What is Your Money Personality? Take the Test!

Like almost everything else in life, your response to money is largely dictated by your personality. But have you given much thought to how you behave in regard to your finances and how that behavior affects your bottom line? Understanding your money personality is the first step and will help you shape your approach to spending, saving and investing. So what's your money personality? Read on to find out.

What's your type?
Money personalities have been analyzed in a variety of ways and many people can identify with aspects of several profiles. They key is to find the profile that most closely matches your behavior. The major profiles are: big spenders, savers, shoppers, debtors and investors.

Big Spenders
Big spenders love nice cars, new gadgets and brand-name clothing. Big spenders aren't bargain shoppers; they are fashionable and they are looking to make a statement. This often means a desire to have the smallest cell phone, the biggest plasma TV and a beautiful home. When it comes to keeping up the Joneses, big spenders are the Joneses. They are comfortable spending money, don't fear debt and often take big risks when investing.

Savers
Savers are the exact opposite of big spenders. They turn off the lights when leaving the room, close the refrigerator door quickly to keep in the cold, shop only when necessary, and rarely make purchases with credit cards. They generally have no debts and are often viewed as cheapskates. Savers are not concerned about following the latest trends, and they derive more satisfaction from reading the interest on a bank statement than from acquiring something new. Savers are conservative by nature and don't take big risks with their investments.

Shoppers
Shoppers derive great emotional satisfaction from spending money. They often can't resist spending money, even if it's to purchase items they don't need. Shoppers are usually aware of their addiction to spending and are even concerned about the debt that it creates. They look for bargains and are pleased when they get a good deal. Shoppers will often shop to entertain themselves, even if the items they buy go unused.

Shoppers are an eclectic bunch when it comes to investing. Some invest on a regular basis through tax-saving plans and other automatic investments and may even invest a portion of any sudden windfalls such as bonuses or inheritance money, while others view investing as something they will get to later on.

Debtors
Debtors aren't trying to make a statement with their expenditures, and they don't shop to entertain or cheer themselves up. They simply don't spend much time thinking about their money and therefore don't keep tabs on what they spend and where they spend it. Debtors generally spend more than they earn and are deeply in debt and they don't put much thought into investing. Similarly, they often fail to even take advantage of the company match in their tax-saving plans.

Investors
Investors are consciously aware of money. They understand their financial situations and try to put their money to work. Regardless of their current financial standing, investors tend to seek a day when passive investments will provide sufficient income to cover all of their bills. Their actions are driven by careful decision making, and their investments reflect the need to take a certain amount of risk in pursuit of their goals.

Advice for Your Personality
Once you recognize yourself in one of these profiles and have put some thought into how you approach money, it's time to see what you can do to make the most of what you have. Sometimes making just small changes can yield big results.

Spenders: Shop a Little Less, Save a Little More
If you love to spend, you are going to keep doing it, but you should seek long-term value, not just short-term satisfaction. Before you splurge on something expensive or trendy, ask yourself how much that purchase is going to mean to you in a year. If the answer is "not much", skip the purchase. In this way, you can try to limit your spending to things you'll actually use.

When you channel your energy into saving, you have another opportunity to think long term. Look for slow and steady gains as opposed to high-risk, quick-win scenarios. If you really want to challenge yourself, consider the merits of scaling back.

Savers: Use Moderation
Ben Franklin once recommended "moderation in all things". For a saver, this is particularly good advice. Don't let all of the fun parts of life pass you by just to save a few pennies.

Tune up your savings efforts too. Pinching pennies is not enough. While minimizing risk is any investor's prime goal, minimizing risk while maximizing return is the key to investing success.

Shoppers: Don't Spend Money You Don't Have
A critical step for shoppers is to take control of their credit cards. Unchecked credit card interest can wreak havoc on your finances, so think before you spend - particularly if you need a credit card to make the purchase.

Try to focus your efforts on saving your money. Learn the philosophy behind successful savings plans and try to incorporate some of those philosophies into your own. If spending is something you use to compensate for other areas of your life that you feel are lacking, think about what these might be and work on changing them.

Debtors: Start Investing
If you are a debtor, you need to get your finances in order and set up a plan to start investing. You may not be able to do it alone, so getting some help is probably a good idea. Deciding on who will guide your investments is an important choice, so choose any investment professional carefully.

Investors: Keep Up the Good Work
Congratulations! Financially speaking, you are doing great! Keep doing what you are doing, and continue to educate yourself.

Knowledge Is Power
While you may not be able to change your personality, you can acknowledge it and address the challenges that it presents. Managing your money involves self awareness; knowing where you stand will allow you to modify your behavior to achieve your desired outcome.

Courtesy: www.forbes.com

Pour Your Heart Into It!

In 1982, Howard Schultz, the current chairman and chief global strategist of Starbucks,left his prestigious job as national sales manager for a European housewares company to join a small, Seattle-based coffee roaster and retailer. Starbucks had come to Schultz’s attention when he noticed this small business was purchasing a disproportionately large number of coffee makers from his company. When Schultz visited Seattle, he stopped to check out Starbucks and became intrigued with the possibilities. “I saw Starbucks, not for what it was but for what it could be,” he has said.

The key to Schultz’s vision was simple: create community. The idea came to him while
visiting Milan, Italy, where he observed how people gathered at their neighbourhood
espresso bars “like an extension of the front porch, an extension of the home,” he liked to say.

At Starbucks, Schultz saw a means to bring people together in America, just as espresso bars bring them together in Italy.

Unfortunately, the founders of Starbucks didn’t share Schultz’s vision and preferred to remain a coffee roaster with a small retail presence. Schultz’s belief in the idea, however, was so certain that he eventually left Starbucks in 1985 to start an espresso bar retailer.Two years later, he bought Starbucks from its owners and merged it into his small company.

Schultz, a passionate, visionary leader, went on to revolutionise coffee retailing in the US and is rapidly taking Starbucks worldwide. Howard Schultz carefully nurtured an inspiring identity for the company in the hearts and minds of employees. At first he told his story and explained in detail how Starbucks would become an oasis for people as they took time out of their increasingly busy days to stop by for a brief period to relax.

As the company grew by 1997 to more than 1,300 stores and 25,000 partners, it became impossible for Schultz to reach everyone in person. So he did the next best thing. He compiled his stories into an inspiring book entitled Pour Your Heart into It.

Pour Your Heart into It is a compelling account of the Starbucks story. Every Starbucks partner who reads it will understand Starbucks’s history and where it’s headed. The book is filled with vividly told stories,including Schultz’s vision for creating a community. By articulating his vision, he helped to transform
their work experience from one of selling coffee to a higher calling of creating communities among people.

Howard Schultz also brought human value to the Starbucks culture by paying employees well relative to other retailers, and also providing generous benefits such as health-care insurance and participation in the Starbucks stock option plan.

Schultz increased knowledge flow in the Starbucks culture by making it everyone’s responsibility to share their ideas about how to continuously improve the business. Schultz also presented a very approachable persona that made people comfortable that it was safe to be honest with him.

Fostering a connection between employees (or ‘partners,’ as they are known at Starbucks) and customers is an integral part of the Starbucks experience. Partners are trained to understand how to make a customer’s visit true to Starbucks’s mission (i.e. frontline employees’ behaviour is aligned with its mission to create a community). Habits such as making eye contact with customers,
remembering regular customers’ drink orders, and anticipating customer needs are developed through orientation and ongoing training programmes.

The results speak for themselves. By 2005, Starbucks had more than 100,000 partners, 10,801 retail locations,35 million customers walking through its doors, and a record $6.4 billion dollars in revenue during its fiscal year. Its success should come as no surprise, given that Starbucks says that “The human connection . . . is the foundation of everything we do.”

Howard Schultz increased inspiring identity by telling the Starbucks story in writing so that anyone could read it and understand how Starbucks developed its values. He increased human value by calling everyone a ‘partner’ and compensating partners above industry norms. Howard Shultz’s approachable persona increased knowledge flow because he made it safe for people to be honest with him.

Do you know the inspiring identity of your organization? Could you articulate it for yourself and others? Do you feel that everyone is on the same page?

Let us start with "Hedge Fund"

"Hedge fund" is a general, non-legal term that was originally used to describe a type of private and unregistered investment pool that employed sophisticated hedging and arbitrage techniques to trade in the corporate equity markets. Hedge funds have traditionally been limited to sophisticated, wealthy investors. Over time, the activities of hedge funds broadened into other financial instruments and activities. Today, the term "hedge fund" refers not so much to hedging techniques, which hedge funds may or may not employ, as it does to their status as private and unregistered investment pools.

A Short History and the Definition of a Hedge Fund

The first hedge fund was set up by Alfred W. Jones in 1949. Jones was the first to use short sales and leverage techniques in combination. In 1952, he converted his general partnership fund into a limited partnership investing with several independent portfolio managers and created the first multi-manager hedge fund. In the mid 1950's other funds started using the short-selling of shares, although for the majority of these funds the hedging of market risk was not central to their investment strategy.

In 1966, an article in Fortune magazine about a "hedge fund" run by a certain A. W. Jones shocked the investment community. Apparently, the fund had outperformed all the mutual funds of its time, even after accounting for a hefty 20% incentive fee. This is because the rate of return was higher on the hedge fund versus all other mutual funds.

Facts about Hedge Funds
-Estimated to be a $1 trillion worldwide industry and growing at about 20% per year, with approximately 8350 active hedge funds in the world.
-Includes a variety of investment strategies, some of which use leverage while others are more conservative and employ little or no leverage. Many hedge fund strategies seek to reduce market risk specifically by shorting equities or derivatives.
-Their returns over a sustained period of time have outperformed standard equity and bond indexes with less volatility and less risk of loss than equities.
-The popular misconception is that all hedge funds are volatile -- that they all use risky techniques and strategies and place large bets on stocks, currencies, bonds, commodities, and gold, while using lots of leverage. In reality, less than 5% of hedge funds are of this sort.

Useful Terms

Arbitrage: the simultaneous buying and selling of securities in different markets with the purpose of profiting from the price difference in the markets.

Derivative: a volatile financial instrument whose value depends on or is derived from the performance of a secondary source such as an underlying bond or currency.

Hedge: making arrangements to safeguard against loss on an investment (can involve various techniques)

Leverage: the use of credit (such as margin) to improve one's speculative ability and to increase the rate of return on an investment

Short Sale: a sale of a security that the seller doesn't own (if the seller does own the security she is said to be in a long position), and that the seller must borrow. Usually, the technique is employed when prices drop. If the price of the security does drop, the seller can make a profit on the price of the shares sold versus the price of the shares bought to pay back the borrowed shares.