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Moneyizor
The Money Log

Moneyizor - new money site

Moneyizor

Syntagma Media has just relaunched Moneyizor.com as a tracker of the hottest topic of the moment : macroeconomics. Think “credit crunch”, “global financial meltdown”, “economy falling off a cliff”, “new Great Depression”, and your adrenalin may just kick in.

The financial news has been so alarming since last summer, Moneyizor has been changed from a magazine-type portal to become a vehicle for this crucial topic.

“On the day when the UK’s biggest mortgage lender, the Halifax, reported a staggering 2.5pc drop in house prices in March alone, the IMF warns governments, central banks and regulators that they now face a test of their mettle unique in modern times.”

Make sure you keep up to date on Credit Crunch technicalities with Moneyizor.

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Stores of value in hard times — clocks

Longcase Clock In these undoubtedly hard times for savers and investors, attention is being focused on reliable stores of value for tucking away spare cash and avoiding shrinkage.

Gold is the obvious first port of call, and it certainly has gone up recently, touching $1000 an ounce. Pundits are forecasting a price of up to $2000 over the next few years, although that may be the upper limit of credibility.

But have you considered classic clocks? Longcase (grandfather), grandmother, and other top-range historical timepieces?

Expert horologist David Cooper comments, “People often don’t realize that a high-class timepiece, such as a longcase clock, holds its value and is a very good investment in the long run.”

Older clocks score over other antiques as investments because, as well as serving as fine pieces of furniture, they also have utility value as timekeepers.

The first mechanical clocks were introduced on the cusp of the 13th and 14th centuries. But it was the invention of the pendulum in the mid 17th century which brought a dramatic improvement in the accuracy of timekeeping. Clock makers went to extraordinary lengths to gain the smallest advance in technology. The future of the British Empire depended on mastery of the seas, and an accurate clock enabled longitude to be determined with life-saving precision.

Traditional clocks come in all sizes and shapes, and modern reproductions are often of very high quality. The investor who wants to clock up a profit need look no further than a specialist horology showroom somewhere on a local high street.

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Reinvest dividends to multiply gains

Dividends are a welcome addition to investor’s returns on their shares. they represent the portion of profits that companies distribute to shareholders.

However, it’s not widely known that reinvesting them can greatly increase returns on share investment. Growth in dividends from Footsie 100 shares in the UK has outpaced inflation over the last 20 years, according to M&G. Indeed, they have grown by 31 percent over the past three years.

Ben Willis, Head of Research at Whitechurch Securities said, “Volatility in the market can benefit the long-term investor. If you reinvest dividends you get more units for your money, which puts you in a stronger position when markets rebound.”

Reinvesting rising dividends often bring handsome returns. Anyone who invested in, for example, the M&G Extra Income fund 20 years ago will have doubled their capital and would have received total net income payments of 176 percent of their original investment. Those who reinvested those same dividends would have seen their investment increase fivefold in the same period.

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Rules for startups and venture capital

Many new entrepreneurs are uncertain about the rules for engaging with venture capitalists. How does a deal benefit a startup? What are the essential calculations involved?

Paul Graham has done an in-depth analysis of this perennial teaser for new business owners.

If a venture capitalist offers you a certain sum of money in exchange for a shareholding in your startup, what are the rules governing these deals and how much of your business should you part with?

The answer apparently is : 1/(1 - n)

Whenever you’re trading stock in your company for anything … the test for whether to do it is the same. You should give up n percent of your company if what you trade it for improves your average outcome enough that the (100 - n) percent you have left is worth more than the whole company was before. For example, if an investor wants to buy half your company, how much does that investment have to improve your average outcome for you to break even? Obviously it has to double: if you trade half your company for something that more than doubles the company’s average outcome, you’re net ahead. You have half as big a share of something worth more than twice as much. In the general case, if n is the fraction of the company you’re giving up, the deal is a good one if it makes the company worth more than 1/(1 - n).

If you are in this scenario, you will have to go through a lot of hoops to get funding. It’s not a decision to take lightly. You will also lose much of your control of your business idea. Equally, a VC company will receive many business plans a year, some as many as 6000. They will probably fund around 20 of them.

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