Hedge Fund 101 - Make Money with Hedge FundsWritten by Scott Hillsworth
Investors are always looking for best investments that will yield most profit. Any investor who can afford extra cost should consider investing in Hedge Funds. Hedge Funds were started in 1949 by Alfred Winslow Jones, who pioneered non-traditional investment strategies. Jones innovated this new investment strategy by selling short stocks, while buying other stocks (long stocks). Hedge Funds are very similar to Mutual Funds, except that there are fewer regulations on Hedge Funds. As a result, Hedge Funds usually require a much larger investment. What Are Hedge Funds? Hedge Funds can help investors make more money with higher-risk investments. Other techniques used in Hedge Funds include “leverage,” which is borrowed money to trade in addition to capital provided one’s investors. The usage of Hedge Funds also requires an incentive fee. An incentive fee is a fee based on a portion of client’s profits as opposed to a fixed percentage of assets. This fee is then invested and ideally will gain investor more money. Generally, companies are owners of Hedge Funds because most people do not have enough money to meet minimum investment required to have a Hedge Fund. In 2004, Hedge Fund investments passed $1 trillion dollar mark. In mid-2004 about 39 companies shared total Hedge Fund values of 1.1 trillion dollars. Common Techniques for Investing There are also other techniques for investing with Hedge Funds. One way is to invest in a company just before a major merger. If one gains knowledge of a merger, and buys large amounts of share in a company that is about to merge, shares go up greatly once merger occurs. This is, unfortunately, a very high-risk investment strategy because some mergers may not occur.
| | How Much Should I Charge?Written by Laurie Soper
People ask me, “What should I charge?” I say, “Ask your clients.” If they are respectable professionals you want as clients, they will be honest with you and give you a fair price based on their experience, their need, and their ability to pay. They will not try to undercut you. And if you are a true professional, you will charge them a fair price and not try to overcharge them. You will not undercut yourself, either. You will base your price on two things: your value to their business, and client’s value to your own company. Your fee should always be based on criterion of a good relationship. If it threatens relationship, is it worth it? You cannot base your price on your company policy or an annual raise, or what you’re worth to your most lucrative corporate clients. You must base your price on relationship with this one specific client and all your clients. Shortly after I opened my business, I received a call from a chartered bank. They were experiencing difficulties with a team who managed world trading, and they needed someone to teach them a thing or two about communications. I was very excited about this opportunity. I shook their hands vigorously and we retired into a little room, where we discussed their needs and they told me kind of written proposal they were looking for. I listened carefully as these two women talked. I couldn’t wait to sink my teeth into it. I proceeded to tell them how I would approach project and then—poor naïve little me—I lowered my voice and almost whispered: “I should tell you, though, that I’m not cheap. I charge $325 a day.” The two of them looked at each other and giggled. “Did I say something funny?” “When you submit your proposal, you had better charge us twice that, or Manager won’t look at it.” I stared at them, cleared my throat, and replied, “Certainly.” I “certainly” learned a lesson from that encounter. You don’t charge a chartered bank same fee you charge a non-profit organization. I also, unwittingly, had been given an opportunity to grow my business. When you meet a new client you have nothing to lose. Use it to take risks with your fees. Let them teach you what going rate is, what they expect to pay. You might be pleasantly surprised.
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