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A Masterclass in Annual Planning: Budgeting for Hypergrowth

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A Masterclass in Annual Planning: Budgeting for Hypergrowth

A Masterclass in Annual Planning: Budgeting for Hypergrowth

In this solo episode, CJ provides a comprehensive guide on annual planning and delves into the complexities of budgeting for hypergrowth companies. He covers topics such as building sales capacity, modeling out rep time, over-assignment, designing marketing budgets, and costing out the full P&L. He discusses the role of various departments in the annual planning process, including R&D (Research & Development), marketing, sales, customer success, and customer support. The podcast highlights the significance of headcount in budgeting, the intricacies of sales capacity modeling, and the necessity of interdepartmental collaboration. CJ offers practical tips for managing expenses, planning for future growth, and ensuring that sales teams are adequately supported to meet their targets. The episode is a deep dive into the strategic and operational aspects of financial planning in high-growth environments.

If you’re looking for an ERP head to NetSuite: https://netsuite.com/metrics and get a customized KPI checklist.

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SPONSORS:

Leapfin is accounting automation software that automatically prepares and posts reliable journal entries. High-growth businesses like Reddit, Canva, and Seat Geek choose Leapfin to eliminate manual tasks, accelerate month-end close, and enable accounting leaders to provide faster insights to help their companies grow. To automatically standardize your revenue data with measurable business impact, check out leapfin.com today.

Mercury is the fintech ambitious companies use for banking and all their financial workflows. With a powerful bank account at the center of their operations, companies can make better financial decisions and ensure that every dollar spent aligns with company priorities. That’s why over 100K startups choose Mercury to confidently run all their financial operations with the precision, control, and focus they need to operate at their best. Learn more at mercury.com.

Mercury is a financial technology company, not a bank. Banking services provided by Choice Financial Group and Evolve Bank & Trust®; Members FDIC.

NetSuite provides financial software for all your business needs. More than 38,000 thousand companies have already upgraded to NetSuite, gaining visibility and control over their financials, inventory, HR, eCommerce, and more. If you’re looking for an ERP platform ✅ NetSuite: https://netsuite.com/metrics and get a customized KPI checklist.

Maxio is the only billing and financial operations platform that was purpose built for B2B SaaS. They’re helping SaaS finance teams automate billing and revenue recognition, manage collections and payments, and put together investor grade reporting packages. 🚀 Request a demo at www.maxio.com/runthenumbers for 10% off your first year.

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FOLLOW ME ON X:

@cjgustafson222 (CJ)

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TIMESTAMPS:
(00:00) Preview and Intro
(01:20) Sponsor – Leapfin | Mercury
(03:54) Key Stakeholders in the Annual Planning Process
(06:02) Bottoms Up Versus Tops down Budgets
(09:00) Creating a Budget Envelope
(12:53) Sponsor – NetSuite | Maxio
(14:50) Building Sales Capacity
(17:00) Quota to OTE Ratio
(18:07) Ramping
(21:00) Over Assignment
(23:08) Seasonality
(24:56) The Sales Pod and Surrounding Resources
(26:45) Sales Capacity Planning Mistakes
(32:25) Marketing: Generating Pipeline Coverage
(33:23) Over-Assignment in Marketing
(35:01) The Marketing Funnel
(38:34) Setting the Pace of the Marketing Pipeline
(39:30) Tracking Marketing Costs
(41:05) Common Mistakes with the Marketing Budget
(43:42) Expenses: Follow the Headcount
(45:53) A List of Possible Expense Types
(49:05) The Three Buckets of Cost of Goods Sold
(50:16) Cost Benchmarks at Department Level
(53:47) Laptops
(54:22) Annual Bonuses
(56:14) Tips for Budgeting for Hypergrowth
(1:02:08) Wrap

Business Spotlight – Lanning’s Restaurant

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Business Spotlight – Lanning’s Restaurant

 

The Insurance Centre Agency is highlighting area businesses, which help to make up the fabric of our great community. Featured today is Lanning’s Restaurant, 826 N. Cleveland Massillon Rd., Akron.

Comment, like or share to help promote Lanning’s and one lucky person will win a $100 gift card.

If you haven’t been to Lanning’s Restaurant or it’s been a while, it’s well worth your time to make a visit.

If you’ve been to Lanning’s recently, then you know: new owners Dean and Bethany Martin have done great things since purchasing the iconic Summit County restaurant in 2020.

Lanning’s Restaurant is located at 826 N. Cleveland Massillon Rd. in Bath, Ohio, less than a mile from Interstate 77. It’s a fine dining steak and seafood restaurant, which has provided superior tuxedo service for more than 50 years.

The Martins have taken a classic and given it modern updates, making it even better.

This isn’t your grandma’s Lanning’s anymore.

Lanning’s Restaurant is a refreshed, sexy, stylish, and updated fine dining experience with the classic service standards that customers have grown to lovespanning several generations.

Lanning’s offers a variety of premium steaks and seafood, an award-winning wine menu, craft cocktails, and a vibe that is not found anywhere else in the Northeast Ohio area.

“We’ve done a complete refresh of the restaurant, bringing a cool downtown Vegas vibe to Lanning’s, complete with live music four nights a week and an award-winning wine menu,” said the Martins, when asked what makes Lanning’s unique.

With far too many chain restaurants dotting the landscape in Northeast, Ohio, it’s truly refreshing to spend an evening at a true original like Lanning’s.

The waiters wear tuxedos and they provide great service. They serve classic dinners Lanning’s is known for, such as steaks, rack of lamb, Oysters Rockefeller, scampi and more.

Many reviewers have called their steaks “the best in the Cleveland area.”

Next time you’re ready for a night out, consider the fine dining and atmosphere at Lanning’s.

Lanning’s Restaurant Quick Facts
Address: 826 N. Cleveland Mass Rd., Akron, OH 44333
Website: lannings-restaurant.com
Hours: 5-10 p.m. main dining; 4-10 p.m. Deano’s Lounge at Lanning’s.
Phone: 330-669-1159
Service options: Dine-in, takeout, delivery
Reservations: opentable.com
Follow Lanning’s on Facebook

Business Spotlight – Lanning’s Restaurant

Here’s What Happens When You Put Too Much Money Into a CD

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Here’s What Happens When You Put Too Much Money Into a CD

CDs have been a popular choice for savers this year due to their impressive rates. For much of 2024, it was easy enough to lock in a CD at 5%. 

At this point, it’s harder to find 5% CDs. But CD rates are still pretty impressive, with many paying well over 4%. It’s not too late to jump on the CD bandwagon if you didn’t do so earlier in the year. 

At the same time, you don’t want to make the mistake of putting too much money into a CD. Going overboard could actually cause you to miss better returns elsewhere.

Be careful with CDs

A CD is a great place to grow your money on a short-term basis. If you’re saving for a home and are aiming to buy one in 2027, now’s a good time to open a 12- or even 24-month CD. 

Our Picks for the Best High-Yield Savings Accounts of 2024

APY

4.10%



Rate info

Circle with letter I in it.


4.10% annual percentage yield as of October 15, 2024

Min. to earn

$0

APY

4.10%



Rate info

Circle with letter I in it.


See Capital One website for most up-to-date rates. Advertised Annual Percentage Yield (APY) is variable and accurate as of Sept. 27, 2024. Rates are subject to change at any time before or after account opening.

Min. to earn

$0

APY

4.70% APY for balances of $5,000 or more



Rate info

Circle with letter I in it.


4.70% APY for balances of $5,000 or more; otherwise, 0.25% APY

Min. to earn

$100 to open account, $5,000 for max APY

But you should limit the amount of money you put into a CD to funds you expect to need in a few years. If you expect to hang onto the money for many years or even decades, you should probably invest it instead.

While you might still get close to 5% out of a CD today, you should know that over the past 50 years, the S&P 500 has rewarded investors with an average annual return of 10%. That 10% accounts for years when the market soared, but also, years when it clocked in losses. 

This tells us that if you invest in a broad market index like the S&P 500 over a long period, you could make a good amount of money. If you put too much money into a CD, you might limit your returns. 

Investing long-term money can make a big difference

Let’s say you’re planning to put $40,000 down on a home you’re planning to buy in 2027 because you’re in grad school until that point. And you have $45,000 in savings right now on top of what you need for emergency fund purposes. You might assume it makes sense to put that entire sum into a CD. But you’re better off limiting your CD to $40,000 and putting the remaining $5,000 into a stock portfolio.

If you earn a 10% yearly return on your $5,000, then in 25 years, it will be worth about $54,000. If you wait two years to invest your $5,000, it will only be worth about $45,000.

And yes, you’ll earn something on that $5,000 if you put it into a 24-month CD. But at 4.5%, you’re looking at $460. That doesn’t make up for the $9,000 difference between investing your $5,000 now vs. in two years from now.

Don’t go overboard

CDs are a good way to earn a little extra on your money in the near term. But when you put too much money into a CD, you limit the amount you can earn on your cash. Be careful when opening a CD today, because even though rates are still pretty high, they pale in comparison to the return you might get out of the stock market.

If you’re new to investing, click here for a list of the best stock brokers. You may want to try out a few different platforms to find the one you’re most comfortable with.

What the Fed’s Rate Cut Means for the Housing Market and Inflation

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What the Fed’s Rate Cut Means for the Housing Market and Inflation

What the Fed’s Rate Cut Means for the Housing Market and InflationWhat the Fed’s Rate Cut Means for the Housing Market and Inflation

October 3, 2024
by Mark Ferguson

The Federal Reserve recently cut interest rates more than expected. This is the first rate cut in four years, and it could significantly impact the housing market, inflation, and the broader economy. Let’s dive into what this means for real estate, inflation, and more.

Video: Will the Fed Interest Rate Cut Increase Housing Prices?

High Interest Rates and Inflation: A Misconception?

For years, I’ve advocated for cutting interest rates and argued against raising them. While many believe high interest rates help control inflation, I think they might do the opposite—and definitely don’t help with housing affordability. Studies suggest that high rates raise mortgage payments, making housing more expensive, not less.

A common belief is that high rates will force housing prices down, but I argue that high rates might actually make the situation worse by reducing supply. Fewer homes are built when borrowing costs are high, and existing homeowners are reluctant to sell, waiting for lower rates. This supply shortage pushes prices up, not down.

What is the Best Investment in a High Inflation Environment?

What the Fed Rate Cut Means for Mortgage Rates

The Fed’s interest rate decisions don’t directly affect mortgage rates, but they are closely related. The Fed sets the federal funds rate, which is what banks pay to borrow from each other. Mortgage rates, on the other hand, are determined by the bond market and overall economic conditions.

Typically, when the Fed cuts rates, mortgage rates also drop. But the relationship isn’t always linear. As we’ve seen recently, mortgage rates have been all over the place. Earlier this year, they were above 7%, but now they’ve dropped to around 5.7% for a 30-year mortgage, according to NerdWallet. That’s a significant drop, which makes homes more affordable by lowering borrowing costs.

Rental Property Cash Flow Calculator

Could Lower Rates Boost Housing Demand?

Lower rates could trigger a surge in homebuying. Many renters and homeowners have been sitting on the sidelines, waiting for rates to drop. When they do, these buyers may jump back into the market, driving prices up. We could see a short-term price increase due to a spike in demand.

However, lower rates also make it easier to build new homes. Increased construction would boost supply, potentially stabilizing prices over time. Currently, there’s a significant housing shortage, and more building is necessary to meet demand. So while prices may rise in the short term, more construction will help create a more balanced housing market in the long run.

Future Value Inflation Calculator

The Argument for Lower Rates Stabilizing the Market

Some people argue that lowering rates will bring more homes onto the market, as current homeowners who have been holding off on selling will finally list their properties. This could increase supply, but those same sellers are also buyers. So, while more homes might come on the market, there will still be buyers ready to snatch them up, including renters who have been waiting for a better deal.

In fact, with more buyers than sellers, we could see even higher demand than supply, leading to an imbalance favoring buyers. Lower rates, combined with strong demand from immigrants and other demographics, could lead to a more pronounced housing boom.

What is the Best Way to Invest in Real Estate?

Job Growth, Immigration, and Housing Demand

Another factor driving housing demand is immigration. Recently, there’s been significant job growth, but most of it has been among foreign-born workers. Data from the Census and the Social Security Administration shows a substantial increase in employment for foreign-born individuals, while employment for native-born workers has decreased. With more immigrants entering the workforce, housing demand is likely to rise, adding pressure to the housing market.

Many predict that population declines will lead to a housing crash, especially as baby boomers age. However, immigration is offsetting those declines. The U.S. population is still growing, which means more demand for housing, both for homeownership and rentals. Coupled with lower interest rates, this could result in continued upward pressure on home prices.

Why High Rates Don’t Necessarily Lower Prices

There’s a misconception that raising interest rates automatically leads to lower prices, whether for housing or goods. While higher rates can reduce demand, they also reduce supply, which can keep prices elevated. Fewer homes are built, fewer people sell their homes, and businesses cut back on production. In the housing market, this stagnation leads to a supply-demand mismatch, propping up prices rather than reducing them.

Studies from the 1970s and 1980s, when interest rates were at their highest, show that housing prices still rose dramatically. In fact, during the 1970s, prices tripled, and in the 1980s, they doubled. High rates simply don’t curb housing prices as much as people think.

Do Higher Rates Actually Cause Inflation?

Another controversial idea is that high rates can lead to inflation. Many people think raising rates controls inflation by reducing demand, but it doesn’t consider the supply side. When borrowing costs are high, businesses slow down production, which reduces supply. This supply contraction can lead to higher prices for goods and services, as companies are forced to raise prices to cover their costs.

For example, I own a small business. If my costs increase due to higher interest rates, I can’t just lower my prices to compensate for reduced demand. I still need to cover my fixed costs, so I might raise prices instead. This is how high interest rates can cause prices to rise, counterintuitively contributing to inflation rather than reducing it.

Conclusion: Why Lower Rates Are Good for the Economy

In summary, I believe lower interest rates are better for the economy and the housing market. Lower rates encourage building, make borrowing cheaper, and can help stabilize housing prices in the long run. While some fear that lowering rates will cause prices to surge, the alternative—keeping rates high—only prolongs the problem by restricting supply.

Additionally, the data shows that high rates don’t automatically lead to lower prices and, in some cases, can even cause inflation. As we move forward, it will be interesting to see how the Fed’s rate cuts impact the economy and the housing market in the months to come.

What do you think? Let me know in the comments below!

Understanding buyers’ needs in today’s M&A market

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Understanding buyers’ needs in today’s M&A market

Understanding buyers’ needs in today’s M&A market

With buyers seeking greater assurance on a business’s quality and growth potential, preparation is everything for company owners looking to sell, says James Goold, partner at global law firm Taylor Wessing.

OCBC First in Southeast Asia to Launch Disney-Branded Banking Experience

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OCBC First in Southeast Asia to Launch Disney-Branded Banking Experience

OCBC has announced a five-year collaboration with Disney, bringing special products and activities inspired by Disney, Pixar, Marvel, and Star Wars to its retail banking customers in Singapore, Malaysia, and Indonesia.

The partnership aims to help OCBC quadruple its new customer base in Southeast Asia by 2029.

This marks the first time a Southeast Asian regional bank is rolling out a comprehensive programme featuring branded card designs, marketing activations, and financial literacy content inspired by Disney characters.

OCBC customers will have access to products like rewards programmes with Disney+ Premium or Disney+ Hotstar subscriptions in Singapore and Malaysia, as well as Disney-themed merchandise.

Starting mid-2025, select OCBC cards and accounts will feature Disney designs and offer exclusive Disney premiums, such as limited-edition OCBC pins.

The collaboration officially kicks off with the launch of the OCBC MyOwn Account on 20 October, which will include Disney and Marvel-themed photo zones at OCBC’s Wisma Atria branch in Singapore.

Additionally, OCBC will offer financial literacy content young savers featuring Disney characters from “Wreck-It Ralph.”

These comics, available digitally and in print, will be accompanied by activity sheets and resources for teachers and parents to help engage young customers.

Over 100,000 copies will be distributed to students across 110 secondary schools in Singapore.

OCBC’s rewards programme will extend to select debit and credit cardholders, OCBC 360 Account customers in Singapore and Malaysia, and Young Nyala Account customers in Indonesia.

OCBC First in Southeast Asia to Launch Disney-Branded Banking Experience
Sunny Quek

Sunny Quek, Head of Global Consumer Financial Services, OCBC, said,

“We are excited to be the first bank in Southeast Asia to launch Disney themed cards and offer customers special experiences inspired by Disney, Pixar, Marvel and Star Wars characters and stories. Disney characters evoke an enchanting and nostalgic emotional connection that resonates with the young and young at heart.

Collaborations like these enable us to attract new customers and bring to the market products and services that are not based on pricing or rates alone. I am therefore confident we will accelerate our acquisition of new to-bank customers across our Southeast Asia core markets in five years.”

 

Featured image: (From left) Alex Baillie (Vice President and General Manager, Consumer Products, The Walt Disney Company, South Asia), Vineet Puri (Vice President and General Manager, Disney Entertainment SEA, The Walt Disney Company, Southeast Asia) and Sunny Quek (Head of Global Consumer Financial Services, OCBC).

The Importance of Insurance For Bakeries

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The Importance of Insurance For Bakeries

Bakeries are a staple in many communities, providing delicious treats for all to enjoy. Whether you’re a small, local bakery or a larger chain, it’s important to understand the risks that come with running a bakery and the importance of having insurance.

Insurance provides peace of mind to bakery owners by protecting their business from unexpected events that could cause financial loss. From natural disasters to accidents, there are many things that could go wrong in a bakery. For example, if a fire breaks out in the kitchen, the damage could be devastating, not just to the physical building, but also to the equipment and inventory. Without insurance, the financial burden of repairing or replacing the damaged property would fall solely on the bakery owner.

Additionally, bakeries face risks from customers who may become ill from consuming the products. Food liability insurance protects the bakery in the event that a customer becomes sick from eating their products. This type of insurance covers the cost of legal fees, settlements, and damages in the event of a lawsuit.

Another risk for bakeries is employee injury. Workers in a bakery may face various hazards, including hot ovens, sharp knives, and heavy equipment. Workers’ compensation insurance provides financial protection for employees who are injured on the job, covering medical expenses and lost wages. This type of insurance is mandatory in most states, but it’s important to understand the specific requirements and regulations in your area.

The Importance of Insurance For Bakeries

Cybercrime is also a growing concern for businesses, including bakeries. As more transactions are conducted online and personal information is stored electronically, it’s crucial to protect against cyber attacks and data breaches. Cyber liability insurance provides protection against losses resulting from hacking or other cyber-attacks. This type of insurance covers the cost of notification and credit monitoring for affected customers, as well as legal fees and settlements.

Finally, property insurance is important for bakeries as it covers the physical assets of the business, such as buildings, equipment, and inventory. This type of insurance provides financial protection in the event of theft, vandalism, or natural disasters. It’s important to have an accurate inventory of all assets and to keep this information updated regularly. This will ensure that you are fully covered in the event of a loss.

In conclusion, bakeries face many risks, both physical and financial. It’s important to understand the types of insurance that are available to protect your business and to choose a policy that provides the coverage you need. From food liability to property insurance, there are many options to choose from, and having insurance in place will give you peace of mind and help ensure the success of your bakery. Don’t wait until it’s too late to secure your bakery’s future. Contact Paradiso Insurance today at 860-684-5270 or fill out a form here to discuss your options and find the coverage that’s right for you!

To Lease or Finance a Car?

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To Lease or Finance a Car?

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}To Lease or Finance a Car?

Deciding between leasing and financing a car is a common dilemma for many prospective car owners. This decision carries significant financial implications and can also reflect personal lifestyle choices. Whether you prioritize having the latest model or prefer the long-term benefits of ownership, you want to weigh each option’s pros and cons. Moreover, your choice can affect your insurance premiums and coverage needs, making it essential to consider all aspects before committing.

Pros and Cons of Leasing

Leasing a car offers several advantages, making it an attractive option for specific demographics:

  • Access to Better Quality Vehicles: Leasing allows you to drive newer, higher-end models that might be out of reach if you were to finance or buy outright. Leasing allows you to enjoy the latest technology, safety features, and luxury without the higher price tag of ownership.
  • Lower Monthly Expenses: Monthly lease payments are typically lower than loan payments for financing the same vehicle. This can free up cash for other expenses or investments, making it easier to manage your monthly budget.
  • Minimal Maintenance Costs: A lease typically runs for three years, and the car is often covered under the manufacturer’s warranty for the entire term. The warranty can significantly reduce out-of-pocket expenses for repairs and maintenance.
  • Flexibility: Leasing allows you to drive a new car every few years. If you enjoy having the latest model or if your needs change frequently, leasing offers the flexibility to switch vehicles regularly.

However, leasing also comes with its downsides:

  • Mileage Limits: Most leases have strict mileage limits, typically around 10,000 to 15,000 miles per year. Exceeding these limits can result in costly penalties, making leasing less suitable for those with long commutes or frequent road trips.
  • Costs for Excess Wear and Tear: Leased vehicles must be returned in good condition. If the car shows excessive wear and tear, you may be charged additional fees at the end of the lease.
  • No Ownership: When you lease a car, you’re essentially renting it. You don’t build any equity in the vehicle, and at the end of the lease, you acquire no assets to show for your payments.
  • Higher Long-Term Costs: While lease payments are lower, they don’t contribute to ownership. Over the long term, continuously leasing vehicles can be more expensive than financing and owning a car outright.

Pros and Cons of Financing a Car

On the other hand, financing a car offers distinct benefits:

  • No Mileage Limits: When you finance a car, you own it, so there are no restrictions on how much you can drive. This freedom is ideal for those with longer commutes or a love for road trips.
  • Ownership and Building Equity: With each payment, you build equity in the vehicle. Once the loan is paid off, you own the car outright, and it becomes a valuable asset that you can sell or trade in when purchasing a new vehicle.
  • Customization Freedom: Financing a car gives you the freedom to customize your vehicle to your liking. Whether you upgrade the sound system, change the paint color, or add performance enhancements, you can modify the car without worrying about lease restrictions.
  • Potential Long-Term Savings: While monthly payments might be higher initially, financing can be more cost-effective in the long run. Once the loan is paid off, you’ll no longer have monthly payments, allowing you to save or invest that money elsewhere.

However, financing also has its drawbacks:

  • Higher Monthly Payments: Monthly payments for a car loan are usually higher than lease payments. The payments can strain your budget, especially when financing a more expensive vehicle.
  • Maintenance Costs Over Time: Maintenance and repair costs will likely increase as the car ages. Unlike a lease, which allows you to switch to a new vehicle more easily, financing means you’ll be responsible for these costs as the vehicle ages.
  • Risk of Negative Equity: When financing, you risk becoming “upside down” on your loan, meaning you owe more on the car than it’s worth. This can happen if the car depreciates faster than you pay off the loan, making it difficult to sell or trade in without incurring a loss.
  • Long-Term Financial Commitment: Financing a car involves a longer-term financial commitment, typically 3 to 7 years. If your financial situation changes or you want to switch vehicles, you may be stuck with a loan balance that needs to be paid off first.

Demographics Best Suited for Leasing

Leasing is often the best option for younger professionals in their 20s to early 40s who have a steady income and enjoy driving new cars. It’s also well-suited for urban dwellers living in cities who drive less and prefer the convenience and status of a newer model. Additionally, leasing can be a good fit for individuals with a lifestyle preference for switching cars frequently and who may use the car for business, benefiting from tax advantages.

Demographics Best Suited for Financing

Financing for a car typically appeals to a few specific groups. Firstly, it’s popular among families or individuals in their 30s to 50s who plan to keep the car long-term and build equity. Secondly, it’s a good option for rural or suburban residents who drive longer distances and need the flexibility of no mileage limits. Lastly, financing is also suitable for those with a lifestyle preference, such as drivers who prioritize long-term savings, want to customize their car or plan to keep it beyond the loan term.

Discover the Best Option for Your Car

Before deciding whether to lease or finance a car, assess your driving habits, financial situation, and long-term goals. Contact your local insurance agent for personalized advice and explore insurance options for your needs. Check out our additional resources for more tools to calculate the cost-effectiveness of leasing versus financing.

How To Invest In Carbon Credits: A Beginner’s Guide

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How To Invest In Carbon Credits: A Beginner’s Guide

Fight climate change and earn profits by investing in carbon credits, the innovative market-based solution that rewards businesses for reducing their carbon footprint

How To Invest In Carbon Credits: A Beginner’s Guide

In this article, we will talk about how to invest in carbon credits. Diversification and asset allocation, in general, are key components of portfolio theory if you want to become an investor.

Carbon credit investing is becoming increasingly popular.

In fact, J.P. Morganrecently invested $500 million in timberland (P.S. it wasn’t for the wood).

So, what actually are Carbon Credits?

Carbon credits are tradable permits that allow companies or individuals to offset their carbon emissions by investing in projects that reduce greenhouse gas (GHG) emissions.

Each carbon credit represents one tonne of CO2 or its equivalent GHG emissions that these projects have avoided or reduced.

Carbon credits aim to create a market-based mechanism that incentivizes GHG emissions reductions by allowing organizations or individuals to offset their greenhouse gas emissions while encouraging investment in carbon reduction projects.

From an investing standpoint, Carbon credits are an alternative investment like wine or real estate because of their illiquid nature and hard-to-value asset.

Many countries have adopted the use of carbon credits as a part of their climate policy framework.

What Is Carbon Credit Investing?

Carbon credit investing and trading involves buying and selling credits, stocks, mutual funds, or ETFs that represent a reduction in greenhouse gas emissions.

It can allow investors to support sustainability efforts and earn a profit. There are numerous advantages and risks of investing in carbon credits.

And while the carbon credit market is fairly nascent compared to traditional stock and bonds, it’s an industry that is worth taking a closer look at.

What Are The Advantages?

Investing in carbon credits can have several advantages, including:

Environmental Benefits

Carbon credits represent a reduction in greenhouse gas emissions, which can help mitigate the effects of climate change and global warming. By investing in carbon credits, you are contributing to a more sustainable future.

Potential for financial returns

Carbon credits can be bought and sold in various markets, and their value can fluctuate based on supply and demand. If you invest in carbon offsets or credits that increase in value, you can earn a financial return on your investment.

Portfolio Diversification

Carbon credits provide a unique opportunity to diversify your investment portfolio. Because they are not directly tied to traditional financial markets, they can provide a hedge against market volatility.

Carbon Credit investing

What Are The Risks?

While investing in carbon credits or companies that invest in the reduction of carbon credits can provide an opportunity for investors to support sustainability efforts and earn a profit, there are several risks associated with carbon credit investing, including:

Market Risk

The value of carbon credits can be volatile and influenced by various factors like regulatory, market demand, and economic conditions in carbon markets.

Regulatory Risk

The rules and regulations surrounding carbon credit markets can change quickly, making it difficult to predict the future value of credits.

Fraud Risk

The carbon credit market is vulnerable to fraud, including creating fake credits or selling credits that do not actually represent a reduction of Co2.

Reputational Risk

Investing in carbon credits can expose individual companies and investors to reputational risks if they become associated with companies or projects that fail to meet environmental or social standards.

Technology Risk

Carbon credit markets rely on accurate measurement and verification of emissions reductions, which can be challenging and subject to errors or manipulation.

Liquidity Risk

Carbon credit markets can be illiquid, meaning that it may be difficult to find buyers or sellers of credits when needed.

How To Start Investing in Carbon Credits

If you are interested in investing in carbon credits, there are numerous ways to get started.

Ways to invest in Carbon Credits include:

  • Carbon Capture Stocks
  • Carbon Credit Mutual Funds
  • Carbon Credit ETFs
  • Carbon Credit Futures
  • Carbon Credit Investment Funds

Carbon Capture Stocks

Carbon capture, utilization, and storage (CCUS) is a technology that captures carbon dioxide (CO2) emissions from industrial processes, power plants, and other sources and stores it in underground geological formations, among other uses.

A few companies are involved in carbon capture technologies, including some publicly traded stocks.

Here are a few examples:

Carbon Credit Mutual Funds

Carbon credit mutual funds are professionally managed investment vehicles that pool money from multiple investors to buy a portfolio of securities, including carbon credits.

The portfolio manager decides which carbon credit projects to invest in and manages the fund’s assets on behalf of the investors.

Carbon Credit ETFs

Another great way to invest in carbon credits is through Carbon credit ETFs (exchange-traded funds) are investment passively-managed products that expose investors to the carbon credit market. These funds invest in companies or projects that generate carbon credits through emission reduction initiatives, like renewable energy projects or energy efficiency programs.

ETFs are similar to mutual funds in that they invest in a basket of assets but are passively managed instead of actively managed like mutual funds.

Carbon Credit Futures

Carbon credit futures are a financial instrument that allows investors to speculate on the future price of carbon credits.

Futures contracts are agreements to buy or sell an underlying asset (in this case, carbon credits) at a specified price and date in the future.

Investing in carbon credit futures involves taking a position on the future price of carbon credits, with the goal of profiting from price fluctuations.

For example, an investor may buy a carbon credit futures contract if they believe that the price of carbon credits will increase in the future. If the price does, the investor can sell the futures contract higher than they paid, realizing a profit.

Investing in carbon credit futures requires specialized knowledge and experience in futures trading and is generally not for beginners.

Carbon Credit Investment Funds

Carbon credit investment funds are investment vehicles that enable investors to invest in a diversified portfolio of carbon credits generated by various emission reduction projects worldwide.

These funds can invest in various projects, like renewable energy, energy efficiency, and carbon capture and storage initiatives.

The primary objective of carbon credit investment funds is to generate a return on investment while supporting sustainable development and helping to reduce greenhouse gas emissions.

These funds typically invest in verified and certified carbon offset projects, which means that the carbon credits they generate are real and can be used to offset carbon emissions.

Carbon credit investment funds can take various forms, such as mutual funds, exchange-traded funds (ETFs), or private equity funds. The investment strategy and portfolio holdings can differ from fund to fund, depending on the fund’s objectives, investment style, and asset allocation strategy.

One advantage of investing in a carbon credit investment fund is that it exposes investors to the growing carbon market, without needing specialized knowledge or resources.

Carbon credit investment funds can also provide diversification benefits to a portfolio and help investors to align their investment goals with their environmental values.

The Bottom Line

Investing in carbon credits can be a way to support and promote carbon reduction efforts while potentially earning a financial return, but it is important to approach it like any other investment; with caution and thorough research.

Frequently Asked Questions

Do you need a lot of money to invest in carbon credits?

The amount of money required to invest in carbon credits can vary widely, depending on a range of factors, including market prices, minimum investment requirements, and the goals of the investor.

Currently, in global carbon markets, the price of carbon credits ranges from a few dollars to several hundred dollars per ton of carbon dioxide equivalent (CO2e).

Secondly, the minimum investment required to participate in carbon credit markets can vary depending on the platform or exchange used. Some platforms may require a minimum investment of several thousand dollars, while others may have no minimum investment requirement.

Finally, the level of investment will also depend on the goals of the investor. If an investor’s goalst the carbon emissions of a small business or personal activities, they may only need to purchase a relatively small number of carbon credits.

However, if an investor is looking to offset the carbon emissions of a large corporation or engage in more significant carbon trading activities, they may need to invest much more.

Best. MAC. Ever. – KW Outfront Magazine

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Best. MAC. Ever. – KW Outfront Magazine

Real Estate Got Personal at Mega Agent Camp 2024, Where Thousands of Agents Convened for KW’s Midyear Learning Event

If you stopped by the story booth at Mega Agent Camp 2024, then you got a chance to listen in on agents from across KW talking about the different ways Keller Williams has changed their lives.

There are some amazing stories out there, like the agent from Louisiana whose market center stepped up when he needed a kidney transplant. We heard from the woman who started as an admin at her local market center while living in a shelter and in recovery from addiction, who’s now held nearly every position in her office. Then there’s the agent from Texas who at first didn’t think she belonged at MAC, until she realized it was where she needed to be to learn to think like a mega agent. Her strategy worked – and she hasn’t missed a MAC in 20 years.

As with every agent’s story, every Mega Agent Camp is unique. Here are some of our takeaways from MAC24. Have more to add? Share your thoughts in the comments below.

Best. MAC. Ever. – KW Outfront Magazine

CEO Summit Is for Everyone

Once upon a time, CEO Summit was an invite-only affair. But in the same way that MAC is about helping you think like a mega agent – wherever you are on your real estate journey – CEO Summit helps you think like a CEO. (We even have a t-shirt for it!)

This year’s event opened with Gary Keller, Jay Papasan, and Jason Abrams talking about the concept of antifragility, first coined by economist Nassim Taleb. Gary, Jay, and Jason discussed how cycles of stress and recovery can help you become tougher – antifragile – on every level. Becoming antifragile in the areas that matter – mentally, physically, financially, and spiritually – enhances your capacity to weather change over time. 

But getting the counterbalance right is key. When you set stretch goals that stress your systems, you also have to be intentional about your recovery periods. Or as Jay said, “If you don’t take regularly scheduled breaks, you’ll get an unscheduled one by default – and that’s called a breakdown.”

The Market Update Is a Can’t-Miss Event

It’s important to look backward to understand how to move forward. The MAC Market Update provides perspective on where we’ve been, where we are, and where we might be going as an industry and a nation. 

This year, Gary Keller and KWRI Chief Economist Ruben Gonzalez talked about how falling home sales historically lead us into recessions, while rising home sales lead us out of them. As the economist of choice for your clients, it’s helpful to know these three scenarios that show where the economy could be headed in 2025:

2025 Economic Scenario 1:
No Recession

  • Unemployment below 5%
  • Interest rates falling to 6%
  • Home sales around 4.5M units

2025 Economic Scenario 2:
Normal Recession

  • Unemployment at 6-8%
  • Interest rates falling rapidly to 5-6%
  • Home sales around 5M units

2025 Economic Scenario 3:
Banking Recession

  • Unemployment at 8-10%
  • Interest rates falling to 3-4%
  • Home sales around 4M units or less

If you’re a KW® associate, you can log in to access the complete 2024 Market Update through Connect.

Mega Agents Really Are All That

From building your database to mastering a MOFIR, every panel at MAC covers a different topic. Each panelist is asked to discuss a proven model or system they’ve implemented that’s made a major impact on their business, which is turned into a one-sheeter that sums up their unique plan of action.

As a KW® agent, you get exclusive access to all of the one-sheets from MAC panelists – even if you didn’t attend MAC! And while the one-sheets are a valuable resource, one of our takeaways from MAC is that being there to hear the details behind the strategy may be even more important when it comes to professional growth. Why? Because learning how someone arrived at a solution and solved a challenge in their business can help you do the same in yours. That’s how you really start thinking like a mega agent. 

Lucky for you, you can take a deep dive into some of the strategies and insights of top agents in the KW Secrets to Success in Real Estate YouTube playlist, with exclusive interviews featured at MAC24.

Coaching Moves the Needle Big Time

If you were part of the KW MAPS Masterminds for Agents or Leadership, then you know: KW MAPS coaching can make all the difference in your real estate career. MAPS Masterminds are coach-facilitated roundtable sessions that go beyond surface-level information to dive into the specifics of your business and your personal Big Why. Breakouts are divided by role, and this year’s Masterminds were open to all agents, including those not currently enrolled in coaching.

Communicating value to clients showed up as a key theme in this year’s breakouts. Participants in the Buyer’s Agent Mastermind discussed MAC speaker Phil M Jones’ suggestion for starting conversations about value with the question, “What’s your experience working with a professional real estate agent?” It was a mindset shift for a number of agents, who realized the framework could help them lean into the value of the expertise and services they offer, and naturally differentiate them from the competition.

Phil also says asking good questions in the sales process helps you uncover the “why” behind a client’s needs and actions. When issues arise, you can bring people back to their “why” to help them power through challenges and demonstrate that you understand their bigger mission – just like a great MAPS coach can do for you.

Your Personal Brand Is More Important Than Ever

Branding expert Rory Vaden dropped this piece of knowledge during his entertaining presentation at MAC24: The higher the requirement for trust, the more important it is to have a personal brand. Why? Rory’s research shows that two-thirds of Americans would be willing to spend more money on products and services with companies whose founders have a personal brand that aligns with their values. In short, if your brand communicates who you are and what you do well as a real estate professional, people who resonate with your message will be drawn to work with you.

When it comes to building your brand online, Rory recommends building trust by sharing your wisdom through your blog and social media, starting with a list of 52 questions – one for every week of the year – that your ideal audience would want to know the answers to. It’s an authentic way to demonstrate your expertise and show potential clients that you’re uniquely positioned to solve their problems. 

Mo Anderson, Vanessa Pollock, John Clidy and Wendy Harrelson on stage during Cultural Summit at Mega Agent Camp 2024

KW Culture Never Changes

While the real estate industry may shift, former KW CEO Mo Anderson and mega agent Vanessa Pollock made it clear that KW’s culture of caring, sharing, and giving never changes. At this year’s Cultural Summit, Mo and Vanessa, along with KWRI’s Wendi Harrelson and John Clidy,  introduced the audience to the newest KW® Cultural Ambassadors, who serve as cultural standard-bearers in their market centers and regions.

KW® Cultural Ambassadors are nominated by their peers for modeling the culture of KW at the highest level. Agent Kim Nishizaki from the Florida – South region was among those new ambassadors asked to share their story at MAC24. Kim suffered a stroke in 2021. While she was fortunate not to sustain any long-term disabilities, the experience changed her life and shifted her mindset toward one of servant leadership. 

Kim’s stroke led her to reflect on the strain of enduring hardship while having to work and pay the bills. In response, she founded H.U.G.S., a group that provides meal trains, care baskets, care calls, and more for associates in her market center. She says that while the idea behind H.U.G.S. is simple, it helps agents feel seen and loved, and their market center feels more like a family. And H.U.G.S. was launched, other agents have started instituting similar programs in their market centers.

As Mo said, that’s the true impact of embracing a culture of caring, sharing, and giving.

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Registration for Mega Agent Camp 2025 is now open!

Get in on lively main stage conversations with top-producing agents from across KW, plus keynotes and events that will empower you to build and grow the business of your dreams.

Register Now

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