In the economic climate that we live in today, most of us can barely survive with the amount we earn at the end of every month from our jobs or let alone if we run our own business, there is never quite enough for us to expand our business or service our debts.

During the last couple of years as I entered into the business world, I was told that it is best to make money by using someone else’s money but I never quite understood this. It took me some time to get my head around this but over the years it started to make sense to me. It is best if you have access to finance to start up a business or project, by borrowing and using someone else’s money rather than plough in your own cash that you have saved up. Not many people would agree with this line of thinking but is had boded well for many successful businesses today.

But not all of us are able or lucky enough to be able to borrow or use someone else’s money. It has been rather difficult to access loans or lines of credit in today’s business environment. But luckily there are financial institutions out there that are still able to offer us with cheap loans. One just has to look hard enough and you will be able to find them.

And the beauty of such companies that do offer cheap loans is that you do not need to go see them physically and have an hour long meeting with the manager to approve your loan, but they have made the process of acquiring a loan to be very simple! We live in the world of technology today and so we can do almost everything online. Now you are able to get instant online loans by simply visiting a website and filling in a form with your details for your application and your application will be approved there and there. How great is that as opposed to what we were used to years ago?

So going forward we should not be scared or put off from applying from loans if there are now quicker and simpler ways of obtaining loans online.

Happily, or sadly, depending upon how you look at it, entrepreneurs just don’t give up! Why? Well there are two answers to this question one negative, one positive. I’ll give you the negative first. Always the bad news first, right? Right… Entrepreneurs play in a game of high stakes poker. Everything being relative, whatever the amount of money they have, they are usually putting it all on the line. We are extremists. The bad part of this is, just like blackjack, when we lose our chips, we just pick ourselves up, look for a new game, find new resources (chips) and try the slots… and God forbid we lose at the slots, we try Roulette or any other game that will make us the quick dollar. Now what I’m telling you is not a good thing. People lose their shirt playing these games, and to fix it, they re-finance their homes, collateralize the cars, scoop up a bunch more money and hit the tables again to start yet another business!

WARNING: IF THIS REMINDS YOU OF YOU, THEN STOP WHAT YOU ARE DOING AND KEEP READING THIS ARTICLE UNTIL YOU FINISH IT.

Entrepreneurs, re-directed in the right direction, can and should start as many businesses as they want, but you need to know there is only one thing that puts them in the right direction, it’s called purpose. If the purpose of starting your business is to re-pay your parents and friends the money you lost, well, then, the purpose of your business will lead you to yet another failure and you will keep starting new businesses for all the wrong reasons. After that business fails, now, the next business you’ve started you’re not only doing it to pay back your friends and family, but also you are trying to PROVE to everyone that you can in fact make it, and you want to especially prove it to those people that never thought you could make it in the first place. Now this is where it gets dangerous. Your motives start becoming similar to that of a desperado. Now you’ve completely lost the purpose that entrepreneurship is supposed to give you. You’re in a dark place. You don’t care about WHAT your business is, only that it needs to serve the purpose of blanketing all of your mishaps.
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Building credit and establishing a good credit history is essential to enabling you to get adequate financing for a car, and a house. There are times though that people may have difficulty in either establishing a credit history or creating a good one. However there is a solution to this dilemma and that solution are prepaid credit cards. Prepaid cards allow users to lend themselves money and pay their bills on time thus putting together a sound credit rating. Companies such as AccountNow, Rushcard and Netspend provide this opportunity to card users.

Prepaid cards provide many advantages. First prepaid cards are like checking accounts. They are insured and allow you to safely and securely store your money. Second, they allow you to keep your spending limited unlike credit cards so you are at less risk to overextending yourself financially. Next prepaid cards save you money by allowing you to avoid late fees, finance charges and overdraft fees. Lastly everyone qualifies and it helps you build credit.

AccountNow prepaid credit cards offer users to build their credit history by allowing them to pay bills online and on time to establish creditworthiness. AccountNow reports your payment history to the credit bureaus.

Rushcard provides benefits such as allowing users to avoid overdrafts on their accounts and avoid fees. It also allows users to prevent themselves from getting into high interest debt from credit cards.

The third prepaid card company is Netspend. Netspend enables people to receive online bill payment and earn 5% APY on their savings.

All of these companies allow users and individuals to pay bills online and on time, avoid high interest rates, avoid debt accumulation and build a good and solid credit history without any difficulty.

I am not an economist but I do try and follow the markets. One of the main reasons I do so is because I have taken the choice of managing my own investment portfolio. The jury is still out on whether this was a good call on my part, but my reasoning is that I believe after all the sleepless nights studying finance and accounting that I should try and make the most of what I have learnt at least for my own benefit. I am not a guru, but in every investment choice there is a lesson to be learnt, both when things go well and particularly when they don’t, which help you arrive at a methodical manner in which you invest.

As an individual that follows the markets on a daily basis, one thing that has caught my attention is the recent extreme volatility in the markets. One area that has made me jittery has been that the volatility has been quite sudden and extreme in just a matter of days, and is still expected to linger on in the short term. A case in point would be just looking at Wednesday 26 May 2010, where the JSE moved about 3% in one day alone, and this was bouncing from a previous day’s negative movement of 2.5%! This is quite large daily movements when one considers there are over 400 companies listed on the JSE contributing to the overall return. The losses are also extended when one includes the extreme depreciation of the Rand against major currencies also in the past month, at more than 8%.

What this has done to a private investor such as myself, is to look at a few areas in my investments where I have had no protection against such extreme volatility which has lead to significant paper losses in a matter of days. On the other hand, others have taken advantage of the volatility and made significant gains from it, and I suspect derivative traders must have been on both extremes.

As I mentioned earlier on about lessons from investing, one such lesson for me in the past month has been the importance of having a diverse portfolio, not just across asset classes, but also globally. The second lesson has been that possibly just holding global equities or bonds is not enough anymore and as a private investor I should consider holding currency or gold positions as direct hedges against Rand depreciation. Once again there are a lot of choices, so the decision is not so easy and a thorough understanding of some of the instruments one can purchase may be required otherwise you may just assume further risk.
Another possible plan might be to include JSE listed companies that earn most of their income in foreign denominated currency, which can act as an indirect hedge against a depreciating Rand, such as Sasol. The logic being that as the Rand depreciates these local companies earnings would actually rise in Rand terms and so should their share price, thereby acting as a hedge. However, the negative global sentiment we are currently experiencing, has not show mercy either to these companies as they have not escaped the carnage on equities despite the Rand’s major depreciation in the past month.

I think sometimes a simple strategy of holding a cash balance in a foreign denominated currency can actually prove to be an effective hedge against Rand depreciation. However, it can also work against you considering the lower levels of interest earned abroad and additionally a possible strengthening of a volatile Rand can hurt you further.

Whatever you decide, I have now concluded that unfortunately for everyone in this world, whether you are a private investor or a man on the street, we all now need to open our eyes and to start looking at the world news beyond our borders, as what is happening globally is affecting us more directly like never before. This is no small feat, as understanding local markets is not so easy, let alone global markets and news. The world has seemingly become so intertwined, that if you are not in tune with the world markets or global news, you will not understand why the local markets and your solid local investments are so volatile when all the fundamentals in your investment strategy and fundamentals that govern this country appear to be in check!

Now, all the negative sentiment coming from the Euro-zone has translated into large paper losses for a lot of investors all the way down here in Africa! Watching an index such as the JSE losing more than 12% in the past month is really distressing, especially when there are very few asset managers that can actually beat the index regularly! Where do you put your money!?

The position is made worse if you factor in the Rand’s depreciation against major currencies, and you realise that in US dollar terms the JSE has actually lost 20% in a month from external global sentiments! If you are there sitting and smiling because you have no equity exposure, but you have other local investments (a house or flat etc) a depreciating Rand has just made you about 10% poorer in just a month and made foreigners holding US Dollars 10% richer. Of course this is just a paper loss to you, but if you pull out your calculator you actually realise just how much you have lost to foreigners in one month.

Once again this just shows how important the global sentiments are affecting you at home in Africa and eroding your wealth through no fault of your own. It also shows the importance of having positions that protect you from a depreciating currency that is very open to external factors.

I guess at this point in time, it all comes down to always having a longer outlook on your investment strategy and as well as the local and global currencies. In terms of the fundamentals in this country, I believe they are mostly in check to allow companies to succeed. In terms of the Rand, I have to consider the views of most economists as there are too many variables affecting it. In this case, they believe the Rand is heading towards R8 to the dollar by the end of this year, so maybe holding some US dollars after a Rand rally might not be a bad idea after all.

Have a great day.
Maki

If you want to create wealth, it will help to understand what it is. Wealth is not the same thing as money. Wealth is as old as human history. Far older, in fact; ants have wealth. Money is a comparatively recent invention.

Wealth is the fundamental thing. Wealth is stuff we want: food, clothes, houses, cars, gadgets, travel to interesting places, and so on. You can have wealth without having money. If you had a magic machine that could on command make you a car or cook you dinner or do your laundry, or do anything else you wanted, you wouldn’t need money. Whereas if you were in the middle of Antarctica, where there is nothing to buy, it wouldn’t matter how much money you had.

Wealth is what you want, not money. But if wealth is the important thing, why does everyone talk about making money? It is a kind of shorthand: money is a way of moving wealth, and in practice they are usually interchangeable. But they are not the same thing, and unless you plan to get rich by counterfeiting, talking about making money can make it harder to understand how to make money.

Money is a side effect of specialization. In a specialized society, most of the things you need, you can’t make for yourself. If you want a potato or a pencil or a place to live, you have to get it from someone else.

How do you get the person who grows the potatoes to give you some? By giving him something he wants in return. But you can’t get very far by trading things directly with the people who need them. If you make violins, and none of the local farmers wants one, how will you eat?

The solution societies find, as they get more specialized, is to make the trade into a two-step process. Instead of trading violins directly for potatoes, you trade violins for, say, silver, which you can then trade again for anything else you need. The intermediate stuff– the medium of exchange– can be anything that’s rare and portable. Historically metals have been the most common, but recently we’ve been using a medium of exchange, called the dollar, that doesn’t physically exist. It works as a medium of exchange, however, because its rarity is guaranteed by the U.S. Government.

The advantage of a medium of exchange is that it makes trade work. The disadvantage is that it tends to obscure what trade really means. People think that what a business does is make money. But money is just the intermediate stage– just a shorthand– for whatever people want. What most businesses really do is make wealth. They do something people want.

Build wealth, dont just make money!

Regards

Wilbert Chaniwa
Founder
Nexus Business Network

Central banks control the monetary system of the world and determine when business cycles are going to change simply by increasing or decreasing the money supply in the banking system. This small group of powerful insiders know when to sell high and buy low because they determine when the market cycle is going to change. What has just happened with oil and gold prices is an example of the power brokers who rule the world.

When Cecil john Rhodes died, he left a series of wills in which he wanted to set up a secret “society of the just”, based on the Jesuit Society, to carry out his vision of a world united under British rule. Interestingly enough, he worked very closely with the British and French Rothschild families to finance the merger and consolidation of all the various South African diamond and gold concessions. One of his directives was to educate well selected men (and recently, women) from key colleges and universities from around the world, in the philosophy of bringing the world under British rule. These people are known as “Rhodes Scholars” and include former President Clinton and many others in government.
Regarding the power of central banks, if you will take a piece of paper money out of your wallet — any denomination — you will see these words, “Federal Reserve Note — This note is legal tender for all debts, public and private.” You might ask yourself why the paper money does not state that it is a note from the Treasury of the United States? If the Federal Reserve is not the Treasury, what is it? The Federal Reserve is a “central bank.” To put it in every day terms, it is a private corporation which claims to provide a service to the people of the United States by providing the money used in our banking system.

When Congress refused to renew the Bank’s charter in 1811, the War of 1812 ensued, and in 1816 Congress re-chartered the bank with a capital stock of $35M. “From 1816 to 1828, it was the sole arbiter of the financial affairs of the nation, both public and private. Its power in politics was immense and it swayed elections as well” (Walbert, 11).
Whoever controls the volume of money in our country is absolute master of all industry and commerce….and when you realize that the entire system is very easily controlled, one way or another, by a few powerful men at the top, you will not have to be told how periods of inflation and depression originate.

Needless to say, the move to re-establish control over the economy of the United States did not abate. Between 1840 and 1913, there was much done to try and re-establish a private corporation to control our monetary system.
Three years later in 1913, the central bankers took action. This time the people involved in this effort included some of the wealthiest people in America: Senator Nelson Aldrich (grandfather of David Rockefeller); Jacob Schiff and Paul Warburg of Kuhn, Loeb and Company, an international banking house; Piatt Andrew, Assistant Secretary of the Treasury; Henry P. Davidson, Senior Partner of J.P. Morgan & Company; Charles D. Norton, and Frank Vanderlip, President of National City Bank which today is CitiGroup. The passage of the Federal Reserve Act of 1913 was done through chicanery. Those in the Senate who favored the Act did not go home while those that were against it went home for Christmas. In a special session convened with quorum, the Act passed at 11:45 p.m. on December 24, 1913 — an evil act of bondage for the American people.

Today, only five countries in the world are without a central bank: Iran, North Korea, Sudan, Cuba and Libya. All of these just happen to be on former US Presidents George Bush’s “Evil of Axis” list.

So the question begs. What was the real reason for the recent Global Financial Meltdown. Look closer at the companies involved and the history, and the picture will become clearer.

Regards

Wilbert Chaniwa
Founder
Nexus Business Network

1. Do Not Blame – the first step is to acknowledge that whatever happens in an individuals or a nations life is as a result of whatever action would have been taken by that individual or nation. Blaming does not solve any problems. One needs to take responsibility and make your problems your own. Do not wait for someone to come and solve your problems. Brainstorm and come up with solutions to Africa’s problems that do not include Handouts

2. Equip Yourself For Economic War – Education is the most lethal weapon to win the war against Economic colonization. Education gives you a skill that you can sell in exchange for remuneration. The more you know, the better you understand. It’s very important to know how money is made and managed. Financial Literacy is a must

3. Embrace Capitalism - Capitalism generally refers to an Economic System in which the means of production are all or mostly privately owned and operated for profit, and in which, investment ,distribution ,income ,production and pricing of services are determined through the operation of a market economy. This is a system that Africans should implore and habituate as this is the road to financial freedom.

4. Manufacture Products (Be a Seller, Not Just a Consumer) – the moment a nation is able to produce products and sell them, it means that there is an opportunity for income to come into that country. Consuming and importing only means there is financial outflow of cash. Money in is far better than money out. If it goes out, let it circulate within your business community.

5. Implement Spider web Doctrine - When that dollar comes into your African community, rather than going outside to spend the money to buy from other communities (importing), the Africans should spend their money buying from themselves and supporting each other’s businesses thus building the community. Charity begins at home

6. Build Wealth – create a personal means for income to be generated for generations to come (passive
Income) leave a legacy and not debt

By Wilbert Chaniwa
Founder
Nexus Business Network