Slot Machine Investing

There are a number of things that differentiate an "investment" from a not-so-carefully disguised form of gambling. Understanding these factors can spell the difference between making a payoff and ending up a financial ruin.

1. Investment is all about making informed assumptions. Gambling, on the other hand, relies heavily on luck. While it is true that luck plays a part in getting an income from one's investment, it should never be the primary factor. This is what makes it tricky this early. No one who will offer you an investment will come to you and say that it has a 50-50 chance of succeeding. Otherwise, you are better off heading to a casino (although I don't think there are games there that offer even a 50-50 chance). Rather, what you will get is a carefully packaged set of assumptions and computations that shows a high probability of getting a high income. What makes it an investment is whether or not you can vouch for the plausibility of these assumptions. Or, as a next best thing, your financial advisor (who is not the one offering you the investment), can vouch for it. Of course, there will be varying degrees and methods, but the bottomline is that the decision to invest was made based on facts, and not chance.

2. Investments offer a reasonable return, while a gamble will promise the moon. So, if you are investing in a highly regulated or very competitive industry, a higher than expected return should be a cause for careful evaluation. Not that it's not possible; it's whether or not the assumptions or methods (as mentioned above) allow for such a return to be achievable.

3. Investments feed on fundamentals, gambling feeds on frenzy. That's why so many who are excited with all these "Ponzi" schemes ended up getting burned. They either knew that there were no underlying reason for such a return on investment, or they couldn't care less.

4. Some investments are really just a step better than a gamble. Let's face it, some investments will have assumptions that will not be any better than a roll of a dice. This is true in such cases as pioneer industries or new technologies. The important thing is to recognize it for what it is.

Hopefully this post can help you in making that very important distinction between investing and gambling. Let me know your views or share what other criteria you may be using.

The Benefits of Mobile Commerce

Mobile commerce (m-commerce) is a way of conducting financial transactions without the necessity of going to an office or place of business such as a bank, a payment center, or other financial institutions. For many of us living in urban areas, we could take for granted the fact that we have access to various electronic channels, like we can pay our bills via the Internet, via SMS or through a simple telephone call. It saves us the time that we could better spend doing our jobs or being with our family. The convenience it provides us is something we can enjoy almost on a daily basis. Likewise, banks and financial institutions are plenty enough in urban areas so that in the event the electronic channels aren't available (or we just don't want to use them), we can always pay a visit to these institution's offices.

For some people, however, m-commerce is more than just convenience. It can become a life-changing innovation in their lives. Take for example a farmer who lives some distance away from the nearest business center. For him to make some transactions, like getting a loan, paying bills, or receiving payments for his produce, he would need to make the trek to town that can probably take him away from his business for a full day every time.

Through the m-commerce network, however, the farmer can receive proceeds of loans and payments made to him delivered electronically through an access device, like a cellular phone, in a form commonly referred to as e-money. He can then use the e-money to also electronically make payments for expenses of his business, or he can "cash out" through a nearby cash center and pay his suppliers and creditors who may prefer to be paid in regular cash.

Through all of these, he would probably spend only a fraction of the time and expense he would have to make if he had to go to town for each and every financial transaction he needs to make. He can then devote this saved time and money to producing more and possibly engaging himself in additional profitable business. Likewise, the risk of losing the money by traveling large distances is also minimized. You can only imagine the impact once this process is replicated and compounded.

For the companies and individuals the farmer deals with, they also benefit from receiving his payments faster. They likewise need to have less people manning their offices, or they can channel their personnel to more productive activities as well. Safety also comes into play in these situations, as fewer people need to handle cash and transport them over long distances.

A lot needs to be done for this system to work, though. Legal frameworks need to be set, infrastructures need to be laid, and the target market need to be made aware and capable of using the network. The efforts, however, is worth it once a vibrant m-commerce is set in place.

eBillme: Paypal killer?

A recent post from The Christian Dollar featured an interview with the Vice President for Marketing of eBillme. This is a payment method that one can use when shopping online. With eBillme, there is no need to provide any personal or financial information to the merchant store or payment partner, like in the way with the traditional payments via credit/debit cards or via Paypal. Based on some of the instructional videos, when a buyer choose eBillme to pay for his online purchases, he gets an email from eBillme for the amount of his purchases. The buyer now has the option to pay eBillme through online banking or even over the counter to their bank.

The approach of eBillme does seem safer, since payment transactions are done through the online banking channel of one's bank, which limits the number of instances where one's financial information can be compromised. One issue, however, is the additional effort of making the payment yourself. It can find itself challenged by the reputation of safety of Paypal, coupled with its ability to streamline the process of one's online purchases.

Another aspect that eBillme highlights is the fact that since all of the payments coursed through them are essentially cash payments, it can be very effective in helping people to control their expenses. While this is a noble goal in itself, it somehow immediately limits the market for them. What's more, it can alienate some people who may feel that eBillme is viewing credit transactions as inherently wrong.

The entry of eBillme as another payment method provide consumers with another way to conduct their online financial transactions in a manner they deem safe, efficient, and aligned with their financial goals.