China Financial Funds Are Right On Track

Atypical urge in most Americans to invest in the China Financial Sector is justified for at least four of the Chinese banks are now among the global top ten banks when measured through their market values. The steep growth curve in the Sino financial equity is a long term idea but almost certain owing to a regulated economic framework and market friendly policies of the state government.

For foreign investors, a China Financials ETF will suffice for more than just an urge, as the exposure enables a standardised vestment throughout the most liquid Chinese bank stocks and their respective ADRs [American Derivatives].

The Jefferies equity strategy team expects China's domestic consumption to form a major portion of its GDP, estimated to touch more than 72.5 % by the year 2025. Last year it was calculated to be a little less than 50% of the total GDP.

The Chinese economy exudes positivity not just for its billions of natives but also for its equity market. Last year figures show a decrease in inflation alongside the most needed increase in exports. Even domestic consumption of luxury items like cars has gone up, so have the circulation of bank loans. China has been increasingly importing commodities such as copper, aluminium and crude. All this indicates furthering growth in key sectors of the country.

The governmental policies are aimed at strengthening its stock market, improving lifestyle and social security of its inhabitants and raise incomes and indigenous consumptions. Infrastructure is a main focus so as to accommodate the urbanisation trend.

China's stock market seems to continue positively for the year 2013 and with the leadership open to newer policies and reforms, a stronger economy will unfold. China offers various funds including small cap funds and allows enough diversification opportunities to its investors.

Along with a strong currency support, the oil and transportation sectors have drawn great revenues even for the investors. China is working on to raise investment in its banking and financial sectors. Also private financing is encouraged.

International traders from the west and other international destinations are keen on profiting from the country's enormous overall growth prospects and may foreign companies have their operations / office in China.

The financial sector is another progressive segment opened up to global players. The Financial Sector in China is mainly dominated by the commercial banks. One such big (state owned) bank is the Bank of China limited, offers services such as investment & commercial banking, insurance, fund and investment management to a diversified list of clients in China, Macau, Hong Kong and about 29 other nations.

American interest in stocks and funds dealing with one or the other aspect of this nation are finding a place in their portfolios. In addition to this ETFs offer fair amount of liquidity and successfully deal with risks and company specific concerns.

Financial Advisor Strategies: Understanding Low Risk Investment Options

When you're considering your investment options you must consider the risk you are prepared to take and it is highly advised that you consult with a financial advisor. Cash and Bonds are the lowest risk assets classes.

Cash is low risk asset class and so, in general, the funds invested in cash will not see a fall in value through the investment period.

In exchange for this security however you should only expect to receive very low rates of return on your investment.

Given the low rate of return, quite often you will find that the rate of inflation may be running higher than the cash deposit rate. In this situation while the value of the cash may not fall, the true value of the money or purchasing power will decrease and so provide negative real returns.

The advantage to cash investment is that it tends to be the most liquid form of investment and therefore it is easily accessible. Typically cash investing would be used to provide for your emergency funds and your day-to-day funds.

Cash investment is predominantly carried out through Banks using deposit and current accounts.

Bonds

Bonds are typically considered low to medium risk depending on the type of bond that you invest in. However, there are also high risk bonds available and so careful analysis of the type of bond you are investing in should be carried out.

What are bonds?

Bonds can be described as loans given to a Corporate or Government body for a set period of time after which the principle amount is paid back in full. The issuer of the bond may undertake to pay a rate of interest on the principle amount. This is can often be known as the coupon rate. Obviously the higher the coupon rate, the higher the returns will be on your investment.

However, you should be wary of bonds offering very high coupon rates as the higher the risk of the bond issuer defaulting on the repayment of the principle will be.

Bonds can be described as relatively liquid because you can buy and sell them on the open market. However, depending on the time of the sale, it is possible to lose money in selling the bonds.

Given the relatively low nature of most bonds the returns are likely to be modest at best and therefore you are not likely to see the huge returns on your investment.

On the flip side of this you are unlikely to see massive negative returns on this kind of investment particularly if held until the maturity of the bond.

As mentioned bonds can be volatile depending on the bond that you invest in and therefore there is need for careful management when investing in this asset class. Bonds can however form an important part of any investment strategy.

Uranium Funds - New Game Changers for the New Year

A leveraged play on Uranium funds and miner stocks seems to be a catching trend as the 2014 expiration date for the Highly Enriched Uranium Agreement [HEU] comes closer. Last year, events saw American derivatives of Cameco Corporation (a large cap Uranium Miner stock) growing up by7 % in the gone year and simultaneously being outperformed by the peers like Uranium ETF URA that appreciated 10 % in 2012.

This deficit may be clearly understood through the supply and demand figures from United States of America which houses 104 under operation nuclear power reactors. The reactors collectively produced only 4mllb of Uranium in 2012, while consuming 55mllb during the same year.

The good news is that a laggard supply is not affecting the demand which is constantly growing. Uranium commodity price has been in a crash mode since the failure of the reactor located in Fukushima, Japan leading to a world-wide apprehension towards nuclear energy as a staple power resource. With time the acceptance is regaining ground and the world demand for energy is on the rise. In order to meet this scenario the supply needs to be uplifted manifold. But with other countries too making an exit (or procrastinating their plans for expansion in this field) from the nuclear power and its associated reactors, the above vision seems to be on the back burner. In China 28 nuclear reactors are under construction. The changing picture in Japan displays the reversal of the anti-nuclear attitude by the new president's (Mr. Shinzo Abe) positive stance on building new safer nuclear reactors in the country.

Then there are the emerging nations such as India, China, South Korea and the likes of Russia that are introducing themselves to the nuclear industry by bringing in nuclear reactors.There are 62 new reactors being built in the world.The International Atomic Energy Agency has a very positive prediction which reads as follows- the nuclear power production will rise between 35% - 100% in 20 years. Simultaneously the Uranium demand will rise 60% in the aforesaid time frame. The world nuclear demand will exceed the supply by the year 2014 as estimated by The World Nuclear Association.

Securities like Cameco Corporation and Paladin Energy will be the direct beneficiaries in an improved sentiment scenario. Cameco which accounts for 16% of world's production from its mines in Canada, United States and Kazakhstan also owns foremost land positions in areas promising new discoveries in Canada and Australia.

Amid the positivity there are few glitches that can be discussed such that another disaster similar to the one mentioned above could create havoc for this industry, secondly there are chances that the world demand could grow at a slower pace than projected and the other alternate energy sources of natural gas and solar power might work out to be cheaper and more abundantly available, but more than the analysis, it is the simple law of demand and supply that may make the yellow cake and its related products a probable game changer for 2014.

"H.E.U is a trade understanding that accounted for 24 million of the total 177 millions of global demand in 2012 and allows Uranium extraction from the old Soviet weapons and war-heads. This treaty stands for dissolution thus creating a huge gap between the metal's supply and demand figures. Capital Markets over the world, have been gradually discounting this production aberration to enhance their stock prices, which saw a recent frenzy not more than three months ago. Current market figures that more or less indicate a certain bottoming out of Uranium Mining Fund are compelling investors to take a closer look at pure play broader market products like index bound Uranium ETFs that use a wide spectrum approach while acquiring industry specific assets."

Analysis of Costco Corporation

CASE 1. COSTCO WHOLESALE CORPORATION ANALYSIS

The purpose of this memo is to analyze Costco's performance compared to Sam's Club and BJ's.

Costco Wholesale Corporation is a wholesale club that requires customers to purchase annual memberships in order to shop at their stores. Costco's main competitors were Sam's Club and BJ's Wholesale. Costco purchased Price Club in 1993 which enabled it to survive in the competitive wholesale industry. It also adopted a strategy that was different as compared to its major competitor, Sam's Club This enabled Costco to be the largest wholesale club in the industry in 2001.

I. Costco's Performance in Relation to BJ's

When I compared Costco's total revenues with BJ's total revenues in Exhibit 5 of FIN 197 Seminar in Finance case book, I realized that Costco's total revenue were increasing at an increasing rate with the exception of year 2000 to 2001. BJ's on the other hand, had growing revenues until 1999 when their revenues then began to grow at a declining rate.

Costco has a higher membership fee and more and this enabled Costco's total revenue to be higher than BJ's. This membership fee is very important as it is the main contributor to the company's bottom line since sales excluding membership fees barely covers operating expenses. Costco also has more warehouses and much higher sales per store. Costco has warehouses in many international locations while BJ's only have warehouses in the US. However, Costco has a lower operating and gross margin which shows that BJ's has more efficient operations and higher product prices than Costco. Costco's inventory turnover ratio is outstanding as it is much larger than BJ's. This clearly shows that Costco has an excellent operating efficiency.

II. Costco's Performance in Relation to Sam's Club

Sam's Club, on the other hand, has more members and warehouses as compared to Costco which makes it Costco's largest competitor. However, Costco had larger total revenues, sales per store and operating income due to its strategy. This is also because Costco is more internationally dispersed compared to Sam's Club as it has more warehouses in international locations. I am unable to compare Costco's financial statement performance with Sam's Club because Sam's Club data is joined with Walmart.

III. Costco's core strength and strategy

Costco pursues the strategy of focusing on lowering the unit price of goods and purchasing few Stock Keeping Units (SKUs) from its vendors which enable production savings.

Costco's core strength is designed to provide it with higher total revenues and also to create value to its customers. Their core strength can be divided into two:

• Targeting a wealthier group of small business owners and middle class shoppers which is different from Sam's Club.

• Refusing to mark up products more than 14 percent over the distributor's price

Costco's strategy is really efficient in providing it with a competitive advantage over its competitors BJ's and Sam's Club. This is definitely a long-term value enhancing strategy because Costco's main goal is to create value to their customers. They will definitely obtain many loyal and satisfied customers who do not mind paying a higher membership fee to join Costco. Costco is also a very ethical company as they are not implementing a strategy which serves to reduce their costs and cheat customers of their money in an indirect way.

Direct Debit Payments a Top 5 Myths and the Truth Behind Them

Direct Debit payments are a quick, easy and popular- for over 50% of the UK bill paying population, a Direct Debit solution is their preferred payment method.

Despite their popularity, there still seem to be a few myths and misconceptions around Direct Debits, so we thought it would be interesting to highlight - and disprove - the 5 most common myths...

Myth #1 - Direct Debits are the same as Standing Orders

This product differ from Standing Orders in a number of ways. A Standing Order is for a fixed amount on a fixed date whereas this product are completely flexible, and can be for variable dates and amounts.

A Standing Order is originated (pushed) from the payer's bank, whereas a product is originated (pulled) from the organization collecting the money. Perhaps the most important fact for customers is that the payments are fully protected by the product Guarantee. A Standing Order offers no such protection.

Myth #2 - Direct Debit software is expensive

Many businesses are under the mistaken impression that the software needed to collect this payments is expensive.

The truth is quite the opposite, particularly if your solution is Cloud-based. You don't have to purchase any expensive in-house software, and you won't have to pay for installation or upgrades.

Myth #3 - Direct Debit software is difficult to install

With Cloud-based Management software, you don't need to waste any time installing or configuring hardware. The Cloud is simply remote access computing, with all the hardware and software needed sitting in a secure, external location - so you don't actually have to install anything. Your provider should take care of all that for you.

Myth #4 - Direct Debit software means lots of costly upgrades

A good Cloud-based solution will operate on a modular basis, so you only pay for what you use and can control your resources, with the ability to scale up or down on demand. For example, you shouldn't have to pay more if you want to add more payers - your annual subscription fee should cover additional payers, and allow your business to grow without any additional costs.

Myth #5 - Setting up Direct Debit Payments is time consuming

A popular misconception is that all customers have to sign a paper this Instruction, meaning that businesses have to arrange a face-to-face meeting or wait for the instruction to arrive in the post.

The Truth? Paperless the product instructions are a common sign-up method - and are much quicker than a paper approach. Instructions can be completed via the telephone, online or face-to-face.

Residential Lettings Market Strengthens

Landlords have continued to see rents rise in the residential lettings market in some parts of the UK while at the same time tenant arrears have been following a downward trend. Across the whole of England and Wales the average rent has also been rising in the private rentals sector. Tenants have been experiencing rents at record highs in many UK regions, including the South East, the East of England, the North West and Yorkshire & the Humber, but most notably in London where they have been hitting new peaks.

On a monthly basis, rents have been rising in eight English regions in total. The South East (excluding London) saw rents climb the fastest as it continues to be difficult for first time buyers to secure a mortgage despite the government programmes, such as Funding for Lending and Help To Buy, which were designed to solve the problem of mortgages only being available to those with large deposits. The lending criteria imposed on many potential buyers has caused the market to stagnate in many parts of the country.

However, in certain regions, such as Wales and the West Midlands, month-on-month rents have been observed to decrease and on an annual basis rents also fell in two regions, decreasing by 1.9% in the South West, and by 1.8% in Wales.

The rental market is right in the thick of its peak season in late summer and early autumn, and the demand from graduates and those starting new jobs has added a new layer of competition for the best properties on top of the existing group of frustrated buyers who cannot obtain an adequate mortgage. The stringent mortgage finance criteria and large deposit requirements imposed by the mainstream banks and building societies for potential buyers continue to increase the pressure for additional rental properties.There is the possibility of this situation easing over time as the Funding for Lending and Help To Buy schemes introduced by the government begin to filter through and result in increased lending to borrowers with small deposits.

The government schemes designed to help first time buyers get on the property ladder in the UK will need to be significant and sustained over a long period of time before the current demand for rental property eases and rents return to more affordable levels.

Whether you are a first time buyer looking for a relatively modest mortgage or are an existing home owner looking for a million pound mortgage to upgrade from you existing home, everyone is hoping for an improvement in the situation where monthly rental costs are at least the same as the cost of a mortgage but it is simply the lack of a large deposit preventing people from being able to secure a mortgage and buy a property. As the Help To Buy scheme is now opening up new mortgage deals from banks such as RBS to those with only a 5% deposit and specialist mortgage brokers are increasingly securing funding from non-traditional lenders, it appears that the state of the property market may be set to improve.

Turn Your Vacation Property Into An Investment Property For More Income and Tax Breaks

If you've been using your vacation home just for your own enjoyment, you're tax breaks on mortgage, taxes, and expenses you pay on it are limited. Turning it into an investment property can not only bring in some extra income but increase your tax breaks for holding it -and still allow you to enjoy it.

Your vacation home becomes recognized as an 'investment' for the IRS investment tax breaks if you rent it out more than 14 days per year and restrict your personal use of it to either 14 days or 10% of the days you rent it - whichever is more. By renting it more than 14 days per year, you can treat it as a rental property (IRS Pub 527 on rental and vacation home property) so you can deduct all your rental expenses subject to the passive loss rules.

The passive loss rules restrict your annual rental loss to the extent of its rental income. But if your adjusted gross income (AGI) is $100,000 or less, you're allowed to claim rental losses of up to $25,000 each year even if they are above your rental income. This 'allowed loss' is phased out as your AGI increases from $100,000 to $150,000 (check if current phase out limits are higher at the time of your reading this).

*So what are those rental expenses?

Rental expenses include all your Schedule E expenses as for any property. That means advertising, annual maintenance costs, mortgage interest, and property taxes. And it means depreciation too. Remember, depreciation is a book keeping amount that doesn't take any cash out of your pocket; it's an amount of loss attributed to the rental building during the time you own it; it's wholly independent of maintenance costs.

Hopefully you can earn some serious rental income. But often it doesn't take much rental income to cover your yearly out-of-pocket expenses to maintain your rental. But your costs including annual depreciation can still exceed your rental income to produce a net 'allowed' loss. Use that loss to offset your personal income - if you're AGI is low enough as mentioned above. That's an important tax break...

The depreciation loss that shelters your personal income from tax while you're getting rental income that covers 'out-of-pocket' expense is a real help to you. And, you get to use your rental home for some 'free' vacation use for a couple of weeks too.

*No thanks, I want to use it a lot for myself:

If you don't make it an investment (i.e. as a rental) property, you really only have mortgage interest and property tax deductions you can take on it. And those generally require you to itemize your deductions, and often that's the case due to the mortgage on your principal home and the working income taxes you have.

But if that's OK with you, realize you can still rent it, but for only 14 days per year. And that rental income you receive for those 14 days or less is tax free. That's a boon.

If you rent it for more than 14 days and your personal use is also more than 14 days and more than 10% of the rental days, then you can deduct some additional but limited expenses (including depreciation) but only up to the extent of rental income your receive - and claim on your return.

So, a vacation home can put more money in your pocket than just its long term appreciation value. With it you can have your cake and eat it too.