How to invest in thoroughbred horses and other racehorses

From betting online to buying stock in horse racing track operator or buying your own horse, there are lots of ways to invest in thoroughbred horses.

Investing in racehorses requires a level of commitment that chases away most amateurs. But, no matter what your level of interest, there are ways to get involved in the Sport of Kings. Here are a handful:

1) Bet at the track or online. The simplest way is to head to the nearest racetrack, buy a race card and place your bets in person. Typically, you’ll be able to bet on live minor league races that take place at your local track, or you can bet on national races (which are shown on TVs at the track) via simulcast. It’s also legal to bet on horses online in more than a dozen states including California. Some of the leading online horse betting sites include TVG.com, Twin Spires and The Racing Channel.

2) Invest in horse racing-related stocks. There are lot of companies that promise exposure to horse racing – namely through the companies that operate horse racing tracks. One of my favorites is Churchill Downs, Inc. (NASDAQ:CHDN), which runs the Kentucky Derby and recently reported record revenue on the strength on surging growth in its online betting service (at TwinSpires.com). Other horse racing-related stocks include Penn National Gaming, Inc (NASDAQ:PENN) and MTR Gaming Group, Inc. (NASDAQ:MNTG).

3) Buy a horse. Thoroughbreds are bred to do one thing: race. To even buy one, you need to register and be approved as a thoroughbred owner in your state. Once you’re approved, you’ll need to pay annual dues to your state thoroughbred owners association. In exchange, you’ll get the opportunity to bid on thoroughbreds at auction. Once you have one, you can expect to pay about $1000 per month in food and maintenance. On top of that, training costs will start around $2,000 a month on the low end (per Stanley Barton at Seeking Alpha). Investing in quarterhorses is cheaper but the payout is smaller and so is the number of tracks that host quarterhorse racing.

4) “Claim” a horse. One of the ways horse tracks try to ensure that races are fair is by forcing owners to set a “claim” price for their horses. About half of all horse races have a “claim price” a horse owner must agree to before entering his or her horse in a race. If the claim price is, say, $20,000, that means the owner of that horse is legally obligated to sell the horse to any buyer for $20,000 before the start of the race.

“About half of all races at North American tracks are claiming races,” Barton writes. “The claiming price can range from as low as $2,000 to hundreds of thousands, although the majority are between $5,000 and $50,000.”

Interestingly, you must “claim” a horse before the race. If the horse wins, the proceeds go to the current owner, then you get to take the horse home for what you hope will be a bright future full of more racing.

5) Enter a thoroughbred partnerships. Horse ownership partnerships provide a unique way of distributing the high cost of owning and racing a horse. Team Valor is one company among many that offers investors an opportunity to buy an ownership stake in a horse. Team Valor also produced the 2011 Kentucky Derby winner Animal Kingdom. According to the site’s Q&As, the average cost to go in on a horse goes “from a low of $6,000, with a median of $12,500 and as high as $75,000 to $100,000.” Should the horse win a purse, you’ll split the winnings between the six and 12 other investors in the horse.

Horse racing is called the Sport of Kings because it’s anything but cheap. If you genuinely have a love for the sport, though, it’s rewarding even without the prospect of financial gain. Every dollar you earn after that is icing on the cake – and, if you find the right horse – it might make for a lot of icing.

One of the most famous racehorses of all time, Secretariat, brought in more than $145 million in winnings and stud fees starting in 1973. Seattle Slew is estimated to have made north of $200 million at stud after being sold at auction for a mere $17,500, according to Barton. That’s the stuff of legend, and it’s part of what makes investing in horses so tantalizing. Just remember that whether you wind up with a winner or loser, the costs to get your horse to the track are very real.

Horse photo by Danagouws.

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How to invest in the Swiss franc

With the threat of inflation looming around the world, the Swiss Franc provides one of the few safe havens investors have left. Here are four unique ways to invest in the Swiss Franc.

In an economy where just about every government in the world is dreaming up unique ways to devalue its currency, there are few safe places for investors to park their cash. Inflationary fears have driven up the price of gold more than 31 percent since the start of year, and they’ve buoyed the Swiss franc (CHF) as well. Since January alone, the U.S. dollar has dropped 13 percent against the franc putting the exchange rate at 1 USD to 0.79 CHF.

I expect that trend to remain intact as the Swiss government recently moved to dispel rumors that it would peg its currency to the Euro. That leaves the franc, and perhaps the Aussie and Canadian dollars, as three of the most attractive currencies on Forex. Here are four ways you can hedge against inflation by investing in the Swiss franc:

1) Currency trading. I wouldn’t recommend currency trading for beginners without a lot of time for practice and research. The currency markets are the most liquid and volatile markets in the world, and – since they’re so leveraged – they can wipe out your trading account in minutes. Still, if you’re willing to put in the time to learn, it’s probably a safe bet that the Swiss franc is going to outperform the U.S. dollar in the coming months and perhaps years. Try a Forex practice account with Zecco.com (my broker of choice) before putting real cash on the line.

2) Go long the Swiss Franc ETF (NYSE:FXF). The CurrencyShares Swiss Franc Trust has rocketed up more than 17 percent since the start of the year. The ETF tracks the franc against the U.S. dollar, which means a weak greenback is good news for FXF-holders. Best of all, FXF’s chart is in a slow and steady uptrend. So long as the Swiss government’s willing to put up with a strong currency, you won’t get the stomach-churning ups and downs that come with investing in precious metals.

3) Invest in Swiss stocks. While it’s not a direct play on the Swiss franc, you could consider investing in Swiss stocks. That might not be a bad idea since the economy in Switzerland looks as if it’s emerged relatively unscathed by the housing and financial collapses that have rocked the U.S. Unemployment currently stands at a mere 2.8 percent in Switzerland (compared with 9.1 percent in the U.S.). The iShares MSCI Switzerland Index Fund (NYSE:EWL) gives you broad-based exposure to the Swiss equities market, or you can add specific Swiss stocks to your portfolio including heavy-hitters like food giant Nestle SA (ADRs, which trade on the Pinksheets under ticker NSRGY), healthcare company Novartis AG (ADR) (NYSE:NVS), international finance company UBS AG (NYSE:UBS), or pharmaceutical company Roche Holding Ltd. (ADR) (PINK:RHHBY).

4) Open a Swiss franc bank account. An interesting play on the Swiss franc is simply opening a global currency savings account that allows you to deposit your cash in Swiss francs. Jacksonville, Fla.-based Everbank does just that. Everbank doesn’t currently pay you a yield for stashing cash in francs, but it doesn’t matter if every other currency around the world is falling. Just convert your dollars to francs, and don’t touch them for a year. When you exchange your francs back into dollars, you should gain quite a bit of purchasing power (especially if the dollar falls another 13 percent against the franc!).

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How to start a B Corporation

Certifying your company as a B Corporation isn’t a walk in the park. You’ll have to submit to random audits, pay annual fees and alter the legal structure of your company. But there are a lot of instances where it makes sense.

While you don’t get any special tax benefits (unless you happen to be based in Philadelphia), certifying your business as a B Corporation demonstrates to the world that you company is committed to solving social and environmental problems. I also suspect that in the future, consumers as well as local, state and the federal government will start showing B Corporations preferential treatment (and that means earning the designation could be good for your bottom line AND for the wider world).

Before you run out and sign up, though, realize that becoming a B Corporation isn’t as simple as filling out a registration form and paying an annual due. If you meet B Lab’s requirements for earning the designation, you’ll probably have to modify your company’s legal structure to limit management’s ability to bypass B Corporation values. That means giving a lot more power to your shareholders AND your stakeholders. You’ll also have to agree to random audits designed to verify your adherence to B Corporation standards.

If you’re committed to running a company that doesn’t just make you money but makes the world a better place in the process, here are the steps to earning a B Corporation designation:

1) Register for a B Impact Assessment. Since every industry has different social and environmental impacts, you’ve first got to submit information regarding your industry, business size, revenues, employee hours and more to B Lab (the certifying body for B Corporations). After you’ve submitted this information, your company will receive a specific B Impact Assessment form to complete. You can register to receive the appropriate B Impact Assessment form here.

2) Complete your B Impact Assessment. After completing your registration, you’ll be sent a custom username and password that you can use to complete your industry and business size’s specific B Impact Assessment. Before beginning, you may want to assess how transparent you’d like to be with your business practices. B Impact Assessment’s are freely available to the public.

3) Review your survey with a B Lab staff member. You’ll need to walk through all of your Impact Assessment answers with a representative from B Lab so he or she can be sure you correctly answered all the questions on the form.

4) Supply documentation verifying your assessment answers. To get certified, your company will have to supply B Lab with documentation verifying roughly 20 percent of your answers to the survey questions. If you can’t verify key questions on the survey, your certification will be denied.

5) Modify your company’s legal structure. If the results of your survey are approved, you’ll have to modify your company’s legal structure to institutionalize stakeholder interests in your business. B Lab provides a legal roadmap to help you do just that. Visit the page linked above to select the type of corporation you run and the state where you’re incorporated. B Lab will provide you with reference language to help you update your company’s legal structure.

6) Sign your new B Corporation documents. If your company is approved as a B Corporation, you’ll have to sign a term sheet specific to the state where you’re incorporated.

7) Set aside funds to cover your company’s B Corporation certification. Fees for B Certifications vary based on the annual revenue at your company. The cost ranges from $500 a year for a company with less than $2 million a year in sales to $25,000 a year for companies with more than $100 million in sales.

8) Be prepared for random audits. One in five B Corporations (20 percent) are randomly selected for audits every two years. Should your company be audited, you’ll be expected to verify all of the information you submitted while filling out your B Impact Assessment survey. If you fail the audit, your company runs the risk of being publicly de-certified (and no one wants that!).

How much does it cost to become a B Corporation?

At the time of this writing, fees for B Corporation certification are based on your annual sales as follows:

Annual Net Sales Annual Fee
$0 – $1,999,999 $500
$2 M – $4,999,999 $1,000
$5 M – $9,999,999 $2,500
$10 M – $19,999,999 $5,000
$20 M – $99,999,999 $10,000
$100 M + $25,000

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How to file a patent

Here are eight tips on how to file a patent whether you choose to file on your own or by using a patent attorney.

Got a great idea you want to patent? Chances are, you’re thinking about the rewards that it will reap you. In an ideal world, your discovery is so revolutionary that a Fortune 500 company’s willing to license it, then sign and deliver checks to your mailbox every month. A patented idea can be as good as money in the bank if it’s something the marketplace genuinely needs.

The truth is quite a bit more sobering, though. Estimates range from one in every 500 to one in every 5,000 patents that actually end up becoming commercially successful (per InventionStatistics.com). Those aren’t good odds, and that makes it all the more important that you think through you decision to file a patent and fully commit to your idea before moving forward.

A recent article in Entrepreneur magazine estimates that the most basic patents cost anywhere from $7,000 to $15,000 in attorney fees, take hundreds of hours in paperwork and can take up to six years to get approved.

If you’re still committed to forging ahead, though, here are eight tips on how to file a patent:

1) Decide whether or not you really need a patent. In theory, you’d think filing a patent on your brand new idea is a no-brainer. In practice, though, there are plenty of reasons why you might not need or want to file a patent. Think about the following factors before deciding whether filing is really going to pay off:

  • Will your design still be relevant in three to six years? If your design applies to a fast-changing field like technology, odds are, it’ll be out-dated before the patent office even looks at your application.
  • Are you certain you can turn your idea into cash? If at all possible, prove that your idea has legs before taking on a second mortgage. Hire a web designer to build a site advertising a product that’s similar to your idea, then track the number of visits and social buzz it builds.
  • In my experience, plenty of great ideas fail, and plenty of terrible ideas succeed. It all has to do with the commitment and passion of the inventor. Assess whether you realistically have the time, energy and focus to devote to marketing, filling out forms and meticulously documenting your invention. On top of that, will you be able to market your idea, even if it’s rejected by the marketplace for months or years?

2) Choose your approach. Filing a patent is a difficult process – particularly for the uninitiated. If you’ve got the commitment and gumption to go it alone, the DIY route is doable. Entrepreneur says to budget at least 150 hours to file your patent over several months (and anticipate lots of additional work in the years to come). Based on some digging I’ve done online, it looks like you should be able to file your own patent for somewhere around $3,000, payable throughout different stages in the patent process.

3) Find a patent attorney. The United States Patent and Trademark Office maintains a list of registered patent attorneys by geographic region. Search the list by state to find several attorneys in your area. Call around to find one that specializes or at least has experience in your specific industry.

4) Determine the type of patent you’re going to file. Currently, they fall into three categories: 1) Utility applications for a “new and useful process, machine, article of manufacture, or compositions of matters, or any new useful improvement thereof”; 2) Design applications for a “new, original, and ornamental design for an article of manufacture”; and 3) Plant applications for “anyone who invents or discovers and asexually reproduces any distinct and new variety of plant.”

5) Research the process for your specific type of patent. The U.S. Patent Office’s web site is a treasure trove of information. Depending on the type of patent you plan to file, you can click on the links below to start reading through background information, download forms and get guidance on the next steps to patent your idea:

6) Electronically file your patent. Once you’ve put together all the drawings, written descriptions (aka “claims”) and filled out all the relevant forms, you can submit your patent application online at on the Patent Office’s EFS-Web site.

7) Wait for a response. You should hear back from the patent office somewhere between 18 and 36 months after you’ve submitted your patent application. In most cases, they will have rejected your patent (according to Douglas Baldwin) because of competing patents that have already been accepted. Don’t get discouraged. The Patent Office should give you specific reasons why your patent is too similar to those existing patents, though, and you’ll have three months to organize and file a detailed appeal.

8) Wait for the results of the appeal. In one to two years, you should get a final response to your appeal. If your patent was rejected, you can appeal yet again, but we’ve got our fingers crossed for you. Hopefully, you’ll be the proud owner of a patent. And then the real work truly begins.

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How to sell your silver jewelry and silver coins

If you’re looking to cash in on your silverware, silver jewelry or silver coins, there are a number of options for selling from silver selling parties to your local pawnshop.

Even though silver prices are well off their recent highs near $50 an ounce, silver’s still up more than 15 percent since the start of the year. Currently, the white metal’s worth $35 an ounce. If you’re looking to cash in on your silverware, silver jewelry or silver coins, there are a number of options for selling:

1) Pawnshops, coin shops or jewelry shops. The easiest and fastest way to sell you silver is to stop by a pawnshop, coin shop or jewelry shop. Keep in mind that you won’t get the so-called “spot price” for your precious metals for several reasons: 1) Gold and silver shops have to make a profit re-selling the scrap they buy from you; 2) It costs money to melt down scrap gold and silver before re-selling it; 3) Spot prices are quoted for “pure” or “fine” precious metals, and most jewelry, silverware and scrap isn’t pure.

If you have the time and energy, it can definitely pay to shop around. Don’t be afraid to ask a prospective buyer what the weight and “purity rating” is for your scrap silver. You can then take that information and call several other shops in your area to see if they’ll out-bid your first offer.

2) Coin shops. Coin shops typically buy scrap gold and silver in addition to coins. Keep in mind, though, that some silver coins are collectible, and that means they might be worth more than their weight in gold or silver. This is particularly true of Silver American Eagles, which are issued by the U.S. Mint and have a slight mark-up over the spot price of silver since they’re easily recognizable as real silver. “Proofs” or circulated silver coins have even more of a mark-up over circulated coins. In general, if you have gold or silver coins to sell, it’s best to try to sell them to a coin dealer rather than a pawnshop or jewelry shop as they have built-in channels to re-sell your silver coins.

3) eBay/online sales. eBay has a thriving marketplace for silver coins and – in some cases – scrap silver. Keep in mind, though, you’ll need to have a strong seller rating so that prospective buyers feel comfortable sending you cash. If you’re just starting out on eBay, don’t expect to get many bids on your silver until you’ve sold several items and received positive feedback from past buyers.

In general, you’ll get much better rates selling silver coins via eBay than you will taking them to a local coin, jewelry or pawn shop (right now, for instance, spot silver is quoted at $35 an ounce, while Silver American Eagles are selling for $45 each on eBay). That said, you’ll have to factor in the time it takes to photograph, list and ship your silver products. Pay special attention to eBay’s seller fees, too, and protect yourself by shipping your silver via insured and certified mail (two additional expenses that will also eat into your profits).

You can also consider selling your silver via an online or paper-based classifieds service (think Craigslist.org). It might take you longer to find a buyer, but you won’t have to pay fees and – if you have the luxury of time – you can wait until you find a buyer who’s willing to pay the price you want.

4) Host a silver party. A small company out of Massachusetts called Party of Gold, has basically put gold- and silver-buying parties on the map. Host a party at your house, and sell your own silver to the Party of Gold representative and help your friends do the same. Not only will you make money on the silver you sell, you’ll get 5 percent of the value of the silver your friends sell, too (and 10 percent of all the gold that sells). It’s a great way to make some pocket money and have fun with your friends.

Ultimately, the route you decide to go when selling your silver will come down to how much time you have to put into it. Keep in mind, though, silver prices aren’t set in stone. The value of any asset, after all, is what someone is willing to pay for it. With a little work, you can find the right buyer, and pad your pockets in the process.

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How to invest in the stock market

Here’s a quick and dirty guide for the complete novice who wants to learn how to invest in the stock market.

Here’s our quick and dirty guide for learning how to invest in the stock market for the complete novice:

1) Determine the type of trading account you want to open. Opening an account is simple. There are literally hundreds of online brokers to choose from. If you’re just getting started, I’d recommend Zecco.com or Scottrade.com. Both are cheap and fairly straightforward, and they do a good job of walking you through the sign-up process.

All you need to get started is some cash, time to fill out the required forms and an understanding of the type of account you’d like to open. If you want to invest in the stock market, but you’re not necessarily doing it for retirement, you should open an “Individual Account” rather than an IRA. Your gains in an individual account are subject to taxes and you’re also allowed to write-off losses. Best of all, you can transfer money out of your individual account without being subject to the penalties you’d have to pay if you were trading via an IRA.

If you’re planning to invest for retirement, you should open an IRA trading account. There are two types: Traditional IRAs and Roth IRAs.

Traditional IRAs allow you to deduct your contributions from your tax return every year (effectively meaning you pay less in taxes while you’re working). When you reach retirement age and withdraw cash from your Traditional IRA account, you will be subject to taxes. Roth IRAs are not tax-deductible, but when you withdraw your cash after retirement, you don’t have to pay taxes on those withdraws. In general, less sophisticated investors should opt for a Traditional IRA.

2) Determine whether or not you want to trade on margin. While filling out the required forms to set up your account, you’ll be asked a barrage of questions. One key question is whether or not you’d like to apply for a margin trading account. Margin accounts function like a line of credit that your broker extends to you so that you can invest more money than you put into your account. This also means you can lose more money than you put into your account. I wouldn’t recommend jumping into investing and immediately opting for a margin account. In the words of billionaire investor Warren Buffett: “Leverage is the only way a smart guy can go broke.” Important note: Margin is only available in individual accounts, not IRA accounts. You’ll also be charged interest on the cash you borrow from your broker.

3) Wait for your funds to clear. After you’ve set up your trading account, you’ll be asked to fund your account. Typically, brokerages will require an “initial deposit” of $500 or more (in some cases as much $2,500) to activate your account. These funds can be deposited electronically, by check or via wire. Of course, you’ll have to wait to wait for the funds to clear. Once they do, you’ll generally be notified via email that your account is credited and available for trading.

3) Place your first buy order. To place your first buy order on the stock market, you’re going to need to know the stock ticker for the company you’d like to invest in. An easy way to figure this out is by going to Google Finance and typing the name of a company into the search bar at the top of the page. For example, if you searched for Apple, you’d be taken to Apple’s quote page where you’d see the company’s ticker is AAPL.

Now that you have a ticker, return to your broker’s site (at Zecco, Scottrade or wherever else you chose to open a trading account), log in and hit the “trade” link. You should now see a series of boxes where you can place your order. Place the ticker (“AAPL”) in the ticker box, and indicate the number (or “quantity”) of shares you’d like to buy. Today, Apple shares are trading at $345.43. Therefore, if you enter a buy order for 10 shares of AAPL, your total cost would be $3,454.30. That’s an extreme example, of course. Most shares cost far less than $345.

While entering your buy order, you’ll see options for the type of buy order you’d like to place. Those options include a limit order or a market order. In most cases, a market order will suffice. That means you want to buy a specific number of shares at “market” price. But what’s market price? In essence, a market buy order means you’ll pay the cheapest available price to acquire shares in a particular company. For high-volume stocks (stocks with a trading volume of 500,000 shares or more per day), your order should get filled at or near the current quote price.

For shares that don’t change hands very often, you’ll want to avoid placing a market order since there may be a significant gap between the “market” price and the “ask” price. Let’s say for example you want to buy shares in Company XYZ, and the current quote for the shares is $2. Unfortunately, Company XYZ doesn’t get much action on the NYSE. Let’s say the company’s got a trading volume of 5,000 shares. That means just 5,000 shares change hands every day. Since the market is open from 9:30 a.m. to 4 p.m. EST, that’s not much trading. There may be stretches of several hours throughout the day when no one buys or sells shares in Company XYZ.

There are, however, a few people who want to sell shares in Company XYZ, and they have a standing order on the market to sell shares only if the price hits $3 (what’s known as a sell limit order). If you blindly submit a market order for shares in Company XYZ, and the only current seller is some guy who’s asking $3 per share, your buy order will be matched with his sell order, and you’ll be the proud owner of shares in Company XYZ at a cost of $3 per share – even though the quoted price was only $2 per share! Since no one was willing to actually sell shares at $2 per share, you got paired up with someone who was willing to part ways with his shares for $3 per share, and you just paid a 50 percent premium on the cost of the shares! That’s not a great way to make money trading stocks.

So, how can you avoid that? Place a limit order instead of a market order. If you want to buy shares in Company XYZ, but you’re only willing to pay $2.01, you can select “limit order” and enter a limit order price of $2.01. Your buy order will then be triggered ONLY if there’s someone out there willing to sell their shares for $2.01 or less.

You can get even more fancy with your buy orders by taking advantage of “buy stop orders”, “buy stop limit orders” and “buy trailing stop orders”, but those fall outside the purview of this column. For the vast majority of beginning traders, market orders and limit orders will suffice.

4) Place your first sell order. It’s a been a few weeks since you bought shares in a particular company, and hopefully, share prices have risen. Now, you want to sell your shares and pocket the gains.

Selling shares is as easy as buying shares. Just click on the number of shares you have in your account and place a sell market order or a sell limit order. A sell market order means you’re willing to sell shares at any available price. A sell limit order means you’re willing to sell your shares, but only if there’s a buyer out there willing to pay the price you’ve set. Congrats. You’ve just bought and sold your first few shares! I’ll be posting common pitfalls to avoid in the coming weeks. Good luck!

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How to invest in a hedge fund

Investors poured $13.1 billion of new cash into hedge funds during a single quarter last year. How can you get in on the action, too?

Hedge funds grew larger in Q4 of 2010 than they have during any other quarter in history. The industry ballooned by $149 billion, according to Hedge Fund Research data, bringing assets under management in the industry to $1.917 trillion.

While most of the growth came from strong performance by the funds in Q4, investors also poured $13.1 billion of new cash into hedge funds. How can you get in on the action, too?

First, it’s important to understand what a hedge fund is. They differ from mutual funds in that they typically use a combination of derivatives and long and short positions to – as the name implies – hedge positions as a way to protect capital while pursuing gains. Thanks to relatively light governmental regulation and the ability to leverage positions, hedge funds can take risks that more traditional funds can’t. For that reason, most jurisdictions limit who can actually invest in hedge funds.

Hedge funds generally fall into two camps: a 3(c)(1) Fund, which is limited to 100 or fewer investors or a 3(c)(7) Fund, which is generally limited to accredited investors.

Since 3(c)(1) hedge funds cannot have more than 100 investors, they’re typically offered on an invitation-only basis (translation: you need to know someone or at least know someone who knows someone). To be eligible to invest in a 3(c)(7) fund, you’ll have to qualify as an accredited investor or qualified purchaser (translation: you need to have a high net worth).

How much money do you need to invest in a hedge fund? First of all, you’re going to have to meet the hedge fund’s initial investment requirements and accept the fund’s management and performance fees. Then you’ll have to qualify as an accredited investor, which means you have a minimum net worth of $1 million (or, alternatively, a minimum income of US$200,000 in each of the last two years and a reasonable expectation of reaching the same income level in the current year). Alternatively, you could qualify as a qualified purchaser, which means you’d need more than $5 million in investment assets.

A new and emerging way to invest in hedge funds comes via ETFs. The MW TOPS Global Alpha ETF, for instance, mirrors a basket of Marshall Wace’s TOPS investment strategies, which use mathematical models to evaluate and capture the best available ideas from brokers, Reuters reports. Shareholders in the ETF should, in theory, get the same returns as Marshall Wace’s TOPS hedge fund participants. The Global Alpha ETF currently trade on London and Frankfurt stock exchanges.

In general, though, hedge funds are operated by and for the wealthy, and they come with the expectation that both parties are sophisticated enough to recognize the unique risks and rewards hedge funds offer. Even once you get in, though, that’s no guarantee you’ll get great results. That trophy in the distance will be bigger, but so will the fish you’ll be swimming against to win it.

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How to get a job at Google Inc. (NASDAQ:GOOG)

Google looks for people “who would have fit in when Sergey Brin and Larry Page were using a ping pong table as a conference table,” according to a recent Entrepreneur interview with Google’s staffing manager Todd Carlisle.

Google’s (NASDAQ:GOOG) staffing manager Todd Carlisle wades through some 3,000 resumes a day. In the latest issue of Entrepreneur Magazine (Feb. 2011), he shares exactly what he’s looking for in new hires. “I look for a trajectory in background stories,” he tells Jennifer Wang, because that’s a far better indicator of focus, intelligence and experience than what you can glean from a resume. To illustrate, Carlisle compares an Ivy League grad with a high GPA to someone who was the first person in his or her family to go to college, hold down a job and still excel academically.

Here are some of the other qualities Carlisle’s looking for in Google employees:

  • Raw intellect
  • High learning ability
  • Diversity
  • Leadership
  • Innovation
  • Someone “who would have fit in when Sergey Brin and Larry Page were using a ping pong table as a conference table”
  • Employees who have demonstrated that they can think quickly on their feet
  • Someone you want to take out to lunch after the interview

Intelligence, it seems, isn’t enough. Google wants proven innovators who are still pleasant to be around – two qualities that don’t always go hand-in-hand.

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How to buy stocks for a child or minor

How exactly does one go about buying stocks for a relative who happens to be a child? By opening what’s known as a UGMA & UTMA Custodial Account for a Minor.

One idea I had for a neat Christmas gift for my 5-year-old nephew is starting him a brokerage account and buying him stocks on a monthly basis. I could contribute some tiny amount (maybe $20 a month), and hopefully get his mom and grandma to join in so that by the time he’s 18, he’ll have a decent chunk of change he can use for college or a down-payment on a house or to buy a 1965 Mustang. Whatever.

The problem is, how exactly does one go about buying stocks for a relative who happens to be a child? I’ve been doing some Web research, and I finally figured it out: Open what’s known as a UGMA & UTMA Custodial Account for a Minor. While I’m still parsing through the legalities, here’s what I know so far (picked up with a lot of help from Fairmark.com):

  • UGMA/UTMA accounts must be opened by the child’s parent/custodian, although the account will be created in the child’s name.
  • Contributions to the fund are legal gifts as governed by the 1956 Uniform Gifts to Minors Act (UGMA) and the 1986 Uniform Transfers to Minors Act (UTMA). Once you’ve contributed money to the fund, it belongs to the child (so don’t bother trying to get the cash back down the road – you won’t be able to).
  • The child’s custodian (and/or someone they appoint) will have control of the funds until the child reaches a specified age – typically 18. With a custodial account, you can specify that the child not have access to the funds up to the age of 21.
  • Cash can be withdrawn from the fund by the custodian but ONLY if it’s used to benefit the child.
  • All property held in the custodial account belongs to the child, and that means the child is responsible for taxes (think “kiddie taxes”) and other fees associated with the account.
  • Custodial accounts could negatively impact a child’s ability to qualify for financial aid for college. I think this concern is relatively minor if the funds are set to release when the child turns 18, and you’re confident he or she will put the money to good use.
  • Since custodial funds can be used to benefit a child before that child has full access to the funds, the custodian could, potentially, tap the funds to buy a computer or car for the child. This MUST be documented. Be sure you trust the custodian of a fund to handle it responsibly.
  • If you think the child is definitely going to college, a Section 529 Savings Plan or a Coverdell Account might make better choices than a custodial brokerage account. They offer tax advantages provided the money is ultimately used for higher education.
  • If your child’s investment income exceeds $950, he or she will have to start paying taxes on that income. If your child’s investment income exceeds $1,900, he or she will have to pay a special “kiddie tax,” which will be taxed at the custodian’s rate. Think about it, unless you’re dealing with a substantial chunk of change, this shouldn’t be a big issue. You’d only hit $950 in investment income if your child’s account had say $9,500 in it that earned 10 percent a year in interest.

Ready to sign your child up for a brokerage account? I’d recommend talking to an accountant first. Still, Scottrade makes it a fairly simple process with their forms here.

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