Category Archives: Finance

The Benefits Of Development Finance

Development FinancePeople tend to confuse Development Finance with Commercial mortgages, which is more than easily done as the two do tend to overlap one another. Development finance is where an individual or company/business is looking to develop property/properties and have some capital but need a short term loan to help complete the development. Depending upon the lender and the circumstance, such loans normally span between 12-24 months. Commercial Mortgages are different in that they are a form of replacing the short term development finance loan when additional funds are needed. Hence, Development Finance and Commercial Mortgages do tend to overlap. Despite the “Credit Crunch”, Development Finance is rapidly becoming more main-stream and is a very specific type of finance. Development finance is an extremely active market, with businesses wanting to expand for survival during the economic downturn. There are many high street lenders out there and therefore there is a wide variety of development finance specialists available to the consumer. It is recommended that you seek professional advice in order to find the right deal for you.

Development Finance can be used for Property Refurbishment, New Build Projects and Property Conversions but can also be used as funding towards international development plans and initial land purchases. Development Finance usually comes in many different guises, which undoubtedly fuels the confusion surrounding this method of financial assistance. For example, a Senior Debt Loan usually covers the first 70% – 80% of loan to value although it can be arranged against gross development value. A Mezzanine Loan is a second charge loan on top of the senior debt loan, usually used to fund costs on one property while a developers financial resources are tied up elsewhere. Finally, Joint Venture 100% Finance contracts you with an experienced partner who underwrites the project and shares the profits upon completion.

Property development is about having a vision; it’s about understanding the market and turning that vision into a reality. However, developers often have problems getting the finance right and knowing what products are available and which lenders to use can be confusing. The forms of development finance are dependent upon personal circumstance, for example whether you are a company wishing to expand, a home owner hoping to develop, or a home owner looking to start anew. Community projects also use this form of finance in supporting people and businesses in disadvantaged communities, both in the UK and worldwide. Therefore, Development Finance is determined entirely upon an individual assessment made by the lender. All aspects of the development proposal have to be faultless in the eyes of the lender before they agree to provide funding. Lenders look meticulously at development characteristics such as land purchase, ground work, labour and services, first and second fix and then sign off. In the difficult current market, lenders have to be more careful when choosing which developers to back; they are much more likely to support a developer with experience in the field than someone new to the industry.

Development Finance lenders are there to build a relationship with the developer in order to share their vision and provide the support needed to make that vision a reality. The loan can cover costs such as building costs, labour and can often include any architect costs and other professional fee’s such as wages and drawings. Property development loans will be secured against the land or the property you wish to develop. Traditional forms usually require a 20%-30% deposit, whereas more recent forms are now available for debt, to release equity or mezzanines.

Loan to Value rates and interest rates vary depending upon experience and percentage of funds required for development. Benefits of this form of finance includes that each development case is assessed on its own merit and it’s a form of finance that can be raised quickly, putting your development project into fruition as soon as possible. Furthermore, the development lender will be on hand to support the client with advice on their development throughout the process and the same person, who authorises the funds, will work with the client to manage throughout the Development Programme. No matter what you decide to do with your completed project, whether you plan to sell in order to start the next project or whether you retain the project for investment purposes, Development Finance is a flexible solution to suit your financial needs.

Choosing The Right Field For A Finance Job

When it comes to jobs in finance there are many different types of categories you can decide to get in. Some of these categories will require different skill sets as well as educational levels. You must make sure you understand what the requirements are before you decide to go about your finance job search. Some of these jobs will include accounting, financial management, banking and real estate. Despite what you may have seen lately in various business magazines and business-related newspapers, the opportunities in the finance industry are strong, stable as well as extremely rewarding.

There is no need to worry about the security of finance careers. If you want to start looking for finance job openings right now, then get started off on the right note by visiting employment911.com/jobs/job-listings-expired.aspx?k=Finance. Here you will be able to find access to all the financing jobs you could possibly hope for. Not only this, but you will be able to use various web based tools to help you apply for these jobs and organize them in a way which will enable you to keep solid track of them.

Besides from the jobs in finance I’ve already mentioned, there are many commercial jobs in banking as well. Banks offer all kinds of financial services to society as a whole, more so than any other financial segment out there. Often times once you are able to obtain a job in banking you will see that the people who you are working around will have a lot of experience. You’ll be able to interact with these people in order to help you gain more experience. You can use this experience to further your career, so that you are able to grow.

Corporate finance is also a segment of finance careers you may want to consider. This is typically the segment that is responsible for managing various money transactions for an organization. They’re also responsible for acquiring funds, planning future interests of the organization as well as other important functions. You want to find finance jobs in corporate finance then you need to have the right place to start your search. You can find all of the jobs in finance you need in one place very conveniently when you decide to register with employment911.com/jobs/job-listings-expired.aspx?k=Finance. While other sites may offer listings, they do not provide you with the type of personalization you will be able to find when you decide to use this resource.

Jobs in finance provide you with a stable career as well as offering you the ability to make a pretty good living while you’re at it. You can feel good about obtaining a job in finance, as the experience gained here can be transferred to other types of careers should you decide to change careers in the future.

Use Bookkeeping Software For A More Lucrative Small Business

Use Bookkeeping Software for a More Profitable Small Business

There are surely lots of things that ought to be considered when it comes to managing a small business. Businessmen value time a lot and delays are something they steer clear of the most for these substantially impact their business and the potential income to generate. Hence, business people should go on exploring alternatives that might be of big help for them. One of which is to utilize some devices that would be quite beneficial for the business in making dealings quicker without limiting performance and precision of course. Bookkeeping software is among the most vital gadgets that anyone who have a small business should have. The company and the bookkeeper can certainly take advantage of such gadget.

With the use of bookkeeping software, speed is a stuff that can be enjoyed. There are several accounting tasks that could be done faster by using this software. Every deal with the firm must be recorded in a regular basis because this can assist in tracking out the financial position of the company. Recording the sales should not just be the priority of a bookkeeper; some other transactions just like payments, purchases, and receipts have to be recorded too. Of course, careful way of documenting them is required; let alone the point that this is quite time-consuming. Auditing and other accounting process will be accomplished within a shorter period of time if they’re automated.

In bookkeeping, it is very crucial to be accurate enough since in case of faults in the record entry, calculations, auditing, and in some other auditing works, confusions and serious issues will come up. The accounting division can have hard times in thoroughly reviewing tons of files just to correct and know the faults created. But if you would like to limit these faults, then consider utilizing bookkeeping software. If there are instances of faults, it will just be easier for the records to be recovered and examined with this software.

Any business must have quick access towards their financial records. In this manner, you will have no sweats in tracking all your financial commitments that have to be compensated and those delinquent payments that should be accumulated from the late paying clients. Through the use of bookkeeping software, you can make these matters happen because all the documented transactions are organized in an automated approach. Additionally, fast browsing of bills, invoices, and other records is even feasible. Because of this, possible loss of doable business profits can be prevented and the company will take total charge of their finances.

Because of the efficiency and speed of the bookkeeping software, bookkeepers no longer need to perform on extensive hours. This is an excellent help to them considering that the anxiety and aggravation they have gone through in their work daily can be lessened. On top of that, the companyAs costs on the human resources will be reduced. Remember that there is an additional pay for every extended hours of working but when there will be no overtime, the expenses of the company will be minimized for certain.

These days, there are so many firms that are putting this software on the market. In that sense, small-scaled business people should be more cautious in selecting the best bookkeeping software so that they wonAt feel remorse in the end. Many small enterprises have now changed their manual operation to an electronic one; with this, they are entirely pleased with the success they have reached for their business.

Finance Online

Getting training in finance will give you the benefit of finding stable employment. Careers related to finance will be practical in your life too, because they will help you manage your finances well. To qualify for careers in finance, you will have to undertake training and earn associates, bachelors, masters or doctorate degrees depending on the level of employment you want to get.

You will get the highest salary by obtaining the highest level of training. In general finance, you can major in degrees such as accounting, business management, economics, commercial banking and investment banking among others.

A bachelor degree program in banking is a finance degree with its focus on banking. The degree program prepares students to work in various careers inside a bank. Courses will center on teaching a student about the many areas of financial institutions. Specific courses may include corporate finance, banking law, international trade law, and global economy. Students will learn about all bank practices, credit, and lending. Career options will allow students to become credit analyzers, loan processing managers, and more.

The finance of any organization must be properly managed to make sure that the company is profitable and an online finance degree would make you invaluable to any organization as you help them to stay above their profit margins.With an online finance degree, you’ll learn the principles of accounting and finance, asset and debt management and financial analysis. After obtaining your online finance degree, you will know how to plan, evaluate and manage a company’s financial position and make recommendations to improve a company’s standing.

An online finance degree provides valuable core skills related to problems solving and critical thinking, as well as some corporate or business communications and usually at least some teamwork projects. Online finance students end up with jobs in just about any sort of business including brokerage firms or banks, insurance companies, and real estate firms among many others.

Graduate students will have the knowledge to make decisions about college debt, their first major investment, and future retirement plans. Finance degree will help provide a healthy and relaxed marriage as many divorces and unhealthy relationships between spouses are due to disagreements over financial decisions.Parents with finance degree will be able to make critical decisions about their children’s college funds, mortgages, and investment opportunities. The knowledge one uses to make decisions at home will help them bring real life examples to job opportunities they will have in the workforce

Various Sources of UK Finance

Finance is extremely important for all kinds of businesses especially if you wish to make a business successful then you really need a good amount of finance with you to help you through. if you have started a business in UK then attaining finance will not be a problem for you because UK Finance is available in nearly all kinds and forms. No matter what your requirement is you will always be able to find a good source of finance for you. The companies offering finance services in UK cover all sectors you will find UK leasing finance company, UK debt collection finance company to also a UK finance company offering you venture capital.

You will also be able to get companies that will help you in arranging and purchasing a lease for you. The information technology sector has most facilities regarding the finance. For financing or purchasing technological instruments you can seek assistance from Corporate Computer Lease Plc. This company has been labeled as one of the fastest growing company in UK and is currently catering to more than 500 satisfied customers on daily basis.

You will get companies that will fund you for hardware as well. some companies services are diversified that they provide finance for both small businesses, industrial and agricultural operations. One such company is called Richard Mares Asset Finance it handles all the finances for agricultural and industrial sector. If you are looking for companies that will help you in financing for equipment leasing, or you are looking for assistance in mortgage or commercial finance then you should approach 1pm.co.uk. Another good option that you have with you is 1st Leasing Company. You can go to their website to see the many kinds of finance offered by them. If you wish to attain finance above £5,000 then firms such as 1 pm are best suited for you as they look after your needs properly.

If your financial needs are related to industrial plants or machinery then you should contact Corporate Business Finance. They will provide finance for purchasing, leasing, capital, factoring and mortgage.

Those who are just starting business in UK usually find it difficult to attain financial assistance the reason being all the financial companies prefer financing established companies. However, there are certain companies such as Oak Leasing that caters to the needs of newly set business really well.

 

A Basic Analysis Of Mortgage Systems

Every American dreams to own the perfect home of his or her own. If you are trying to get your first home however are unsure of the mortgage financing process, this is the ideal article for you. Use the information in the following paragraphs to learn the key suggestions you need to comprehend to assist you get a awesome deal on your mortgage financing./p>

Keep away from fudging the numbers on your loan application. It is not unusual for men and women to look into exaggerating their earnings & other sources of revenue to qualify for a bigger home loan. Alas, this really is considered froud. You could truly be criminally prosecuted, albeit it doesn’t seem like a huge deal.

Before you refinance your mortgage, make certain you’ve got a superb reason to do so. Lenders are scrutinizing applications more closely than ever, and if they don’t like the causes you are trying to find more revenue, they may decline your request. Make certain you can accommodate the terms of the new mortgage, & make certain you look responsible with the motivations for the loan.

Have a look at hiring a consultant to walk you via the home mortgage process. There is a lot to know about getting a home mortgage and a consultant can help to ensure that you get the best deal feasible. They can also ensure that the terms are fair for you and not just the company you chose.

Don’t forget to calculate closing costs when applying for a mortgage, especially if this really is your first time. Above and beyond the down payment, countless charges exist basically for processing the loan, and countless are caught off guard by this. You will need to anticipate paying up to four percent of the mortgage value in total closing costs.

Since the mortgage sector is not regulated, get your loan from a reputable company. Stay clear of working with a mortgage company that is only obtainable to you online. It’s valuable to select a company that is known to you & who will be available to you. Do not use the services of a mortgage broker who records your income or expenditures inaccurately.

Pay off or lower the amount owed on your credit cards before applying for a home mortgage. Though your credit card balances don’t are compelled to be zero, you must have no more than 50 % of the accessible credit invoiced on each credit card. This shows lenders that you’re a wise credit user.

Do not use real estate brokers or mortgage lenders who encourage you to lie on your home mortgage application. It is illegal to lie on this application, and it’s a legal write-up. Misrepresenting your earnings or other details is grounds for criminal prosecution. Working with those who encourage you do commit a crime isn’t a fantastic concept.

Never assume that a great faith estimate is truth or written in stone. It’s in truth not just an estimate, yet one written in great faith. Consistently be wary of extra costs and charges that may creep into the official & formal paperwork later that drive up your total expense.

Be aware that particular things may must be done to the property before the loan may be approved. 1 such thing is additional insulation added to the home. This work can either be done by the home buyer or the homeowner. Still, once the work is completed, it must be inspected by a certified inspector.

Keep in mind that it takes time to get a mortgage closed; this is why, it is important to incorporate sufficient time in the sales contract for the loan to close. Though it might be tempting to express the deal will be closed within 30 days, it’s greatest to use a 60 or 90 day timeframe.

Pay off more than your minimum to your home mortgage every month. Even $20 additional each month can allow you pay off your mortgage more swiftly over time. Plus, it’ll mean less interest costs to you over the years too. In case you can afford more, then feel free to pay more.

As was stated earlier in this piece, practically all Americans dream to own a home of their own. Should you are in the process of trying to find your first home, use this document to educate yourself on mortgage financing. By meticulously reviewing the hints in this write-up you could get a excellent deal on your mortgage.

Get a home loan for your new house or refinance from a network of lenders who compete for your business. Applying for a home mortgage loan is straightforward. Receieve home loan offers from up to 5 mortgage lenders. Want help with your home loan? Whether your shopping for a brand new home loan or refinancing an existing home loan, we can help you make the proper choice. Visit us athttp://getalowmortgagerate.com/

Alternative Financing

Alternative bank financing has significantly increased since 2008. In contrast to bank lenders, alternative lenders typically place greater importance on a business’ growth potential, future revenues, and asset values rather than its historic profitability, balance sheet strength, or creditworthiness.

Alternative lending rates can be higher than traditional bank loans. However, the higher cost of funding may often be an acceptable or sole alternative in the absence of traditional financing. What follows is a rough sketch of the alternative lending landscape.

Factoring is the financing of account receivables. Factors are more focused on the receivables/collateral rather than the strength of the balance sheet. Factors lend funds up to a maximum of 80% of receivable value. Foreign receivables are generally excluded, as are stale receivables. Receivables older than 30 days and any receivable concentrations are usually discounted greater than 80%. Factors usually manage the bookkeeping and collections of receivables. Factors usually charge a fee plus interest.

Asset-Based Lending is the financing of assets such as inventory, equipment, machinery, real estate, and certain intangibles. Asset-based lenders will generally lend no greater than 70% of the assets’ value. Asset-based loans may be term or bridge loans. Asset-based lenders usually charge a closing fee and interest. Appraisal fees are required to establish the value of the asset(s).

Sale & Lease-Back Financing. This method of financing involves the simultaneous selling of real estate or equipment at a market value usually established by an appraisal and leasing the asset back at a market rate for 10 to 25 years. Financing is offset by a lease payment. Additionally, a tax liability may have to be recognized on the sale transaction.

Purchase Order Trade Financing is a fee-based, short-term loan. If the manufacturer’s credit is acceptable, the purchase order (PO) lender issues a Letter of Credit to the manufacturer guaranteeing payment for products meeting pre-established standards. Once the products are inspected they are shipped to the customer (often manufacturing facilities are overseas), and an invoice generated. At this point, the bank or other source of funds pays the PO lender for the funds advanced. Once the PO lender receives payment, it subtracts its fee and remits the balance to the business. PO financing can be a cost-effective alternative to maintaining inventory.

Non-Bank Financing

Cash flow financing is generally accessed by very small businesses that do not accept credit cards. The lenders utilize software to review online sales, banking transactions, bidding histories, shipping information, customer social media comments/ratings, and even restaurant health scores, when applicable. These metrics provide data evidencing consistent sale quantities, revenues, and quality. Loans are usually short-term and for small amounts. Annual effective interest rates can be hefty. However, loans can be funded within a day or two.

Merchant Cash Advances are based on credit/debit card and electronic payment-related revenue streams. Advances may be secured against cash or future credit card sales and typically do not require personal guarantees, liens, or collateral. Advances have no fixed payment schedule, and no business-use restrictions. Funds can be used for the purchase of new equipment, inventory, expansion, remodeling, payoff of debt or taxes, and emergency funding. Generally, restaurants and other retailers that do not have sales invoices utilize this form of financing. Annual interest rates can be onerous.

Nonbank Loans may be offered by finance companies or private lenders. Repayment terms may be based on a fixed amount and a percentage of cash flows in addition to a share of equity in the form of warrants. Generally, all terms are negotiated. Annual rates are usually significantly higher than traditional bank financing.

Community Development Financial Institutions (CDFIs) usually lend to micro and other non-creditworthy businesses. CDFIs can be likened to small community banks. CDFI financing is usually for small amounts and rates are higher than traditional loans.

Peer-to-Peer Lending/Investing, also known as social lending, is direct financing from investors, often accessed by new businesses. This form of lending/investing has grown as a direct result of the 2008 financial crisis and the resultant tightening of bank credit. Advances in online technology have facilitated its growth. Due to the absence of a financial intermediary, peer-to-peer lending/investing rates are generally lower than traditional financing sources. Peer-to-Peer lending/investing can be direct (a business receives funding from one lender) or indirect (several lenders pool funds).

Direct lending has the advantage of allowing the lender and investor to develop a relationship. The investing decision is generally based on a business’ credit rating, and business plan. Indirect lending is generally based on a business’ credit rating. Indirect lending distributes risk among lenders in the pool.

Non-bank lenders offer greater flexibility in evaluating collateral and cash flow. They may have a greater risk appetite and facilitate inherently riskier loans. Typically, non-bank lenders do not hold depository accounts. Non-bank lenders may not be as well known as their big-bank counterparts. To ensure that you are dealing with a reputable lender, be sure to research thoroughly the lender.

Despite the advantage that banks and credit unions have in the form of low cost of capital – almost 0% from customer deposits – alternative forms of financing have grown to fill the demand of small and mid-sized businesses in the last several years. This growth is certain to continue as alternative financing becomes more competitive, given the decreasing trend seen in these lenders’ cost of capital.

 

Car Finance Places You On The Top Gear While Buying A Car

Fast car on open roads. It is a perfect picture for any car enthusiast. But you have to go to your work and also drop your kids to school. This is the real picture for most of us. We need to save time when we don’t have any. A typical individual has so many odd jobs to complete that a car can, without doubt, facilitate their accomplishment. Financing your car doesn’t fit your idea of the way of buying your car; then probably you are still stuck with traditional car buying methods. Shed your inhibitions with regard for car financing because it undoubtedly keeps in mind your financial caliber before furnishing you with a car finance loan.

Car financing has taken a new spin with regard to providing investment for buying a car. So, how do you finance a car? If this question leaves you baffled, then you have to go a long way in the process of buying a car. The term ‘financing’ in relation to buying a car connotes either rendering loan to buy the car or lease the car to you. You are probably concentrating on the former meaning. Many people are in favour of talking car finance from dealership for it seems like a convenient option. It seems easy; you select a car, fill out a credit application, and drive away with your car – all in a day’s work. Car finance through dealership will give you car finance on weekends and even at nights when other banks and credit unions are closed.

Seems convenient, isn’t it? But there is a catch. The dealer will be certainly charging you more for your car finance. Usually car buyers are overcharged by 3% on their car finance. A great number of complaints about car financing are related to dealers. 0% APR is not only attractive but lures the buyers to acquire up car finance not meditating if it is feasible for them. There are very few people who can actually get a 0% APR. Thus car finance deals usually fall midway thereby making car finance experience an extremely distressing one. You are buying a new car and probably for the first time, you certainly want it to compliment your enthusiasm. There are few elementary things that need to be kept in mind before taking that crucial primeval step in car buying.

First and foremost in car buying and financing is checking your credit score before you apply for a car loan. Many people are unaware of the fact that they even have a credit score. You can expediently check your credit score online. So, if you have bad credit history then probably you will be paying more interest rate for your car finance. If your credit score drops below 550, then probably apply for new car finance is not such a good idea. First repair you credit score. Repairing credit score requires little effort, helps you repay your debt and retain your credit report. Online car finance companies can get you car finance loan even if your credit score is lower than required. Your car finance loan can get approved in minutes. Online car finance companies have revolutionized car finance procedure. With lowest online car finance rates, no application fees, or down payments car finance companies provide a formidable competition to car dealers. Car finance companies have set a standard for providing car finance that is worth opting for.

70% of cars are obtained by some kind of financing. You can even finance a used car. The process is as effortless and undemanding as financing a new car. The essence to finding the right car finance is doing to research about your kind of car. Knowledge is power; you must be awake to this age old logic. When so much information frequently exists, then why not make use of it. Find out how much your car costs by comparing rates with local dealers. Very decisive, is cognizing how much, you can afford. Calculate, you monthly income and deduct your usual monthly expenditure to find out how much you can afford on a monthly basis. Compute carefully, otherwise you will find difficulty in repaying your car finance loan. And you definitely don’t want to fool around with your repayment plan because a lot is at stake. You can seek free advice for your own car finance online through credit unions and loan institutions.

You are a car enthusiast, a car consumer, a just a person who needs a car you ought to drive the best car. And why not drive the best car, when you have access to the best car finance plans. Car financing is a transparent route that leads you to become a car owner. Car finance loans are usually short term loans ranging from 36 to 72 months. Shorter loan term imply, lower interest rates and will prove to be cheaper. You have been working hard to select the car you want; there is a fairly good chance that you would not have to work so hard for car finance. So, sit back relax and enjoy the ride.

Postpaid Or Prepaid Cell Phone Service – Which One Is For Me

Communicating with your loved ones, friends, co-workers or employees has never been easier and faster with the help of wireless cell phones. There are actually two types of cell phone service you can choose from – a prepaid and a postpaid. Which is the right for you? Which can help you save more? When is the best time to switch to a prepaid service? The answer will depend on your needs and lifestyle. Let us compare the advantages of a prepaid service over a post paid one to help you make a final decision.

Prepaid – Pay As You Use It

Prepaid phones are recommended for people who do not need to make calls or send messages as frequently. If you compare the rates, per minute call charges are much higher with a prepaid plan. However, you can cut back your costs if you limit the calls you make.

You can find phone plans for as low as $10 a month only. At .10 cent per minute that will give you at least 30 minutes of talk time. Reloadable cards may also come in denominations of #25, $30, $50, $100 and up, depending on the carrier. Higher card denominations have a longer lifespan than lower cards.

Prepaid phone users are not tied up to any contract. There is no need to sign any document that will indicate that you need to be with your chosen carrier for a certain period of time. If you are unhappy with your present carrier’s service, you can simply get a new reloadable prepaid kit or SIM card from a different provider.

Prepaid Phone Limits

For someone who used to be a post paid cell phone plan subscriber, switching to a prepaid package may have its drawbacks. First, you’ll need buy a new prepaid card and reload each time you have used up all your available balance. This limit can be a hassle especially if you need to make a call at an unexpected time. You can prepare yourself for such emergencies by reloading your account as soon as your last load expires.

To cut back on costs, set a definite budget that you are willing to spend on your cell phone each month. Do your best to stick to that budget. Take advantage of free text messages or extra talk time that your chosen carrier offers.

Being a good customer will give you a chance to get special rates since some prepaid cell phone service providers are very generous to their best subscribers. For instance, you may be able to enjoy unlimited calls or unlimited text messages simply by registering your cell phone number to the network.

Pay attention to the expiration date each time you reload. There are prepaid wireless service companies that give you the opportunity to carry over your unused calls or texts if you reload the day before your balance expires.

Also, you can cut back on costs by choosing the right service provider. See to it that the carrier offers reliable coverage in your area or in places where you often need to use your phone. Coverage is very important especially if you are the type of person who often travels.

When Post Paid is a Better Option

If a post paid phone plan suits you best, you can cut back your costs by choosing the right plan and service provider. Before signing the contract, it is a must to read the fine print carefully. Compare the prices and services offered. It is also a good idea to ask around and hear from people who have a firsthand experience in subscribing to that particular phone plan and carrier.

 

Up To 50 Percent Of Americans Plan To Retire From The Lottery. Are You One

So, I’m at work the other day and I am talking to people about retirement and personal finance basics. I told them that basically I don’t want to work a job forever and I will most likely leave my current job within the next few years. I was surprised to find that most people I told this to laughed and asked if I was planning to win the lottery. This got me thinking. Is this how most people are planning to retire or leave work early? Do they realize that they could have so much more? After talking to more people and doing a little research, itbecame obvious that not only do most people not have plan, their ideas for attaining retirement are just down right ridiculous.

I find it funny that a large group of people think they will get to retirement by winning the lottery. Perhaps funny is the wrong word, maybe I should say disappointing or unfortunate. Whatever the name, it’s not important, what is important is the fact that this is a “legitimate” plan for a large number of people. Actually, I was quite surprised to find how large of a number it actually is. Consider the stats below:

In a 1999 survey by the Consumer Federation of America and financial services firm Primerica found that 40% of Americans with incomes between $25, 000 and $35, 000 a year, thought that the lottery would give them their retirement nest egg. What is interesting is that the same study found that number to increase to 50% when the income is $15, 000 to $25, 000 a year. The study shows that people become more desperate and hopeless as their income decreases. Consider this: Let’s say you spent $3 a week on lottery tickets each week. If you put that in an investment at 8% for 25 years you would have $12, 557.38. I am confident that this will be more than your total lottery winnings for that 25 year period. The odds are very slim that you will win anything.

The most popular lottery in Canada is the lotto 649. In this lottery six different numbers are randomly drawn from a set of balls with numbers ranging from 1 to 49. Your odds to win are as follows:

1 in 13, 983, 816 or

0.0000000715%

Odds of being killed by a dog: 1 in 700, 000

If everybody in Canada played the same lotto 649 draw at the same time only 2 people would win. Most people think that playing frequency will dramatically increase their chances of winning. Consider this: If you played the lotto 649 twice a week, every week, for the next thousand years, the chances of winning the jackpot are about 1%. The cost to play the lottery for that thousand years would be about $208, 000 not considering a thousand years of inflation.

I have heard that the lottery is a tax for people who can’t do math. I could not agree more. People who play the lottery don’t understand personal finance basics. I have never played lotto 649 and I intend to keep that streak for life. I see no logical reason to spend money on the lottery when I am 20 times more likely to get killed by a dog. And how many people do you know that have been killed by a dog? I rest my case.