Be aware that if you are the manufacturer and distributor of your product, you will be responsible for providing product liability insurance to the retailers who sell the product. All retail products, no matter how innocuous they appear to be, must carry product liability insurance.
If you are building a business around your invention, keep in mind that it is your responsibility to enforce your patent. If you should find your product infringed this could be a significant expense. Many independent inventors choose to license their products for this reason alone. They know that they would never have the financial resources to sue for infringement.
Large companies also know that small independent product developers are not likely to have the funds to force them to stop if they choose to infringe. This makes it more likely that a large company might consider it worth the relatively small risk that an independent inventor could make them stop producing and selling the inventor’s patent protected product.
Posted in Dealing with risk, Economy, Financial Advice, credit score, finances (Tags: annuitant, Annuities, banking, banks, Bearish Patterns, Budgeting, cash, company costs, currency cycles) | Comments Off
Marketed as simple and easy to own, stocks are actually the most complex and emotionally challenging of all asset classes. Powerlessness,
unmanageability, regrets, fears, social pressures, herd behavior, and complexities galore are the norm. Stock investors are primarily an optimistic group. They believe that stocks they purchase will increase in value. They all know stories of stocks that increased in value by 100 times or more. The potential rewards appear unlimited. Of course, most stock investors are aware of the risk of loss, so they diversify and employ other cautions. Still, every stock investor believes that one or more of his stocks or mutual funds will have fantastic returns.
Businesses issuing stock encourage this belief and are all too happy to accept the investor’s cash.
Investment relationships are not identical to romantic, family, and social relationships solely among people. Though people, often with conflicting interests, are involved in investment relationships, the primary relationship is between the individual and an inanimate object: money. At first, it may seem odd that a relationship between a person and an inanimate object could be dysfunctional. In fact, our society is saturated with such dysfunctional relationships.
It is estimated that 10 percent to 15 percent of the U.S. population is alcoholic; essentially more than 30 million Americans have a life threatening dysfunctional relationship to an inanimate object: alcohol. One out of every three adult Americans are obese, based on their dysfunctional relationship to food. Sixty million American families have larger credit card debt than they can afford. Their relationship to material goods is dysfunctional.
In fact, consumerism dysfunction has reached new heights. Compulsive shopping is portrayed in the media as fun, not as an illness. Yet in the booming economy with a roaring stock market of the late 1990s, the number of personal bankruptcies had never been higher: 331,000 filed for bankruptcy in 1980; 413,000 in 1985; 783,000 in 1990; 927,000 in 1995; and more than 1,300,000 filed in 2000. In recent years, Americans as a whole have spent 1 percent more than they earn.
Let’s look at another example. Sally is carrying a $10,000 balance on her credit card. Sally’s monthly minimum payment is 2% of the balance, or $200, and the interest rate on the card is 18% annually.
If Sally makes just the minimum payment each month, it will take her 57.5 years to pay off her balance! Not only that, the $10,000 she put on the credit card will have cost her $33,930 by the time she gets it paid off.
But let’s say Sally always makes her minimum payment, plus an extra $100, or $300 a month. In this case, it will take Sally just under 7 years, instead of 57.5 years, to eliminate this credit card debt. In addition, her $10,000 that she spent on the credit card will only end up costing her $16,000. That’s a savings of over $17,000, which could have been used to eliminate other debts sooner.
Keep in mind as well that this example used a credit card that is charging 18%. With credit cards that charge higher rates (30%+) and things like payday loans, you can spend the rest of your life trying to get caught up. In either case, you’ve got to take drastic action to cut your debt now.
The majority of subprime loans are refinanced (cash out), meaning that borrowers are extracting equity from their homes. The purchase cohorts differ according to loan type. Specifically, the purchase ARM repayment risk multiplier is 1.06; conversely, the fixed multiplier is 0.97. This suggests that the hybrid ARM purchase borrower demonstrates faster turnover than the cash-out borrower, whereas the fixed rate purchase borrower exhibits a slower turnover.
Rate and term (no cash out) hybrid ARM and fixed rate borrowers exhibit lower voluntary repayment multipliers of 0.89, and 0.83, respectively. This suggests that rate and term borrowers refinance based on an
expectation of living in their homes for a longer period than either refinance cash out or purchase cohort.