People still ask is it wise to invest in gold? It has always been a solid investment, throughout history, and even more so today. Gold still holds an air of mystery, sure, we all know about gold, its history, jewelry, gold coins, gold watches, but how many of us have really owned gold, I mean, a substantial amount, more than a few grams?
How many of us have investigated gold investment, and where and how to buy it? It is simply a matter of knowing where to buy at the right price and from a secure licensed dealer. Providing you deal with the legitimate companies in the gold industry, your gold investment will provide you with the financial security you have dreamed about. If these criteria can be met, then the answer to should I invest in gold is always a definite yes.
Investors who purchase gold will find that they have a hedge against market crashes, political disasters, currency crises, economic turmoil, taxes and devaluation.
Gold has always been a steadying influence throughout history, with investors achieving financial security and stability, due to the steady rise in gold, a safe haven for their investments.
Most people would want to find an investment that is secure, that can’t nosedive. With rapid fluctuations in forex and stock markets, investors want a safe place to put their money, and there are many reasons why gold ticks all the boxes.
Governments can’t make gold, they can make paper money, which is devaluation, but gold holds its value. Gold has always been around and will be around for a long time yet, steadily, or rapidly rising in value. Gold is the one perfect investment instrument which has the means to survive any financial catastrophe.
The Chinese and the Indians are starting to invest heavily in gold, they are increasing their gold reserves, and so is Russia. Investors in these countries are also looking for safe investments, and of course, realize the value of gold. Many Governments have dropped restrictions on the purchase of gold and so it is now possible to store gold with very low overheads, making gold a very viable investment.
You now can take control of your investments and protect against inflation, and create wealth when others are seeing their finances deteriorate. Governments can always rescue themselves by printing more and more money. The US and UK are printing more money now than at any time in history. This of course makes your cash worth less, but it also means that gold is worth more, gold always rises when confidence in Governments is at its lowest, with confidence in the economy at an all time low and markets sliding, what do you feel confident investing in? In a turbulent time, if you have invested in gold, you have secured your assets, which means peace of mind for the future. Your risk is minimal against other investments because it tends to outperform others in times of turbulence. Gold has quite rightly been called the ‘crisis’ commodity.
With the US Dollar falling over 40% since 2001, and stocks at an all time low, the dollar could soon be in freefall, but gold is still a solid haven for hard earned cash, why?
Because since 2001 the value of gold has increased by 150%, try beating that. Over the last eight years it has outperformed all markets, and unlike stocks which can quickly fall, gold remains valuable and stable. For gold to collapse in line with other markets, it would need to rocket to over $6,000 per ounce (I hope it does, but if it does get out quick). Gold remains stable, therefore, is a secure way to protect your money and assets.
As a more promising outlook for the economy emerges, the focus should then fall on the possibility of inflation, which will increase with time, therefore increasing the demand for gold. The demand for gold investment in 2008 increased by 10% over previous years, and is expected to rise year on year as supply dwindles.
Gold is still going strong despite many critics predicting a fall in gold prices during last year, of course this was not the case, the bubble did not burst, with gold investors making a steady profit, from $800 to $950 per ounce, and certainly not losing as predicted. Gold is not subject to a bubble, unlike real estate or stocks; it is very rare to see a sudden movement in precious metals. No, there was no crash, indeed gold proved what a reliable investment it is, with its price during the first half of the year still producing a steady return, and should continue to do so.
Summing up, gold has, throughout history always been a strong, reliable, solid investment. Crashes in the economy, stocks and real estate we have all seen, but who can remember a serious crash in gold? If you don’t believe it now, you never will.
A good investment?
Make up your own mind.
January 31st, 2010
posted in Gold Investment
Buying property in Montenegro for investment offers anyone wanting to invest in property a superb opportunity for big capital gains.
The country was recently voted one of the top 5 overseas investment destinations and investors are looking at property investment in Montenegro and its advantages longer term and buying in increasing numbers.
Why Montenegro Property Investment is rising in popularity
Many countries that have recently joined the European Economic have seen strong growth in property prices and Montenegro look set to follow this trend.
Montenegro could could join the EU as early as 2010 and has already adopted the euro as its currency.
Montenegro’s property market offers capital growth potential on property values, but there are also great buy-to-let options in the cities and popular tourist resorts.
Montenegro Facts
Montenegro is a small country of just 14,000 sq km. that sits in the Balkans.
It recently voted to become fully independent of Serbia in 2006 of which it had a loose federal union with after the break up of Yugoslavia in 2003.
Montenegro maybe small but has something for everyone from:
The fascinating capital of Cetinje, to rugged mountains, breathtaking river gorges such as the awesome kotor fjord and finally, the beautiful beaches of its Adriatic coastline.
With approximately 200 kms of coast and some of the most stunning bays in the Mediterranean, like the Bay of Becici – Montenegro has much to offer and is far cheaper than its near neighbor Greece.
So why should you buy be looking buying property in Montenegro?
1. The best value in Europe
Capital appreciation according to the World Travel and Tourism Council should see growth of up to 20% between 2005 and 2014; and the “value of Montenegrin property should triple or quadruple, given the huge surge in demand.
2. Tourism set to boom
In 2005 Montenegro was chosen as the #1 Country for tourism growth over the last ten years, by the World Travel and Tourism Council.
The government is committed to the development of tourism having realized that there is exceptional potential in this area.
The potential can clearly be seen in the recent development of the Tivat marina, costing in excess of $600 million and more such developments look to follow.
Montenegro benefits from close transport links to Dubrovnik’s International Airport, which offers competitive and regular flights in and out of Croatia.
Getting Dubrovnik takes only around 20 minutes.
In the near future, the budget airlines are expected to reduce the cost of flying to Montenegro as its popularity increases as a tourist destination.
3. Rental yields and capital growth potential
Montenegro is short of quality summer rental properties to accommodate an ever-increasing number of tourists visiting Montenegro beautiful Adriatic coast.
This means, rental yields should remain strong for the foreseeable future.
4. Montenegro enjoys a low cost of living.
This includes the cost utilities, making it extremely attractive for renting out investment property to the tourists.
5 Montenegro has a booming economy
The economy is strong and overseas investment is increasing, when Montenegro joins the EU investment will accelerate.
6. The buying process is straightforward
The buying process is relatively straightforward and transaction costs and taxes are cheap.
Montenegro property investment looks a great investment for long term investors all the above will come together to create both capital growth and lucrative income from buy-to-let properties.
With average growth of 30% per annum and far higher in many locations and strong growth likely to continue astute property investors are buying property in Montenegro for high rewards and low risk.
If you are looking for the next property hot spot consider Montenegro Property investment and you may be glad you did.
January 31st, 2010
posted in Property Investment
There are numerous overseas property investments to choose from, but how do you pick the best one?
Below we have outlined 5 simple tips for you to consider when buying abroad, so you can make the most of your overseas property investment, in terms of return on your investment.
The 5 tips below could see you double or triple your overseas property investment in just a few years, so here are your 5 tips for buying an overseas investment property.
Note: Against each tip we have provided an example of a solid overseas property investment and its advantages to reinforce the points.
1. Buy an Established Market
There are a lot of overseas property investments that are touted as the next “big one for growth” and you should get in early. Problem with many of these overseas property investments is you are one of only a few in and prices never take off and worse still plunge in value.
The best way is to buy an established overseas property market that has a track record of good growth and where prices are still relatively cheap and have potential for further growth.
Costa Rica: The market has been growing steadily for the last 10 years and the average growth is 300%.
This is an average growth and many investors have made much more on their investment, by careful choice of locations.
2. Look for competitive Prices
Once you have found a good established market that has had good property growth rates, look for prices that have the potential to give you further potential growth on your overseas property investment and that the market is not over priced.
Costa Rica: Despite the past growth rates prices still remain around 70 – 80% cheaper than equivalent properties in southern US states, such as Arizona or Florida.
3. Look At Long Term Prospects for the market
Take a look at the long term prospects for the country that your overseas property investment is in.
For example, how does the local economy look from a growth and stability point of view?
There is no point risking your money in an overseas location that has the potential to be unstable politically or economically.
Many overseas property investments advertised are in economies that are poor and where the government and political situation is fragile.
Costa Rica: Is a long established politically stable democracy and doesn’t even have an army!
The country is stable, has the potential for substantial growth and this fact is reflected in the huge investment from both US residents and corporations such as Intel
3. Look at Up & Coming Locations in the country
If you want to make more than the average growth rate from your overseas property, then look for new and up and coming locations. As locations become established, they become more expensive and growth potential drops.
Look for the next hot are and look at the coming infrastructure to see if you can take advantage of buying near important new developments
Costa Rica: Consider the following changes and think how you could take advantage of them.
1. A New freeway
Due to be completed shortly, this road will link the largest metropolitan cities to the Pacific Coast.
2. A New marina
The largest marina in the country will be completed soon in the coastal town of Quepos.
3. A New airport
A new international airport is being planned and will be built near the town of Orotina. Buy near these and your investment can take advantage of increased prices once they are completed
6. Rights and Ease of purchase
Many countries don’t give favourable purchase rights to overseas investors and this can mean problems if you don’t do your research, or there are laws that apply to you that are unfavourable.
Costa Rica: Offers the same rights of ownership for foreign buyers as residents and the buying process is made simple by the government, who are actively trying to attract overseas property investment to Costa Rica.
Overseas property investment – do your homework!
Don’t fall for sales hype and buy locations that may look good make sure that if you do overseas property investment, the location looks good already.
Make sure you do some research on the country itself in terms of stability prospects and legal rights for buyers.
Do all of the above and you should dramatically increase the potential for growth from your overseas property investment.
January 31st, 2010
posted in Property Investment
Millions of people dream about owning their own business. Having the independence that being your own boss brings, the security that no one can fire you, enjoying a good income – and for the most successful – the accumulation of wealth and prosperity. Unfortunately, the cards are stacked against a new small business making it big – or making it at all. An endless stream of problems makes competition from large, sophisticated chains too intense. Many new start-ups end as failures.
Buying a franchise represents a different approach to starting a business. For an upfront franchise fee plus ongoing royalty payments, the parent company teaches its business model and methods to the franchised-operator who shoulders all operating and financial responsibilities of the outlet. Some statistics are impressive: it is said over 40% of all U.S. retail sales are through franchised establishments. While franchise giants like McDonalds, KFC, H&R Block and Radio Shack are familiar, household names, franchises are available in a wide range of industries. The list of 3,000-plus companies selling franchises span over 100 different industry categories.American Dream … Or Nightmare?But just as franchising represents a chance to get rich, it’s also a chance to get stung. An alarming number of franchised operators make less than the minimum wage, working seven days, sixty to eighty hours a week, pursuing an expensive and elusive American Dream that turns into a nightmare. Since the ongoing franchise royalty payment comes right off the top, as a percentage of gross sales or a fixed minimum amount, the franchise company gets an assured revenue stream, even if its franchised units are operating unprofitably and are sold over and over again to new, unsuspecting buyers. The internet is filled with comments of the many people who lost $250,000 and more on concepts like eBay Drop off stores (iSold It), 30 Minute Fitness concepts (Curves), The UPS Store, etc. Yet many of these companies continue to sell and resell franchises over and over again. How do they accomplish that? Because there are enough people who think they can “believe” their way to success, even with a concept or business that’s not working in the marketplace. As discussed below, in many cases franchise investment decisions are incredibly based on emotionalism, not on business logic or even common sense.Ownership And Being Your Own Boss?Pride of ownership and being your own boss are highly touted phrases in franchise recruitment ads. But these are more fantasy than reality. Although you get all the financial exposure, headaches and stress of business ownership, what do you really own? A franchise owner is merely licensing a trademark (or service mark) from a company that dictates every detail of business operations. So the real boss isn’t you, but the company that sells you their franchise rights . . . and sea of franchise obligations.Equity Build up?But at least you’re building up equity, the ownership value of the business as a going concern beyond your investment of money, to compensate for all those years of hard work and long hours – right? Wrong – at least in the world of franchising. The franchise company reserves rights to acquire your entire business at below wholesale prices if their contract is not followed precisely. The acquisition rights provide for predetermined asset-based valuations, like book or liquidation value. These valuation methods provide bare minimum compensation (the used value of some file cabinets, office furniture, equipment, etc.) and are not generally used to determine the selling price of any business.Absolutely no compensation is paid for established goodwill, the value of a business that is generating $X in profit or cash flow every month after years of effort, investment and expense – thus eliminating the most valuable ownership asset. Of course, you may be able to sell your franchise to a third party for a sales price that includes an earnings-based valuation. But that’s possible only if:(a) you can find a buyer who is willing to live within the complexities of a franchise relationship, and(b) you happen to own a franchise that’s showing healthy profits.What follows is a bottom-line franchise checklist and tips compiled by franchise attorney and franchise expert, Mr. Franchise, based on reviewing over 500 franchise offering circulars and twenty-eight plus years of experience in the franchise industry – including ownership of a very successful franchise. These factors to consider in making a franchise investment will help you eliminate 95% of the companies you are considering. Then, you can concentrate your efforts on the 5% “cream” of the crop” companies that may deserve consideration. This franchise checklist assumes you’re suitable for and willing to live within the confines of a franchise relationship. It also assumes the franchise company:(1) has itself successfully operated the concept being franchised for at least five years at multiple locations;(2) is not plagued by franchise litigation and franchise lawsuits from disgruntled franchise owners;(3) does not have unusually high franchise attrition rates (owners who have “left the system”); and(4) has a balanced, fair franchise contract.SOLD It – An American Dream That Turned Into A NightmareAn example of a franchise company in trouble that failed to meet basic threshold standards is iSOLD It, an eBay drop-off store franchise. The company started its one and only company-owned store in November of 2003. Just weeks later, on December 10, 2003 they filed an application to sell franchises. The California Department of Corporations didn’t say “What are you thinking? You’ve only been in business a couple weeks, how can you even consider selling franchises?” Nor did they require this be disclosed as a risk factor on the cover page of the Franchise Offering Circular, as it should have. Disclosure responsibilities ultimately rest with the company (and its attorneys), and this will become one of many issues in future franchise litigation.Instead, the Department simply collected its $675 filing fee and issued an order declaring the franchise registration effective the next day – on December 11, 2003. Then the magic of franchise marketing took over. By 2006 the company had nearly 200 franchised drop off stores in operation and was touted by Entrepreneur Magazine as #1 in their list of “Top New Franchises for 2007” and #17 on their “Hotter Than Hot” franchise list. Entrepreneur Magazine, which requires franchise companies to submit their FOC’s (Franchise Offering Circulars) for supposed review each year before they’re listed, didn’t consider the high attrition rate (franchise owners leaving the system) or the fact that the audited financials in their FOC showed the company hadn’t operated profitably since 2004 as serious negatives and awarded iSold It the #1 listing for Top New Franchises of 2007. How did all of this happen? It’s yet another bizarre reality in the world of franchising.The franchise company’s audited financial statements for the year ended 12-31-05 showed an operating loss of $1.1 million. Nine months later, in September of 2006, the net operating loss mushroomed to over $4 million.In its November 3, 2006 Franchise Offering Circular, the table in Item 20 disclosed a total of 10 franchise owners leaving the system, yet a hand count of Exhibit D-3’s “Former Franchisees” revealed a significantly different number – 44. A similar “discrepancy” exists about franchise transfers. Item 20 says 12 transfers whereas Exhibit D-3 discloses 27.In a long overdue letter distributed to franchise owners on April 5, 2007, CEO Ken Sully painted a dire picture of an American Dream that had turned into a nightmare. Mr. Sully’s letter admitted the company has not been profitable since 2004 (according to the audited financials, the company showed its one and only operating profit of $356,286 in 2004 before the precipitous downward spiral of 2005 and 2006). Over 60 franchised stores have closed and many more are struggling for survival. Mr. Sully observed “Tragically, many individuals who believed passionately in the potential for the category have lost sizable investments, including homes and retirement savings.”Lost homes and retirement savings? How could such a travesty happen? I counseled a number of persons considering an iSold It franchise and warned all of them against the investment. Fortunately, they followed my advice. The concept was never proven in the marketplace before franchise efforts began, violating the most basic Franchise 101 precept. I also felt the management team lacked strong franchise credentials and the five-day training program was woefully inadequate. Finally, the franchise company was operating increasingly in the red and had a high attrition rate (owners leaving the system). It didn’t take a lot of brain power to see this was an accident waiting to happen. I predicted the bubble would burst and, sadly, it did.Common sense could and should have prevented so many people from losing so much. Unfortunately franchise sales persons appeal to emotions (passions and potential, to use Mr. Sully’s terms) and strive to keep common sense and business logic out of the buying equation. If a franchise company is able to obtain a ranking on a media list, the sale is even easier. Reprints of high rankings on lists, like Entrepreneur Magazine, are included in the package given to franchise buyers, who are lulled into a false sense of security and begin to stumble over each other in a rush to sign up before someone else takes their desired territory (another favorite closing technique used to sell franchises).iSold It! amended its FOC at the end of May, 2007 to add some long overdue risk factor language to the cover page of its Franchise Offering Circular. Hmmmm… maybe they read my comments above and did a little research. The new FOC cover page risk factor language says their “franchise system is still new and unproven.” That’s very interesting. How can they say a franchise system, that’s approaching its fourth anniversary, is “still new?” Maybe they’re looking at things from a ‘how old is our universe’ perspective? The word “unproven” is another play on words. The system is most certainly proven in the sense that many people, to quote Mr. Sully, “have lost sizable investments, including homes and retirement savings.” So why not use this quote directly in their Franchise Offering Circular? Answer: can’t sell any franchises that way.In an August 31, 2007 Business Week article, CEO Sully claimed it wasn’t necessary to disclose these risk factors in the FOC. His reasoning: “We told everybody that this is sort of like the wild, wild West” he says. “It’s a brand-new concept and nobody knew for sure where it was going.” Disclosure was added to the UFOC recently, he says, “because of the number of stores that weren’t understanding the complexity of the business.” Hello? You don’t tell your franchise investors after the fact what you were required to disclose in the FOC before they bought so they could make an informed investment decision. That’s the purpose of franchise disclosure laws. And claiming written disclosure of risk factors in the FOC is not necessary if a prospective buyer hears a salesman’s verbal wild, wild West story ignores franchise disclosure responsibilities and is really an admission the company failed in this regard. With its amended FOC, the company incredibly continues marching forward with franchise marketing efforts.Now, let’s consider the franchise checklist and factors to consider before any leap into franchising.INDUSTRY TRENDIs the franchise in a cutting-edge industry that is doing well currently and is projected to do well in the future despite any economic slowdown? Education and home-improvement services are stable categories. Food is over-saturated generally and, except in exceptional circumstances, is not worth the high investment, long hours, headaches and marginal income.TOTAL INITIAL FRANCHISE INVESTMENTIn general, don’t expect a franchise that requires a five-figure initial franchise investment to produce a six-figure income. As with most things in life, you get what you pay for. On the other hand, don’t assume a six-figure investment will lead to a six-figure income level. Be realistic and conservative. Is the total initial franchise investment range (including working capital) $125,00 or less; and the maximum investment less than $200,000? You can find solid companies in this investment range if you’re willing to look around.Don’t forget to consider long-term financial commitments, particularly the real property lease (see discussion below under “LEASING AND LOCATION”). Also, the working capital estimate (called “additional funds” in Item 7 of the company’s franchise offering circular) does NOT cover operations up to the break-even point. It only covers a short initial phase (usually only three-months) of operating costs As the break-even point (where revenues cover all operating costs) may not happen for one, two or more years, knowing only what it’s going to take to get you through the first 90 days is not helpful – in fact it may set you up for financial suicide. In many cases, reaching the break-even point can require more reserve funds than the total initial capital investment. Don’t ever forget the name of Item 7 in the Franchise Offering Circular: “Initial Investment.” If you don’t have enough reserve capital to reach the critical break-even point, your entire investment will go down the drain and franchise failure occurs.One franchise owner in a relatively low investment and low operating cost window cleaning franchise said his biggest surprise was how long it actually took his franchise to be profitable. Going in, he thought it would take 12 to 15 months. It ended up taking twice that time. Fortunately, he had enough reserve capital to make it there, but declined to say what his actual franchise profits or income level were once he reached “franchise profitability.” If you’re operating just above the break even point and making less than minimum wage, is that anyone’s definition of success?REAL BUSINESSIs this a legitimate retail business, as opposed to a “work out of your home” operation? The vast majority of work out of your home concepts produce marginal income at best.FRANCHISE MANAGEMENT EXPERTISEDoes the management team of the franchisor (the company selling you the franchise) have executives with demonstrated past achievement and experience in operating a franchise company (not just persons who have sold franchises)? If not, this is a big RED FLAG. Many companies enter franchising and fail to realize they are in a brand new business – one requiring entirely different management skills and abilities to navigate franchise relationships. A seasoned franchise management infrastructure must be in place. If the franchise management team lacks strong franchise credentials, or does not receive ongoing advice from qualified individuals, you might as well take a trip to Las Vegas with the money you’re intending to invest. Your chances of making vs. loosing money are roughly equal.NORMAL WORKING HOURS AND DAYS; SUFFICIENT FRANCHISE INCOME LEVELWill the nature of the business allow you to work a normal five-day, forty-hour workweek? Life is too short for the seven-day, sixty to eighty hours a week, workaholic lifestyle that destroys health, family and pocketbook. Financially, we’ve calculated the true hourly rate for franchise owners who work these workaholic hours and discovered many are making far less than the minimum wage. One couple who operated a $200,000 fancy pizza franchise in an upscale mall were shocked to discover they were making fifty cents an hour each. Hardly an income level to recoup or justify the franchise investment. Many more fast-food franchise operators make even less, or operate at a loss until their funds, retirement savings, homes, etc. are exhausted. Buying a franchise in a non-food industry doesn’t necessarily improve the franchise profit picture. In a 2006 article “Mail Boxes Etc. Owners Fighting UPS Conversion,” a Mail Boxes, Etc. franchise owner who operated his franchise since 1993 reported profits for a typical MBE store like his were $16,000 per year after paying royalty and advertising fees to the franchise company. That calculates out to about $8.33 per hour for a forty-hour work week, approximately the wage of an entry fast-food worker.Another major shortcoming of disclosures in the Franchise Offering Circular is not telling you how much money the franchises in the network are making. Instead of answering what is the most important question in a franchise investment decision, the franchise disclosure laws make this “optional” for the franchise company to answer or not. If they do answer this critical question, it will be found in Item 19. But don’t hold your breath – more than 90% of franchise companies “decide” not to answer this question. It’s another bizarre reality in the world of franchising. Although they collect complete monthly (and in many cases, weekly) financial profit and loss statements from their franchise owners, and know exactly how much their franchises are making (or losing), more than 90% decide not to share this information before you buy one of their franchises. A number of franchise salespersons have told persons asking this question: “the franchise laws don’t allow us to answer that question.” Nothing could be further from the truth.And just because you’re a business executive making a 6-figure income now, don’t assume this income level will be duplicated in a franchise investment just because the company “approves” your application. One such executive, despite a plethora of negative feedback from current and past franchise owners who’d lost everything, marched forward with her franchise investment in a 30-minute fitness concept. Despite her 6-figure income, she didn’t invest a dime in professional franchise evaluation advice and stated she was taking a leap of faith, hoping to build her wings on the way down. Build her wings on the way down? Sound’s (and is) crazy, but this happens all the time. Due to the ploys of the franchise salesperson, too many franchise investment decisions are based on emotionalism. Prior business skills, business sense (and even common sense) are short-circuited. Needless to say, if this business executive made a similar investment decision for her corporate employer paying the 6-figure salary, she would be promptly fired.MINIMUM NUMBER OF EMPLOYEESCan you operate the franchise business with 6 or fewer employees? Managing dozens (or in the case of some fast-food operations – hundreds) of minimum-wage teenagers who are constantly quitting or simply not showing up for work is a royal pain in the ….. Well, you know what we mean.LEASING AND LOCATIONFor most retail franchises, the triple net lease of the location is the biggest financial commitment, larger than the total franchise investment. Yet, the typical real estate lease and its ramifications are not required disclosure in any Franchise Offering Circular (FOC). For example, an estimate that you’ll need 2,000 sq. feet of space with expected rental of $5 to $10 a foot per month is normally disclosed in the Franchise Offering Circular’s initial investment table as Leased Real Estate $10,000 to $20,000. A footnote to the investment table may say “assumes 2,000 sq. ft. at $5 to $10 a foot.”But, that’s only the beginning of a much longer story. The lease is normally a 5 to 10 year triple-net lease. So, the financial commitment made when the lease is signed is at least $600,000 (at $5/foot for 5 years) to $2,400,000 (at $10/foot for 10 years). And this doesn’t include substantial, additional obligations to pay all of the landlord’s yearly property taxes, insurance, common area operating expenses, etc. With hundreds of thousands (or even millions) of dollars in financial obligations at stake, personal guarantees and other risks, more than just a warm, fuzzy feeling that everything will work out is necessary.Key questions to ask here:(a) is the franchise you’re considering one that can be operated in a low rent commercial business zone? Avoid franchises requiring the costly expenses and triple-net leases of a visible retail storefront and the extravagant rent associated with areas of high foot traffic, like shopping malls. You’ll sleep much better at night.(b) What’s your total financial commitment under the lease?(c) Do you have sufficient liquid assets (or a willing, sufficiently liquid third party guarantor) to meet the landlord’s lease qualification standards?If you don’t, you might as well forget about investing in the franchise. Or even worse, getting involved in a questionable franchise and business model, then realizing you’ve made a big mistake – and discovering you’re on the hook personally for a $500,000+ lease obligation.A related real estate variant is securing a lease with a sufficient term (with renewal options) to recoup your investment and make a profit. In July, 2005, an attorney in her mid-forties purchased an existing ice cream store franchise for $375,000 believing it to be a “once-in-a-lifetime opportunity.” Trading her briefcase for an ice cream scoop, she attended the company’s 11-day Ice Cream University and assumed operations of the ice cream store. Turned out it was an opportunity – but only to inherit a store with numerous problems. These problems included (but were not limited to) a lease that would expire the following summer and a landlord who’d previously announced the lease would not be renewed. Rather than pay the $100,000-plus in relocation costs, the attorney returned to the practice of law, but is still paying off $350,000 remaining on the loan taken out to buy the once-in-a-lifetime franchise opportunity. Although there’s a franchise lawsuit pending, it’s yet another case of “franchise fever” – this time attacking a professional no less. Who would ever commit to paying $375,000 for an existing retail franchise without checking out the l-e-a-s-e? Sound’s like another bad attorney joke, but I can guarantee she’s not laughing. Business fundamentals were ignored or forgotten in the rush to acquire the opportunity of a lifetime. And I’m willing to bet not a dollar was spent on competent, pre-investment franchise advice.IMAGE AND LIFESTYLEHow does flipping burgers, scooping ice cream and cleaning restrooms fit the image of what you want to do for a living? Investing in a franchise will be the most important financial and psychological decision you ever make. Many prospective franchise owners fail to realize they’ll be wearing virtually every hat at some point, from salesperson to bad-debt collector, from firing employees to bathroom janitor. The franchise owner is usually the first one to arrive in the morning – and the last one to turn out the lights late at night. And you’ll need to forget about corporate perks like paid vacations, paid holidays and sick pay. In their place, substitute financial pressures, unexpected events and money draining out of your savings and retirement accounts. Does the typical working day and responsibilities of the franchise you are considering fit your personal image and desired lifestyle? You can experience some of this BEFORE you invest by working for a couple weeks in an outlet owned by one of the existing franchise owners. TRUE FRANCHISE VALUEBuying a franchise from a “blue chip” franchise company that has spent decades and hundreds of millions on advertising to develop their brand can make a lot of sense. These companies have “true franchise value” that compensates for the long-term disadvantages of ongoing royalty and advertising fund payments. Often these additional payments literally mean the difference between earning a profit and operating at a loss. In unknown franchise chains with little or no brand recognition, you the franchise buyer are building their brand from scratch, and are saddled with severe, long-term competitive disadvantages.In these unknown franchise chains, you have to ask yourself a simple, common sense question. What value is the company giving you that you couldn’t learn on your own by working at one of their locations as an employee for a couple months? Franchise truth be told, what most unknown franchise companies are selling is just a business opportunity – teaching you how to get into a new business venture. But unlike a business opportunity seller that charges a one-time fee to help get you into business, they call it a “franchise” and charge ongoing royalty and advertising fees like they’re a McDonalds or other blue chip franchise company.The reality is they’re not a McDonalds type franchise – not even close to one. In the majority of these lesser-known franchise chains, you’d be much better off starting an independent business on your own. You can learn most or all of their so-called “secrets” in the franchise interviewing process and by talking to (and possibly working a short time for) existing franchise owners.FRANCHISE PROFITABILITY & “SUCCESS”Dr. Timothy Bates’ study released in 1993 by the Entrepreneurial Growth and Investment Institute in Washington, DC (and another study published in 1996) was the first to compare start-up costs, franchise profitability and franchise failure rates for franchised vs. nonfranchised firms. In his analysis of some 7,270 firms over the test period, Dr. Bates found that startup capital for a franchised business averaged $85,293 compared with average startup capital for nonfranchised firms of $30,156. In 1987 nonfranchised firms reported average pre-tax net income of $19,744 as compared to a loss of (-$1,548) for franchised firms. Dr. Bates concluded “Despite their larger revenues, much better capitalization, and their supposed advantages of affiliation with a franchisor parent firm, the franchisees lag behind cohort young firms in profitability and rates of survival.”The franchise companies ignore both studies by Dr. Bates, pretending they never happened. Instead, other techniques are employed. For example, some franchise companies use misleading success statistics to sell their franchises. Their promotional materials say franchises generally enjoy a 90% success rate, compared to less than 20% for independent firms. These figures are based on unverified information supplied thirty years ago by a select, non-representative group of franchise companies. A full third of the companies receiving “questionnaires “ elected not to participate. There was no verification of any of the information supplied by the franchise companies, not even random, spot checking. Nor was any effort made to identify franchise companies who, along with the franchise owners in their chain, had gone out of business.Even more recent “studies” saying nine out of ten franchise owners (90%) consider their franchise to be somewhat or very successful also suffer from serious methodological flaws. These were simply telephone surveys of franchise owners who were still in business and asked to say (with absolutely no definition of the term “successful”) whether they felt their business was “very unsuccessful,” “somewhat unsuccessful,” somewhat successful” or “very successful.” Franchise owners who had gone out of business or bankrupt were not included in the survey.Even if terms are defined and a representative sample obtained, franchise owners can be a quirky group. Hence the need, as in Dr. Bates’ studies, for review of financial data. I remember evaluating an existing franchise for a client. I asked the current owner of the franchise if his business was successful. He said it was very successful. But his financial statements revealed a different picture. He’d never taken a dollar out of the business for himself, never made a profit in two years of operation, and was on the verge of bankruptcy. Another owner of a bakery franchise, interviewed by Business Week, says being successful in franchising means “adjusting your definition of success.” He says he makes a profit, but declined to say what it is, or if he’s ever recouped his $250,000-plus initial franchise investment. Incredibly, he insists he’s in business “for lifestyle reasons, not profit reasons.” Huh? Probably a quote from the company’s franchise recruitment materials. In the world of franchising “success” and “profitability” are very subjective terms.FRANCHISE BROKERS WHO FIND YOUR PERFECT MATCH?Does the franchise you are considering have its own in-house marketing department, or does it utilize outside franchise brokers? The use of franchise brokers is a definite red flag. First, it indicates the franchise company is not very serious about who it lets into the franchise network, or even worse, they’re desperate to sell franchises. Second, franchise brokers receive a substantial commission up to 50% or more of the franchise fee you’re paying the franchise company. Franchise Broker Realities: (1) Their service is definitely not “free” despite these and other similar misrepresentations. It’s really common sense – how could anyone offer a “free” service and survive in business? Unfortunately, the common sense part of the brain tends to short circuit when the franchise brainwashing process begins. The simple truth is if you buy one of the franchises they’re hawking, your money goes to the franchise company, then into the broker’s pocket. If anyone ever calculated how much time they spend to collect their $15,000 or $20,000 commission, it’s probably a lot more than a brain surgeon earns. (2) Franchise brokers definitely do NOT have your best interests in mind. They will do or say whatever they have to in order to close a deal and earn their commission.Many franchise brokers claim they will help you find a franchise company that is the perfect match for you. In the beginning it sounds good. There’s some personality testing and review of your personal finances. At the end of the day, it turns out they only represent (and steer you towards) a handful of small franchise companies you’ve never heard of before. A detailed analysis often reveals these highly touted franchises produce mediocre or even below minimum wage financial performance. Yet franchise brokers don’t mention this, and individuals continue to rely on their recommendations, believing the broker represents them. Nothing could be further from the truth.Also, many franchise brokers call themselves franchise consultants. A franchise consultant is usually an independent adviser who offers advice to others (usually franchise companies or firms that want to franchise their business) for a fee. This makes their advice more impartial in theory as long as they are not compensated by third parties. Because they are not legally required to disclose actual or potential conflicts of interest, it’s important ask questions. For example, if you’re using a franchise consultant who is recommending the “best franchises,” are they paid anything by the companies on their list? This could be a commission, kick-back or consulting fee. As mentioned, many franchise brokers call themselves “franchise consultants” to hide their true identity. So, make sure if you’re dealing with a franchise consultant, he or she is not really just a franchise broker in disguise.FRANCHISE DISCLOSURE LAWSThe franchise disclosure laws, while requiring franchise companies to give you certain, limited information, don’t come close to protecting your interests. For example, as discussed above, Item 7 of the Franchise Offering Circular only requires an estimate of additional funds for 90 days as part of the investment information. But economic reality is you need to know the additional funds you’ll need to reach the break-even point, which can be years away, or your entire “initial” investment will go down the drain. You’d think this type of information would be required by franchise disclosure laws, but it’s not.FRANCHISE REGISTRATION LAWSDon’t ever assume that because a company has registered its Franchise Offering Circular in your state, someone at the state has approved or reviewed the document in your favor. Franchise registration is obtained by simply forwarding documents and paying a filing fee – period. In most cases, franchise offering circulars are given an extremely limited review to ensure state-specific disclaimers are present.I remember filing a registration application for a new franchise company in a state with a reputation for being one of the “toughest” franchise registration law states in the country. After the three-week review period set forth in the statute had gone by, and not hearing anything, I called the examiner assigned to the application. After looking through his files, he finally found my client’s offering circular and application. He apologized for entirely misplacing the file and promised to immediately review the application and call me back. Ten minutes later, he called to say he’d finished and was making the registration effective that day. Ten minutes of review and the franchise company was given the state’s green light. This is not an isolated case – it happens all the time.WHAT STANDARDS MUST A FRANCHISE COMPANY MEET TO SELL FRANCHISES; ARE THERE ANY REQUIREMENTS TO FRANCHISE A BUSINESS?Incredibly, the answer is – none. There are no minimum standards or requirements to franchise a business except preparing a Franchise Offering Circular. It’s yet another bizarre reality in the world of franchising.You and I could have no background in any business, form a new corporation or LLC, capitalize it with only $1, put together a Franchise Disclosure Document and file it with any franchise registration state. While the offering may be subject to an impound or escrow requirement because of the low capitalization ($1), we’d still get “registered” and be able to sell as many franchisees as we want.In these 14 franchise registration states, we may not be able to receive any money until each franchise actually opened, but simply posting a bond would alleviate this difficulty in the franchise registration states. And in the vast majority of states there are no franchise registration laws, so we’d be able to sell franchises and collect fees with impunity once we compiled our Franchise Offering Circular. The federal FTC Franchise Rule doesn’t protect against this risk either – it only requires disclosure (i.e. provide a Franchise Disclosure Document) and has no registration component or minimum standards for franchise companies.Basic investor protections and requirements found in both federal and state securities laws for over 50 years were never carried over to franchise investments. While most non-blue chip franchise companies could never even qualify to sell you a single share of stock in their company, they are entirely free to collect unlimited franchise fees, ongoing royalties, equipment and other purchases, as well as cause you to incur financial obligations totaling hundreds of thousands of dollars, or even millions in some cases. This isn’t information you’re likely to find in the glowing articles about franchising and franchise companies prevalent in the media.CLOSING REMARKSRemember, you are the only guardian when it comes to your franchise investment. It’s definitely an environment where the phrase “Buyer Beware” applies. So, before you sign on the line and make what will undoubtedly be the most serious financial and emotional commitment of your life, get all the facts and figures.One couple I counseled after-the-fact, invested $2 million in a new franchise company. The contract they signed gave them no right to terminate, no matter what the franchise company did or didn’t do. Of course, the contract gave the franchise company unlimited termination ability, a right it had exercised. The franchise company’s management team had no one with experience in running a franchise company. Incredibly, the couple had not spent a dime on legal or business advice before investing $2 million. The once friendly franchise company had transformed into a formidable foe and was poised to take over their franchise. Sadly, this happens too frequently in franchise investments. Decisions are made on fuzzy feelings and emotionalism. In an effort to save a couple thousand dollars, franchise investors risk homes, retirement savings, everything they have. Then they scratch their heads in amazement later on after inevitable and often horrific problems develop, wondering how they could have been so nearsighted.Another indispensable level of inquiry is whether you’re getting true franchise value and whether you’d be better off doing the business on your own. In the overwhelming majority of franchises touted by unknown companies, franchise value isn’t there and doing the same thing independently makes better economic sense and actually decreases the risk of failure.Finally, and this applies to franchise investments as well as investing in any business venture, develop a plan to succeed but also plan a franchise exit strategy that minimizes financial risk in case things don’t work out. Both plans need to be thought through before the investment is made. Don’t wait until problems develop to start thinking about a franchise exit strategy – by then it’s usually too little, too late.
For more information, visit the Franchise Foundations Website.
© 1990-2008, Kevin B. Murphy, B.S., M.B.A., J.D. – all rights reserved
January 30th, 2010
posted in Investment News
Slovenia property investment is hot and it has recently been named one of the best 10 countries to invest in the world. This article will look at Slovenia property investment and the potential for capital growth which has been estimated at up to 280% over the next ten years.
When investing in overseas property a number of factors need to be considered which include:
The countries Political stability, economic growth and housing values at the present compared to possible future growth.
Slovenia property investing has become popular with savvy property investors all over the world, due to its potential to earn great capital growth and solid rental incomes from the buoyant buy-to-let market.
1. Economy
One of the newest members of the European Union (joining in 2004) with the top performing economy of any of the recent member states.
Government macro economic policies have seen Slovenia achieve and sustain great growth.
The Slovenian economy features:
Small external imbalances and public debt, while at the same time lowering inflation and keeping interest rates in line with the rest of the euro economy. EU entry has increased confidence which in turn has increased trade and increased growth, and overseas investment has increased steadily as a result and this has also seen property investment rise dramatically.
Per capita incomes have reached about 80 percent of EU-average for year end 2006.
With growth rates running at around 5% per annum Slovenia’s economic future looks solid. It is this economic expansion which is driving house prices up, as higher incomes and people looking for second overseas homes has increased the demand for quality housing stock.
2. Geography & Communications
Slovenia is only small, compact country and is around half the size of Switzerland or the size of Wales, yet it is beautiful with diverse scenic beauty.
Located to the east of the Trieste region of Italy, it also has borders with Croatia, Austria and Hungary making it a country at the crossroads between the established western economies and the new emerging nations of the east.
Slovenia makes a great base to explore a host of nearby countries and attractions – Venice, Prague and Budapest are all within a day trip.
Many investors who buy a Slovenia investment property are skiers. You can Ski in three countries in one day with one ski pass in these three countries Italy, Austria and of course Slovenia
Slovenia has good infrastructure and communications which is great news for the economy and tourism generally.
With budget airlines flying direct to Slovenia and offering frequent and cheap flights, more people are getting easy access to the delights of this country.
3. Beauty
Slovenia is a beautiful country. The country features all the following:
Stunning mountains, tranquil lakes, alpine forests, valleys, dotted with vineyards and finally, a beautiful stretch of Adriatic coastline. There are also bustling cities and towns such as the capital Ljubljana, the coastal town of Piran with their many attractions and plenty more. Ljubljana is popular with investors and has been compared to Prague and features beautiful baroque architecture, lovely church spires and a cosmopolitan atmosphere.
There is much to enjoy and that leads on to next point which is boosting Slovenia property investment.
4. Tourism
Tourism is rapidly becoming one of the most important industries in Slovenia, as it catches up with its neighbors who have promoted their tourist industries more aggressively until now.
5. Quality Housing
The capital has become popular with overseas property investors, who are taking advantage of growth rates of 30 – 40% per annum. The city reflects the economic growth of the country and new housing is lagging behind demand. This is due to strict local planning laws, which are restricting the flow of quality housing and demand is out stripping supply.
Primorska on the coast and the mountainous area of Gorenjska are the next most expensive places to buy in Slovenia but offer great returns.
6. A Boom in Its Infancy
Property booms tend to last for a long time and the boom in Slovenia investment property looks to be no different. With prices starting at around £40,000 and a wide choice of areas that remain relatively undeveloped there is a wide choice to suit all tastes and budgets.
7. Potential
With capital growth forecast to be up to 280% for the next decade, Slovenian investment property offers solid returns in a safe and stable environment.
You can of course also get rental incomes in the major towns such as Ljubljana and a host of other developing areas offering Slovenian property for sale which include:
The holiday resorts of Lake Bled and Lake Bohinj, Maribor, the beautiful coastal city of Piran and the ski resorts of the Kranska Gora region, as well as the Soca Valley – an area of outstanding natural beauty.
8. Ease of Purchase
The buying process in Slovenia is designed to protect both buyers and sellers and local finance is also available from banks and secured locally on the property. All details are held at a central Land registry, making ownership rights clearly visible to all – which is not the case in many countries!
9. Its Safe & Friendly
Slovenia has friendly, helpful, courteous people and an absence of serious crime making it a welcoming country which leaves an impression on all who visit the country.
Slovenia property Investment offers overseas buyers a lot and buying property in Slovenia has never been more popular and it’s easy to see why.
Discover Slovenia property investment and you maybe glad you did.
January 27th, 2010
posted in Property Investment
In our investment work when we get involved in stock investing, we do hands on stock research. Here are 12 basic stock investing rules that you may follow for successful trading. The stock market is driven by earnings, and a good stock investing course will teach you to judge the emotional state of the stock market.
Basic concept behind stock investing before getting involved in the stock trading, you should be well versed with its concept as this will help you in achieving success every time you trade. Now with all these information presented to you, it is now your choice whether you will get involved in penny stock investing. With ETF investing, you get the best of stock investing (ease of trading) and the best of mutual fund investing (built-in diversification) all in one investment vehicle.
When taking a stock investing course you may learn a few things that your broker may not even be aware of. Unlike stock investing, you need strong credit to use other people’s money to finance investment property. As you might imagine, the ads under stocks generally (which includes broad search terms like ‘stock investing’) are seen the most, because most searchers begin with generic inquiries.
So if you are new to investing in the stock market take some time and learn how to by taking a stock investing course. Stock investing is relatively volatile and full of uncertainty. The more forex stock investing trades you make with a high probability of success, the more successful you will be.
Stock investing takes a great deal of research however if you make good investing decisions, it can have a high rate of return. Stock investing is a popular tool that many use for creating wealth. It is not difficult at all to succeed in stock investing.
They don’t know anything about stock investing and they often lose a few thousand dollars very quickly. You have to weigh both the pros and the cons of small cap stock investing before you sink any of your hard earned money into anything. In the real world, the world of stock investing, you should always put money after your best ideas.
It is also the hardest part to master in stock investing. Penny stock investing is a junior level course at least. Fraudsters don’t think twice before developing stock investing, commodity or option trading courses to make a little extra money for themselves regardless of whether or not what they teach helps their students.
Also, online stock investing has opened the door wide for overseas stock trading, giving you more investment opportunities than ever. In this manner, stock investing is much like surfing: spotting when or when not to ride the waves. So, before putting any money into stocks, the first question you should ask is what do you want to achieve with stock investing.
The second richest man in the world, Warren Buffett, has made his millions from stock investing. Social networking has been intergraded into many stock investing courses. When you take a closer look, the alternative means of extra income via stock investing is just a spin-off of earning from a business.
Online stock investing has helped a lot in saving time and money by enjoying the thrill of trade at your convenience in the ambience of your home. What any ‘vexed’ shareholders are forgetting, and he is not, is that Rule 1 in stock investing is, don’t lose money. Penny stock investing can be profitable.
January 27th, 2010
posted in Investment News
If investors want to buys stocks or bonds, they can call up their brokers and quickly make the purchase. They can also buy stocks online with the push of a button. Commodities such as gold and silver, however, are more difficult to buy because of the the complicated way in which they trade through futures and options markets.
Whatever the current price of gold is, many people wish to learn how to invest in gold. Metals such as gold and silver are called commodities and they are more complicated than stocks for the normal investor because there are different ways you can invest in them.
Luckily, investing in gold is one of the easier commodities to invest in. One option is that you can invest in gold coins that are obtained from a dealer and from some banks. If you do this, though, you will have to find a safe way to store the gold. Many people who have gold store it in bank safe deposit boxes. This seems to be the most secure method of storage.
The second way to invest in gold is to buy an ETF. Exchange traded funds work much like stocks and they can be bought and sold any time the stock market is open. These funds mirror the price of gold and so even though you do not directly own any gold, you have a fund that has exposure to it. Investing in gold through ETF’s is probably the easiest method and the most recommended method of gold investment for the average investor.
The third and most complicated way to invest in gold is to trade futures and options in the commodities market. This takes a lot of knowledge and experience to know what you are doing and it is not advised for the normal investor. Trading futures and options is something that you learn how to do over time and it is not usual for most gold investors to take this route.
Investing in gold is not as intimidating as it sounds. Usually people can easily buy ETF’s and this is by far the most popular way. As the current price of gold fluctuates, these ETF funds go up and down correspondingly. If you like to have the physical gold in your hands you can always buy it but then the safety issue comes into play. Whichever method or methods you use for your investments in gold, you will still have the benefits of owning the most treasured metal in earth’s history.
January 27th, 2010
posted in Gold Investment
January 26th, 2010
posted in Investment News
Gold Investment is an old age tactic of putting your money into something that you feel will increase in value over time. It is a liquid and tangible investment. There are so many motives behind gold investment. Some invest in the hope of future increment in the value, some because they love the yellow metal, some other for price speculation and so on.
Gold is slightly more risky than bonds, so you should be careful to pay attention to this. However, as a long term investing strategy, gold has steadily increased in value over time. Also, part of the reason that gold is worth so much money is due to its comparative rarity. Even though it is rare, If the markets were to become flooded, chances are good that you would lose money. However, gold has a tendency to stay relatively stable, or to increase its value, over time. The rarity of gold is what keeps it’s value up.
It can be a trading item, store of value, investment, insurance and others. You have the options of investing in gold, gold stock, gold bullion, gold certificates, options, forward contracts, gold linked notes and such other gold related options. Trading gold has also been an old established business. Trading may be like other currencies for future appreciation in the value.
How stable is gold investing? Well, the demand for gold is much higher than its supply. As you can tell, this is already good for people who are thinking about gold investing. Once there is more supply than demand, the price starts to rise. Since the demand for gold is almost twice the amount that is actually mined, the prices for gold are likely to go up steadily.
Speculation is the main cause for trading. There may be different types of gold investors like people who store gold, people who include in their portfolio, banks who keep part of their deposit in gold, financial institutions, gold bugs, speculator, petroleum speculator, portfolio hedger etc.
Gold may be included in your investment portfolio. But with other investment strategy, gold investment should be a part of your portfolio not the whole portfolio. Exposure to only one kind of investment can have negative effects should you run into a down time. You can invest in gold but with some research and knowledge. Investing is interesting but may be destructive for your investments. Like stock investing, in gold investing also you should do research and fundamental and technical analysis.
Just like diversifying your total investment portfolio, one thing that you should keep in mind about gold investing, is that you should not put all of your money into one type of gold investment. You should also not just go out and buy a bunch of physical gold. While this is a good way to build a solid and insured foundation, you should also be investing in some of the other parts of the gold industry. For instance, if you invest in gold mines that are not producing at their top amount yet, or in potential gold mines, you stand a chance of making more money in the future.
Gold values are currently at all time highs as the US dollar weakens in value, and oil prices continue to rise. The perfect time to invest in gold would have been a few years ago up to last year, however, timing the market is not the best strategy for non active investors. Dollar cost averaging is best for non active investors. What you would do is purchase gold in even increments over time, and the over all average cost of the acquisitions lowers as you buy gold in up times, as well as down times.
January 25th, 2010
posted in Gold Investment
There are actually many ways to invest in gold to take advantage of its bullish fundamental activations. You could buy gold itself, buy gold stocks, or buy gold derivatives. Just as any other sector, there are gold investments possibilities out there to meet the unique risk tolerance and capital development of a potential gold investor. Before you invest in gold, you should carefully consider what percentage of your overall portfolio you are willing to risk in gold- related investments. If you are totally new to gold and you are just getting your feet wet, protect allocations of under 5% of your capital will be great plenty. Later as you investigate gold become more familiar with the gold world, you can increase your capital allocation to gold investments.
Gold is a proven way to preserve wealth when your local currency may be loosing its value. Gold is also valuable for things beyond investments and this is demonstrated by the ever growing demand for gold. In fact, over the last decade, consumption of gold has actually exceeded production. And since the production of gold is controlled by relatively few companies, whenever the price of gold dips below current production cost, these companies ceases operations. Also gold is a good way to diversify or hedge an investment portfolio since the price of gold does not necessarily move with stock prices.
For example, investing in jewelry can be profitable. The purchases and holding of gold jewelry for investment purposes is much more common outside of the United States. This is an expensive way to collect gold since a premium will be paid for the craftsmanship associated with making gold jewelry. Along with higher inflation and global instability, important driver of the gold prices this year is expected to be increasing demand for jewelry in developing countries. Jewelry accounts for 70% of total demand of gold. Specifically, women see gold jewelry as both a fashion item to enhance emotional well- being and as an intrinsically valuable investment.
Now a combination of factors, including a weakening dollar are aligning to drive gold prices higher as gold had been loosing investment. Meanwhile, the demand is surging. Markets such as Indian and China with gold ownership have largely been confined to jewelry. Gold was in use as a form of money, in one form or the other. Gold are assets that are both tangible and liquid too.
Gold is a long term, low risk yet profitable investment. Gold is a must in every serious investor’s portfolio. But what if you don’t have knowledge, experience, skill or time to invest in gold by yourself? Then you should leave it to the expert like us. By leaving it to us, we ensure you’ll make profit of 2% monthly, 112% after six months or 124% per annum. Find out more here GenuineGold.biz
January 23rd, 2010
posted in Gold Investment
In today’s world of global uncertainty, one thing remains certain: gold coins. Gold bullion coins continue to outperform traditional vehicles the same way gold coins and bars outperformed everything under the sun during the 1970′s. By holding gold coins in one’s portfolio, you dramatically reduce the overall risk of your portfolio. Just by having some gold coins as part of your strategy, you also allow the price of gold, as it increases, to bring up the value of your portfolio.
It is much easier to buy gold today than it was 30 years ago. Gold bullion coins are easily bought and sold with the click of a mouse. Not only is it easier to buy gold, but gold investments are exploding onto the investment scene like never before. In fact, gold coin sales by the U.S. mint in recent months have outpaced the gold coin sales of the prosperous-for-gold 1970′s. Despite this recent fact, the gold price is just beginning its increase.
As gold coins become more scarce, quite naturally, investors covet the yellow shiny metal at an ever increasing rate. The type of gold coins sought after by investors who follow the price of gold are American Gold Eagles, Canadian Gold Maple Leafs, South African Gold Kruggerands, Australian Gold Kangaroos, Chinese Gold Pandas, and Austrian Gold Philharmonics. These are the most popular gold coins available to investors who want profit potential and protection. The benefit to owning these gold bullion coins is four-fold.
1. You get immediate liquidity. This means you can sell your gold bullion coins at or near the gold price at any time, anywhere in the world.
2. You are in control. A strong gold investment is an investment in certainty. Knowing you have gold coins in your possession that you can rely on makes a world of difference to one’s sense of financial well-being.
3. There is tremendous profit potential with gold bullion coins, more so than just about every other vehicle out there. It matters not whether you hold American Eagles, Canadian Maple Leafs, South African Kruugerands, or any other type of these gold bullion coins, they will provide a well positioned investment portfolio an increased probability of profitability.
4. Last but not least, gold bullion coins provide economic safety and stability in a world increasingly plagued with uncertainty and dangers.
Those are some of the “pros” of owning gold bullion coins. There is more that a first-time purchaser of gold coins should be aware of; the “other side of the coin,” so to speak. If you own American Eagles, Canadian maple leafs, South African Kruugerands, Austrian Philharmonics, Chinese Pandas, or Australian Kangaroos, they are subject to confiscation by the federal government. In 1933 Franklin Roosevelt issued an executive order which required U.S. citizens to turn in all gold bullion coins produced by the U.S. mint, as well as any gold coins and bars produced by foreign governments. Our country, in that period was in the peak of a crisis: the dollar was in trouble, smart investors were getting out of stocks and bonds, and unemployment was on the rise. This period was the great depression. The consequence of not turning in your gold bullion coins or gold bullion bars was a huge fine and jail. If you buy gold bullion coins today, like the American Eagle, the U.S. mint prints a $50 denomination on the back of the coin. Why? Because if the government were to confiscate gold bullion coins like they did in the 1930′s, you would only receive the $50 denomination value, despite the current price of gold in the market, whether that price be $500, $1000, or even $2000. The chance of such Federal government confiscation is universally deemed as unlikely.
Also gold bullion transactions are reportable to the IRS. We will also cover in detail the type of gold transactions that are not reportable, private gold, momentarily.
Also important to recognize is that as the price of gold fluctuates, so does the value of gold bullion coins.
Nevertheless, despite these contingencies, asset managers all over the country are recommending allocating at least some portion of an investment portfolio to gold. Prices are on the rise, in what analysts have termed a long-running bull market which is just in its beginning stages
PRIVATE AND NON-CONFISCATEABLE GOLD COINS
Investors naturally gravitate to gold investment vehicles where they can expect the greatest return with the smallest amount of risk. In the physical gold market certified gold coins reign supreme. Certified gold coins are the gold coins minted by the US Mint befor the year 1933. $20 Saint Gaudens, $20 Liberty, $10 Indian, $10 Liberty, $5 Indian, $5 Liberty and $2.5 Liberty gold coins are all examples of the most profitable gold coins an investor can acquire for several reasons.
1. Certified gold coins have a limited mintage. The government can not go back and mint any more of these gold coins. You want to own gold coins that continue to go up because of this fact year after year regardless of what the gold price does. Because of their limited availability these gold coins can surpass the gains seen by gold bullion 2 to 5 times.
2. Certified gold coins are also one of the last legally private assets the government allows you to acquire. World Financial and goldcoinsgain.com are not required to ask for a social security number when you buy gold coins or when you sell gold coins.
3. Non-confiscatable. Certified gold coins are exempt from confiscation. Certified gold coins are exempt from confiscation if the government decided to confiscate gold like they did in between 1933 and the early 1970s. You were in a world of hurt during those almost 40 years of you were holding the wrong kind of gold coins. So you can rest assured your certified gold will do what its supposed to do under the most strenuous conditions — protect your money.
4. Immediate liquidity. World Financial is a major market maker in certified gold coins and will assist in converting your gold coins back into cash on a moments notice.
In addition to the advantages listed above, certified gold coins are also more stable than bullion gold coins. The value of a certified coin is not solely determined by what the spot price of gold does. In fact, certified gold provides more stability than the stock market, bond market, or just leaving your money in cash. So if you are tired of having to worry about the current economic environment you may want to consider diversifying out of riskier vehicles into an asset that has stood the test of time.
Portability is also something you should keep in mind when selecting which type of gold coins are right for you. To put things in perspective, you could carry one million dollars worth of certified gold coins in an attaché case. This should give you a sense of comfort knowing that you have acquired an asset that is completely portable and discreetly portable.
IRA AND 401′s BACKED BY GOLD COINS
Gold Coins backing your IRA or 401k rollover makes the perfect diversification asset in today’s uncertain economic environment. Gold coins can be added to your retirement strategy in just a few easy steps.
Step 1. Determine what portion of your retirement account you would like to convert over into gold coins.
Step 2. Print out the one page Gold Coin IRA Setup Form and fill out to the best of your ability. Fax the form into our retirement account department at (818) 506-6597.
Step 3. A Gold Coin Customer Service representative will contact you in a very short amount of time to confirm and guarantee the availability of your gold coins. We then work with your existing custodian to get the appropriate funds transferred over into your new self-directed IRA, backed by physical gold coins.
American eagle bullion gold coins are one of the most popular gold coins allowed by the IRS for your precious metal IRA. American eagle bullion gold coins come in 1 ounce, 1/2 ounce, 1/4 ounce, and 1/10 ounce denominations. These gold bullion coins are guaranteed by the US Mint for purity, weight and size. The Gold American Eagle bears the “W” mint mark reflecting the gold coin was struck at the US Mint at West Point. The obverse of the American eagle bullion gold coin features Augustus Saint-Gaudens’ full-length figure of Liberty with flowing hair, holding a torch in her hand and an olive branch in her other hand. On the other side of the gold coin a male eagle carries an olive branch as he flies above a nest containing a female eagle and her eaglets. Each gold coin is encapsulated in plastic and comes with a custom designated Certificate of Authenticity.
American Eagle Proof gold coins are also available. The proof gold coins are more desired because each year they are produced by the US Mint in a limited quantity. Each proof gold coin is struck several times with a special die to create a more lustrous finish. Because of the limited quantity, investors will typically prefer these gold coins for their retirement accounts. Weather we are talking about gold coins or widgets whenever there is a limited amount naturally prices increase faster and become more valuable. The American Eagle Proof gold coins are also exempt from confiscation. A lot of investors like knowing they have the type of gold coins backing their retirement account that are not subject to confiscation by the Federal government.
January 22nd, 2010
posted in Gold Investment
There are several different types of investments, and there are many factors in determining the success of your investment.Before you get there,remember that all success story began with researching the various available types of investments, determining your risk tolerance, and determining your investment style along with your financial goals.
Do Your Homework – If you were going to purchase a new car, you would do quite a bit of research before making a final decision and a purchase. You would never consider purchasing a car that you had not fully looked over and taken for a test drive. Investing works much the same way.You will of course learn as much about the investment as possible, and you would want to see how past investors have done as well. It’s common sense!
As a potential investor, you should read anything you can get your hands on about investing but start with the beginning investment books and websites first. Otherwise, you will quickly find that you are lost.
Learn From The Experts – Learning about the stock market and investments takes a lot of time but it is time well spent. There are numerous books and websites on the topic, and you can even take college level courses on the topic which is what stockbrokers do.
Test Run – While the person who sold you your brand new car or ipod will provide you with a 30 day money back warranty, there is no such thing as money back warranty in stock investment.
Once the money’s gone,its gone forever and that could be your life savings!
With access to the Internet, you can actually play the stock market with fake money to get a feel for how it works.Do a search with any search engine for “Stock Market Games” or “Stock Market Simulations.” This is a great way to start learning about investing in the stock market.
Speak with a Financial Planner – Finally, speak with a financial planner. Tell them your goals, and ask them for their suggestions, this is what they do.A good financial planner can easily help you determine where to invest your funds, and help you set up a plan to reach all of your financial goals. Many will even teach you about investing along the way,make sure you pay attention to what they are telling you!
Different Types of Investments – Overall, there are three different kinds of investments. These include stocks, bonds, and cash. Sounds simple, right? Well, unfortunately, it gets very complicated from there. You see, each type of investment has numerous types of investments that fall under it.
There is quite a bit to learn about each different investment type. The stock market can be a big scary place for those who know little or nothing about investing. Fortunately, the amount of information that you need to learn has a direct relation to the type of investor that you are. There are also three types of investors: conservative, moderate, and aggressive. The different types of investments also cater to the two levels of risk tolerance: high risk and low risk.
1.Conservative Investors – Conservative investors often invest in cash. This means that they put their money in interest bearing savings accounts, money market accounts, mutual funds, US Treasury bills, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments.
2.Moderate Investors – Moderate investors often invest in cash and bonds, and may dabble in the stock market. Moderate investing may be low or moderate risks. Moderate investors often also invest in real estate, providing that it is low risk real estate.
3.Aggressive Investors – Aggressive investors commonly do most of their investing in the stock market, which is higher risk. They also tend to invest in business ventures as well as higher risk real estate. For instance, if an aggressive investor puts his or her money into an older apartment building, then invests more money renovating the property, they are running a risk. They expect to be able to rent the apartments out for more money than the apartments are currently worth or to sell the entire property for a profit on their initial investments. In some cases, this works out just fine, and in other cases, it doesn’t. It’s a risk.
Before you start investing, it is very important that you learn about the different types of investments, and what those investments can do for you. Understand the risks involved, and pay attention to past trends as well. History does indeed repeat itself, and investors know this first hand!
The Importance of Diversification – “Don’t put all of your eggs in one basket.” We have all probably heard of this advice and when it comes to investing, it is very true. Diversification is the key to successful investing. All successful investors build portfolios that are widely diversified, and you should too!
Diversifying your investments might include purchasing various stocks in many different industries. It may include purchasing bonds, investing in money market accounts, or even in some real property. The key is to invest in several different areas not just one.
Diversification May Bring Better Returns – Over time, research has shown that investors who have diversified portfolios usually see more consistent and stable returns on their investments than those who just invest in one thing. By investing in several different markets, you will actually be at less risk also.
For instance, if you have invested all of your money in one stock, and that stock takes a significant plunge, you will most likely find that you have lost all of your money. On the other hand, if you have invested in ten different stocks, and nine are doing well while one plunges, you are still in reasonably good shape.
Diversification Plans – A good diversification will usually include stocks, bonds, real property, and cash. It may take time to diversify your portfolio. Depending on how much you have to initially invest, you may have to start with one type of investment, and invest in other areas as time goes by.
Lower Your Risk – If you can divide your initial investment funds among various types of investments, you will find that you have a lower risk of losing your money, and over time, you will see better returns. Experts also suggest that you spread your investment money evenly among your investments. In other words, if you start with $100,000 to invest, invest $25,000 in stocks, $25,000 in real property, $25,000 in bonds, and put $25,000 in an interest bearing savings account.
January 22nd, 2010
posted in Investment News
Learning is the beginning of wealth. Learning is the beginning of health. Learning is the beginning of spirituality. Searching and learning is where the miracle process all begins, Jim Rohn
Investing in property may seem like todays flavour of the month. However, due to the large amounts of money changing hands, it is not something that you should try without proper training and guidance.
When I first started investing in property, I spent a lot of man hours educating myself. I bought every single book on property that I could lay my hands on. I spent a lot of time and effort attending workshops and seminars. When I had become confident of my abilities, I ventured out and bought my first property.
Buying my first property did not mean that I could now stop learning about property investment. In fact, it was the exact opposite. I was now spending more time learning the different property investment strategies; I was attending more seminars and courses and reading specialised books on investing. Had I stopped learning after my first purchase I would not be a successful property investor today.
A couple of weeks ago, I did some research to see what courses were being offered to help people get into property investment. Quite frankly, I was shocked by the results. I found single day courses and workshops ranging from 500 pounds to 10,000s pounds. And, thats not all.
I even found several portfolio companies requesting 6 figure sums in return for an off the shelf property portfolio! Today, every other person appears to be offering a property investing course. How do you choose which one is right for you?
Firstly, my advice would be for you to not pay anyone to buy a property portfolio for you. If you want success in property, you need to understand at least the basics of property investing. Paying someone a truck load of money to buy a few properties for you will not give you this knowledge.
Attending property courses should by definition increase your knowledge of property investment. However, prior to parting with any money you need to address the following issues:
- What are the credentials of the course organiser? Is he/she a property investor himself and how much experience does he/she have?
The best person to advise you on property investing would be someone who walks the talk – theres little to gain from a presenter who has never bought a property before.
- What are the course contents? Will advanced techniques be addressed?
Its the advanced techniques used by successful property investors that will set you apart from all those other wannabe property investors.
- How many people will be attending the course?
A course attended by hundreds of people may lack the personal touch, but will present networking opportunities to you.
- How much and how long is the course?
Paying several thousand pounds for a one day course is too much. You need to weigh up the cost, length and contents before making up your mind.
- Will I be given the opportunity to network with other attendees of the course?
The property business is a business of relationships. You need to network with others in the same business as you will not be able to do it alone.
- What is the location of the venue?
Is it worth travelling hundreds of miles to a course that may be offered closer to where you live?
- What support will be provided after completion of the course?
Course attendees quite often become unstuck after attending a course. You need to find out if any support is offered after you complete the course.
Only once you are satisfied with your answers to the above questions should you part with any cash.
Be warned though, attending a course by itself will not make you into a successful property investor. What will set you apart from any other attendee on the course is your level of motivation and determination to succeed in property investing.
January 22nd, 2010
posted in Property Investment
“Gold is a wonderful thing! Whoever possesses it is lord of all he
Wants. By means of gold one can even get souls into Paradise.”
Columbus, letter from Jamaica, 1503
Gold is one of the good investment avenues open for many reasons.
Why one should invest in gold?
The uncertainty in world markets, particularly the US economy and the weakening of US Dollar against world currencies coupled with phenomenal rise in Oil prices, cascading price rise and inflationary trends – all these point to the need for strong world currency and that is the yellow metal- “” THE GOLD””. The Bullion has its own Standard. Besides, Gold is said to have sentimental values particularly in the Asian countries. Over time, Gold has proved to be an excellent preserver of wealth.
Gold has maintained its value in terms of real purchasing power in the very long run in all the countries especially in the US, Britain, France, Germany and Japan. Despite price fluctuations, gold has consistently retained its historic purchasing power parity with other commodities and intermediate products.
Gold traded mutual funds are the answer for people who want to invest in gold without the real difficulties of gold holding. For example, to buy gold for investment, one has to spend time to verify its weight, purity (particularly in third world countries) quality & other aspects. After all these, the problem of safe- keeping hovers over one’s head. Now Gold Traded Mutual Funds offer all the benefits of investment in gold without any of the above physical difficulties. Gold’s liquidity, acceptability and portability are particularly important in times of need. In essence, all these benefits are retained & rendered by Gold Traded Mutual Funds.
How these Gold Traded Mutual Funds operate?
They accept funds from public and buy 100% pure assayed gold. They issue unit certificate to the public for each gram of gold invested by them. For example, if one wants to buy 100 gram of gold, one has to buy 100 units from the Mutual Fund. The price of each unit depends on the price of gold ruling on any given day.
This investment can be kept in paper or in a demat account. These units can be surrendered to the fund and gold bars can be obtained in return (if required).
How the Fund repays in gold bars?
All the gold bought by the Fund is deposited with a custodian- usually a reputed banker- for safe keeping in their safe vaults. Once the fund units are surrendered, the Fund authorizes the banker/ custodian to release the gold bars.
So this helps the investor to get back gold or retain the deposit in gold (investor’s choice). Since these gold units are traded in the market, anybody can sell these units easily in the market at the price prevailing on that day. One need not search for a buyer as in the case of selling physical gold.
Gold Traded Mutual Fund offers all the benefits of investment in gold without its physical difficulties. The major advantages of these funds are:
· Safety
· Liquidity
· Convertibility to physical gold
This is one area that an investor can look forward to invest. However there are many more alternatives to invest. To know about investing in mutual funds visit Investing in Mutual Funds and to get an idea as to how mutual funds work visit Mutual Funds. Also visit Exchange Traded Funds to know about exchange traded funds
January 20th, 2010
posted in Gold Investment
Balanced investment strategy is perhaps the most followed and successful investment strategy for portfolio management. Its primary aim is to keep a balance between investment risk and return. A balanced investment strategy combines the merit of aggressive and defensive investing strategies. Aggressive investment strategy involves investing in high return high risk investments with the sole purpose of maximizing return from investments. It involves allocating major portion of portfolio capital to invest in equities, equity based funds and highly volatile markets. Investors following aggressive investment strategy often look for comparatively short-term profiting and wish to invest more in growth stocks, and small caps and mid cap stocks. Advantages of aggressive investing include quick profit, high return over investment and no need of large portfolio capital. It can work really well for experienced investors and investors who are very strict in their money management. Disadvantages include high risk, high volatility in total portfolio value and no surety of profit. It less supports novice investors and investor looking for monthly earnings or living costs.Defensive investment strategy is just opposite of aggressive investment; it’s purpose is to preserve the capital and ensure some return from investments. It involves investing in low profit low risk investments like bonds, money market funds, treasury notes, and equities with minimum price volatility and good dividends. Defensive investors look for long-term profits and/or monthly earnings. Advantages of defensive investment strategy include reduced risk, predictable income, better investment planning and diversification of portfolio. This strategy mainly suits beginners. Disadvantages include low return from investments and requirement of high capital investments. In balanced investment strategy, the investor tries to keep a balance between his aggressive and defensive behaviors. It involves balancing of both return and risk by diversifying investments in both high return high risk and low return low risk investments. Balanced investors often follow a portfolio capital allocation rule telling how much to invest in equities and bonds and how much to invest in treasury notes, precious metals and funds. Usually one portion of portfolio is actively managed and other portion is left to grow automatically. Balanced investment strategy can be slightly aggressive or slightly defensive with respect to investments made.The greatest advantage of balanced investment strategy is the diversification of portfolio and hedging against high total portfolio value volatility. It is good for investors looking for medium-term (3 to 5 years) profits. Other advantages include flexibility in portfolio management, better results with better capital investments, (almost) predictable income and manageable portfolio risk. Balanced investment strategy support both beginners and experienced investors and can be an option for monthly earnings for living.
January 20th, 2010
posted in Investment News
Everybody wants to have a secure future and therefore look out for various options to invest their money wherein they can earn substantial returns. Generally, people tend to invest their hard earn money in stocks and share which is definitely a risky process to an extent however as the time is advancing people are moving towards investing in the properties which promises a better rate of return and above all a secure process. Investment in land and properties has steadily gained the repute of being one of the best ways of investing.
Stocks, debentures or funds often do not come to the expectation of the people and also due to its nature of being up and down frequently, people are gradually turning towards a more promising investment and that is properties investment. However, an investor should be well equipped with property investment information before taking any decision. Proper advice on the properties investment helps in taking a well informed decision. Discussing with the property agents and conducting market research helps to a greater extent. Such things will enable you to know about the extent of rent an investor can earn. Another major thing which should be emphasized upon is that never ever invest the entire amount of your earned money, it is always better to find out the sources from where loan can be obtained on the reasonable interest rate.
It is always good to select an area which is already yielding profitable returns rather then investing into some land which is yet to be expected to gain appreciation in the near future. This will help the investor to gain immediate results other than waiting for the results to come. Also, people tend to get attached to their properties; it is advisable to think like a property developer, who has a business to do with the land. Moreover, any planning to get the property renovate should only take place if houses for the sale can help the investor to fetch good amount of profit.
Gathering all the relevant information related to the latest happenings in the property world helps to a larger extent. There are a lot of magazines, published articled etc available that provides the reader with the first hand information of the properties available world-wide. Pay visits to the property developers, enquire about the existing land rates and rent rates and invest only when there is any lucrative option is available.
Never get taken away by people who try to de-motivate, without finishing the entire research work and see it for your self, what happening in the market. Doing proper calculations and being smart helps an investor from investing in a property which is unlikely to provide with the good returns. If such home work is done with zeal and enthusiasm profits are sure to come.
January 20th, 2010
posted in Property Investment
The idea of investing in rental investment property is very attractive. Many turn to the real estate market, because it is a good method of long time investment. Property investment brings a good income, depending on the location of the real estate. Even if it is profitable, not everyone possesses those qualities which really make him or her good landlord. However, the one who possesses these qualities can earn a fortune due to the profits from renting the apartment or the villa. If you really decided to buy a property for its rental potential, your real work starts finding a good property for investment and this takes time, connections and good research in this field are vital.
As with any other investment property, you should know from the very beginning how long you intent to rent your property for. The longer you rent it out your property for the more rent you will receive freeing funds to further improve the property. You can also wait till you get at least a half of your invested money back, and after it to sell the property in its condition when market conditions are favorable for this. You can as well face more property investment risk with a shorter time renting. Even if, your rental will almost certainly appreciate over the next 15 years, it could as well diminish its value in the next 10 years, especially if you buy your property in an agitated market. That is why you will need a bigger potential annual return in order to cover the potential risk which might possibly occur. Nevertheless, in any case you should be careful from the very beginning.
Long-term ownership is more suitable for many small investors. You will have a lot of time to avoid any real estate market perturbations, and the investment property income can turn out to be a good supplement to your day job. With time, if you really get interested in this type of business, it can even become your day job. Although, the small landlords do not work in a professional capacity. The landlords who have some experience in this field find the necessary properties using different methods. Some analyze the market and the forecasts. Some buy real estate with foreclosures, but for this there are necessary certain connections with the city hall clerks or bank employees who know which properties are about to be sold. Newspaper ads can also serve a good help. Others sign contracts with real estate agencies which keep the landlords updated.
One thing you should look out for when deciding for a property investment is you can save enough for retirement and other goals before advancing in rental real estate investments. While rental income can represent a good supplement for your retirement money, most people should not rely on it to substitute other savings or make them entirely opened to the perturbations of the local real estate market. Those who are adequately adjusted to different investments in bonds, stocks and cash will be more ready to pass over the bad and good times. Because it is clear that, the rents and the value of the investment property can rise and fall as well, so it is important to be ready to count on other investments in order counter-act a bankrupting situation. You should calculate your expenses very carefully, from the very beginning in order for your expectations to be up to the level of the income you might receive.
January 20th, 2010
posted in Property Investment
Copyright (c) 2008 Parmdeep Vadesha
More and more people are putting UK and international property into their portfolio of savings and investments. With property investing comprising a big industry in the UK, it is natural that it is attracting a lot of investors who are on the lookout for great investment opportunities. If you are interested in property investing in the UK, you might want to take a peek at what’s going to be in store for you.
The United Kingdom holds a place as one of the world’s greatest trading powers and is home to the biggest financial center in the world. The country’s economy is the fourth largest in the world. Aside from these facts, here are a few more that make investing in the UK a practical alternative.
Rental Property Is Big Business in the UK
Purchasing a home today requires enormous financial commitment. With the prices of houses constantly increasing, a lot of young professionals perceive house-buying as next to impossible. They find it difficult to raise adequate capital for a deposit on a property. What becomes the next most viable alternative is renting. This then creates a big opportunity for property investors, who will find the established rental market in the UK an advantage.
Low-deposit structure. A lot of new-build properties belong to a low-deposit structure, making it possible for property investors to buy more than one apartment. This allows them to spread the risk factor between units.
Buy-to-let schemes are attractive alternatives. Property investors will find that buy-to-let financing is appealing since many schemes allow multiple purchases without the need for additional proof of financial standing. This is because the mortgage is obtained on the value of the property and the rental income rather than the individual making the purchase.
More investors are coming in. With high city bonuses house markets are being driven higher as a growing number of people are seeking to invest their money in property which is considered the most secure type of investment. Property investing in the UK is a lucrative endeavour, but if you don’t feel too confident about being able to do it, finding an experienced property investor to guide you would help you get the boost you need. You can find them in property investing web sites, or from friends or relatives who are also in the business.
As sometimes word-of-mouth is not enough, you may want to seek more information and advice from other property investors who have invested in the UK. You can do this by joining the tycoons-forum.com, where more experienced property investors are constantly meeting up to discuss all things related to property investing. This is one way of gathering information on the latest and most exclusive investment properties. You can also find resources on different issues related to property purchasing, such as land ownership, legal, infrastructure, rental and management, taxation, and more.
The steady and continuing growth of the property market in the UK poses a profitable opportunity for property investors. As long as you are equipped with all the information you need to have to endure in this industry and you keep yourself well-informed, there is no reason why you won’t make it big in this business.
January 18th, 2010
posted in Property Investment
In order to invest wisely, you need to have a suitable investment plan that will ensure the appropriate amount of growth for you. Your investments will also need to be safe and easy to manage.
Developing an Investment Plan:
The first step in developing an investment plan is to identify what type of an investor you are. Investor types are often determined by their stages in life. Here is a guide:
- Single person under 40 years old. Focus: Long-term investments, medium to high risk. Emphasis: capital gain, compound growth.
- Two-income married couple, no children, aged 20 to 40 years. Focus: Long-term investments, medium to high risk. Emphasis: capital gain, compound growth.
- One-income family, young children, aged 20 to 40 years. Focus: Long-term investments, low to medium risk. Emphasis: compound growth.
- Single person, aged 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- Married couple with adolescent or independent children, aged 40 to 60 years. Focus: Medium-term investments, medium risk. Emphasis: capital gain, compound growth.
- All investors, aged 60 and over. Focus: Short to medium-term investments, low risk. Emphasis: Income.
The following are examples of investment portfolio mixes for the various types of investors.
Low Risk Investments:
Low risk investments are predominately cash, fixed interest and superannuation. This has the lowest risk of all investments but has also the lowest return – in today’s market, approximately 3% to 6% per annum. Fixed interest includes cash, cash management trusts and bonds. They return approximately 5% to 10% per annum, sometimes as high as 15% if you invest in global bonds in good markets.
Superannuation returns and risk profiles vary from institution to institution, however the best and safest usually return on average 10% per annum.
Medium Risk Investments:
Medium risk investments include property and non-speculative shares. Diversified funds, which invest in a range of asset groups, are also considered to have medium risk profiles. Average returns from these types of investments will range from 8% to 15% per annum.
I also like to include the broad spectrum of mutual funds, to be discussed later, in the range of medium risk investments. Some can return up to 25% and more depending on the fund type and managers.
High Risk Investments:
High risk investments include all speculative shares, futures and any other type of investment that is purely speculative by nature. Because with these types of investments we are betting on whether the price will go up, or sometimes down, I often classify this as a form of gambling. Accordingly, the returns are unlimited but so is the ability to lose the total money invested.
The basic rule for investing in highly speculative stock is to build in ‘sell-out’ thresholds, three up and three down. For example, if you buy a stock at $20.00 per share, your sell-out thresholds might be:
Sell out threshold 3 $30.00
Sell out threshold 2 $25.00
Sell out threshold 1 $22.50
Buy $20.00
Sell out threshold 1 $17.50
Sell-out threshold 2 $15.00
Sell-out threshold 3 $10.00
Each time your stock reaches one of the threshold levels, you sell a third of your stock.
If the stock starts to rise, you sell a third at $22.50 and then another third at $25.00 and so forth. If the stock starts to fall, you also sell a third at $17.50, then another third at $15.00 and the final third at $10.00. In this way, you will never lose all your money, however you have also put a cap on the total profit you will make on the investment. This I have found to be the best and safest method for investing in speculative shares. In 1987, my husband and I were saved from the severe losses of the Wall Street crash because we were well and truly out of the market by taking our profits beforehand. Like all systems, this strategy will only work as long as you obey the rules and do not get too greedy.
Mutual Funds:
Mutual Funds are a selection of investments that are professionally managed by a financial institution or organization. These institutions have a wide range of specialists, researchers and advisor’s who devote their time to ensuring that the fund invests in the best companies and assets.
As well as the advantage of having experts manage your investments, managed funds also give you the ability to invest in a wide range of shares, property or fixed interest markets, either locally or internationally, for as small an outlay as $1,000. In the latter case, they also require a savings plan where you agree to deposit additional capital of a minimum $100.00 per month.
Because managed funds cover the whole spectrum of investment risk profiles, you can easily cover your preferred investment portfolio, as described above, by investing in several different funds.
Putting Together Your Investment Program:
After you have identified your investment type, you need to either seek a good financial advisor or devote your own time in researching investment options.
Shares have traditionally outperformed other asset groups over time. However, share markets can widely fluctuate in the short term, so any entry into the market should always be done with a long-term view of up to 10 years. Even the best managed share funds can fall if the stock market crashes or enters a severe downward cycle. As long as you ensure that you are with a reputable fund with good managers and are willing to ride the waves, your investment will do well in the long-term. If you are in the short-term, low risk category then your investments should be in the safer, more stable areas with lower returns.
Rules for Investing:
Investing may seem daunting for a lot of people. Maybe you have tried it once and failed, or maybe you are simply frightened of losing your money.
To avoid losing any capital, you simply need to be aware of the main pitfalls and always avoid them. The simple, reliable rules for investing are:
1. Have a plan. Always ensure that you or your financial advisor draws up an appropriate investment strategy for you that incorporates your risk profile, timeframes and financial goals. As foolish as it seems, many people plunge headfirst into investing without thoroughly working through these fundamental issues.
2. Don’t put all your eggs in one basket. Obvious advice, but many people fail to follow it. Many people think that they are on the right financial track by paying off the mortgage on their family home and then buying another property for investment purposes. Think about it! You have put all of your financial eggs in one asset basket – property. What happens if the property market collapses? Despite common thinking that this is a safe way to invest, the outcome is very risky. You have invested all of your well-earned money into only one area.
3. Build in appropriate timeframes. There is an old saying, “When the tea lady starts to invest in the stock market, it’s time to get out.” What this means is, when the share market is so high that everyone starts to clamber on board, it has probably reached its peak. There are two ways of successful investment timing. The first is to always pick the low-end of the market to buy and the high-end of the market to sell. This is extremely hard to do. Even the best-informed experts have trouble. The second way is to choose good investments and stay with them over the long-term (say 10 years or more) and ride the waves of the market. For safe, easy investing, choose the second method. Do not buy into the top-end of the market and sell once it starts to fall. You will definitely lose money this way.
4. Avoid high-risk investments. These include risky business ventures, highly speculative stock, tax avoidance schemes or too-good-to-be-true propositions that promise unusually high returns.
5. Avoid borrowing for your investments. Although some financial advisors advocate ‘gearing your investments’, this can be fraught with danger. Gearing means to borrow. If borrowing for investments takes you over your 40% fixed costs margin, you will be cutting it too fine, particularly if you lose your current income level.
6. Stay with the traditional and known. The best and surest investments are fixed interest, property and shares. Although all asset classes will fluctuate over time.
Work out the optimum mix for your investment profile, have a safe plan to work with and you can’t go wrong.
January 18th, 2010
posted in Investment News
Gold dealers saw their clients enjoy some of the best investment returns of the past decade, notes a recent report. According to Bloomberg News, the last 10 years saw investors more than triple their returns, significantly outperforming those who chose to stay in the stock market. Specifically, a $100 gold investment at the start of the decade would have reportedly been worth $380 as it came to a close, while the same investment in the stock market would have lost $10. “The fear of inflation is in the gold price. Commodities and oil show emerging markets emerging, and the rest is the developed markets submerging,” the report quoted Toby Nangle of Baring Investment Services as saying. Stocks were especially hard hit over the past couple of years by a worldwide recession that claimed a number of corporate casualties while undermining overall confidence in the financial system and wiping out billions of dollars in investments. With the economy recovering, gold remains a strong investment option because instead of just seeing it as a safe alternative to the stock market, it is also now in growing demand for industrial use and other applications in developing nations.
One reason that investors will pay attention to commodities in the coming months is concern about whether stock markets have risen too quickly in recent months and whether the economy is finally poised for a significant and brisk recovery.
With that in mind, a report on the India Times’ Economic Times website gives silver and gold dealers, as well as commodity traders in general, a reason for optimism about the coming year.
January 17th, 2010
posted in Gold Investment
As an investor, you should always know what your objectives are. One of the biggest traps investors fall into is buying a gold position that has little or no relationship to his or her objectives. Gold is not for everyone. Buying gold is usually used as an insurance policy in case other investments such as stocks go down.
Gold is in a bull market right now because its core fundamentals are so outstanding. It is also doing well because the stock market is tanking. You see, that is the “insurance” part of gold. When stocks go down, gold often goes up. A position in gold will often offset your losses in the stock market in troubled times.
The price of gold may jump up to thousands of dollars per ounce in the current rally or it may struggle and fall lower. No one knows for sure even if they pretend to. One thing is for sure: if the stock market continues to fall, things will look good for the gold investor. Gold is the ultimate alternative investment because it is tangible.
Many people, including the die hard stock investors, often still see gold as the most undervalued asset group in a standard portfolio mix. In general, gold becomes more desirable in times of banking failures and tough economic times. Also, like all investments, gold becomes more attractive to more people the higher it goes. People don’t seem to want to miss out and that is why both gold and stocks tend to go up too high before they fall back.
Before you invest in gold, you should carefully consider what percentage of your overall portfolio you wish to risk in gold-related investments. If you are thinking about investing in gold, it is worth giving the same consideration to your purchase as you would to any other investment. When you buy gold investments, you lower risk in your investment portfolio.
As more investors realize that gold is a great way to profit in today’s uncertain climate, more fund-makers have been happy to supply the means with which to buy gold. There is a whole world of excellent alternatives out there for investors who wish to invest in gold. Just be sure you understand what your gold objectives are before you allocate too much of your portfolio towards it. Gold can be a great addition to any portfolio but only in the right amounts. Putting too much of your net worth into gold would be the same as gambling.
January 16th, 2010
posted in Gold Investment
A lot of people are making real money with their residential property investment portfolios. While the concept can be daunting to new investors, the key to making money is simple. And who doesn’t want to make money?! You may already know just how simple it is, but if you haven’t, here is a quick guide along with some helpful tips. A lot more than luck is required to make good investments of any kind. Really, with any investment the more you know the better you’ll do. With that in mind, you can study up on the basics of residential property investment. Nothing is more valuable than money, and the best way to protect and increase yours is with a solid strategy. If you’ve done your homework and are ready to take the next step, then that means you’re going to be viewing a lot of residential investment properties. The number one mistake first-time investors make is buying into the hype of so-called hot properties, and overseas properties are all the hype right now. Sure, having the ocean in your backyard sounds nice, but that’s for tourists not for property investors. For some new investors, the prospect of making their first residential property investment is overwhelmingly exciting while others feel only anxiety or fear. Both feelings are normal but letting your excitement override your good sense can prevent you from making the best investments, and letting fear hold you back can keep you from ever getting started. Begin by considering the following questions: · What are you really looking to accomplish? · What type of long-term goals have you set? · What are your expectations? · What type of finance options do you have available? Is Income or Capital growth, more important to you? Or perhaps both? When buying and selling investment property, each investor will have their own goals and strategies. Regardless, many still fall for typical sales lines and enticing new deal offers over and over again. The best advice for new investors would be to start by determining and focussing on their investment property strategy goals. The following four basic options to property investments are: 1. Flipping Property – In order to profit from the sale. 2. Buying Development Land. 3. Invest in “Income Generating Property” in the “Buy-to-Let” and “Commercial Property” markets. 4. Invest in Property Development Companies. Once you have decided which investment property strategy is best for your specific situation and goals keep the following business factors in mind: Consulting with most Professionals may seem like a good idea. Just remember that you should see your solicitor for legal advice, your bank manager for financial advice, your accountant for tax advice and your local real estate agent for actual property investment advice and also for any tips on where to find some of the better investments. Use professionals specifically in their areas of expertise only. Lastly, beware of the media and incorrect and often misleading information. Stay on top of the property market by following top sources only.
January 14th, 2010
posted in Property Investment
A lot of people get into property investing thinking that its just about buying houses; you buy a house, develop it and then sell it on. Or you buy a property and then rent it out. And, in return for your efforts, youll make a load of cash!
Surely, if life was this simple, everyone would be investing in property. Right?
Before you throw in your job and embark on a lucrative career in property investing, you really need to sit down and try to understand what property investing is really all about. Property investing is a serious business. Treat it as a hobby and you will only ever achieve hobby profits. However, treat it as a business and youll get great results.
A successful property investor who buys and deals in property every day will:
-Understand what vital research is required before he offers on any property. This will include a lot of desk research including but not limited to ringing estate agents and letting agents to get the feel of any one street in any one area.
-Perform essential calculations to assess the viability of the purchase before even stepping out of the front door to view the property.
-Know exactly which locations to invest in, and which to avoid like the plague.
-Have a system in place to enable him to source and buy property below market value time and time again.
-Know all about clever negotiation strategies that will help him to save literally thousands off any property purchase.
-Understand creative strategies such as options, no money down and cash back deals.
-Know how to invest not just for asset building, but also for cash flow.
-Be able to structure each deal to suit the property sellers situation.
-Understand both buy-to-sell and buy-to-let strategies.
-Know what to do with the property once he has bought it.
-Have mastered the basics of property ownership and how to be a good landlord so that tenants never leave.
-Will know about property development and how to ensure that jobs get done on time and within budget.
-Know how to create a win-win situation every time.
So next time you think about investing in property, consider the above and start knowing exactly what will be expected of you to succeed. Dont start investing in property thinking it will be easy money with very little effort.
Property investing will require a lot of hard work and dedication especially from the outset. Educate yourself on the subject and develop a list of like minded friends and mentors whom you can consult when you get stuck.
If you go into property investing knowing the above, theres a good chance you will succeed. However, if you maintain a casual ‘lets see what happens’ approach you will throw in the towel much sooner than you initially expected, labelling property investing as a waste of time!
January 14th, 2010
posted in Property Investment
By understanding the performance of socially responsible stocks, individual socially responsible stock, the socially responsible investor can gain the profits of socially mindful investing, either through individually socially responsible investments, or by engaging with socially responsible investment funds and socially responsible funds. In addition, the article also confers the sustainable investing approach in investing with ethics, green investing, values investing, and socially responsible investments.
Although socially responsible investing has expanded dominance in the last numerous decades, countless socially responsible investors are still under the feeling that to invest in social good, they must decline certain levels of portfolio performance. However, with the confirmation escalating that socially responsible investment funds strictly match, if not surpass, their market counterparts, many socially responsible investors are capitalizing their earnings – and their involvement to social good.
Long-term vs. short-term corporate focus
Socially responsible investing (SRI) takes the long term vs. short term investment discussion to a socially alert investing level. In comparison to countless corporations who take advantage of natural assets and human labor for short-term profits, a socially responsible stock drives under long-term natural sustainability, lending itself well to green investing. For example, the oil magnates such as Exxon-Mobile and Chevron have experienced exponential expansion in the last numerous years. However, where will these corporations be in 10 or 20 years – when the oil rigs are pumped dry and clients have switched over to hydrogen-fuel cars? In stark contrast, green investing stress the long-term sustainability of corporate social responsibility on the environment, society, and monetary well-being.
Overarching SRI principles
The extensive investment ideology of socially responsible investing are conceptualized based upon unstable techniques of social investing analysis. The execution of social investing in Europe is usually diverse than in the United States, but the underlying essentials are based upon using a set of foundation values. Depending upon the socially responsible investments portfolio or socially responsible funds, the SRI analysis may be based on one or several of the following criteria:
1. Sustainability Practices : This socially conscious investing perspective analyzes whether a company’s business practices are sustainable in the long term. If the business operations negatively impact the environment, economy, communities, or human welfare, then it is not considered sustainable investing for long term profitability.
2. Corporate Governance : This socially responsible investing component analyzes the company’s policies on employee, community, investors, stakeholder, and environment relations. Social investment’s mutual authority analysis is a separate process from the company’s financial outlook.
3. Religious Beliefs : Considered the original father of socially conscious investing, religious beliefs have screened many portfolios. For example, a Catholic screened socially responsible investing portfolio may divest companies that produce contraceptives. Both Christian and Muslim screened socially liable funds are prevalent, imparting strong religious beliefs onto the social investing analysis of opportunities.
4. Public Policy : Geared for socially responsible stock portfolios that include international holdings, the public policy filter analyzes foreign governments’ actions, either on an individual country case-by-case basis, or based upon an international mandate, such as a ban by the UN or NATO.
Socially responsible investment funds’ performance
Beyond the desire to contribute to social good, socially responsible investors are seeking SRI investment performance. Values investing demonstrate that socially conscious investing can be done quite profitably. In fact, in some market conditions, socially responsible funds outperform their market counterparts.
The Domini 400 Social Index (DS 400), the socially responsible investing industry benchmark, has outperformed the S&P 500 since its inception in 1990. According to KLD Indexes, as of November 30, 2007, the DS 400 has enjoyed 11.75% annualized returns, leading ahead of the S&P 500’s 11.21%. The DS 400 screens its index for socially responsible stocks based upon environmental, governance, and social filters, and within its index, there are 250 S&P 500 represented companies, 100 companies not on the S&P 500, and another 50 socially responsible stocks that have demonstrated significant strength in social investing filters.
With the sustained long-term SRI investment returns in the socially responsible investment funds, such as the DS 400, socially conscious investing can match or outperform its market counterparts – dispelling the myth that a socially responsible investor must sacrifice performance for social consciousness.
The risk exposure of socially responsible stocks
However, when comparing SRI indexes against market benchmarks, the question begets: does the performance of socially responsible investment funds come at a higher portfolio risk than its market counterparts?
Considering the rigorous screens of socially responsible investing portfolios, the socially responsible stocks are naturally geared towards companies with smaller market caps. Theoretically, the lower market caps contribute to a higher volatility and beta for the overall socially conscious investing portfolio. For example, the Domini 400 has a weighted average market cap of 83% of the S&P 500.
Beta Coefficient: measurement of an investment’s volatility against the market
However, instead of reducing the overall beta, the socially responsible investments screens minimize the individualized corporate risk. By evaluating a socially responsible stock based upon its governance, sustainability and relationship with stakeholders, social screens reduce the economic risk of the individual corporate holding. For example, by not choosing to invest in tobacco, socially responsible investors shield their portfolios from the negative performance factors of lawsuits. Or, by selecting companies that have good relations with their employees, the negative financial reprimands of strikes are curtailed from the socially responsible investment portfolio.
Risk and volatility are not necessarily synonymous in the world of financial portfolios. Whereas beta may be a good indicator to evaluate the short-term probability that a negative event may occur, this does not specifically analyze the individualized corporate risks. Though socially conscious investing portfolios may have higher betas, the risk of the socially responsible stocks in the portfolios experiencing financial degradation is more limited than the market benchmarks.
Alpha: risk-adjusted measurement of an investment’s excess return over “risk-free” instruments
One of the most compelling factors of socially conscious investing is that despite its demonstrated increased returns, the risk does not necessarily increase. Social investing may be one of the few exceptions to the risk-to-reward ratio. In fact, the performance of the socially responsible funds may not be fully indicative of its true earnings, once the lowered individualized corporate risk is weighted. After adjusting for both short-term and long-term risk, social investing’s alpha may be stronger than the numbers indicate. For more information visit our website http://www.sristocks.com
January 14th, 2010
posted in Investment News
I’m often asked if Gold is a good investment and I invariably answer that gold may well be a good long term investment for an investor but I am a wealth creator and the very word “investment” is simply not part of my wealth creation vocabulary.
This statement usually results in a very perplexed look on my questioner’s face.
And so it was with Walter. Walter is a financially struggling bank employee and came to me to learn about wealth creation. (Yes I assure you, there are tens of thousands of financially struggling bank employees out there.)
‘Charles, so you are saying that if you had a spare $25,000.00 you would not even consider exchanging it for gold bullion?’
‘My dear chap, why would a wealth creator swap one asset (money) valued at $25,000.00 for another asset (gold) also valued at $25,000.00? Rather pointless exercise don’t you think?’
‘But gold may rise in value and your money might devalue – isn’t gold a hedge against such occurrences?’
‘Yet equally, gold could go down in price and the currency strengthen – surely what you are contemplating is just a form of gambling, is it not?’
‘On that logic all investment is a form of gambling, as prices of any share or commodity can go down as well as up. That is why one needs to weigh the risks.’
‘Exactly so – and that is why I am a wealth creator and not an investor or speculator. Investors and speculators hope and pray for some future event to occur, whereas a wealth creator insists on increasing one’s wealth at the point of purchase.’
‘But Charles you can’t buy gold bullion at wholesale rates – as you well know the spot price is fixed daily.’
‘Who said anything about paying wholesale price for it – I would prefer to be an alchemist and turn dross into gold.’
Walter’s young moon face went red with frustration. ‘Oh come Charles, please be serious with me and stop toying. I truly want to be wealthy one day and on a bank teller’s salary alone, I can’t see that happening.’
‘Oh but I am being serious. Turning dross into gold is a very enjoyable hobby – the challenge is not whether one can accomplish the task – merely how quickly one can accomplish each stage of the goal one sets for one’s self.’
‘An enjoyable hobby! … But how on earth do you do that?’
‘Simply by making the conscious decision to become a wealth creator – develop your own part time wealth program and stick to it. Besides my book The Secrets Of Wealth Creation Revealed, I’ve written many free articles that are now all over the web. Study them and then begin your wealth program ASAP! There are a thousand and one ways to accomplish the task of turning dross into gold. It’s a matter of first knowing the principles, secondly establishing an easily managed workable plan – then thirdly, having the fortitude to stick at it.’
‘You mentioned setting “goal stages” could you give me an abbreviated example of how one goes about the process?’
‘Well if your desire is to amass gold then if I were you, I would have a clean out boot or yard sale of all superfluous items in my possession (dross) to raise some initial capital. I would take that small amount of money and taking my time (because time is virtually immaterial to the success of this endeavor) haunt charity shops, other peoples yard and boot sales, auctions etc and buy items that I know I can resell at several times the price I paid.
I would keep a list of the expected realizable value of such items (wealth total) and keep buying and selling till that list total becomes about $9,000.00 in value. Now I know to you that may sound difficult to achieve right now but please understand, if you are working on 200% minimum mark up, this can be accomplished so quickly. That is $150.00 in sales becomes $450.00 which becomes $1,350.00 which becomes $4,050.00 which becomes over $12,140.00 and so on.
Now as I said, once that total of goods on hand passes $9,000.00, stage 2 of my wealth plan would come into effect. That is, I would then save the proceeds of the next approx $3,000.00 of sales (depending on current spot price) and purchase a 5 ounce gold bar.
The realizable value of the remainder of stock would still be a minimum of $6,000.00. My next task would be to quickly increase this total back up to $9,000.00 and then repeat the gold purchase. You can continue this process until you feel you have amassed enough gold.
You will find as you learn and gain experience, wealth creating will become your second nature. Opportunities will materialize all around you. Soon you will be running in and buying gold bars at least twice a month. People will think you have the Midas touch and you will be able to say ‘No it isn’t that at all – It is all the result of Alchemy and my dear old friend Charles Goodwin!’
Do not worry about the spot price fluctuating. Merely stay detached and consider that you are simply turning dross into gold and of course that is exactly what you are doing. If you have any doubts in your own abilities divide all the figures by 5 and initially buy an ounce of gold at a time. I can assure you the journey is both exciting and interesting. You will learn so much upon this journey and then one day the penny will drop and you will suddenly realize that the world is now your oyster. You can create as much wealth as you desire.’
‘Charles, forgive me – but may I ask the obvious question. You have shown me a fool proof way to amass great wealth, what do I do about taxation?’
‘I am a wealth guru as well as a mystic! Would I leave you floundering without a tax plan equally as simple and equally as effective? No of course I wouldn’t. But at some stage you will simply have to beg, borrow or steal a copy of (or dare I say it – even buy a copy!) The Secret Of Wealth Creation Revealed and truly – all will be revealed!’
January 14th, 2010
posted in Gold Investment
Why invest and why take out an investment loan? People’s needs for investment are as varied as the investment vehicles themselves. Some want to own their home outright, pay the kids’ university fees, or take world trips; while others want to start their own business or retire on a comfortable income. The reality for most of us is that we won’t be able to afford these things on our salary alone (unless you’re fortunate enough to be the CEO of a major corporation). The key to successful investment is to leverage, that is, to use an investment loan to improve your capacity and increase your return. Why invest in property? Investing in property is the safest way to invest, but we also believe in a diversified portfolio to minimise risk. Similarly, Australians have trusted investment property as their favoured investment vehicle for generations – and with good reason. We recognise the cycles, the incredible advantage that appropriate leverage (making capital gains from borrowed funds) offers, the benefits of rent return and taxation relief in servicing those borrowings, and the significant growth achievable over time. It is not unusual for ordinary investors to accumulate four or more properties over 10 years – and the financial flexibility and cash flow outcomes can be exceptional, giving you piece of mind. Property allows you to leverage. With only $20 000 cash invested (plus around $10 000 upfront costs) it is possible to invest in a $200,000 property, making your earning potential greater. Can you afford to invest in property? The question should really be, “can you afford NOT to invest”, whether it be in investment property or some other form of investment? While everyone should be investing to give them more options in life, property investment may not be suited to everyone. Most people on a standard wage can service an investment loan. After all, the investment loan interest is first met by any rental income you generate. As a general rule there will only be a small shortfall on the interest on your investment loan. Traditionally the investment loan shortfall, as well as other costs relating to your investment property would be met by your personal income. Many investors however include a capitalising line of credit in their investment loan package so that they can draw on this to meet any shortfall costs as opposed to paying same from their personal income. Instead, they use as much of their personal income as possible, not to pay any shortfall interest on the investment loan but to make additional repayments to their home loan. This way their home loan is paid off much more quickly. With your investment loan you should also remember that negative gearing does deliver some relief to servicing your investment loan on the way through. While most investors will wait until the end of the financial year to claim their tax deductible shortfall you can in effect claim the investment loan shortfall on a monthly basis. Check out the ATO website on deductibility of interest on investment loans. What history can tell you about property History shows us that all property whether it be investment or owner occupied doubles in value every 7 to 12 years. Each property market is cyclic, that is, it goes through times of fast growth followed by little or no growth. When one market eg Sydney is in strong growth, other markets eg Brisbane will be in a little or no growth phase. The markets are referred to as being counter cyclic – when one is doing well, another is doing not so well. This means for example that when the Sydney’s growth slows, Melbourne’s picks up followed by Brisbane. This is the reason we emphasise the importance of investment property as a mid to long term investment. The key however is to identify the markets with the highest probability of short to medium growth and lowest probability of downside risk. This enables you to build equity faster and therefore add to your investment property portfolio. It also means that there are always new opportunities for investment property as there are always markets somewhere which are experiencing their growth phase. Choosing investment properties in growth markets assists in developing well-balanced, diversified portfolios. Property in the futureIn the past all property was good investment property, and a lot of people did very well out of it. While those days are gone, there are still exceptional opportunities for investors who understand the current market influences such how our population is changing, how family size is changing, how types of employment are changing, and how the economy is changing and what influences it. So why wait? Research property – buy with your head not your heart – be an informed purchaser and most importantly make sure your investment loan is also working for you.
January 12th, 2010
posted in Investment News
Property investment is a wise concept to consider, especially in the USA. Some individuals may be hesitant to invest their money in real estate due to the latest news headlines concerning the slow real estate market. However, such an issue can in fact act in your favor in a few different ways. There are a few different reasons why engaging in an investment in real estate now is a great thing to do.
One reason to consider purchasing real estate as an investment is that although the market is slow at this time, everyone needs a place to live. The sale of property may be slow right now but this does not affect the purchaser of the investment property. This in fact will help to benefit the purchaser of the investment property, especially if he/she plans to rent it out for investment purposes. Many individuals may not be able to afford to buy property and therefore will be willing to rent the property from you. This is an advantageous factor for the buyer of the investment property and one very good reason to consider buying some property to hold as an investment.
Another benefit to engaging in the investment of real estate is that equity on the property will accrue throughout the years. Although the market is seeing some trouble in various areas of the United States, it is still possible for a good amount of equity to be built in the property. In other words, the real estate slump is not expected to last forever. Therefore, those who invest in property may find that they receive a nice return on such an investment property in the future.
An investment of this type is also beneficial in that it provides a safeguard for the property owner to have in their back pocket. With the ups and downs of the real estate market it is nice to know that one has a roof over their heads even if it is currently being treated as a property investment. Should an event occur where your primary residence is not livable or you wish to move, it provides peace of mind for you in knowing that you do have a property in reserve just in case you may need it.
Lastly, by choosing to invest in property in the United States you may be able to lay claim to something which is up and coming. Certain areas throughout the United States are experiencing revitalization and one area which was once a less desirable place to live may just be the new hotspot. By selecting a property investment of this type you are becoming part of a new era and investing in a piece of real estate which will pay you back quickly and efficiently in the future.
January 11th, 2010
posted in Property Investment
An investment property is becoming a more popular choice for those seeking to create a revenue stream and also achieve capital growth through the investment property value increasing over time. This can also be part of a strategic financial plan and should be considered by investors as part of a diversified portfolio. When considering an investment purchase you should also source the best investment loan structure for you. With any investment your investment loan can make a difference to your return. If you are negatively geared through an investment loan the cost to you of that investment loan can effectively be reduced. If you purchase wisely, once there has been capital growth in the investment property over time there is the option of using this built up equity to move into another investment property, take out another investment loan and thereby continue to further increase your investment portfolio. Aside from the traditional belief that tax advantages are the key driver for taking out an investment home loan there are many other factors to consider when purchasing an investment property. Below are some key points for your reference, by using these points as a guide in conjunction with a detailed discussion with your accountant or financial planner you will be in a better position to ensure your investment purchase and investment loan is a financially sound decision for the long term. In relation to property enquiry therefore, you should consider: * What is the infrastructure like in the area? Are there enough schools, hospitals, shopping centres, doctors and dentists, freeways or main roads? * What has the historical capital growth been in the area over the last two decades? * Is the local council planning to increase housing density or add a new road to increase traffic flow? * If you are purchasing in a new subdivision, are there more new land blocks and house and land packages planned nearby. New developments can impact on the value of your home as purchasers often prefer a new home to one that might be 2 or 3 years old in the same area. * What length of time will the investment be held? And will this tie in with planned infrastructure development which will in turn accelerate capital growth? There has been recent press to suggest that investment and home property values in Sydney have a potential capital growth of 18% over the next 3 years so buying off the plan as an investor may be an attractive option in the current market. If you find a good property development, suitable for investment, which has a completion date in say 2010 – 2011 then you can exchange contracts with either a 10% cash deposit or a deposit bond (as a guide the cost of a deposit bond of around $86500 for say settlement September 2011 will cost you approximately $9000- $9500 (significantly less than the interest you would pay over the period if you borrow $86,500 at current interest rates of 9% p.a). The general feeling is that direct investment into property as opposed to into managed property funds is a better way to go – you are in control of your investment and avoid the high management fees so often charged by share and property investment funds. Do some research on the internet to see which areas have the greatest potential for capital gains – remember if you are looking for an investment property you should invest with your head not your heart. An investment property needs to be well located to transport and other facilities so that those renting can easily access these services. When considering which investment loan would suit you best take the following into account: 1. Does the investment loan allow you to split it into a number of investment loan accounts. This is a good feature to have in an investment loan because you are positioning yourself for the future – if you use the investment property at a later date to gear into another investment purchase then you can split the account so that the investment loan portion relating to the new purchase is clearly identified. This allows you, and your accountant, to easily track the costs associated with the new purchase. 2. If you use your home property (with an existing home loan) as security for the investment loan then it is imperative that you do not mix any home loan debt with your investment loan borrowings. The ATO in Australia requires you to apportion any additional repayments to a loan where the borrowings are “mixed”. You want to apply any additional repayments to your home loan before your investment loan. You are paying your home loan off in after tax dollars – whereas you can deduct the interest you are paying on your investment loan against the income form the investment property. 3. Does the investment loan allow you to capitalise interest? It is always a good idea to include a capitalising feature as a part of your investment loan to protect you against any unexpected costs in relation to the property. It also means that instead of subsidising the investment costs and interest shortfall on your investment loan you can capitalise these and make additional repayments to your non-deductible home loan debt. 4. If you have sufficient equity in your home then you may be better to consider a 100% + costs investment loan for the investment acquisition and use any savings you intended for the investment purchase to pay down your home loan debt. If you consider all these points your investment loan will be working in your favour at all times.
January 11th, 2010
posted in Investment News
Gold, as everyone knows, is a beautiful metal. Coming down through the ages, gold has adorned the rich, the famous and the royal. These days, it is at such a reasonable price that most people will have at least one piece of gold jewelry that they just love to wear.
Some people love gold so much that they will even put all their savings into gold bullion or gold shares. Of course, the reason that they do this is because it tends to increase in value over time. Gold, although it may seem that it is available in abundance, is actually not as common as people would imagine. This is why the price tends to stay steady or go up.
When deciding on what to give as a gift, a lot of people will be stuck for the perfect idea. Should they give something that will be useful in the kitchen, in the car or at work? What will the gift say about the giver? Will it impart a good emotion or will it portray a stronger message than it is supposed to convey? No wonder then that people seem to obsess so much about this seemingly simple task that rolls around several times per year.
Perhaps the perfect gift is the gift of jewelry. Although some may see this as a somewhat personal item which may not be what is required. However, many people will see it as a thoughtful and beautiful gift which is valued and respected for exactly what it is. That is, something that the recipient will be able to cherish for life.
Of course, if it is a ring, it does have other more emotional connotations and should be given with care so as not to embarrass the recipient. They may think that the ring, the symbol of the circle of life, is asking for a long term relationship. If it is not, then the ring should be something other than one that looks like an engagement ring or wedding ring. Dolphins, swimming in a circle, are one of the prettiest designs for a ‘new age’ style ring that can denote a deep friendship rather than anything more romantic.
For the young, or young at heart, new styles of jewelry are on the market. Belly rings have made a huge impact on the world’s population and there are many different designs to choose from. Beautiful crystals hanging from the ring itself, adds a lovely sparkle to the piece. Semi precious stones are also included for those who want a touch of color for that region of the body. Whoever would have thought some years ago that even ladies ‘in a certain condition’ would also take to wearing these small pieces of jewelry, and showing that part of the anatomy, even when heavily pregnant?
Nose studs are also a trend that has taken the world by storm. Pierced noses used to be confined to the Asian culture, but as fashion tends to spread, it is now a popular piece of jewelry even for some older ladies. This is also similar to the trend for men to wear one earring in gold or in a semi or precious stone. That fashion has gone one step further to include pairs of studs for men. A fashion that would have been frowned upon not so long ago! Indeed, the fashion has gone even further and multiple piercings are the growing trend for a lot of people, men and women both!
Ankle chains mad a mark on most populations in recent years. Although this trend was reserved for ladies of dubious nature some fifty years ago, the fashion has now been taken on by the ‘bling’ set of today. These chains show off a well turned ankle perfectly, particularly the ones that have a subtle charm hanging from it. Diamond cut chains, those that reflect all ambient light, are a firm favorite for this style of jewelry since it flashes and flares each time the leg moves.
Charms are great for the more usual bracelets too. Most people will start off a collection with a plain, but strong, wrist chain. Each year on birthdays and holidays, people will tend to give a charm for the bracelet so that it builds up over time. These may not be so popular amongst the younger set, but they do have a wonderful chinking sound when worn by someone who loves them. These styles of bracelets normally attract a lot of attention and each charm will have its own story and a memory of the person who gave it. Some relatives will pass this style of jewelry down through the family, along with all the stories, which makes it a kind of ‘living family history’.
Of course, neck chains are always in fashion. Style depends on the person who will wear it. Some people like tight choker style chains, while others will prefer long chains that they can wear a pendant or locket on. It really depends on what the recipient likes but a little research will normally reveal the taste of the intended recipient.
Jewelry does not necessarily have to be in the yellow gold that we have all become accustomed to. These days, rose or red gold, and even white gold, has become very popular. The combination of all three colors in a piece of jewelry makes for some stunning creations and most people like this kind of gift. Match up a love neck chain with earrings in the same combination to give a wonderfully coordinated look to any outfit.
Some people don’t like gold at all. They may have a different skin tone that doesn’t suit the color of gold, no matter what color is chosen, so for these people, silver is a great compromise. Silver is more economical than gold but it usually comes in similar styles with or without semi and precious stones. Whatever metal is chosen, the gift of jewelry is a very welcome and acceptable gift, no matter what message it conveys.
January 10th, 2010
posted in Gold Investment
INTRODUCTION
Addressing to the Indian Economic Summit’s session, on Tuesday, the 18th of Nov. 2008, the State Minister of Industry, Mr. Ashwini Kumar declared that Rs 500 billion would be invested by the Central Government with public-private partnership in infrastructure pertaining projects. According to him this investment would lure demand to boost economic growth. In the prevailing time when Indian economy is under threat of the entrance of world depression 2008, such type of a big dose of investment in infrastructure is desirable to barricade against the entering depression. But, the private partnership may hamper the way of receiving the desired results.
INDUCED INVESTMENT
When talking about investment, it is categorized as the induced investment and the autonomous investment. Induced investment is that investment which is induced by profit motive in a free enterprise capitalist economy. It produces commodities and thereby it can be termed as ‘directly productive investment’. Establishment of a productive unit which produces consumption or capital goods comes under the category of the directly productive investment. It changes with a change in (national) income that is why it is also called income elastic investment. Induced investment is incurred especially to produce larger output.
AUTONOMOUS INVESTMENT
On the other hand, the autonomous investment is the investment which is not induced by profit motive. It is not sensitive to changes in income. It is also known as public investment and is incurred in direct response to inventions and much of the long range investment which is only expected to pay for itself over a long period. Autonomous investment is generally associated with such factors as introduction of new production techniques, new products, development of new resources or growth of population. Autonomous investment generates favorable environment for production. An autonomous investment is never profit motivated and that is why it is always suggested to be undertaken by government instead of private investors. Autonomous investment does not directly produce goods. It creates external economies whereby the cost of production sustained by the producing firms is lowered. Thus, their profit is increased whereby the firms are induced to produce more. In this way the autonomous investment indirectly helps to increase production. Moreover, autonomous investment generates general utility services to the general public which they can’t afford to purchase.
DUAL INVESTMENT
Autonomous investment is autonomous only to the extent it is free of profit. If this investment is made by private investors they can’t help earning profit. Therefore, the producers will have to pay for the external economies and the general public will have either to go without the generated general utility services or will be exploited for they will have to pay high to avail the services. Thus, in a developing economy where cost of production is high, general mass is poor and markets are undeveloped the autonomous investment will lose its importance if given in private hands. In this way, autonomous investment is made of two different portions. One is that which can never be given in private hands irrespective of the fact whether the economy is developed or developing. Therefore, this portion of autonomous investment is a true autonomous investment. The investment incurred in the projects pertaining to national security, law and order maintenance, international relations, world peace, general governance, epidemics eradication, general health, poverty alleviation, public welfare etc. comes under this type of autonomous investment. The remaining portion of autonomous investment is that which can be (and is generally) given in private hands in a developed economy. In a developed economy sufficiently a high level of income is achieved, the distribution of income is almost equal, market is extended and developed, general poverty stands alleviated and cost of production is quite low on account of capital based modern technology. Hence, the producers can easily pay for external economies and people can pay for many of the general utility services. Therefore, in a developed economy, the portion of autonomous investment to be incurred in the projects like road transport, construction of highways, construction of bridges, power and electricity, civil aviation, sea transport, education etc. can be (and generally is) given in private hands. This portion of autonomous investment, being however similar to the previous one (above said true autonomous investment) in a developing economy, but thus becomes profit motivated and is converted into induced investment in a developed economy. In other words, this portion behaves as autonomous investment in a developing economy but is converted to and starts behaving as induced investment in a developed economy. Therefore, this portion of autonomous investment can be regarded as the convertible investment or the dual investment.
CONCLUSI ON
The above concludes that investment can be categorized as the autonomous investment, the dual investment and the induced investment. The autonomous investment should be exclusively incurred by the government in both the developed and the developing economies and, similarly, the induced investment should be incurred by private investors in both the economies. As regards to the dual investment, it should be incurred by government in a developing economy and by private investors in a developed economy. However, a partnership of government and private investors may be desirable in case of the dual investment if the economy has entered into the stage nearest to the full development. It is similar to the case of the partnership of government and private investors in induced investment in early stages of development in a developing economy. The Indian economy seems to have travelled though a long on the development path but it has not so far achieved such a high stage of development which may allow private hands to participate in the dual investment. General poverty still persists there, income distribution is highly unequal, technology is not fully capital based, cost of production is high, and much more. Therefore, the dual investment in Indian economy still needs to be incurred exclusively by the government. Therefore, the partnership of government and private investors in case of the declared investment worth Rs 500 billion, referred to in the beginning hereof, is not desirable. The loss to the producers and the poor general mass on account of so far brought about privatization of the past is not a latent fact. All the same, if the government somehow feels itself helpless to desist from accepting the partnership, it must not at all allow it beyond the dual investment. In more clear words, the Government of India must keep the (true) autonomous investment fully intact from the private partnership and may allow the partnership in the dual investment but only to a limited extent if the partnership can not be fully abandoned.
_________________________________________________
January 8th, 2010
posted in Investment News
« Older Entries
