have four different valuation models we have grams valuation a discounted cash flow analysis a multiples valuation and a dividend discount model which will all roll into our output tab so that we can find the intrinsic value of coca-cola stock so let’s go ahead and start with grams valuation we can see here graham’s valuation was invented by benjamin graham he was one of warren buffett’s mentors and we can see exactly what his formula was right here to calculate the intrinsic value of stocks so we can see in order to do this the first thing we need is our earnings per share so i have that listed for coca-cola right here we then take seven which is the price to earnings of a company with no growth and we’re going to multiply or excuse me we’re going to add that to the projected growth rate for coca-cola which is currently 10 for most analysts we are then going to take the average yield of aaa corporate bonds which is 4.4 so we then multiply all these together and then we have to divide it by y which is the current yield of aaa corporate bonds which is currently 3.3 so we can see based off of graham’s valuation we come to an intrinsic value for coca-cola of 51.23 per share so let’s go ahead and jump over to our discounted cash flow analysis and in order to perform a discounted cash flow analysis we need to find the growth rate for the future free cash flows for coca-cola so in order to do this i looked at the historical free cash flows for coca-cola and found that they had an average growth rate of about 10 percent so i decided to use a growth rate of 10 for this scenario based off of this i then projected for the future free cash flows and calculated the terminal value which is a combination of all the future free cash flows past the year 2030. i then found the present value of these future free cash flows and added them all together which you can see right here the next step was to add all of coca-cola’s cash and cash equivalents and then i subtracted their total debt and this allowed me to find the equity value of coca-cola the final step was to take the shares outstanding and then take the equity value and divide it by the number of shares outstanding so we can see based off of our discounted cash flow analysis coca-cola had an intrinsic value of 54 dollars per share so let’s go ahead and jump over to our multiples valuation model now and for the multiples valuation model there were only a couple of companies that i felt comfortable comparing to coca-cola but essentially in order to perform a multiples valuation what we’re going to do is we’re going to take companies that are similar to coca-cola which you can see in this scenario is pepsi and monster beverage corporation we then take their earnings per share and we’re going to take the stock price and divide it by the earnings per share to find the price to earnings multiple we then take the average price to earnings multiple which in this scenario was 28 and we then multiply it by coca-cola’s earnings per share which leads us to a stock price of 63.62 which should be the intrinsic value based off of our multiples valuation model so let’s go ahead and jump over to what everyone wants to see for this valuation of coca-cola which is the dividend discount model and this is a very popular way to value dividend stocks so for coca-cola this is obviously a very important valuation model so essentially the idea behind the dividend discount model is that we can find the intrinsic value of a stock based on how fast they grow their dividends and how much they’re paying out in dividends so essentially what i did is i took the historical dividend data for coca-cola and i then found what their yearly dividend payout was this allowed me to see what the growth rate was year over year and their average growth rate over the past few years was about 3.23 percent so i projected a growth rate for their dividends of 3.3 percent after applying a discount rate of 8 we can see that based off of our dividend discount model their intrinsic value was 36.92 cents per share so let’s go ahead and jump over to our output tab.
Here on our output tab you can see exactly what our valuation models projected for graham’s valuation 51 multiples valuation 63 discounted cash flow 54 dividend discount model 36.92 i then take the average of all these valuations which we can see was about 51.46 and so when we look at the current price of coca-cola it’s currently trading at a price of about 58 dollars per share that’s a different of about 14 between the two and so it really doesn’t matter what our margin of safety is in this scenario because we can clearly see our current price is higher than the intrinsic value let’s go ahead and say we wanted to apply a 10 margin of safety we can see that based off of our valuation our acceptable buy price would be about 46.31 now full disclaimer i do own a fair amount of coca-cola stock but i wouldn’t want to buy in at its current price i’m up about 500 in my own personal portfolio which you can see in my monthly updates but i was able to buy into coca-cola at a much better price than it’s currently priced at and if we jump back over to our stock screener one other thing to take note of is coca-cola is starting to get a pretty high payout ratio i do love the dividend yield it’s a pretty solid yield at 2.86 percent and they have been very consistent with increasing their dividend payouts but it is worth noting that that payout ratio is getting a little bit high so really again i do love coca-cola stock but at this price i don’t know if it’s the best option for dividend investors let me know your thoughts on coca-cola stock in the comments below i know for me personally if it does dip back down into this acceptable buy price of about 46 dollars i will likely be adding more to my.
Portfolio Diversification for Beginner Investors
PORTFOLIO DIVERSIFICATION
Portfolio diversification refers to investment in different securities so that the overall risk is reduced by the mix of investments. Instead of investing in stocks for one company for example, you invest across different sectors. A popular analogy for portfolio diversification is carrying eggs in different baskets. As such, if one basket breaks, eggs in the other baskets are still good.
Importance of Portfolio Diversification
Mitigates unsystematic risk
Ultimately, portfolio diversification limits the exposure to of funds to risk. Specifically, unsystematic risk is eliminated through the use of a portfolio. Unsystematic refers to risk that is specific to a given market segment or company. Thus, if investment is in the specific company and the market events are unfavorable then all your investments are affected.
Portfolio diversification will mitigate the risk if the securities invested in are of negative correlation to each other. This basically means that if security A performs in a specific way in the market then security B should perform in the opposite direction for the risk to be reduced.
Although portfolio diversification does not eliminate systematic risk, which is inherent risk for the market at large, it affects unsystematic risk that be controlled as it is firm specific.
Enhanced returns
A diversified portfolio consists of investment in different securities in terms of asset classes, markets and across time. Thus, on average, the securities bring forth higher returns in the long term. With an appropriate mix, the portfolio’s performance can be seen as superior.
Takes Care of Market Cycles
You are able to adjust to market cycles smoothy with a diversified portfolio. When the market moves up or down the different mix of assets behave differently. Whether the market is bullish or crashes, you are able to turn the tides into your favor.
Investment in Grown Opportunities for Different Sectors
A diversified portfolio is exposed to the vibrant growth that some of the securities are experiencing. As such, you are able to leverage this and obtain lucrative returns while still investing in other options.
Different Ways One Can Diversify Their Portfolio
There are a number of ways that a portfolio can be diversified.
Diversification across asset classes
This basically entails allocation of portfolio funds across different investment vehicles such as:
- Shares or equity for companies that float their shares to the public.
- Commodities- which are goods that are necessary for production such as cotton and precious metal.
- Bonds – fixed income debt instruments from government or corporates.
- Cash and cash equivalents – that are short term in nature and include treasury bills, money market instruments and certificate of deposit.
- Real estate involves investment in buildings, land and natural resources.
- Exchange Traded Funds that entails investments in securities that are based on an index, sector or commodity.
It’s Time to Stress Test Your Personal Finances
It’s Time to Stress Test Your Personal Finances
The devastating pandemic that is still a raging malady has had a ripple effect on the global economy and continues to be a huge impediment on normal operations. The outcry has been heard from both corporations and stretch to even personal finances. Situations such as increase in school fees, loss of employment and tough business losses have taken a huge toll on finances. It is therefore prudent to have a strategy that can pull you into recovery despite the catastrophic conditions.
Stress testing refers to a simulation whereby institutions or finances are subjected to drastic economic scenarios to gauge their resilience ability. As such, one is able to know how well they can manage their funds during a financial crisis. Stress testing is also performed to ensure proper measures are considered for managing risk levels and capital. Without a doubt, these daunting moments call for a stress test to your personal finances.
How to Stress Test Your Personal Finances
- In depth Analysis of Your Financial Position
- Come up with simulation questions
- What contribution do the sources of income have to the overall income portfolio?
- What contribution do the expenses have to the total expenditure?
- What is the impact felt on your personal finances when any of the sources of income stop?
- How are your personal finances affected with a rise in expenses?
- How will your personal finances be affected by stock market fluctuations?
- How liquid are your finances in case of an emergency?
- Obtaining answers for the simulation questions
- Examining the worst-case scenario
- Obtaining an emergency fund account that is interest bearing.
- Reducing expenditures such as personal loans
- Automating savings to avoid over spending
- Diversifying investments to assets with negative correlations
- Budgeting and financial management on a consistent basis.