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10 Smart Steps to:

Focus on Prosperity Provided by: Financially S.M.A.R.T. Services

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MONEY $MART...

Question: I’m really distressed about my 7. finances. All I hear on the news are reports of people getting laid off and businesses facing tough challenges, and I’m finding it hard to think positively about my financial future. What can I do to counteract all this negativity?

Learn about the law of accumulation. This states that every great achievement is an accumulation of hundreds of small efforts and sacrifices that no one ever sees or appreciates.

Answer:

It is possible to initiate prosperity in your life, if you are willing to learn and practice certain principles of success. Here are some timetested concepts have brought financial success to others throughout history:

1.

Embrace the law of abundance. This states that there is enough money in the world for everyone who knows how to get it and keep it. Believe in your ability to be prosperous.

8. Design a practical action plan to overhaul 2. Stop concentrating on your lack of money. your finances. Get expert financial advice to help

Thoughts like “I don’t have enough to pay my bills,” “I need to pay off my credit card debt,” “I can’t afford…” focus your mind on scarcity instead of prosperity.

you set goals. Carry out purposeful steps to turn your dreams into reality, and be disciplined and persistent in your actions.

This states that your thoughts attract into your life people and circumstances in harmony with your mental pictures. In other words, what you think is what you’ll get.

Optimism is being enthusiastic and believing that you will get the best outcome from all your efforts.

9. Create a positive expectancy for your life. This 3. Understand the power of the law of attraction. helps you to be optimistic despite your challenges. 10. Be happy and grateful for the money you al4. Use the law of attraction in a positive way. ready have, by giving thanks every day. Gratitude

Create a vivid and detailed image of you living a prosperous life and keep this picture in your mind every day. Never doubt that this can be your reality.

5.

Make-believe you already have the money you want. Play games to trick your mind into thinking you’re already wealthy. For example, visualize cheques coming to you in the mail, or white out the figure on your bank statement and replace it with your desired total.

6.

Maintain a positive self-motivation. Some people are motivated by what they fear and others by what they desire. Replace fear as the motivation in your life, by getting motivated by the things you really want out of life.

is a positive energy that will attract more blessings and prosperity in your life. ........................................................................................... Financially S.M.A.R.T. Services is Jamaica’s number one source for practical, down-to-earth and independent answers for all questions relating to personal finance. Get more money smart advice at www.financiallysmartonline.com. Email advice@financiallysmartonline.com with comments or questions.


Private Equity Funding When will Jamaica be ready? Christopher Williams, Managing Director of NCB Capital Markets, painted a bleak picture for the current prospects of private equity funding in Jamaica and by extent, the Caribbean region.

By: Andre’ Biurnett

YM INSIGHTS

Speaking at a conference earlier this year, Williams outlined several reasons and examples of failed endeavours that prove that what he says might just be true. Your Money has looked at the success of private equity funding abroad and has assessed the possibility of this thriving locally. Private Equity and Venture Capital… Private equity is actually a broad category into which venture capital falls, along with leveraged buyouts (LBOs), growth capital and mezzanine capital. The term refers to equity that is not traded or quoted on the public market and is usually cash that is pumped directly into a company, with the sole purpose of realizing a profit over a short period of time. Public vs. Private Equity Private equity firms and their acquired companies are very true to their names and tend to keep their records and methods of success fairly close to the chest. The main tenet of private equity is that companies are acquired with one simple goal in mind: sell at a profit. The companies are bought for their portfolio, fixed, grown and then sold to other companies or made public through an IPO. This type of mindset changes the running of a business from a marathon to a hundred meter dash. Tom von Krannichfeldt who managed AZ Electronic Materials for private equity firm, Carlyle Group, stated in 2006, “Everybody in the company knows you’re on a sprint to do well, It’s not this mindset of working for a company that’s been there for 100 years and will continue for another 100 years. I find this much more intense than a public company.” Interestingly enough private equity powerhouse, The Blackstone Group, sold a 12.7% stake in its ownership in 2007, in the largest public offering since 2002. The Rise of Private Equity Firms such as The Blackstone Group that acquired

the Hilton Hotels Corporation in 2007 for $26 billion and The Carlyle Group that controls over 20 companies including Dunkin’ Brands and QinetiQ are examples of huge firms which provide huge returns to investors and were part of the most recent private equity boom in the United States. These firms flourished between 2004 and 2007 which saw several mega buyouts being completed in the US including toy chain Toys R Us and movie house Metro-GoldwynMayer. The latter parts of the 20th century saw private equity investments, especially venture capital, making huge strides due to the boom in the technology sector and the creation of the so-called “dot com bubble”. Success of Private Equity Funding Overseas This type of funding, venMark Zuckerberg ture capital in particular, is Founder, CEO & especially attractive to young President of entrepreneurs many of whom Facebook are present in today’s Jamaica. The number of upstart companies in the United States which have made the transformation into viable functioning entities because of venture capital funding is significant. Google, FedEx, Starbucks and more recently Facebook are all companies that received a healthy dose of venture capital that allowed their growth to be as explosive as they were. Is Jamaica ready? Are we ready to be as flexible as is needed to take advantage of private equity funding and are our entrepreneurs capable of coming up with the necessary ideas to make venture capital worthwhile? Check out next week’s issue for more.


MOVE UP JAMAICA eSUPPLEMENT

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Inflation Management and its Consequences on Nation, Citizens and Businesses “Now abideth these three rates: interest, forex , and inflation; but the greatest of these is inflation.”

I

Apostle Common Sense, Acts of the Economy, Knowledge Testament, New International Wisdom Version, Burnsil Doctrine

In true Jamaican style, we have been generating much heat, reactions and focus on the consequences of poor inflation management (interest and forex rates) but with an equally deafening silence on the causes. The focus of the business community, the policymakers, the technocrats, the workers, the citizens and the media should be on INFLATION. All things being equal; bring inflation down to single digits and the other two rates will receded. (And note that recede implies gradualism). Maintain a double digit inflation environment and we will perpetuate a high interest regime and a galloping forex rate. Let us not blame the commercial banks. Lay full blame with the institutions, systems and processes responsible for managing and driving down inflation. They are clearly doing a dismally poor job. Forget the circular argument about which came first (inflation or forex or interest); inflation drives the other rates. Further, forget about the “small, open economy” argument; Jamaica has the worst inflation record of all the “small open economies” in the entire Caribbean. In the small OECS countries, inflation runs between 1 – 3% typically; in Cuba 3 – 6%.; Barbados 0 – 5%; Trinidad 4 – 8%. In Jamaica’s case the out-turn has been, 8.5% in 2006; 9.3% in 2007 and 20.2% in 2008 (data source – IMF 2008 World Economic Outlook). We should ask ourselves why is this so ? What are we doing in Jamaica to make our inflation rate so terribly high ? Even with the same common exogenous variables, Jamaica’s outcome is much worse. Think about it if, as a lender, we know that inflation is hovering at 20.2%, would any of us lend out money at less than 20.2% ? No we would not. An interest rate of 20.2% is just maintaining the nominal value of your funds. Add operation costs and profit and one is already at 25%; at least. However, consider this, with an inflation environment at 4%, would strident calls for interest rates to be in the 9% range be an issue. Clearly not. Interest rates in double digits would be

clear and obvious anomalies in that context. By a perverse logic, the BoJ is correct on this one; their rates are in the correct range, given the actual prevailing inflation rates.. You cannot have a low interest rate regime in a high inflation environment. On the matter of forex rates, think about this, if the US annual inflation is 3% and Jamaica’s is 20.2%, what is the minimum that the forex rate will slip in a year… .17.2% at least. It is as simple as gravity. If the dollar started out at 71:1 at the start of 2008 and the USAJA inflation differential is 17.2% what is the expected value at end of 2008 ……83:1. Its not rocket science. That model is generally defined as the purchasing power parity of the currency. Lower adjustments than that serves to overvalue the dollar by dynamically, and artificially, revaluing it upwards. No amount of NIR, or moral suasion, or ministerial imploring can prevent the subsequent, inevitable, corrective devaluation. As an adult country of 47 years, we should all have learned this lesson by now. What can we, therefore, justifiably blame the BoJ for ? We can blame them for trying hard, as mandated by their own Act, to maintain artificially overvalued exchange rates. The Christmas 08 debacle is proof-positive of this. We can also blame them, and the authorities, for the present long list of misplaced priorities in the BoJ Act’s five stated objectives; none of which includes price stability.

K C I CL E TO D R OA E H NL AD N W RE T I O N D ND E A LEM PP ITS TY U E eS R I T EN

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The Jamaica Junior Stock Exchange a viable option - Mrs. Marlene Street-Forrest explains

by: Kenartur Alexander Mitchell

BUSINESS LOUNGE

Little access to loans, few avenues for raising additional equity, lack of a proper advisory board and inefficient accounting practices are some of the problems that have plagued small and medium-sized businesses for years and have hindered their growth and viability within the marketplace.

Fortunately, the recently launched Jamaica Junior Stock Exchange (JJST)seeks to provide solutions to these problems by offering individuals the opportunity to take their companies to heights of success. JJST plans to aid companies in switching from the private sphere to that of public listing, where the prospects of raising capital are greater. The optimism of this venture Money eZine to investigate…

led Your

Mrs. Marlene Street-Forrest, General Manager of the Jamaica Stock Exchange, states that an increase in domestic investment in entrepreneurship, employment, healthy competition, customer service and overall improvement in economy development are the objectives behind the development of the JJSE. “This is the time for budding entrepreneurs to take advantage of the opportunities to come!” she says. The general function of the JJSE is to list small and medium size companies that seek to have a capital base between $50 million to $500 million. While being a good source for raising capital; JJST will also allow for such businesses to become more organized and developed, something which StreetForrest calls “fostering good governance”.

at 50% tax. This in itself gives companies the flexibility and the ability to have substantial growth. Additionally Street-Forrest explains that having a “mentor” is required when becoming a member of JJSE. Such an individual would assist with such critical factors as developing a board and audit team and dealing with listing fees and other relevant expenses. At the launch of the JJSE on April 2nd, one can argue that the anticipation and excitement was not as expected; however the main aim is to get the system in order and generate not only interest from businesses and budding entrepreneurs but to get them listed. Street-Forrest informs that roughly 20 companies are geared up for listing and the public may see at least 2 listings in May. “Businesses are getting themselves organized, some are in better positions than others but they all are heading in the right direction,” she says. Addressing the promotion issue, Street-Forrest states that there will be advertisements in such mediums as the newspapers, television and radio and upcoming workshops Your Money sees great potential for this new Junior Stock Exchange system and wishes Mrs. Street-Forrest and her team all the success in this venture, as this can only generate healthy activity in the economy and ultimately help Jamaica for the future.

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In essence, the JJSE forces entrepreneurs to get their businesses aligned with the demands of the stock exchange, which in the end helps their companies to foster a good reputation in the eyes of the public. Becoming a member of the JJSE would lend access to tax holiday for 10 years, five of which is fully tax-free and the remaining years

The Second Annual R. Danny Williams Career Symposium Theme:

Developing a Recession Proof Career April 24, 2009 • 6pm-9pm The Grand Caribbean Suite at the Knutsford Court Hotel Speakers: Mr. Richard Byles

Mr. Robert Gregory

Mr. Geoff Houston

President/CEO of Sagicor Life Jamaica Limited

President of Jamaica Trade and Invest

Country Manager of Cable & Wireless Jamaica Ltd. (LIME)

Moderated by Al Edwards

Hosted by


Credits Publisher eZines Limited Managing Director Tyrone Wilson Your Money Reporters Shari Lyew Kenarthur Alexander Mitchell Kimberly Taffe Columnist Cherryl Hanson Simpson Design and Layout Omar Phinn

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