When the stock market crisis began in 2008, one of the reasons operators sited then was investors shift of focus to the real estate sector. The explanation then was that many investors who made money during the stock market boom divested from the stock market and were investing in real estate.
Apart from individuals, most corporate organizations joined the race to invest in properties and sell later. However, the property sector suffered weak demands too as the global economic crises worsened.
Like the stock market, many investors both corporate and individuals had their fingers burnt and suffered huge losses. But the negative experiences in both markets – stock and real estate- will not stop people from investing. Already the stock market is showing signs of recovery due to increased investor confidence. Despite this, many investors who are liquid are still contemplating on where to invest – stock or properties.
In the opinion of leading investment experts, both markets are good but the investment objectives and ones sources of income will determine ones choice. Another investment consultant concurred, saying that the choice of any form of investment will depend on many factors.
Real Estate Versus Investment, Which Way To Go? has been a raging question for long. First will be the motive or intention of the investor. Is it for a short term or long term> Is the investor interested in capital returns or in streaks of returns in form of regular income? Is it an investment to be left for ones children in death? The answers to these questions among many others will set the tone for the rest of the investment decisions that will follow.
If one is only interested in short term investment of funds that are not needed immediately but may be required in a short while – say in two to five years, buying stock may be more preferable than real estate. This is because it is easier to convert stocks to cash than buildings. However, beyond this simple reason, is necessary to examine the principles of investment and apply the different tests to both stocks and land properties before concluding on which one is more suitable in any particular case.
SECURITY OF CAPITAL
Whatever your intention, the first thing to consider is the safety of the capital to be invested. Any investment that does not guarantee the recovery of the capital invested is not worth considering at all. When you relate this to stocks and investing in buying buildings, to a large extent capital investment in land and buildings are more secured than stocks. Except in the case of war or natural disasters, an investor can guarantee the safety of his or her investment in properties by taking out an insurance policy. Hence in the invent of fire or other agents of destruction, you can always recoup your loses from the insurer. But investments in stocks can vanish in one day if for instance the stock market crashes or the company fails.
CAPITAL APPRECIATION
The second point to consider is the issue of capital appreciation. It is known that except in rare cases of war or natural disasters, land and building values are always on the increase, even if marginal.
SECURITY AND REGULARITY OF INCOME
In most cases, the major reason for investment is the expectation of income from the investment. In this regard, dividends are expected from investments in stocks and rents from investments in land and buildings. However, while it is certain that rent will be paid on your property [barring a bad defaulting tenant] you can never be sure that dividends will be paid on your stocks. Many companies has not paid dividends to their share holders for many years. More over, you can never know how much that can acrue to you as dividends from stock investment until they are paid. One year it may be $0.20, the next it may $0.10. It is difficult to plan on such irregular source of income. Regarding income from real estate, except the unusual happens, you will know your rent at the beginning of the year or term of the lease. In some cases, the rent is even paid in advance.
We have made a fair attempt at answering the question, Real Estate versus Stock Investment Investment, Which Way To Go? I hope you found it useful enough as a guide to profitable investment decisions.
April 30th, 2010
posted in Stock Investment
Investment corporations, also known as investment funds, are institutions of collective investment. They gather capital from the public to reinvest it collectively and diversely, therefore the investment risks are lower and the returns to the investors are in theory going to be enhanced. It is a Panama vehicle to raise third party investment funds.Definition – An investment corporation in Panama is any judicial person (corporation or foundation), trust or contractual agreement that, through the issuance and sale of its own participation quotas, is dedicated to the business of obtaining monies from the investment public, through one time payments or periodical payments, with the object of investing and negotiating, either directly or through investment managers or administrators, investments in securities, bonds, options, futures, metals, real estate or any other recognized investment medium. The Panama investment corporations are entities that gather funds from the public to reinvest them collectively. The intent is that they can offer lower risks and costs of administration (reduced trading commissions for instance) and a professional capability of investment analysis, administration, follow up and financial control of the investment.Investment Corporations Conducting a Public Offering in PanamaIt is legally understood that a public offering of participation quotas of an investment corporation is taking place when it or its investment administrator, or another entity on behalf of it, offers securities through marketing and promotion activities in the territory of the Republic of Panama. These marketing and promotional activities are any form of communication targeting potential investors with the object of promoting the subscription or obtaining participation quotas (investments) in an investment corporation vehicle, and will be considered to be in the territory of the Republic of Panama as long as it is addressed to people domiciled in Panama. This is probably not of interest to many of you since you are reading this in English not Spanish. It is useful to read through this article to see how the law operates and how one can be excluded from registration which will probably be of great interest to you.An investment corporation is considered to be administered in or from Panama when one of the following applies: 1. That the investment corporation designates an investment administrator in the Republic of Panama. 2. That the principal domicile of the investment corporation is located in the Republic of Panama, or the prospect or any other advertisement material indicates that it is located in Panama. 3. That the investment corporation designates a custodian in the Republic of Panama 4. That the directors necessary to adopt a resolution of the Board of Directors of the investment corporation have their domicile in Panama.Investment Corporations Requiring Licensure with the Panama Securities Commission 1. Simple Investment Corporations: Only have one type of participation quotas and one investment portfolio. 2. Umbrella Investment Corporations: Have multiple series of participation quotas with different investment portfolios. 3. Multiple Class Investment Corporations: Have multiple series of participation quotas, each one of those series with different terms regarding the payment of commissions and subscription fees, redemptions and administrative fees. 4. Principal Fund Feed by other Funds: This is best described as an investment corporation that invests in other investment corporations.Requirements for the Registration of an Investment Corporation in Panama 1. Name and incorporation information. 2. Legal and commercial domicile of the corporation. 3. Designation of an investment administrator who will have to have a License issued by the National Securities Commission. When the investment corporation will be administered for itself, the documentation regarding the person who will be the principal executive and the compliance officer must be submitted. 4. Designation of a custodian for the investment corporation. 5. Identification of the type of fund. 6. Authorized share capital and minimum capital to initiate the operation. 7. Amount of participation quotas required to be registered for public offering and value of the initial offer.Documents to be Submitted with the Application 1. Authenticated copy of the articles of incorporation, which must establish that the corporation will exclusively operate as an investment corporation and the accounting books will be kept in Panama. Must be in Spanish but a certified English translation can be obtained. 2. Copy of passport or Panama Cedulla of Directors. 3. Audited financial statements or audited initial balance. 4. Curriculum Vitae of Directors and Dignitaries and Legal Representative. 5. Informative prospect of the investment corporation. 6. Signed contract with the investment administrator and signed contract with the custodian. 7. Draft Code of Conduct for those investment corporations that will assume their own administration and representation. 8. Advertisement and other publicity material that will be used by the investment corporation (everything that will be used even once). 9. Draft of the investment contract to be subscribed to every potential investor. 10. Draft Minutes of the Board of Directors establishing all terms and conditions related to the operation of the investment corporation.Private Investment Corporations ? Registration ExemptThis type of investment corporations are not required to be registered in the Securities Commission and therefore are not subject to the rules that applies to registered investment corporations found above.The Commission can sanction any representation or declaration that the investment corporation does, stating that it is registered in the Commission.It is considered to be a private investment corporations when it is administered in the Republic of Panama or from the Republic of Panama, and has participation quotas that are not offered in the Republic of Panama and that its Articles of Incorporation includes one of the following two dispositions: 1. One disposition that limits the amount of effective owners of its participation quotas to 50, or that stipulated firmly that the offers for the investment will be done through private communications only and not through public communication such as web sites, newsletters, print or media ads etc. 2. A disposition that establishes that its participation quotas will only be offered to qualified investors in minimal initial investment amounts of $100,000.The private investment corporations must designate a representative in Panama, who can be an licensed investment administrator, a securities house, a licensed investment advisor, a licensed Bank, an Accountant or a Lawyer, who must be able to dully represent the investment corporation before the Securities Commission at any time.They must provide copy of the Articles of Incorporation, the Offering Prospectus, Audited Financial Statements, name and address of Directors. Yearly audited statements must be submitted.Self-Administered InvestmentWhen the investment corporation decides not to use an outside investment administrator, it must comply with the following: 1. The investment corporation must have at least 3 members of the Board of Directors, all of whom must have renowned business and professional honorability. They must be able to demonstrate that they are reputable well-regarded business professionals. This is generally established with reference letters, education and professional licensures. 2. At least one third of the members of the Board of Directors must have adequate knowledge and experience in fields related to securities market and financial market in general. This would be established through professional licenses, work experience, references and education. 3. Have a complete administrative and accounting organization, in addition to technical (Information Technology, Legal) and human resources for the administration of the investment corporation. They must be able to clearly demonstrate that all the pieces are in place to be able to competently and profitably administer the investment. 4. An internal code of conduct. 5. Designate a compliance officer that can ascertain all investment and due diligence requirements are being complied with.This document was basically translated from Spanish Legalese and putting it into English Legalese which if you have ever tried it you would know it is not easy so do feel free to ask questions.
April 30th, 2010
posted in Investment Theory
It is time to invest! Houses are everywhere! Take a stroll through your neighborhood and everywhere you look, there is a “For Sale” sign. Out of each property that you see, one of them could be yours! Now is the time to put all of your cards on the table. Decisions need to be made regarding your job that you are in danger of losing. Plans need to be made regarding your children and their future. How are you going to pay for college? How are you going to pay off old bills? These are questions that every American has been faced with since the decline of the Auto Industry that has affected us all so greatly.
Becoming a Real Estate investor can be the best and the biggest decision that you’ve ever made in your entire life. Deciding to turn your circumstances around and having the power and determination is all up to you! You have the ability to change your financial future. Don’t worry if you have never bought a property before. Don’t be discouraged if you have never owned or managed anything in your life. There are so many resources available on the internet and in the community that can help you learn everything you need to know. Don’t be afraid to step on faith and make a decision about your financial future. Invest Today! Show yourself the money!
Making a change in your life that involves your finances is huge, scary even. It involves careful planning and more importantly, it involves your money. Those of us that are already in the Real Estate profession understand the anxiety but don’t be afraid and let fear deter you from becoming a success! Now is the time to invest! I have been in this business for over several years and it was the best decision that I could have made for my life. I was able to save some cash from my job in Corporate America and along with some help from my family, I was able to invest and buy my first Real Estate property. I was able to turn a profit and the feeling was invigorating! I had acquired only a piece of my financial freedom. Invest Today! The feeling of financial freedom was overwhelming and I started to see my life more clearly. Becoming a Real Estate investor and being able to provide a stable future for your family will give you a sense of stability and hope. Invest Today! Show yourself the money!
As the saying goes, “Knowledge is power”. Owning Real Estate is great. The first step is to get educated. Don’t be afraid to ask questions and do research. Although Real Estate is very rewarding, you want to make sure that you get all the knowledge available to you and become familiar with your future business. Making the right decision to invest in real estate will give you a solid financial future. Get out there and show yourself the money! Invest Today! For more information on real estate investing go to http://www.annettapowellblog.com
Sincerely,
Annetta Powell
The Queen of Real Estate
April 30th, 2010
posted in Money Investment
For many individuals, the thought of investing their money in stocks, securities and bonds can be a scary proposition. For some, images of Bernard Madoff coupled with the recession makes for a very risky market indeed. You have probably heard of too many banks, insurance companies and investment houses folding under the pressure of the recession as well as the domino effect of fraudulent Ponzi schemes.
For others, you probably think that the investment world is so complicated and complex that it is confusing to all but the likes of Warren Buffett. In many ways, it can be, especially with akjargon. However, with proper education and training, you can actually make money investing on your own. Here is how to do it.
Begin Your Education
Education empowers individuals to take on and succeed at challenges that previously seemed insurmountable. You will learn to understand the technical lingo – bid, ask, spread, annual percentage yield, annual percentage rate, to name a few – that goes with each type of investment whether it is a certificate of deposit or a crude oil future.
You must apply what you learn. Just reading on and on without applying your new knowledge is pointless. You will only learn by taking action, figuring out what works and doing more of the same.
Be Familiar With Tools
You have many online resources that will help you understand the concepts but also assist you in making smarter decisions. Just to name a few of these investment tools, you have stock screeners and filters, visual maps, e-mail alerts, comparison tools for ETF, market and stocks, market tools like ETF tracker as well as various worksheets and calculators.
Investment Strategies
As mentioned earlier, education and tools alone do not make a wise investor. You still have to apply your intelligence of them so that you can make informed decisions. Some of the lessons that we’ve learned along the years are as follows:
* Always limit your exposure to risk. Although taking big risks is a given in investments, you have to take calculated risks. This means that you have to avoid “slippery places” like commodities and short sales. Instead, stick to safe investments like CDs and proven stocks. You may not make big money but at least you will not lose big money either.
* Stay in the investment market. You may experience large blips in your investments due to economic conditions but, by and large, you will still have good returns on your investments when you continue to do your due diligence.
April 27th, 2010
posted in Money Investment
Best Online Stock Investing
Online stock investing has gained huge amounts of popularity in the modern world. These days, there is no need to consult and pay high commissions to traditional stock brokers for the purchase and or sale of your stocks. With just a few clicks of your mouse, you can have entire control of your investments. Best Online Stock Investing
Online brokerages that are competing for your business have low commission prices that are affordable. The information for which people had to consult brokers is now available at their finger tips. With the help of online stock investing platforms, it is now possible to get all the information you need in short time. According to the type of trader you are, various software is available that can help you to purchase or sell your shares.
You can get your orders in quicker, easier and in a more effective manner. You can log onto the internet, make a survey of the stock market, get complete information about the stock you are interested in and go back to your online trading platform and purchase the stock immediately.
Many people believe that the buying and selling of stock is a simple process and they can easily earn money and become rich fast. They open an online account with a trader and end up losing their hard-earned money. Therefore, it is essential to understand that becoming a successful stock market investor is not as easy as it may initially seem.
Stock market trading is considered to be a slow process and long-term investments are usually the safest option. It is true that money can be made from stock trading, but time is your friend in this business. You are far better to get educated in this field, prior to out-laying your hard-earned money without the right knowledge.
It is essential to have deep knowledge of exactly what shares are and which companies are generally accepted to be the safest for investment (blue chip companies for example). The basic strategies of the company you are considering, how they invest their profits, what their long-term plans are, profit sharing details and what benefits they provide for their shareholders is something that should be considered. Best Online Stock Investing
After building a good understanding of the above issues, it becomes a positive opportunity for you to invest in the stock market and become successful from doing so. Online share investing helps you to consistently study the market and make informed decisions. This study helps you to invest in the right direction and in the right shares. Hundreds of companies are available in the market for people to invest in, but the best companies need to be determined based on their own performance and past track record.
Online stock trading provides you with the charts you need in order to learn the complete ups and downs of the company you are researching. A chart is also available for showing the fluctuations of the stock market in general. These fluctuations can give you a good idea of the right time for making your investment. It is a wise move to make your investments when markets are fairly consistent, rather than investing in the fluctuating highs and lows of the market.
For all the reasons above, online stock investing is considered to be one of the best ways of investing in the stock market. Before opening an account, look out for software that is most suitable for you. In online share trading, you are provided with a customer id and password, it is crucial for you to keep these safe. If your id and password are leaked, anyone can misuse it to make trades from your account. As soon as you receive your id and password, you should immediately change your password to protect it from unauthorized access. Best Online Stock Investing
April 24th, 2010
posted in Stock Investment
Making money investing in the stock market takes patients and know how. You should first educate yourself so that you understand when stocks go up or down. You should find someone that has been in the business for a while to get the best advice.
How to: Trade Great Stocks
First you need to learn about the stock market and what makes it go up or down. Reading and learning before investing is always a good idea. Market conditions are always changing and learning why they do can help you to be successful and make money trading stocks.
You Can: Get Rich Trading
Next you want to reduce your risk by making smart choices. You are always taking a risk when you invest your hard earned money in the stock market. You can minimize these risk when you have a good knowledge base of what to invest in and when. Timing is everything to make money so make sure you learn about when to buy and when to sell.
Investing can make you rich and making the right choices will help you get there. You want to be cautious as well because you can loose money if you make the wrong decisions or your timing is off. You do not want to invest everything you have to begin with. It is better to get your feet wet first.
Remember that investing your money can make you wealthy. You want to start by getting the best advice you can before making a trade. Building wealth is not hard to do but be smart with the choices you make.
April 23rd, 2010
posted in Money Investment
Is it possible to make money investing in real estate? You see all of those ads for courses that cost hundreds of dollars, and claim to teach you how to make money by investing in real estate. The truth is that some research and knowledge can save you hundreds, and even thousands, when you invest in rental property. If you have some money to invest, rental property is a great way to turn your money into a lifetime of income.
There are many advantages to investing in rental property, but there are a few disadvantages as well. One advantage is that it is a long term investment that in the past has given an annual rate of return at around nine or ten percent. This is comparable to the stock market, but with significantly less risk. The capital gains tax on any profit you make from your rental property is twenty eight percent, which is less than most investment or employment income. One of the disadvantages of investing in rental property is the cost of tenant repairs, and another is vacancies.
There are some tips to follow to maximize the return on your rental property investment. The first is to consider a month to month lease for your rental property. Most landlords prefer to rent for a fixed period of time, like six months or one year. The advantages are less vacancy and more stability. There are some disadvantages to having a longer lease time as well. One is that it takes much longer to get an unwanted tenant out due to the legal system. With a month to month lease you are only required to give a tenant one month of notice to have them move. Certain groups of people, like college students and workers who may be relocated among others, actually prefer a short term month to month lease, and these groups will usually not sign an agreement for an extended time.
A short month to month lease can actually save you money in your real estate investing. This is because it is easier and quicker to raise the rent if your expenses for upkeep and other costs go up. With a longer lease, you can not raise the rent for that length of time, even if your costs go up. With a month to month lease, if your costs go up, you only have to give the tenant one month of notice before you can charge them more.
In summary, it is sometimes better to have a month to month lease with your rental real estate investment. The benefits far outweigh the costs, and certain good tenants would prefer the shorter terms. The short time length allows you to get any undesirable or non paying tenants out a lot faster, so good tenants can be found and moved in. This can save you quite a bit of money, repairs, and hassles. You invested in real estate to protect your money and make it grow, and a shorter lease period will work harder for your money.
Copyright © 2007 Joel Teo. All rights reserved. (You may publish this article in its entirety with the following author’s information with live links only.)
April 21st, 2010
posted in Money Investment
About the systemic approach. The systemic approach is the direction of scientific knowledge and the methodology of social practice, which is based on the discussion of the objects in systems. it is used as an instrumentarium, which directs the research to the substantiating the wholeness of the object, discovers various contacts in it and gathers them into the total complex.
The systemic approach in its essence is the concrete principles of the dialectical materialism, in the bounds of which, we can discuss the investment process the series of those operations (the kinds of activities), which is fulfilled at the beginning capital (the preface of the process). It increases the value and conditions a definite result (the exit of the process). It is possible to learn the investing process from the position of the systemic approach, because the investment process is an economical system and it has a preface – the complex position of this system (investment surrounding) and exit – the changes of the entering investments into the economical system. The result of investing process got at the exit, defines the development of the economical system, in which the process is going on, and gives in it rise to the rates of the economical growth.
Ruling the investing process. The investment process is realized by ruling. It is discussed to be such a strategy, which guarantees achieve maximum effectiveness and it leads every kind of activity to the maximal growth of the economical system. Ruling consists of the following active cycles:
1. the analyze of the current position of the investment process, in which consists of: the analyzes of the investment attractiveness and investment business, satisfaction of the requirements for investments of the economical system;
2. definition of the showing of volume needed by the investments and of the investment attractiveness, to which this volume is conformed;
3. Working out activities which provide needed position of the systems’ investment attractiveness;
4. The changes of the incomes in the investments of the economical system, which is provoked by the changes of investment attractiveness;
5. Changing of the parameters of economical system at the investors’ expenses, which exists in the changing of the rates of economical growth.
Permanent realization of this cycle improves the ruling system of the investment process and increases the defectiveness of functioning of the economical system.
The realization of the systemic approach is situated in the analyzing the investment process not only in the horizontal section (the ruling subject – investment attractiveness – investor – investment business – the volume of the investment – investment object – ruling subject), but also in the vertical one (the world comradeship – country – region – field – manufacture – physical person). Such discussion reduces the quantity of repeated activity of the ruling of investment process and gives the complex theoretical picture of the investment process.
For preparing and realizing effective investment policy it is important to define clearly and simply the criteria of estimating the investment situation formed in the country, economical fields and regions; also working out methodological apparatus adequate to the economical regalia and its successive usage.
The investment process (that is the process of realizing investments) has every feature of the system: there always is in it a subject (an investor), object (investment object), the connection between them (investment in the purpose of getting income) and surrounding, in which they exist (investment surrounding). It is characterized with a special structure and the opportunity of an exact identification between other economical process. It displays its features as a result of interaction with other systems, protects a definite conception and reflects the points of view, aims and values of the subject of the investment process. Connection is the system-forming factor, because it unites all other elements into one whole (pic. 1). the systemic approach gives an opportunity of exhaustive description of the investment process essence and defines fully its basic concept.
The investment process is defined by the formed interaction about situating investments between the investment subject and object for getting income, also the realized investing influence from the side of subject and ruling organs upon the object; and changing of the conditions of investment surrounding.
Place of the investment process in the system of social relations. The investment process doesn’t exist itself and it is always involved into the sphere of following level, that is to say that it must be discussed in the bound of the total approach – discuss the system in the sphere of the interconnections with other systems. This gives us an opportunity of describing the place and role of the investment process as in the separate sphere of the activity and also in the system of the social relations. Every subject is oriented towards the development and always demands the supplementing of resource and changing this or that feature. The orientation towards the supplementing this deficit with own forces, slows the economical growth, because it demands from the subject to provide amused activities and wasting the time the its basic resources on this. In the conditions of specialization, the reducing of own forces makes the subject search for the object, the features of which give him an opportunity of of filling the existed deficit with a minimal investments. The need of investments appears, when the potential of the chosen object does not satisfy the necessary criteria and needs a kind of outer participation for its development. The possibility of the investment development occurs when the resources owned by the subject and its features give the opportunity of needed influence of the object upon the demanded features of the object.
At the moment of fulfilling the investment, investor makes contacts with the concrete object. Under the investors influence the features of the investment object changes and then these changed features in the face of investment income influences upon the investor, changes its features, including – filling the resource deficit. After finishing the investment process, the subject and object begin new existence; consequently, the investment process gives rise to the diffusion of the object and subjects’ features.
The dynamic of the social development is defined by the development of separate spheres of the activity. If the revolutionary sudden changes of this or that sphere of the activity gives stimulus to the unseen before growth, this gives rise to the natural chain reaction of the development of connected to these spheres. If the evolution development of the spheres of activities takes place, its dynamics, as a rule, is defined by the least developed abilities. When the investments and investment income have different subject consistence, that is if they belong to the different spheres of activities, the various investment processes make these spheres inter penetrative. According to this, the logical ruled changing of their development dynamics take place. This provokes the natural chain reaction of the development of the interconnected spheres. Consequently, the investment processes give opportunity of making and keeping natural chain reaction of the interconnected spheres of the activities. These processes appear to be the fastening factor for the social development.
Showing the connections between the basic categories of the investment process give the opportunity of establishing dependence of the investment volume to the factors and conditions of the investment domain, that is the investment surrounding formed in the region.
The picture 1.4 may elucidate basic structural elements of the investment surrounding and the connections between them, which are shown in literature.
The interconnection of consisting comp
onents of the investment process. Such an approach reflects the most essential sides of the investment process, but doesn’t give us opportunity of taking in mind the influence of the current processes upon the investment surrounding and on the contrary – of the investment surrounding upon the investment process. That’s why we think important to discuss differently the interconnection of the consisting components of the investment process.
The investment attractiveness is a positive category in its context, and the investment risks participating in the process of forming this attractiveness – a negative one. That’s why it is important to turn the quantitative showings of the risks into the quantitative showings of the concept, which is essentially opposite to the concept of “the investment risk” during taking in mind the noncommercial investment risks, as a complex factor of the investment attractiveness. We must call such a concept (the antonym to the concept of the investment risk) “social-economical and economical security of the investors” or, in other words, investment security (consequently, on the macro-economical, regional, field and industrial level). The mentioned changing gives an opportunity of avoiding inter contrary influence upon the resulting showing – the investment attractiveness of two complex factors – the investment potential and noncommercial risks.
Exactly same way, every private factor of these generalized concepts have at the same positive quantitative [removed]with the help of the positive showing – for defining the final level of the field’s investment security), and also negative one (with the help of conceptually “negative” showing – for defining the final level of the noncommercial investment risks of the field).
The investment attractiveness of the social-economical system (SES) is defined the position of the investment potential and the level of the investment risk. The investment assets existed in the region – the real development of the investment business in the SES – is characterized with the intensity of the investments. It its turn, it is defined by the past, current and future investment assets. The past investment asset characterizes the intensity of the investments invested before and gives an opportunity of defining their future profitability, the quantity of the presumable competitor and the most profitable sphere for the capital-investment. The current asset of the investment defines the level of the system’s economical development and gives the opportunity for predicting the volumes of the additional investments and their possible profitability, also to define the position occupied by the investor in the market in the future. Future (expected) investment asset is the oriental for planning whole investment process: from the definition of future volume of the investments till ruling the investment surrounding of the SES – for getting the needed income flow of the capital. Analyzing of these three consisting components of the investment business gives the investor information about the level of competition ability at the SES investment market, also the tendencies of its development and the activities for reducing market.
The wholeness of the investment attractiveness and investment business makes the investment surrounding for the country, region, field, corporation (existed in the manufacture). Though it is important also to reflect reverse connection, that is the influence of the investment surrounding upon the investment business. For example, the current position of the investment surrounding defines the investor’s ideas and his/her activities towards future investments. Improving investment surrounding in the current period gives the stimulus to the development of the competition held between the investors for getting the rights for investment. Also it gives the stimulus to the competition held at the commodity and service market, which helps the lowing of the prices and raising the quality of the production. Parallel to these, the inflow of the investment resources takes place, which gives an opportunity for rational and effective distribution of the existed resources to the ruling organs of the regional development. It reduces the disproportion in the regional development, improves the living social conditions in the region, helps the development of the infrastructure and communications, changes the situation in the investment surrounding according to the demands of development of the regional economy.
The interconnection and subordination between the participating categories of the investment process is represented by the scheme shown in the pic. 1.5.
Taking in mind the peculiarities of the investment process, it mustn’t only be based on the usage of administrative-regulating activities, but also the usage of those economical models, which prove the necessity of this or that activity.
1.6. Subject – matter of investment process and its main stages
According to the said above, the investment process is the successiveness of the stages, motions and operations of the investment business provision. The concrete flow of this process depends on the investment object. Consequently, the division of the investment process into the stages is provoked by the kinds of the investments. We speak, of course about the real and financial investments.
The investment process consists of two main stages; they are (1) making decision about the investments and (2) Realization and exploitation of the investments. It is adopted to divide the first stage into several separate phases (under types), which characterize the real and also financial investments. The quantity of these phases may be different, but three of them are the most typical: a) underlining the goals of the investments; b) definition of the investment direction and c) selecting the concrete object of the investments.
Goals and directions of the investment. In the process of getting decision about the investments different goals are defined and reflected. The ascending goals are the formal ones, which are in the future used as the criteria of selecting investments. The formal goals come from the strategical firmness of the investment.
Working out the strategical direction of the investment business is connected with the defining equality of this or that form of the investments on the concrete stage of the perspective period and also with the definition of the direction of investment business including its branch consisting part. The priority selection of the investment forms at this or that stage by the investor is provoked by a number of inner and outer factors.
The functional direction is the most important from the inner factors, those are the basic kinds of the investor’s (manufacture, organization) activities. For example, basic direction of the investment businesses for the institutional investors is investments into the securities. The manufactures of the real sector of the economy, which perform the industrial activities, give priority, as a rule, to the investments into the material and nonmaterial assets.
The financial investment is realized mostly in the form of the manufactures’ (as concurrent, so partner ones) participation in ruling purchasing shared securities, or in the form of temporal placement of free money sources for speculative goals.
From other inner factors important role in selecting the investment direction is played by the strategical direction of the operational activity, size of the manufacture (organization), the stage of the investor’s vital cycle and others.
From the manufactures and organizations of the real sector of economy the growth of financial investments characterizes, as a rule, large-scale industries, which have more opportunity of finding the sources of placing funds into the investments, and those manufactures, which are at the stage of the so-called “ripeness”. More extended form of investments at the earlier stages is the investments in the material and nonmaterial assets.
Among those outer factors, which make an essential influence upon selecting the investment forms the most important are the rate of inflation and the percent rate formed at the financial market.
The formal goals may be the aspiration for increasing profit, widening the scales of the manufacture (activity), obtaining power and prestige in the society; also, solving the social-ecological problems, keeping and increasing the working places and so on.
These goals are not often defined distinctly, are not coordinated according to the priorities or are not verified at the subject of the ability of their realization. That’s why, it’s necessary to point out the real goal of the investments from the formal goals by establishing concrete purposed showings. For example, the formal goal – increasing profit – must be concretized in a number of showings, for which the definition of the achievement quality will be possible. Concretely, it may be the middle quantity of the profit for several years or the showing of net profit, or those other showings, which characterize the earned profit from the investment.
Formal goals of the investments make the decision of defining problems about investment directions easier. Mutual connected, independent and alternative (inter excluding) investments may also be among them.
Main stages of the investment process. According to the formation of investment portfolio, the investment process becomes importantly easier at the expense of reducing its stages. In the foreign literature dedicated to this problem, they differ following stages of the investment process:
1. Selection of the investment policy;
2. analyzes of the investment market;
3. re-inspecting the portfolio of the securities;
4. estimating the investment effectiveness.
At the first stage they define the investment goals and the volume of the necessary sources for its realization, also the quality of risk and profitability for every financial instrument. Selecting those financial assets of the potential kind, which may be included into the portfolio, fulfills this stage.
At the second stage, they concretize the rate of value of the securities’ separate kinds on the foundation of marketing conjuncture formed at the concrete moment and provide the prediction of the share rates’ dynamic of the concrete firm. Such kind of approach is called technical analyze. Basing on the got data they conduct fundamental analyzes. Its essence is analyzing the brought value of all those cash money flows, which is expected to get by the owner of the financial asset.
Third stage of the investment includes selecting concrete assets for the investors, also defining the optimal proportions between the assets in the bounds of investment capital. The bases of it are selection, selection during the operations and the diversification of risk according to total profile.
The fourth stage concerns the periodical estimation of the current portfolio according to the changing the investor’s goals and its deviation from the optimal portfolio. After this selling of the part of purchased securities and buying new ones become possible.
At the last stage they provide periodical estimation of the factual profitability and the level of risk and their comparing with the existed standards.
Main participants of the investment process and their functions. To the circle of main participants of the investments belong: state, regional and local organs of the government, manufactures and physical persons: they can participate in the process of investments from the side of demand and delivering.
In the conditions of the market economy the circle of the participants of investment process is importantly widened. The web of commercial banks, credit-commercial organizations, investment funds of companies and insuring companies have appeared, which make independently the investment decisions. But still, the state and governmental regional and local organs define their participation in the process of investments. It is represented by holding investment competitions, by selection and proving the investment projects, by licensing and quoting the production, and also by defining the quantity of the percent rate and taxation. The financial activities of the state, the organs of regional and local government as from the demanding, so the delivering side, influences essentially upon the behavior of the financial institutes and market.
Main distributor of money at the financial market is the population, because it gives much more to the investment process, then takes. Of course, it will not be said about the organs and manufactures of the executing government.
The researches of the foreign scientists U. Sharp, G. Alexander and G. Bailey show, that wholly the state and manufactures are net consumers of the money sources, that is that they use more sources then give. More concretely, many large-scale companies for realizing their long termed aims need enormous quantities of money for building factories, buying furniture, working out new products and so on. Besides, by realization active and difficult strategies of ruling cash cash masses, they appear to be main purchasers of securities. Such a situation is created on the side of the state, regional and local governmental organs, the activities of which is connected with the capital investments and guaranteeing current expenses.
The organs of executive government fill the insufficiency of the money sources by producing debt commitments and obligations, and companies by producing shares and other securities.
The factors defining the consistence of investment project participants and fulfilled functions. The consistence of the investment project participants and fulfilled functions provided by them, are defined by the following factors:
- the specifics of investment project, its volume, technological hardness and so on;
- compatibility of functions by the participants of the investment project during the realization of the project;
- financial status of the customer, who increases or reduces the influxing the financial structures in the realization of the investment project;
- providing the customer with the best material resources, building materials, techniques, furniture and so on;
- selection of the type of ruling the investment project (traditional or progressive).
Basic participants of the investment project. In the ruling the investment projects with the traditional type they differ its following basic participants: sponsors, constructor, distributor of the furniture, the consultant of insurers, legal adviser, the consultants of the taxation and financial branch, creditors and others.
Let’s discuss them in more details.
In a wide understanding, a sponsor is a guarantor; a physical or juridical person, who finances an economical project or a registration of social activities. Also, an orderer, an organizer of a large-scale project or arranger sponsor may be as commercial, so noncommercial structure.
As to the sponsor, as the participant of an investment process, we may call it an orderer, organizer, who connects then activities of every participant of a project, arranges discussions, analyses commercial suggestions of the constructors of financial structures or distributors, realizes marketing researches and selection of the financial partners. In the separate occasions, it becomes responsible for fulfilling such functions of the constructing engineering, as engineer-consulting service, projecting-construction and analytical-calculating works, preparing a technical-economical substantiation, organization and ruling of the manufacture, working out recommendations in the sphere of production realization. These reduce the quantity of the investment process participants.
Project-construction and construction organizations or individuals act the role of a constructor, that is the provider of the work. The constructor can involve other persons in the process of fulfilling the order, who become the sub-renters, and the constructor him/herself becomes the general renter. He appears to be the main fulfiller of the constructive lease agreement and is responsible the before the orderer for the fulfillment total complex of activities established in the agreement.
Distributor of the furniture represents the filial, foster companies or those other firms, which have signed at distributing furniture and providing services. If the manufacture registers an agreement with an orderer for a complex distribution of materials, building techniques and furniture to many of firms, it becomes the general distributor and answers for the whole distribution.
The insuring consultant is invited for displaying the insuring risk and estimating the quality of the project’s safety, also, for working out the appropriate recommendations. The juris-consult provides the preparations of the juridical documentation around the project, discusses wholly agreements and contracts.
The consultant of the branch of taxation questions analyzes the taxation situation existed in the country for realizing the project and also the taxation obligations of every participant, makes recommendations for minimization the taxes.
Financial consultant provides the selection of financial, credit and calculation conditions by combination of the alternative variant for the realization of the project. In the case of influxing foreign investors into the project, he must bring it to the appropriation with the existed international standards. This will make easier the status of the potential investors and creditors.
Creditors, as the participants of the investment process, lend money in different terms and conditions. Under these conditions, the creditor has a right of demanding from the debtor to return credit or fulfill other obligations. A state, bank, manufacture or a physical person, investment funds and others may be the creditors.
A traditional form of ruling the investment project, in the time of which the orderer carries out him/herself the functions of ruling, has several defects. First is that the most part of the orderers is not competent enough in every question connected with the project. It makes the level of the risk stronger during getting the ruling decision that gives rise to a number of expenses. Second one is that, the successful ruling, according to the experiences, requests the leader’s systematic participation in the investment process, because the orderer is not always able to do it. And third, this form of ruling the project is characterized by the comparative dispersion of phases and stages as in the time, so in organizing. All these gives rise to the additional problems in the provision of the s’ agreement of its every participant.
Overcoming the mentioned imperfection happens at the moment of moving to the progressive form of the investment project ruling. Its essence is that the leader (manager) of the project becomes the basic figure in the organization and ruling the investment businesses. This may be a construction or construction-projecting organizations’ especially prepared high-qualified specialist or an experienced leader. He/she provides a general ruling of the project including finances, personnel and the construction works.
1.7. Planning and selection of objects of investment process
The definition of re process of investment planning. The final phase of the first stage of the investment process is the selection of concrete objects of the investment, which is fulfilled in the process of planning investments.
They, as a rule, call the process of investment planning the process of forming such a portfolio (investment program) of the projects, which may be discussed as one of the alternative and mostly desired variant for achieving the investment object. Mostly using the mathematical models, which have no ability at all of reflecting every factor of the investment business, provides the planning of investment. That’s why the results of modeling don’t provide making such straight decisions, which would be the guarantee for the achieving the set object. The manufacture’s operative management basing on the results of planning and taking in mind other non-formalized factors provides getting the final decisions about those concrete objects of the investment, which must be included into the investment program of the manufacture.
The investment model is called such a mathematical model, with the help of which it is possible to estimate the effectiveness and resulting of the investments, as towards the set objects, so towards the sources for reaching it.
We must take into account the fact, that the real investments together with achieving the set objects cease quantitative changes as in the material-technical, so in the financial spheres. As to the financial investments, they are separated and touch mostly upon the financial side of the manufacture’s activities.
The investment business also may be isolated (separated) and interconnected. In the first case, in the process of investment business they discuss only alternative variant. Mutual connected investment planning also takes in mind the alternatives of getting decisions in the spheres of financing and organization. So the subject of isolated planning is working out the investment program. In the second case, the aim of the planning is industrial sphere wholly.
Any planning means distinctive period, during which the fulfillment and realization (exploitation) took place. This period is always reduced. It must be mentioned that the subject of investment planning terms is always conflicting. Basic question of the discussion is the ability of correcting the decisions under the influence of the phenomenon happened after finishing the planning section. Though this is a just demand the definition of the future investment decisions’ influence is possible only after these investments are realized.
Periods of the investment planning. In the process of investment planning, they divide the terms of planning into the intervals, which are called periods. The realizing decisions of one period are belonged to the beginning of end of the appropriate period. It’s important that this is not reflected at the conceptual side of the investment decisions and influences only the numbering of the period. Got results from the realization of the investments are expressed by the taxes, which are divided into delivery (for example, paying off the other industrial subjects by the investor) and incomes (for example, paid fee to the investor by other industrial subject).
The total sum of the payment during the concrete period equals to the sum of the realized delivery and incomes. If their balance is positive – that is the income overcomes the delivery or on the contrary.
The quantity of those periods during which the income-delivery of the sums takes place, is called either the term of the investment exploitation (in the case of the real investments), or the term of action (in the case of financial investments). This portion of time is either defined beforehand, or discussed as alternating quantity (at the time of getting investment decisions). The freed invested sources are called commonly disinvestments.
In the system of investment planning, the goal of the capital investment in this or that period of time may be the growth of property, increasing the income flow, making the investment profitableness higher and other showings, which characterize the ability of getting prolonged profit.
In the investment models of the planning, the volume of capital investment may change in the definite period of time, for which the plan is working out. During getting decisions, the priority is given to those projects, which guarantee the incomes from the realization of the investment in shorter time. Combination of the payments flow in this or that period of time is realized by the discount method.
Isolated planning of the investments. The isolated planning of investments is realized during the given budget toward the separate investment objects or the separate investment programs. The term of the investment (investment projects) exploitation may be discussed as a alternating or fixed parameters. The market of capital may be improved and also not improved. The separation of these markets is carried out by usage of distinctions between the percent rates of deposits and credits. Number of limitations of the financial resources in the isolated planning system may be belonged to any period of planning.
1.9. Interconnected planning of investments
Interconnected investment planning. The interconnected investment planning is realized in tight relations with planning the industry-financial activities. This relation is based on the complex formation of the cash flow taking in mind the fact, that like every activity the realization of every investment project needs the financial provision. This means that in the process of realization of the investment program, it is important to balance its financial parameters with the industrial and financial parameters of the manufacture, also, taking in mind the possible reductions. We mean, firstly the potential of own investment resources, the possibility of influxing loan capital, necessity of branch and regional diversification of the investment businesses, also, provision of effective balancing of inner balance, that is profitability, risk and liquidity of investment businesses.
The system of interconnection planning means the existence of many criteria during the selection of investment projects. It is based on ranging the goals and aims of the investment businesses in the system of the goals of business leading, according to either time, or meaning.
The differentiation of the criteria of investment projects’ selection takes place, as a rule, in the section of concrete forms of independent, inter-exclusive (alternative), and interconnected investment projects. Ranging of the goals requests the raging of criteria too. Usually, they use criteria of the net brought values and inner percent rate (inner profitableness) mentioned above, as basic criteria.
During the interconnected investment planning the system of reduction concerns basic and additional reductions. Basic reductions are the most important criteria of the selection. For example, if established basic criteria of the selection of investment projects are the showing of the project’s net brought value, the basic reductions may represent concrete meanings of the following showings: inner percent rate, the total risk level of the project, the terms of repurchasing the investment project and so on.
The additional reductions may be: the level of diversification of risk at the expense of regional and branch consistence; the value of the borrowed capital; the terms of realization of the investment projects; the size of the total volume of investment resources; the volume of the production and realization of the product and so on.
The realization of real projects. The concept of the second and third phases is essentially different from the real and financial investments, and it is stipulated by the peculiarity of their realization.
In the modern conditions the real investment is the foundation of investment businesses of the most manufactures. The realization of the real investment is characterized with a number of peculiarities; we can separate following ones:
1. the real investments are straightly connected with the basic activity of the manufacture, the widening of the assortment of the production and improving its quality with the help of involving the achievements of the scientific-technical progress. In other words, investment business and real investment processes are connected and condition each-other;
2. the real investments, relatively to the financial investments, are followed by bigger economical risks, which, in its turn, means the ability of providing higher profitableness relatively with the financial investments. Economical risks are connected with the peculiarity of the technological processes, factors of the material wearing out and so on;
3. Real investments are less liquid relatively with the financial ones. The reason for this is a tight purpose of most of the investments in the real industry and very often absence of the abilities of alternative industrial usage. That’s why it is extremely difficult to compensate mistakes made during getting decisions about real investments.
The forms of realization real investments. Real investments are realized differently by the investments in the in the basic capital, capital investments in the turnover assets and investment in nonmaterial assets. The realization of the capital-investment, in its turn, happens in several forms and, firstly, it is building of new manufactures, reconstruction of the existed ones, modernization, technical re-equipment, and also, purchasing total prosperity complexes.
Purchasing total prosperity complexes is the prerogative of the largest companies with such a policy, which is directed towards increasing its influence at different markets. Real investments of this kind guarantee growth of the total value of the manufacture’s assets, which is conditioned by the growth of abilities of financial potential and joint usage of the system of materials, reducing the level of the manufacture expenses and so on.
New building, usually, is connected with the investments in such modern manufactures, which increases the labour production and satisfies the request of the ecological security, also, means the building of new objects.
Reconstruction in the most cases requests moving to the modern technologies of the industry taking in mind the achievements of scientific-technical progress. As a rule, it is connected with the involving of the resource economizing technologies, moving of the production to the modern standards of the quality and so on. The reconstruction may touch upon the building of new objects.
Modernization mostly is connected with bringing to conformity the active part of the basic funds to the modern requests of realization the technological processes.
Technical re-equipment touches upon the changing and purchasing new furniture, mechanisms and basic complexes of the technical system for effective realization of the technological processes. It is not always possible to put a sharp boundary between technical re-equipment and modernization.
Investments in the turnover assets as a rule, serves for widening the turnover funds used by the manufacture. In the most cases it is realized following the capital-investment realization and this essentially is the result of realization capital-investments.
Investments in nonmaterial assets generally mean innovational investments and realized in two basic forms:
Most part of the real investment forms and kinds – the turnover assets, excluding the innovations of separate kind of the furniture, mechanisms and so on, – are realized in the face of real investments having appropriate business-plans.6 In the business-plans of the investment projects together with the traditional section the subjects of providing the needed level of liquidity of the real investment objects and minimizing the level of investment risks must be worked out and shown.
Organization of the investment project realization. For preparing the organization and realization of every needed plan documents, as a rule the leader is appointed. The most important plan documents are the calendar plans of the projects and their capital budgets.
The calendar plans are made for definite period of time – year, quarter, month or decade. The data of terms and volume of the realization the separate kinds of activities foreseen by the investment project are represented in them. The terms and character of the activities define the quality of detailing the calendar plans.
Fulfillment of the calendar plan is straightly connected with financing the activities of the investment project. For this purpose, the financial plan is worked out, which, usually is called “the capital budget of the investment project”. The volumes, terms and sources of the financing any kind of activities considered by the project in the section of separate phase of the calendar plan are substantiated and established in it.
Capital budget consists of two sections: capital expenses of the projects and influxing the needed sources for its realization. The capital expenses are the specified estimation of initial volume of the investment expenses taking into account the reserve of those financial sources, which are needed for recovering unexpected expenses according to the calendar plan.
The section of the “source influx” of the capital budget is the specification of volume of the investment needed resources for the project realization in the section of own sources of the investor, influxed sharing capital, leasing, banking credits and so on.
The synchrony of the income of the sources and the volume of investment expenses must be provided in the capital budget for realizing the works foreseen in the calendar plan.
Briefly about the investment risks. An important element of the project’s calendar plans and systems of sustaining capital budget taking into account the factors of the investment risk and working out the activities for their neutralization. The investment risk, as a rule, is discussed in the prism of possibility for getting unprofitable financial result. The forms of its displaying may be loosing the planned investment income or shortage for vagueness in the realization of investment projects. The investment project risk is a complex concept and units those various kind of risks, which are connected with the realization of investment projects.
Every stage of the realization of investments is characterized specific kinds of risks. That’s why estimation of whole risk of the project is provided on the foundation of aggregated facts according to the separate stages.
The realization of any investment project is in its essence a unique phenomenon for even one-typed projects. This circumstance makes the individual approach necessary, taking into account the specific information, which is connected with objective and subjective factors of occurring risks during the realization of the investment processes. The long is term of the project realization; the bigger is the vagueness of final results of its realization and, consequently – level of the risk.
We mist take into account the planned size of the cash incomes to get from the investment project depends on future status of appropriate segment of commodity market and effectiveness of commercial activity of the manufacture. It means that the investment risks are greatly conditioned by the commercial risks of a manufacture. In other words, there is a straight connection between the length of the vital cycle of the project and level of the investment-projecting risk. The completeness and trustworthy of the gathered information about every stage of the project’s realization, the level of qualification of the investing management defines greatly the substantiation of taking into account the various factors of the different types of risks.
The kinds of investment risks.Let’s name the basic kinds of the risks of investment projecting taking into account the specific conditions in Georgia.
The risk of inability of paying is in important connection with fulfillment of state obligations of the partners in the business, also, lowering the level of liquidity of the turnover sources.
The risk of financial provision of the project is connected with the late influx of the investment resources from the separate sources, the danger of incomplete financing because of increasing the value of the capital, which is needed for the realization of the project. It is in a straight correlation with the risks of inability of paying and inflation.
The risk of financial infirmity of the manufacture. It is characterized by the flow of invested own and borrowed capital and the incomes conditioned by the investment project and unbalancing of the flow of payments. This risk, together with the risk of the inability of paying is one of the most provoking reasons for bankruptcy of the manufacture.
The risk of inflation is connected with the possibility of devaluation of the expected incomes from the investment project and raising the value of capital expenses expressed by the nominal price. In the modern conditions the risk of inflation has permanent character and touches upon most parts of the operations of the project’s realization. Solving the problem of its taking into account and softening neutralizes this permanency.
The percent risk is related with the risk of inflation. It has own specific in Georgia, which is conditioned by the peculiarity of formation of the financial market and its being not developed.
The marketing risk is the risk of getting incomplete income from the investments on the stage of the project’s realization conditioned by the active circumstances at the expense of the volume and exploitation of the realization. The long are the terms of the project’s realization, the higher is the possibility of this kind of risk.
The criminal risk is conditioned, at the first place, by the absence of the appropriate defense of the rights of the investor’s privacy that appears in the economic of our country the most often.
For neutralization of the possible negative results of the investment projecting risks various measures and arrangement are worked out, which are grouped into the inner and outer measures. Inner measures of the neutralization of the risks concern the foundation of the various insurance and financial funds (reserves) and working out such measures, which will suppress possibility of raising this or that risk. This may be refusing using the low-liquidated assets and the borrowed capital of the important volume, also the mechanism of transferring the risks following the separate operations to the partners.
Foundation of the insurance and financial funds means the reservation of one part of the investment resources for getting over those unexpected negative results, which are not related with the actions of personnel and contractors of the manufacture. Of course, wasting of the part of the own sources of a manufacture, or, more concretely, “freezing”, makes important getting the loan at the market of finances for filling it, that makes the dependence on the outer sources of financing the investment projects stronger.
The outer methods of the neutralizing the projecting risks, in the first place, is insuring the project risks of separate kinds and guaranteeing by the third person. The object of the insuring is the property of the manufacture, which is used in the process of investment process; the responsibility of the manufacture and its personnel towards the third persons; insurance of the participants of the investment project’s realization. The mechanism of guaranteeing is oriented firstly towards the protection of the investors’ rights in case of changing the investor’s conditions.
The peculiarities of realization the financial investment. For the manufactures, which are not institutional investors, the basic direction of the investment business is the realization of the real investments. Herewith, when the conjuncture of the financial market gives the ability of getting significantly higher level of profitability at the invested capital, then the operation activity at the commodity market (the formed situation at the market of securities in Russia in 1995-1996 is a good example of this). Also, in case of existence of temporary free financial resources, the manufactures actively invest sources into the high liquidate financial instruments. Except this, the manufactures invest own capital other manufactures’ regulation funds for diversification and ruling other companies and organizations.
From the economical point of view, the financial investments are such instruments, with the help of with the solving the strategical and operative problems of effective placement of the capital in the country and abroad. The financial investments are mostly realized in the manufactures in the time of having free money sources. They appear in the face of outer investments (except the occasions, when the manufactures expiate their own securities, for example shares).
The most part of the manufactures realize the financial investments for the purpose of getting additional investment income (speculative income) from the usage of the free money sources. The concrete choice of the concrete instruments of the financial investments is wide enough even in the conditions of already formed market.
The level of profitability received from producing the investments into this or that instrument is in the straight relation with the level of risk. Higher is profitability, the higher is the risk of financial set-back.
The portfolio of the financial instruments. In the purpose of getting the desired level of profitability of the financial investments and the diversification of risks, the enterprises (investors) purchase financial instruments with different levels of profitability and risk, that is, in other words, they create the portfolio of financial instruments of specific character.
For the changing character of the conjuncture of the financial market, the process of getting desired level of the profitableness requests permanent monitoring of the various instruments’ profitability, risk and liquidity and also making the appropriate ruling decisions related with changing the portfolio of finances; it means the reducing or increasing the share of this or that financial instruments. Such kind of correcting is called “the restructuring of the portfolio”. It is the basic concept of the financial instruments’ operative ruling in the manufactures.
Basic financial instruments of the speculative portfolio of the finances the shared and debt securities, also, deposits and the currency valuables. During the monitoring process, depending on the type of the financial instruments, they take into account and analyze a lot of factors, which influence upon the levels of their profitability, liquidity and risk. From the factors which negatively influence upon the profitability of the shared financial instruments, the most important are:
· growing the level of taxation of the emitenti manufactures’ investment profit;
· the conjuncture changing of the volume of emitenti companies’ selling (it especially touches upon the oil companies);
· reducing the level of dividends for reducing the volume of the profit;
· reducing the price of net assets of the emitenti manufactures;
· speculative games of the participants of stock market.
The growth of the percent middle rate at the market; increasing the level of inflation; increasing the level of taxation of emitenti manufacture’s investment profit; degradation of the level of financial firmness of the manufacture; degradation of the pay ability of emitenti manufacture belong to the factors, which reduce the level of liquidity of the debt securities. The level of registration rate of the central bank; the firmness of the national currency; financial stability of the institutions of the deposit kind; changing of the percent middle rate at the financial market make and essential influence upon the profitability, risk and liquidity of the cash instruments.
According to the results of the investment market monitoring, they display the separate instruments of the speculative investments and also the tendency of the levels of profitability, risk and liquidity of the whole portfolio. Based on the received information, they make decisions about the necessity of the portfolio restructuring and its direction.
The investment resources during realization of the financial and real investments are used as in the cash, so in the natural form. The formation of the investment resources of the manufactures is connected as with the manufacture itself, so with the processes of gathering and keeping, which take place in the whole country. The rates and scales of the keeping and gathering the investment capital are conditioned by the level of the country development and also the level of the population’s profitability.
The process of formatting the investment resources in the manufacture is permanently working in the face of the incomes received from the basic activities and the activities not for realization, also by taking loans and others. The concrete quantity of those sources, which are used either for the investments, or the consuming needs, are defined by the finance-industrial plan of the manufacture. it depends greatly upon the values of their influx, the growth of the manufacture’s capital and its structure. If a large portion belongs to the sources in the structure, then the abilities of loaning are reduced. At the same time, the value of additional resources influx increases because of increasing the credit risk.
In the system of effective planning of usage and analyses of the financial resources it is very important to point out those various groups of the investments, which differ in specifics and request the usage of the adequate methods of ruling. They differ several characteristical features, with the help of which the classification of the investment resources takes place.
April 21st, 2010
posted in Investment Theory
Living in this time of economic instability and global economic crisis, it shouldn’t take us long to realize that in order to ensure a bright future, we need to make a few investments, take a few risks. The truth is that this crisis isn’t only hard on the common people, but also on the world’s richest people. The wealthiest billionaires from all over the world have taken hard blows to their accounts. So what can we do in this case? The best thing for anybody that still has an opportunity to take a step for their future is to make a penny stock investment or a hot stock investment, and other safe investment opportunities that have generous returns on investments but with low risks for failure.
The penny stock investment and the hot stock investment present large advantages over other investment opportunities because, even in these hard times, they still present quite good opportunities for profit. The first advantage that can be taken into account when considering to make a penny stock investment or a hot stock investment is that the actual stocks are very cheap, so the actual penny stock investment can be partitioned, so the risk is greatly diminished.
The majority of people making a penny stock investment or a hot stock investment get 50% returns on their investments. The usual penny stock investment or the hot stock investment presents some challenges that need to be taken into account so that the risks are lowered to a minimum. First of all, the investor has to choose wisely from the great variety of viable options for a penny stock investment. Investment experts claim that the top penny stock choices present much higher risks than low profile penny stock investment opportunities. The first steps that anyone thinking of making a hot stock investment are research, dry practice and more research.
When starting out in the investment world, is to create a mixture of personal research and expert advice that can be received from a number of sources, like magazines, newspapers, etc. Every penny stock investment expert will tell you that in order to start off on the right foot is to practice on paper before investing even one dollar. The next step is to find a professional and reliable penny stock or hot stock investment company. The internet is a great source for finding such companies. With the great variety of hot stock investment companies, as a new investor, you need to review some of these companies so that you make sure you choose a legitimate and trustworthy penny stock investment company.
The last piece of advice would be to learn how to correctly manage the investment and the risks involved, along with setting correct goals.
April 19th, 2010
posted in Stock Investment
Today’s economy is in transition. Investors are seeking new venues to explore and energize with capital. Emerging markets are a major factor in capital development. Today the United States has less than 50% of the world’s capital investments. Current statistics place 70% of the world’s population living in developing countries with 46% of the land mass and 31% of the GDP. Opportunities are in abundance for astute investors with a conservative attitude and approach.Setting financial money investment goals is a critical first step in any financial plan, personal or business related. Many investment fund companies have a selection of products from annuities to fixed rate return investment packages; your goals will help you select the appropriate product or combination of products as well as rate of return. Next will be to select a reputable investment firm that markets the type of funds you have determined will satisfy your plan. With the current world situation of financial challenges, working with a company that offers reputation, longevity, experience and skilled advisers and fund managers who will listen, provide advice and work on your behalf with ethics and high professional standards is essential. Companies that have been in operation for several decades offer the dependability and security an investor wants without the staleness of ideas and inertia other older companies might be carry as the baggage of age.Firms that are investing in capital projects in what was once called the third world are seeing dramatic success in earning legitimate and safe profits for their investment funds. This environment is properly termed the developing economy sector. It holds great promise for the savvy investor who utilizes a qualified company that has the experience and sufficient fund capability to sponsor development projects. From energy development to mining, the new economies are developing their natural resources with company investment capital from investor resources.There are some caveats that investors should have in mind when considering a company that puts their money in these projects in the developing economies. Due diligence is for everyone: investors have a personal responsibility to select the best money investment firm that is qualified for this type of process. The investor should also be as knowledgeable as possible about the location of the project, what local authorities, regulations and other unique conditions are involved that could have an effect on the outcome and their investment. The firm itself has in-depth due diligence as its priority. Developing proper, ethical and cordial relationships with the appropriate authorities is essential to the necessary cooperation needed to guarantee the project’s completion and success. The firm must be aware of potential problems and have in advance the resources to resolve them. They must possess a deep knowledge of any and all regulating bodies and have the local representation to work directly with them. The reward for considering investment in developing economies with investments managed by reputable, professional and experienced firms is waiting for the conservative investor who plans, sets goals and does their own due diligence. Fortune favors the bold and the knowledgeable.
April 19th, 2010
posted in Investment Theory
Stock investment is certainly one of the strangest and most confusing methods of earning money. When investment is done properly, it can be an exciting and a confirmation to immense wealth and fame. However, stock investment also has a deadlier side; incomplete understanding of the techniques of stock investment can have catastrophic results. While almost everyone who ventures into stock investment fantasizes of being the next millionaire, you cannot afford to neglect getting a solid foundation early on. Before investing into stock market you must know the basic techniques and strategies of stock investment. There is no ‘right’ way to invest in shares, but there are some methods and strategies that tend to work better than others.Stock trading refers to the buying and selling of shares and stocks within the stock market. It is essentially a numbers game, because each decision involved is based on a great deal of calculation and analysis. One’s success mainly depends on one’s knowledge, skills, and expertise. If you want to learn to trade stocks, there are now so many options available to help you gain mastery of this numbers game. Fortunately, current technological developments have made it possible even for laymen to become expert traders. Technical analysis really works for all. This is because stock prices do tend to move in a particular direction for quite some period of time. This direction can be up, down, or sideways. The retail investors are abandoning trading and investing in US stocks. They got burned one too many times by the market that leaves them with the huge losses. What causes the price of a stock to go up, down, or sideways? Much of what happens in the market is psychological. The price of a stock is determined by the enthusiasm or conviction of all potential buyers and sellers. There must be a buyer for every seller, and a seller for every buyer. It must balance out.Technical throw away the fundamentals and focus on the supply and demand of a stock or commodity.You can choose various stock investing software available in the market. These tools are Faster, Smarter, and helps in better stock market decisions for better profits. With stock trading software you don’t have to spend hours trying to pick the right stocks.Want to learn about stock investment and stock investment software? Start here: http://stockmarketsoftware.wetpaint.com
April 19th, 2010
posted in Stock Investment
Private money investing involves dealing with real estate companies, entertainment, retail and several other businesses. It basically involves two parties: the borrower and the lender. The lender becomes the investor.
The borrower receives money based on the value of real estate owned by him. Private individuals, trusts and pension funds can try their luck on private money investing. Substantial knowledge and experience of trust deed investing is required and mostly individual investors are good at it.
Everyone wants their money to grow and this is why this form of investing is such a desirable form of investing now. First, their investment in real estate will always pay off. Secondly, it will give regular income derived from the monthly dividend distribution scheme and thirdly, higher results than those available from investing in stocks and bonds. There is something called investor eligibility that you need to meet for this form of investing, and that is determined once you meet the minimum net worth requirements.
Private money investing involves many technicalities i.e. the lending process, funding and underwriting that one must be aware of. Methods of investments: Fractional method, Mortgage fund investment, Equity ownership etc.
Things to consider before venturing out into private money investing:
The amount of investment that is being asked, the value of the property that is pledged, description of the property, negotiation of suitable terms from either party and the use of funds whether to construct the property or to renovate. This eventually is a risky business so it is important to associate your investment with known construction brands.
Before lending money, several things are taken into account and one of it is to calculate the worth of the real estate piece. The liquid value of the collateral minus debt and liabilities is what investors look at while using private money investing.
Again, it cannot be emphasized enough: focus on one area of investing, and stick with that. For instance, either focus your efforts on real estate, the stock market, mutual funds, etc. don’t try to learn everything about all of them. Follow these important tips, and if you have decided to use private money investing, you will make a fortune with your investing efforts.
April 18th, 2010
posted in Money Investment
Investing in stocks is not like playing a game of blind man’s buff; neither is it a matter of trial and error. If you leave your earnings to chance or luck, you are more likely to lose than gain.
If you want to make money from stocks, you must draw a carefully considered plan. You have to create a stable, long-time, profitable investment strategy. Your broker may have provided you with certain investment tools and facilities, which may include low commissions, automatic investment plans, low cost real time trades, various research tools and easy account management. You can make use of these tools and plans to devise your strategy.
You have to develop your strategy on the basis of your objectives. First of all, you should decide your objectives for investing in stocks. Do you want to invest in stocks to create an additional source of income? Do you want to make it a full-fledged source of income? How much do you want to earn per month? Are you a long term or a short-term investor? Above all, what is your budget and how often can you comfortably invest? If you were a salaried person earning, say, $3, 000 per month, it would not be a good idea to invest $ 500 per week. Just decide upon an amount that you can afford easily without having to stretch your resources too far.
Diversify your stock investment
‘Never put your eggs in one basket’ is a time-tested adage. Stock market offers numerous options. Therefore you should follow the concept of diversification in stock market also. Diversification in this context means spending your investment across different sectors and funds. If one sector shows poor performance, your entire investment will not be affected adversely. The risk exposure to a particular investment would be reduced and over all risk to your portfolio will be considerably minimized. To explain it, let us say you have invested $1,000 in one stock and the prices of your stock fall, you will be losing a substantial part of your investment. If, however, your investment is distributed over a number of stocks, you may gain in some other stocks. Thus your losses will be neutralized to some extent.
Invest in ETFs
The best and the most popular options are the low-cost index tracking exchange-traded funds-ETFs. The ETFs are, in fact, securities that track an index or follow the performance of a group of stocks. They trade like regular stocks. The only and the important difference is that you have to pay minimal expenses for trading. It is, therefore, convenient and cheap to buy and sell the ETFs. Since they follow indexes like the NASDAQ 100 or the Standard and Poor 500 to track a bunch of different stocks, they are automatically diversified. The great benefit of buying ETFs is that you can actually buy hundreds of different stocks with every dollar you invest. You have to pay your broker only a low cost investment plan fee that ranges from $1 a trade to $3 a trade.
Fractional Shares
If you think you cannot buy high priced stocks because you are intimidated by their high prices, you may consult your broker. You may be offered a plan in which you can buy fractional shares. In fractional share investing, you need not buy 100 shares or even one share. You can buy just a fraction of a share. Therefore you can invest absolutely any dollar amount with no minimums and buy any quantity of a stock or ETF. You can buy a thousand shares or one-tenth of a share through automatic investment plans.
You can buy expensive stocks with small investments. Let us suppose, a stock is trading at $200 and you can afford to invest only $50 per week. If you use the automatic investment plan offered by your broker, you can buy any fraction of a share at a cost as low as $1 per trade. In this way you can invest in stocks of over 500 companies with only a few dollars by buying fractional shares of an ETF or any stock for that matter. This is really a revolutionary concept in stock trading.
April 15th, 2010
posted in Stock Investment
Copyright © By James Parmis
There are lots of different ways to make money in the modern world. It’s not always as cut and dry as getting a job, or starting a new business, although those are viable ways of making money.
There is a lot of money to be had by investing, and there are a lot of different ways to look at it. You could invest in a handful of options, some of which are high risk, and some of which are low risk, but all of them can make you money with time.
Finding which ones will make you the most is a tough one to call, but there are three sure fire ways to make money investing, that have been proven time and time again to work.
Although we will look at three different things, it’s important to understand that investing does take some risk, and there are no real 100% sure-fire investment options, but that’s not to say there aren’t some “safer” routes to travel.
The first major way to make money investing is to look at mutual funds.
Mutual funds are relatively low risk investing options that come in various different types. There are roughly six types of funds to look at, and require a professional to help you organize and distribute your money. The minimum amount is usually around 1,000 dollars and yields various annual returns based on 1, 5, and 10 year periods.
When you open up the average mutual fund, you’re investing in a variety of low risk, low yielding stocks. The return on investment fluctuates annually, but most often than not, you actually yield steady returns. You’ll have to invest a large sum of money to make it worthwhile, but with the low risks, and quality, nearly guaranteed results, many investors find this to be a great overall option to take advantage of.
The second major way to make money investing is to buy gold.
Gold gets a bad name by many high profile money managers. It seems that a lot of people have a problem with the fluctuations in value of gold, but what they seem to neglect to mention, is that gold is never really at 0 value.
Sure, it’s true that you’re not going to pay your bills in gold, but it can be a solid investment strategy if you’re looking for tangible investments. The price of this precious metal has reached over one thousand dollars an ounce and has been the target of many different companies, trying to invest, as the price could rise with economic hardships. This method of investing has a high investment point, but could reach to higher limits. Once again, it’s important to understand that there is always a risk involved with purchasing precious metals, but on the contrary, gold has never been at $0 value.
A third way to make money investing is to look at CD Bank Accounts.
Certificate of Deposit (CD) accounts are offered by many different banks and are relatively low risk, financially sound investment options for people that are looking to save money, and earn a higher return than the traditional savings account.
CD’s are relatively similar to a savings account, and are backed by the FDIC or the NCUA and function with fixed time frames and fixed interest rates. The rates are often around 3 – 5% and vary wildly from bank to bank.
The investor has to leave the money in to maturity, in order to earn a return on investment, and can be coupled with penalties for those that take their money out too early. There are several different types of CD’s to explore, and are low risk investments that require a large amount of money to yield extensive returns.
It’s important to understand that while there are many roads to travel down in regards to making money investing, it’s important to weight your options carefully.
You don’t have to limit yourself to the preceding options. You can look at stocks, bonds, commodities, currency, real estate, comic books, baseball cards, autographs, and so much more. Be careful when investing, and make sure that you weigh the risks, to ensure that you are prepared, just in case anything goes awry.
April 15th, 2010
posted in Money Investment
What percentage of my savings shall I invest in stocks? And what percentage shall I invest in bonds or keep in cash or other investment classes like real estate?
The questions in what to invest and how much of your savings to invest are on top of the mind of every investor. Let’s have a look at a much quoted rule of thumb on this topic and what type of tools are available for this on the web.
A much quoted rule
A much quoted rule of thumb and a simplified asset allocation guide on how much to invest in stocks and bonds is the age related rule:
Allocate a percentage of your portfolio equal to 100 minus your age to equity stocks, and invest the rest in bonds. For example, if you were 45 years old, then you would hold 100 – 45 = 55 or 55% of your investments in stocks or stock funds, and 65% percent of your assets in bonds or bond funds.
The background argumentation for this model is that when large cap stocks are held for periods of 15 years or longer, they in general have a better return than bonds. But because of the higher fluctuations in stock prices than in bond prices, stocks offer a higher risk and should be a smaller part of your investments when getting closer to retirement. The assumption is that you need the money when you retire and you cannot afford then that your stocks have lost a lot of value.
The following issues are often highlighted around this simplified model:
- It only takes into account two assets classes: stocks and bonds. It does not take cash, real estate funds and the difference between large and small cap stocks into account?
- It looks upon bonds and bonds funds as part of the same class while both have considerable different characteristics; more on this later.
- It does not take into account how wealthy the investor is and with what risk levels he or she is comfortable. Wealthier investors are often prepared to invest a larger portion of their wealth into more risky but also more rewarding investments than less-wealth investors.
- It forgoes on the idea that younger people have not only more time to make up earlier losses but have also have more time to lose even more than older people since they have more time till the standard retirement age.
- It does not take into account that in case of death of the owner of the assets, it could be, from a tax point of view, more favourable to inherit ate stock holdings than cash.
In summary, this much quoted rule of thumb is a very simplified model that could be plainly wrong for a lot of people.
On the internet, you can also easily find automated asset allocation advisors like this one on the CNN Money website. Based on your inputs regarding time horizon, risk tolerance and flexibility, it provides you with a suggested assets allocation over bonds, small cap stocks, large cap stocks and foreign stocks.
A good aspect of the availability of tools like this is that it may prevent people who have no better information to put all their savings in just one asset. Following now such a model, they in any case diversify their investments. But this does not mean that they are only taking risks that they are comfortable with. The problem is that they maybe do not know or understand what risks they are taking.
The issue for me with following an advice like this would be that it is very much a black-box tool. You know what you put in and see what you get out of it, but you do not get an understanding how the tool came to the results. For me to sleep well at night, I want to understand why I would invest in a certain way. Just following the advice of a web application won’t do it for me since it does not provide me clarity on what type of assumptions are behind the advice that I am getting and if those assumptions are even valid for me.
When we want to answer questions like “in what assets to invest” or “how much of our savings to invest”, we consider at Stock Trend Investing the following aspects:
- Two different types of “risk”
- Your risk tolerance
- Inflation and Interest Rate
- Bonds, Options and other Assets
- Your presence in the market
Do you want to consider these aspects as well?
April 15th, 2010
posted in Investment Theory
Trying to find a good and ‘up to date’ property investing book can be quite a challenge. There is nothing worse than reading a property investing book that refers to property prices that are half what the current day values are. In my experience I have found that sometimes a good general investment book can be of just as much use as a specialist property investment book. Most real estate investors are actively investing in other areas so having a book that discusses real estate investing in relation to the stock market etc. can be very beneficial.What to look for in a property investing book?
The best property investing books should be written in an easy to follow – step by step fashion. It is no good if the reader finishes the book but still doesn’t feel like they have the confidence to start building their property portfolio. At times the facts and figures involved with property can become quite tiresome so it is also vital that the writer can deliver the information in a fun and entertaining way. Let’s have a closer look at three of the all time great property investing books.
More Wealth from Residential Property – Jan Somers
A fantastic property investing book that covers all aspects of how to purchase residential property. It literally covers every stage and detail that you need to know when buying your first (or 10th) investment property. Jan Somers writes in an honest and fun way and she doesn’t forget that most of the people reading her book probably haven’t ever bought an investment property before. There is a chapter that talks about renting vs. buying the house you live in and Jan mentions the fact that living in your own house can have great mental advantages that don’t come into consideration when you only look at the figures. This is a refreshing view point from a property investing professional as I often find that the writers of these property investing books can loose touch with reality but definitely not Jan Somers.
What I Didn’t Learn at School but Wish I Had – Jamie McIntyre
This book is a more general investing book but it covers some great real estate strategies. The first half of Jamie McIntyre’s book concentrates on the mental aspects of becoming a successful investor. He calls it developing the mindset of a millionaire. It is easy to want to skip over this section of the book but I promise you that if you haven’t developed your mental investing muscles then no matter how many great strategies you have you will find it hard to succeed. Whilst Jan Somers book goes into the real ‘nuts and bolts’ of Real estate investing this book covers some more elaborate and interesting strategies.
Go For Your Life – Chris Grey
This is a very underestimated book that didn’t receive anywhere near as many accolades as it deserved. It is basically a combination of the above two property investing books. It shows how Chris slowly bought the 6 investment properties that he currently owns.
You might be saying “6 properties – that’s not enough to write a book!” But this is the exact reason why it is such a great book. He explains how you don’t need to own 100 houses to be a successful real estate investor and enjoy the luxuries of life. By owning a handful of properties he has been able to obtain his dream lifestyle. So there you have it 3 great property investing books that you should definitely read before or after you start building your property empire.
All of them are filled with great property investing tips and secrets that will help you achieve your goals. The only thing missing from these books and form every property investing book ever written is the magic ingredient that makes you actually put the strategies into action. You will need to find that yourself! You can read as many books as you like but if you don’t ever take some action then you won’t ever achieve the success that you would like.
So what are you waiting for? Start taking action today by reading one of these books and then when you are armed with the required knowledge take the next step and start your investing career.
April 11th, 2010
posted in Property Investment
In 2006, the U.S. Mint issued the modern version of American gold Buffalo coins in order to compete with the foreign 24-Karat gold coins such as the Canadian Maple Leaf. Before the release of Buffalo 2006 gold coin, there were no American 24-Karat pure gold coins available for investors who need 0.9999 pure gold Bullion. So the Buffalo 2006 gold coin was an immediate success. Over 300,000 coins sold out that year, comparing to the total sales of around 200,000 American Gold Eagles. Here are some important things you need to know before buying Buffalo 2006 gold coins. Buffalo 2006 gold coin features a distinctive American Design based on American sculptor James Earle Fraser’s 1913 Buffalo Nickel. The coin’s obverse side is the famous Indian Chief Head. An standing American Bison appears on the other side. Beneath the Buffalo’s head inscribed with the motto “In God We Trust.” Although the coin has a legal tender value of $50, Buffalo 2006 gold coin is actually priced based on the gold content it contains plus a small premium as the gold Bullion coins. The 1 oz Buffalo gold coins appear in two versions, proof and uncirculated. Proof gold Buffalo coin is struck multiple times with a specially polished dies to produce an effect that highly detailed images seem to float above the field of the coin. Uncirculated old Buffalo coin is minted with a satiny finish and flashy appearance instead. Buffalo 2006 gold coin specification: Condition: Bullion Face value: $50 Fineness: 0.9999 Weight: 31.108 g (1.0001 ounces) Diameter: 32.70 mm (1.287 inches) Thickness: 2.95 mm (0.116 inches) Minted Year: 2006 Mint: West Point As the first 24-karat pure gold Bullion coin produced by the US Mint, the gold content and purity of Buffalo 2006 gold coin are guaranteed by the US government. This helps Buffalo gold coin become one of the most popular gold Bullion in the world. Almost all gold dealers or stores are willing to buy and sell Buffalo 2006 gold coins, making them easily converted into cash should the need arise. This allows you to liquidate your asset very quickly when necessary, which is an important factor to take into consideration for gold investment. I recommend you checking out American Buffalo Coin. It is a specialized Buffalo Gold Coin for Sale site, offering a great selection of American gold Buffalo coins, silver Buffalo and Buffalo Nickels for sale. This website makes finding your dream American Buffalo Coin a million times easier. Be sure to try this website before you buy.
April 11th, 2010
posted in Gold Investment
Real estate investments are very popular these days. Whether you make commercial property investment or residential property investment, you can pave the way for impressive earnings. However, real estate investing is one option, which requires considerable amount of knowledge about all its aspects and this is where real estate investment firms enter the scene. These firms lend helping hands in making you financially independent and let you relax about your post-retirement years.If it is your fist attempt to earn monetary benefits from investments in real estate, here are few reasons why you should approach one of the real estate investment firms.Evaluation Of Various Investment PlansThe market of real estate investing is flooded with a number of plans like commercial real estate investments and equity real state investment plans. However, you should have the talent to choose most rewarding plan out of these. A real estate investment firm can help you to evaluate various investment plans in this category, so that you can witness your money growing at a dependable rate. These real estate investment firms have huge networks of real estate professionals and investment experts and thus, they can provide you with profit-bearing investment products.Saving Your Time And EffortsReal estate investing certainly requires an individual to spend time and efforts to achieve desirable success as an investor in this market. If you are in a regular job or an active social being, it might be difficult for you to reserve time in this direction. But, you can always take advantage of real estate investment firms to devote time and efforts on your behalf.An Array of Beneficial ServicesThe real estate investment firms offer a wide spectrum of services to its clients. For instance, portfolio diversification, debt analysis, tax related issues and due diligence are some of the issues handled proficiently by these firms. You can seek advice from these firms on any aspect of real estate investing at any point of time.Thus, you can begin your journey towards successful real estate investing with the help of these dedicated investment cradles.While searching for a good investment firm, you might come across a number of options. However, a search under the lens can help you to figure out, which option is better for you. Concrete Equities is a good suggestion, as the firm is positively reviewed by its clients and market spectators.
April 11th, 2010
posted in Investment News
UK’s top moneymakers reduce their winning investment policies to their most fundamental points, divulging what they believe is the most important property investment advice they can give. There are circumstances when the owner may not permit you to assume the loan or the seller already owns the property. In such situations, the owner can use a trust deed, permitting you to make a lower down payment and setting more flexible terms. If the condition allows you to abide by this bit of property investment advice, you can benefit from a lower transaction costs and you have the chance to for lower interest costs as well.
Some of the other complications with these events include failure to disclose commissions, the promoter having relationships with the actual properties being sold or proposed and as a result misrepresenting the investment.
Here are some property investment advices to take care of to ensure an intelligent purchase: – Look into the demographics. This is the key to learning what your clients need. For example, the rising aging population and high divorce rate of the UK means more demand for city center flats or smaller-sized homes for an individual person. Usually, young investors want a fashionable and urbane home while families concern with safety and accessibility to school and transport as priority. – Stick to what you know. Suppose having your property investment buying in an area that you know well. Research entirely and consider the local economy. Above all, assure that you are buying a property located in a bustling or up-and-coming part of town.
This property investment advice is helpful only for those individual who have some extra funds they could use to purchase a new loan in case the original one is called. Believe there are probability for anyone out there, whether you are a first time buyer, and not sure where to buy, someone seeking for a hands free property investment with assured returns, someone seeking to top up their pension, or someone who is willing to give 10 hours a week or so and be in a position to sack the boss in 3-4 years time!! However for anyone to succeed at property investment, they must have some good knowledge from property investment advice- a clear strategy, concern about property tax, mortgages for investment properties and mainly understanding what a good property investment deal is and the core of leverage.
So, first start exploring online, then you came across some excellent resources and invaluable information – however there are also some who are more interested in charging you a fee than getting you a good deal.
April 10th, 2010
posted in Property Investment
“Growing instead of Shrinking
First thing to note in the list of real estate investing benefits is that if you look at the real estate market as a time line compared to the stock market, you will notice that real estate is a growing line with few major fluxuations. On the other hand the stock market has high points and valleys that range from quick high’s to sudden drops through out it’s history. It’s harder to look at the time lines of other forms of investing i.e. currency investing, mutual funds, buying gold and silver etc – but one thing is clear, no other market is as profitable or as safe as the investment real estate market.
Many people ask me “Why is investing in real estate such a safe investment?” and the answer is as simple as it is complicated, the quick answer is “God isn’t making any more of it” the more complicated answer isn’t as poetic. The reason investing in real estate has so many benefits has many factors, I will go over the basics with you now:
“”A 1031 exchange or Like kind exchange is defined by section 1031 of the Internal Revenue Code. This code specifies that if an asset, usually some form of real estate such as land or a building, is sold and the proceeds of the sale are then reinvested in a like kind of an asset then no gain or loss is recognized, allowing the deferment of capital gains taxes.”"
The simple explanation is as long as you reinvest the money you made from your real estate investment into another investment you don’t have to pay taxes on said profit. No other form of investing gives you this much freedom with taxes.
Anyone Can Invest – Because real estate investing is so profitable and safe it see’s a huge amount of amateur investors entering the market everyday. Why else do you think all these infomercials are on late at night talking about the millions they’ve made overnight with someone’s CD set? O.k. I’m not saying that buying one of those CD sets will make you a millionaire but they are good to learn the basics of real estate investing from. The big problems with these CD sets is they teach making millions in real estate with bad credit or without spending a dime. This is not the case, 99.9999% of the time you will need excellent credit and a good amount of money for the down payment on an investment property (usually 10-20%).
Other People’s Money – Why invest your money when you can invest someone else’s? One of the big rules in real estate investing is “If someone is willing to flip the bill – let them”. Banks are more then willing to give out a loan to buy houses because unlike other forms of investing they have something tangible they can keep if you don’t pay up. Banks are usually not as willing to give loans for stock or gold investing because the stock you invested in maybe worth nothing by the time you sell and the bank has nothing OR you take your gold and run across the border. Real estate is almost always going to be worth something (often increasing in value every year) and their hasn’t been a recorded case yet of someone taking a house across the border.
Right now the investment real estate market is booming like never before in history and those investing in it are being rewarded more so then in any other time in. If you want more information on this explosive market feel free to visit my website or give me a call and I will answer any question you may have.
”
April 10th, 2010
posted in Gold Investment
There are a couple of ways that you can invest in a Mutual fund; one is a one time payment and the other through periodic investments. The later is termed to be Mutual Fund SIP. When you go for one time investments, you just hand over the cheque and you get your fund units depending on the value which is called Mutual NAV (Net Asset Value) of the units on that particular day. When you go in for this kind of investments a couple of factors creep in that determines the number of units you get. A small percentage of your investment is charged as an administrative fee and is termed as entry load. The other charge that is levied is the Mutual Fund NAV, which is the price of the unit of a fund. Say if you are investing Rs 9000/ and if one particular unit costs Rs 30/, then the total number of units that you get to purchase is 300. The other type of investment is done periodically instead of a one time down payment. This kind of investment planning is called Mutual Fund SIP (Systematic Investment Planning). This type of investment is done when you tend to go for high capital gains and you need to invest a bigger amount, but find it difficult to invest it at a single time.It is then that the concept of Systematic Investment Planning creeps in. If you intend to invest a sum of Rs 10,000/ into a particular Mutual Fund, but your current financial obligations prevents you from doing so, then with the concept of SIP, you breakdown your investment principle into equal installments month wise. If a monthly investment of Rs 1000 is done at the end of the year you end up investing a sum of 12000/. Unlike general investment where you pay an entry load, SIP usually doesn’t charge any fee, though as of late some companies have started to in the form of exit loads, which is a fee charged when you sell your units. The minimum amount that has to be invested during a one time investment is Rs 5000/, where as incase of a SIP it could be Rs 500/ or more (depending on the company). In most cases payments through SIP is done month wise, but companies also gives their customers the option of making the payments half-yearly or quarterly. Payments are basically made Electronic Clearance Service from your bank; this means the mutual fund will, as per your instructions, debit a certain amount from your account every month. If you don’t have the required money in your account, then for that month, no units will be allocated to you. But, if this continues periodically, the mutual fund will discontinue the SIP. It is a compulsion that you state to the company as to how long you long you would want the SIP. After that during the course of the period if you realize that you can’t continue with the SIP, all you have to do is inform the fund 15 days prior to the payout. The SIP will be discontinued. You can continue to keep your money with the fund and withdraw it when you want. The amount invested till then will be considered as the total investment made. Investing in Mutual Fund through SIP makes your budget more disciplined. Every month you are forced to keep aside a fixed amount. It helps you make money over the long term. Since you get more units when the NAV (charge/unit) drops and fewer when it rises, the cost averages out over time. So you tide over all the ups and downs of the market without any drastic losses. In case of SIP basically no fees are charged, but if you sell your units in a year time you pay and exit load. Hence it pays to invest in a longer run. The best way to enter a mutual fund is via an SIP. But to get the benefit of an SIP, think of at least a three-year time frame when you won’t touch your money.
April 10th, 2010
posted in Investment News
Property investment is one of the securest, and most recession proof methods of investing. However, many personal investors limit their portfolio by looking close to home.
Many investors have made millions. British investors started investing in Spain in the late 1990s. Now, many of those properties, purchased for less than $50 000 are now worth more than 1m.
At first glance, many new real estate investors are attracted to hot spots. Unfortunately, many areas, like the Black Sea coast are over developed, or where construction is a full time nuisance.
Spain is another long time hotspot. However, things cooled last summer when more than 100 new homes were sold to retired foreign residents for more than $200 000 each. Within months the government demanded they be demolished because they were built on rural land, not zoned for residential development.
Bulgaria is another ‘worn out’ hotspot. Property investors need to be willing to hunt down good deals. It was the ‘hot spot’ for property investors until it lost its appeal due to over construction.
The price quality ratio is out of balance in Bulgaria, especially in places like Sofia. A savvy investor can still find a good deal in a prime location, but the imploding population is causing concerns. Investors are worried that no one will rent the 3-4 bedroom “luxe” apartments in a country where the social trend is leaning toward childless couples. There is a risk that the supply will soon exceed the demand.
Investor analysts still suggest that a good location will generate more profit when rented to American tourists. The devaluation of the US dollar makes unusual tourist areas more attractive. US travel agencies now report a steady interest in both Bulgaria and Romania. They cite diversity of entertainment, and low cost air fair to many Baltic states by German and US airlines.
This means that investors who are looking for long term profits may find that a bed and breakfast, or renting to tourists, will earn a profit in the interim, while protecting their equity.
Arlette Adler from the Federation of Overseas Property Developers, Agents and Consultants (FOPDAC), claims that Bulgaria’s property market has reached saturation levels. This means that there are still some deals for first time buyers hoping to invest abroad, but little for the serious investor.
“The more serious buyer is looking at [other eastern European] countries and considering them,” said Adler.
“The thing that is bothering many of us [about Bulgaria] is that they are building all over the place,” she added.
Specialist house TRI Investments warned property investors to avoid European holiday destinations such as Bulgaria, France and Italy.
FOPDAC also announced that the emerging markets in Croatia, Montenegro and the Czech Republic may offer fast profits for daring investors.
South Africa remains a hotspot for investors who are willing to put some effort into building their portfolios. However, no one has to step in blind. Experts are suggesting that investing is moving beyond South Africa. Growth in other areas of Africa is precarious, but promising. The risks are higher, as is the potential for profit.
Investors who want to minimize risk are following the lead of the large property management companies in South Africa, taking advantage of their ‘inside’ knowledge of the continent and its growth trends.
April 9th, 2010
posted in Property Investment
When it comes to investment pursuits, first time investors usually want to plunge in with the needed knowledge and trading. Unfortunately, only a few of these investors find success, which only means stock investing basics are needed to really enjoy excess in these type of investment. Having even a basic knowledge do help big time as investments means either gaining profits or losing your money – and so one must know what he is doing.
Before jumping into the stocks investment, it is advisable to learn more about investing. This can be done by studying and determining what the stock investing basics are. One basic in stock investments is know what your goal is. You should discern what you are trying go get out of your investments. Before deciding on investing a penny, think really hard first on what you want to earn from your investment. The fact is that knowing what your investing goal is will be a big help in your making more intelligent decision on investments.
One of the most important stock investment basics is to create a simple investment goal at first. Unfortunately many people wanted to become wealthy overnight with their investment. It is not a smart idea to begin your road to investment by having high hopes of getting rich overnight. It is best to make a slow but sure investment.
Stock investment basics also dictates that you work with a financial professional that will tell you if such as a wise investment. Your stock planner will provide you with information that will take you to sound investing moves in order to experience financial goals.
Simply put, you must be reminded that investing requires much from you as an investor. You simply cannot just call a broker and tell him that you desire to purchase or sell stocks. It takes a good amount of stock investment basics as well as investing knowledge especially about stock market in order to earn profitably and successfully.
For more articles and discussions on investing ways such as penny stock investment, do visit our Best Investing Strategies and Ideas blog.
April 9th, 2010
posted in Investment News
Does your gold bullion collection include Dutch gold coins? If it doesn’t, it definitely should! You may or may not be aware of the scarcity of these coins, and why you should add then to your portfolio. These gold coins not only have true historic value, they are unusual in appearance. Whether you are an experienced collector or a complete beginner, expanding your gold investing horizons can be a profitable idea.Gold coins in the Netherlands are distinct in appearance. If you like variety in your collection, these will add value as well as uniqueness to your portfolio. Prices for any type of gold coins vary greatly, but investing in your collection is wise. The value will increase, and gold is one of the most stable markets today. Whether pure gold, bullion or bars, gold is hard to beat for financial security.No matter where their origin, gold coins have always been known as something of “real” value. It is one market that is constant, and appreciates in value as other markets fail. Adding value to your portfolio is very important, and can add a great measure of security to your financial future. It is also a “liquid” market, meaning it can be easily traded.When searching for Dutch Gold coins, you may find terms such as ducats, florins, florins d’or, duits, stuivers, cavaliers, gulden or guilders, and ducatons. This can be confusing when you go to purchase an addition for your collection, but don’t let it stress you too much. Just like the country has many names (Holland, The Netherlands, or Der Nederlanden to the Dutch), so does its coins.Many collectors have coins from a variety of countries. Why limit yourself, when you can increase the value of your collection, and vary the interest? In the future, if you decide to sell your gold, having a diverse collection will enable you to better yourself financially.Most North American people who have a passion for collecting coins start with United States coins. Although they are of great value, there is no reason to limit yourself. Diversify and add Dutch Gold coins to your portfolio – increase your financial assets!
April 9th, 2010
posted in Gold Investment
Creating a goal plan is half the fun of beginning real estate investing. It’s all about starts at the end, when you are beginning a real estate investing remember to begin with the end in mind, as you start down the path to beginning real estate investing. What kind of lifestyle you would like to have, how much time you want to put in, and where and how you want to live. What you would like your real estate investing activities to provide for you, Spend some time thinking about exactly what you want to accomplish. Don’t think only in financial terms. Be specific, and write down your goals. When you can see them clearly in your imagination, you’re well on your way to achieving them.In real estate investing goal setting step has fail to notice in short interval, this is very unfortunate because taking a few moments to complete this simple task effectively can have a huge impact on your long term results but also on how seriously you are treated by professionals. A great way to describe creative real estate investing is to describe what it is not, here are examples of what it is and isn’t. Real Estate has classified in five types they are Flipping real estate, Probate real estate investing, Virtual real estate investing, Lease option real estate investing: Part I is Lease option real estate investing and Part II is Flipping real estate. Flipping real estate is one of the most used terms in real estate investing. The term flipping real estate means different things to different people depending upon who you are. Probate real estate: Motivated seller, an unemotional is one of the great benefits of probate real estate investing. This benefit is usually from out of town, but not familiar with the property and therefore not emotionally attached to it. Virtual real estate investing: There is many an elaborate and systematic plan of action such as virtual real estate investing, it is an ideal virtual real estate investing system would allow you to work and never leave your house. For example leads are automatically generated through automated e-mails, websites and direct mail, which are directed to a prerecorded message and or answering service.Lease option real estate investing Part One: Now a day investing real techniques are accessible which creates multiple rewards by combining techniques. Lease option real estate investing Part Two :If your are beginning real estate investor making money by doubling cash flows is slam dunk. It gives you what ever you wanted.The most often asked questions by new or aspiring real estate investors have to do with beginning real estate investing. You would want to read this to learn some specifics associated with real estate investing if you are an avid goal setter, if not a frequent goal setter please read on and consider that setting goals which are really a powerful tool. It does have some magic about it, and is critical to you to become successful in real estate investor.
April 8th, 2010
posted in Investment News
The Cyprus real estate market represents quite outstanding potential for foreign purchasers; these purchasers may wish to invest their money and time in an apartment, villa or other real estate in Cyprus after seeing a wide range of real estate possibilities. The real estate market of this country is particularly strong and Cyprus is a desirable investment location for plenty of reasons. There are some main characteristics that transform this market into a well defined one that can be very appealing to foreign investors. One of the main reasons is that the market grows on a constant basis; actually, the Cypriot market is one of the fastest growing environments when it comes to the development of real estate businesses. The annual average may reach almost 20% and almost every property price is still lower compared to other European countries.
Another aspect that may be very convincing for foreign investors is the sharp increase that has characterized the golf properties that are available on the current market; the tax rate is lower, thus transforming the entire country into a genuine attraction for almost every investor who is interested in buying an apartment, villa or other real estate in this country. One should not forget about the weather either because every resident of this country can enjoy 340 days of real sunshine a year. Cyprus is an enjoyable location and this country is quite comfortable too regardless of your country of origin. You can expect high standards when it comes to living in a country with good facilities that can even include top class golf courses.
You can live in this country at a low cost and your life will be improved by quality features; therefore, you may choose to make a Cyprus property investment because this investment will prove to be a highly beneficial one. This country even has a low crime rate and its friendly inhabitants are likely to transform the country into quite a desirable place to live or visit. The medical facilities are excellent and if you are planning to develop your own career, you ought to be aware that there are plenty of business opportunities in this country. These business advantages may actually transform the country into a more desirable destination or residence. Every investor will discover a ready market that will provide him with all the necessary opportunities; well administered procedures are likely to secure your future investment when purchasing an apartment, villa or other real estate. Buying property is this country is actually a safe decision for the future.
If you are looking for genuine reasons for making a Cyprus property investment, you may consider the following points because they are likely to be helpful when it comes to understanding the current real estate market that can be found in this country. First, investors will discover that prices are generally lower than other European prices; even the living costs are relatively lower when compared to other countries and the quality of life itself is thus improved. The good facilities are worth mentioning too because the national economy is mainly characterized by stability and robustness. All these features are underlined by the constant and favorable evaluations that are coming from almost every European institution. Even the International Monetary Fund underlines the economic and financial stability of this country.
Cyprus boasts an efficient land registry and this system comes along with well administered and straightforward procedures that are designed to encourage every potential foreign investor. Property purchase has thus been transformed into a safe option that any person may consider for his/her future life experience. Even the legal system encourages all potential investments that are related to the real estate market; investors will also take advantage of some fiscal incentives and they can also enjoy a lower level of taxation.
Special tax incentives are offered by the Cypriot government in order to encourage the real estate field; the country also has one of the fastest growing economies and this aspect may be very appealing to every real estate investor. The strategic location of the country together with the unrestricted access makes this land the perfect location for your future real estate businesses.
April 8th, 2010
posted in Property Investment
Each gold bar is of 24 karat gold purity and has the exact purity and weight stamped on each gold bar, then sealed for your safety and security. The pure gold content of each Credit Suisse gold bar is fully backed by the world renowned Credit Suisse Bank of Switzerland. Each bar is also stamped with a unique serial number to authenticate the bar. These bars come in gold, platinum, silver and palladium. We sell unique gold 10 gram pamp zodiac bars which have the zodiac sign. They come in Aries, Taurus, Gemini, Cancer, Leo, Virgo, Libra, Scorpio, Sagittarius, Capricorn, Aquarius, and Pisces. These bars can be worn as jewelry items when placed in gold bezels. Bezels are available in many sizes, 1 gram, 2.5 gram, 5 gram, 10 gram. By investing in gold physical precious metals, such as gold, platinum, silver and palladium, you will avoid the drama of the stock markets paper investments. It also does not have the staidness of parking your money in long-term debt products. Metal prices have been volatile, but well within ranges and though the metal has had a strong run in 2007 and 2008 with fairly high prices, analysts expect there will be a further appreciation. Looking at what the crude oil market has been in the last few months is an indicator of where the metals market is heading in the near future. The time is still right in purchasing gold or other precious metals as it is a commodity that still has legs for a good run. Near future prices of gold in the range $1000-$1200 per oz for gold is only a matter of time as gold investment money will flow into precious metals do to the still uncertain global economy. Buying bullion bars and uncirculated mint coins buying as physical investment is the right choice. Online purchase of the coins and bars can be a very easy process with secure transactions provided by coinsbullions.com
April 8th, 2010
posted in Gold Investment
While rampant speculation may grab headlines in national property markets, improving regulation and increasing transparency are making them more attractive to investors from around the world, a new research study shows. The global Middle East and North Africa (MENA) report from Jones Lang Lasalle, the property investment and advisory firm, found that Dubai was the most transparent market in the region. The emirate has seen a 12-fold increase in transactions since 2002, which is when the emirate opened up the property market for foreigners and began improving its legal structure.
The total value of the transactions at the end of last year reached Dh460 billion (US$125.34bn), up from Dh39bn at the end of 2002, according to Dubai Land Department data quoted in the report. Jones Lang Lasalle estimated that Dubai could see more than 70,000 property transactions by the end of this year, valued at about Dh700bn. The study covers 82 global markets classified into five tiers, with the top tier the “most transparent” and the fifth the most “opaque”. Dubai rose to tier three this year – an area defined as semi-transparent – with Jones Lang Lasalle predicting the emirate will upgrade to a fully transparent tier two market by the end of 2010. “If you superimpose the improvements in regulation on the sales figures, you will see why Dubai has seen a 12-fold increase,” said Blair Hagkull, the managing director for MENA at Jones Lang Lasalle.
Abu Dhabi followed closely behind and is rated the third most transparent market in the region after Saudi Arabia , sharing tier three with Dubai . “ Abu Dhabi is three to four years behind Dubai ‘s real estate boom and what they have achieved in terms of transparency is remarkable,” Mr Hagkull said. Attributing the rising level of transparency in Abu Dhabi to the establishment of a Land Regulation Department in 2005 and the emirate’s vision 2030, Mr Hagkull said there was still “a lot to be done in Abu Dhabi” due mainly to foreign ownership limitations.
April 7th, 2010
posted in Property Investment
It looks like another banner year for the triple net leasing market, with demand far exceeding supply in most areas of the country. Thanks largely to the baby boomer population seeking out new types of retirement investments, demand continues to be high, and the demand, for the most part, comes from people who are in the midst of 1031 tax deferred exchanges. And even in light of interest rates trending upwards, cap rates tend to remain low with prices holding steady. Shopping Center Business recently spoke with several companies that are active in the triple net market to find out more about these trends and what we can expect for 2006. Demographic Shift The main reason for the current state of the triple net market is the significant demographic shift of baby boomers moving into their retirement years. According to Bruce McDonald, president of Net Lease Capital Advisors, there are about 75 million baby boomers, the oldest of which are just hitting the age of 60, so there are a lot of older Americans who have built up substantial wealth in real estate portfolios. Their ability to go into the net lease market allows them to avoid paying capital gains tax and move from management-intensive real estate to passive real estate that provides a stable income. “There are a lot of people who have built their portfolios out of single-family, duplexes or triplexes, and they are getting too old to bother with that and now have a yin for a management-free investment that produces a regular cash flow,” says Ralph Bunje, president of Reverse Exchange Services, Inc. “The traditional triple net model for these investors was a single-tenant property, such as a Burger King or post office because it fit their criteria. Now, as a result of this demographic shift, there has been the creation of the TIC [tenant in common] industry.” In addition to a management-free investment, a lot of these retirees are looking for “safer” investments as opposed to the traditional stock market approach. “There are a lot of people who had perhaps previously invested in the stock market or other investment opportunities and feel more comfortable getting into the triple net market now,” says Leith Swanson, president of Prime Net Realty Advisors, Inc. “There are a lot of very wealthy investors — individuals and entities — that are in the market and, at the same time, there has been a shortage of quality investment-grade net lease properties available for that pool of investors to buy. So what you’ve ended up with in the last couple of years is a huge pool of investors that are investing because of 1031 requirements or simply because they’re in the market and they are doing a dozen deals a year.” Though most agree that triple net investing is becoming more and more popular, one person we talked to thinks the stock market still has some appeal. “I think the media has been successful in helping create the perception of the real estate bubble out there,” says Keith Sturm, principal with Upland Real Estate Group. “I don’t think there is a bubble, but certainly clients have been a bit more hesitant about real estate just based upon what they hear on TV. With that, I’m noticing that the stock market has become sexy again. People have very short term memories and have forgotten how their 401Ks turned into 101Ks over the last stock market ‘crash.’ Those memories have been fading, and people are thinking about jumping back in.” Gaining Interest Interest rates on triple net investments may be rising, but cap rates so far have not necessarily followed, according to several people we talked to, and pricing still remains steady. “The demand continues to be strong because folks are simply looking for non-management properties and net lease seems to fit the bill,” says Jay Bastian, senior vice president of acquisitions for Commercial Net Lease Realty. “If treasuries stay where they are or trend lower, I think cap rates will probably maintain their current levels, but obviously treasuries are a driver of cap rates in some respects. Everyone talks about increasing interest rates, but I don’t see the demand sliding because of it; it’s just going to change pricing on deals.” “It’s still an incredible seller’s marketplace,” notes James Dwoskin, president of ICA Realty. “Sellers are still holding tight to prices that were originally put in place at a lower interest rate environment, but there doesn’t seem to have been any movement in the cap rates on the highest credit deals. On the lesser credit deals, there’s always been more flexibility and play in the pricing.” According to William H. Winn, president of Passco Companies, LLC, supply is still constrained and there is more demand by buyers. “However,” he says, “the movement of the interest rate has changed the market somewhat. Rising interest rates have, and will continue, to put downward pressure on yields, and as the trend continues, demand will be reduced on the buyer’s side.” Winn continues: “If sellers do not lower their price expectations, the result will be less transaction volume because buyers and sellers will not be able to agree on purchase price.” McDonald says he has yet to see a change in pricing. “Everyone would think that the cap rates will track interest rates,” he notes. “If interest rates continue to go up, there may be a change in pricing at some point, but so far it’s early. There’s usually a delay anyway, but I think in this market, there’s likely to be a longer delay between the interest rates and the cap rates.” Jonathan Hipp, president of Calkain Companies, takes a similar view. “There’s a lot of activity with tax-motivated buyers and plenty of fresh equity that’s not tied to an exchange,” says Hipp. “Although interest rates have gone up, cap rates have not correspondingly seemed to move in conjunction with the interest rates, so there are some pretty aggressive cap rates compared to what the debt is.” According to Sturm, the lower-priced, quality properties are holding their cap rates, and in the category of non-investment-grade properties that are in the $1.5 to $5 million range, there’s real pressure to increase cap rates. “The trend I’m seeing now is there’s incredible pressure on cap rates, based upon interest rates rising, that is causing a little bit of a slow down in the market until cap rates can adjust to interest rates,” says Sturm. 2006 Market So what effect will the demographic shift and rising interest rates have long term? The great risk is that people are buying at a market high, according to Bunje, but how long that will last is the burning question. “The demographic shift will probably continue to push for this type of investment for the next 10 years, at least,” he says. “But the question is, will these investments be popular and will the demand be there if the housing market should fall apart? If housing values go down, the whole focus is going to have to be on long term interest rates. So you just watch the 10-year Treasury rate and that will tell you what happens in that marketplace.” There are several forces that are going to cause cap rates to ease in 2006, says Barry Silver, senior partner with Silver Willis Investment Real Estate. “For the first time in my experience, investors are not willing to accept such small returns and they’ve turned to the TIC market,” he notes. “And they are being sold a higher current return without giving a tremendous amount of thought to the ramifications of what’s going to happen when the debt adjusts up to the interest rates that they’ll be seeing in 5 or 10 years.” Swanson says cap rates for net lease properties are going to be higher in 2006. “We may not see a fourth quarter that will look as good as the third quarter results are looking. But cap rates historically have lagged behind movements in interest rates, and though cap rates have continued to drift lower in September, October and November, interest rates have been fairly stable overall. But there are some inflationary pressures, and we’ll see an increase in cap rates possibly late next year.” “An average cap rate for a long term triple net property is between 8 and 10 percent,” adds Bunje. “Many of them are selling at 5 and 6 percent today, and that’s largely because of low interest rates. If interest rates go up, then cap rates go up, and as cap rates go up, investors who invested will lose their money because the cap rates will change.” While competition remains fierce, it may be a tougher market in 2006, according to Paul Domb, asset manager for United Trust Fund. “As interest rates increase, the primary players — the large REITs and the CNLs — will continue to do business, and I think a lot of the Johnny-come-lately’s will not be able to compete and will find a very tough market.” Hot PropertyWhat, where and how 1031 investments are being made. With the success of triple net leasing and 1031 exchanges, what types of investments make the most sense these days? Shopping Center Business recently talked to James Dwoskin, president of ICA Realty; Paul Domb, asset manager for United Trust Fund; Ben Simon, partner with The Simon Companies; Leith Swanson, president of Prime Net Realty Advisors, Inc.; Bruce McDonald, president of Net Lease Capital Advisors; Jonathan Hipp, president ofSusan H. Fishman ; Keith Sturm, principal with Upland Real Estate Group, Inc.; Michael Shephardson, executive vice president of Trustreet Properties; and Dan McCabe, president of Investment Exchange Group to find out more about the types of properties and investments that are at the top of the list for today’s investor. SCB: What types of properties are hot for 1031s right now? Domb: From our perspective, one type of property is no better than the other, and we do everything — office, retail, industrial, bank branches, pawn shops, 7-11s, you name it — all single tenant. Simon: On the seller side, it’s the Eckerd’s and CVS’s that are popping out of the ground. If you can get with a builder that’s doing those, then you might be able to get your arms around a newer product. McDonald: All properties are sought after for 1031. I think that what typically separates it is the size of the 1031 buyer in terms of how much money they have to reinvest. On a typical bell curve, there are just a lot more 1031 people who have smaller dollars — $1 million to $5 million — to invest. You have a large volume of smaller retail properties, such as drugstores and fast food restaurants. If you put it in a larger perspective, retail has the most transactions, but it’s not as high because industrial and office tend to be larger deals. Hipp: It used to be mainly retail, but now there is a lot more office and industrial. But I’d still say retail because it’s the most produced product out there — like a 7,000 square-foot Advance Auto or a 3,000 square-foot video store. The most sought-after property is any pure triple net property with reasonable or good credit behind it and rental increases. More than ever, I’m seeing buyers who have to buy something other than what they had hoped for and at yields lower than they had expected. Sturm: The single-tenant net lease, good-credit, well located properties are what’s really selling most today. We do a lot of retail, and it’s what we classify as the minimal management properties. The best-selling ones we see currently are passive real estate investments, where the owner just gets a check on a daily basis. McCabe: There are a wide variety of sought-after properties for 1031s. I’ve seen everything from large industrial complexes that are broken down and the typical semi-regional shopping center to gas and oil interests and multi-tenant office buildings. It almost depends on what the originator can find. I’m seeing a significant number of multi-tenant product, i.e. office buildings, medical facilities. There are too many inexperienced dollars chasing too few good deals. SCB: How hard is it to find properties? Dwoskin: The better properties are very hard to find. There are a lot of lesser credit, specialty type buildings, things like net-leased franchisee restaurant properties — those are always readily available. The harder things to come by are leased properties that are significant assets, such as warehouse distribution facilities, office buildings or well located retail facilities that are leased to investment-grade credit tenants. Over the last several years, most of the high-credit big-box users, like Wal-Mart, Target, Costco, Home Depot and Lowe’s, have decided that they no longer want to be tenants if they can avoid it and want to own all of their properties. So those deals are evaporating; there are very few, if any, in the marketplace. So what’s left of the investment-grade credit deals is coveted, and people will pay more for them. Hipp: Properties are not hard to find; it’s hard to find something that makes sense. It still continues to be a market where, if you see something you like, you’ve got to go after it. Shephardson: We’re very niche-focused and work in two primary sectors – 90 percent of our business is in the restaurant arena and the other 10 percent is just general retail that includes drugstores, banks and convenience and gas stations. We’ve found that because we’ve been in the business for so long and know so many restaurant operators, and because we have a very strong acquisition business in our origination efforts, we don’t have any challenge finding product. SCB: Where are people looking for property? Domb: To the 1031 investor, private ownership is a big factor, so local properties would be key. Credit and the type of real estate are secondary or tertiary considerations. The 1031 investor is hard-pressed to find quality investments. Swanson: We typically deal with clients in the $7 million to $10 million range and above, and the area doesn’t seem to matter, although obviously they’re not buying a lot of property in Louisiana and Mississippi. The driving catalyst behind the growth in the net lease market is the fact that the investor can move across state lines and not be relegated to his own backyard. McDonald: The product is spread across the country; there are certain areas for different product types. Florida and the whole Southeast are big growth areas and so are the western states. Office and industrial headquarter building deals are being done all over — they tend to be in the distribution hubs, such as Memphis or New Jersey. SCB: Are TIC structures still on the rise? Swanson: TIC structures offer the individual investor who doesn’t have $3 million to $7 million an opportunity to jump in, so that’s really propelled the market growth that we’re seeing. McDonald: They are certainly on the rise. In 2001, they did about $160 million in equity and in this year, they’re expecting to do $4 billion of equity — and that’s just on the securities side. So there is obviously a huge demand, and that ties into the fact that the majority of 1031 buyers have less equity and TICs allow them to have somewhat of a passive investment. So it’s clearly a product that there is substantial demand for. Hipp: They are becoming a very popular vehicle and much more publicized and well known. There are a lot of people out there with $200,000 to $300,000, and it’s hard to buy something without taking on a lot of leverage. They would much prefer to partner with a group of others to buy a more quality asset and let somebody else worry about the management. Hipp: The TIC market is certainly becoming more popular, and I think they serve a purpose. But when people start buying properties with interest-only loans so they can cash flow, I think it’s a double-edged sword because when that loan comes due in 5 years, they’re going to be out to the market looking for debt in a different interest-rate environment. I’m not sure they realize exactly what they’re buying. Sturm: We think the TIC structure is really the future for passive real estate investments. The baby boomer generation as a demographic group just turned 59 and a half, and it’s not long until their 401K plans are going to be available to them to start pulling down money on a tax-deferred basis. But what we’re finding is that the quality TIC properties that are investment-grade are able to attract very good financing right now. We’re able to get long term fixed financing in the 5 to 6 percent range, while the 1031 or net lease properties we’re talking about have been financed in the 6 to 7 percent range. Shephardson: TICs have wonderful application in the larger 1031 arena where you are selling a pool of assets or you’re going to sell one large asset at $10 million to $20 million and you want to syndicate it amongst many buyers. So the only thing that’s holding the TIC market back is the potential ruling on whether it’s a real estate product or a securities product. We expect that we’ll be doing TICs sometime in the not too distant future because it expands the buyer’s universe.
by Susan H. Fishman
April 7th, 2010
posted in Investment News
The following is from originally published article at www.gold-speculator.com on February 4th
I’ve been trying to tell anyone, who would listen, to diversify at least some of their assets into gold for some time now. Five years back, the lot of willing listeners was small. I clearly remember my voice going hoarse one night as a mix of beer and fruity margaritas made a b-line straight to my brain and unleashed a roaring spiel on my uninterested friends. As I recall, the rest of the night, I was rather enjoyable, so I make no apologies. We’ve come a long way since then. When I first became interested in the commodities market, I remember very specifically that gold was trading at $375 per ounce, interest in the sector was low and misguided information was plentiful. It certainly wasn’t the bottom of the bear market, which came around the turn of the millennium and was marked by the 400 tonne auction of bullion by the Bank of England at historically low prices around $250 per ounce. Today we’re looking at gold prices north of $900, interest has definitely perked up but misguided information is still plentiful. So it doesn’t surprise me that many of the people who once shunned my message with apathy have now turned to me for advice. Nothing gets a person moving like fear and greed. If you’re worried that you may have missed the train, there’s good news for you. I strongly believe that we’ll see prices upwards of $2500 before all is said and done.
My goal is to try and demystify some of the myths and try to simplify your foray into gold investing, which is no-doubt one of the main reasons you are reading this. So without further ado, let me delve into some of the fundamental reasons why you should own some gold.
MONETARY INFLATION LEADS TO PRICE INFLATION AND YOU”RE WEALTH SHRINKS OVER TIME.
There are several reasons to own gold in the current environment and the most prominent and insidious of these reasons is inflation. I refer to the current inflation problem as insidious because it is in essence a hidden tax on the holders of whatever currency is being inflated. It is a sad fact that the “buttons” to control the printing of more money is unarguably under the control of politicians who have little regard for the long-term economic health of our nation and are more interested in where their next votes will come from to keep them in power. So as a means of protection from the whims of idiot politicians and the throngs of “expert” economic yes-men screaming that everything is alright, there is no substitute for gold as a means of preserving your hard earned wealth.
Let’s delve a little deeper. Two millennia ago, gold was used as a medium of exchange and also as a store of wealth. Back in the ancient roman days, it is said that you could buy a nice outfit and a nice pair of sandals for an ounce of gold. Today the equivalent to an ounce of gold (currently $923) will buy you a fairly nice suit and a decent pair of dress shoes. Let me contrast that with a brief study of history and “money” as we know it now, namely fiat currencies much like that green paper in your pocket. We’ll begin with Germany in the early 1900’s.
“Before World War I Germany was a prosperous country, with a gold-backed currency, expanding industry, and world leadership in optics, chemicals, and machinery. The German Mark, the British shilling, the French franc, and the Italian lira all had about equal value, and all were exchanged four or five to the dollar. That was in 1914. In 1923, at the most fevered moment of the German hyperinflation, the exchange rate between the dollar and the Mark was one trillion Marks to one dollar, and a wheelbarrow full of money would not even buy a newspaper.”
(http://www.pbs.org/wgbh/commandinghe…inflation.html)
Now we’ll jump forward a few decades and slide west to Argentina in the 1990’s.
“Argentina was subject to military dictatorship…for many years, that resulted in a number of significant economic problems. During the National Reorganization Process (1976-1983) huge debt was acquired for money that was later lost in different unfinished projects, the Falkland/Malvinas Islands War, and the state’s takeover of private debts….. new government’s plans included stabilizing Argentina’s economy including the creation of a new currency (the Austral, first of its kind not to carry the word peso as part of its name), for which new loans were required. The state eventually became unable to pay the interest of this debt, the economy collapsed and inflation began increasing. In 1989, Argentina’s inflation reached 200% per month, topping 3,000% annually.” http://en.wikipedia.org/wiki/Argenti…sis_(1999-2002)
And more recently we have Zimbabwe under the criminal dictatorship of Robert Mugabe, where we’ve seen hyperinflation to the tune of nearly 1000% per year. The price of a 2-ply sheet of toilet paper went from pennies to $417. A whole roll now costs $$145,750. History is littered with similar stories of currencies being inflated to worthlessness. The point I want to make with all this is that the root cause of all these problems can be summed into a few bullet points which then leads to the reason for owning gold. And they are:
1. A government exists with an entirely fiat currency, which means that the “money” used as legal tender has no intrinsic value and is enforced by means of law and the threat of punishment.
2. For whatever reasons, the government finds itself in a position where it has entered into more obligations to pay (liabilities) than it has funds to cover payment of. This is known as “bankruptcy” or “insolvency” if you are an individual and business-as-usual if you are a government entity.
3. The government finds that it is easiest to print money out of thin air to cover the obligations it has committed itself to pay for. This is usually the most politically acceptable solution as opposed to cutting spending or raising taxes.
4. The constant creation of money (monetary inflation) leads to a greater and greater supply of “money” chasing after the same amount of goods, thus leading to (price inflation) which I’m sure everyone is painfully aware of.
Previously I referred to inflation as a “hidden tax” on the holders of the currency. You may be wondering why this is so. Well, I believe it is pretty evident to anyone who eats, drives, buys, sells; that the price of everything around us has gone up considerably over the years. Or, a better assessment, I think is to see it as the dollars in your pocket have lost considerable purchasing power over time. (I’m trying hard not to use the word “value” because dollars have no value in and of themselves) This is no accident. The reason is simply because there is more money or “liquidity” floating around the economy and the supply of goods available for purchase has not increased by as much. I should mention, at this point the important difference between “monetary inflation” and “price inflation”. Monetary inflation is a direct result of the government creating too much money, which undoubtedly leads to higher prices for goods and services. But price inflation can occur without monetary inflation. Let’s say for example that a good or service becomes more scarce, and therefore more valuable, then the price of it will increase independently of what the monetary authorities are doing. However, when there is a general and sustained increase in the price of most goods and services, especially basic necessities, we definitely need to take a close look at what the government is doing with the printing presses.
I’ve taken the liberty of dissecting this enormous article into more digestible sections. Please check under the Gold Investing 101 sections for more on this series.
Disclaimer: Please keep in mind that we may or may not have positions in the financial instruments or assets we may write about. We provide our opinions in the interest of facilitating the free flow of ideas, which should not be mistaken for an investment advise. Please do your own due diligence before making any investment decisions. Please read the disclaimer at http://www.gold-speculator.com/index.php?pageid=disclaimer for the full disclosure.
Sincerely,
Markus Shultz
www.gold-speculator.com
April 7th, 2010
posted in Gold Investment
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