Investing, why should i invest?Investing can provide you a comfortable retirement fund, along with help you with your kids futures. If done smartly, it may give fantastic returns for little effort.Understand your targetsIf you’ve been working a couple of decades and you’re planning a retirement fund, developing a huge amount to invest may possibly help you greatly. As you will likely spend your investment in a few years, the return, if not enough to furnish a paid-for retirement home, will at the least start you, on your way.If you are younger, having time on your side is a wonderful advantages, because you can invest reasonably small amounts of dollars, that will then supply a large return if you are ready to stop working in 45 years or so. Of course, if you grow your investments as your monetary capabilities increase, the time it requires for you to develop a secure retired living will lower to thirty-nine years.The power of compoundingUnder is a description of how a good investment of $100 will grow in various situations:Year 5% 10% 15% 20%1 $100 $100 $100 $1005 $128 $161 $201 $24910 $163 $259 $405 $61915 $208 $418 $814 $1,54125 $339 $1,083 $3,292 $9,540The reason this type of extreme surge in earnings is made is due to a term referred to as compounding. Once your first earnings are developed, they begin yielding profit also, making a snowballing impact.Age 5% 10% 15% 20%15 $100 $100 $100 $10020 $128 $161 $201 $24925 $163 $259 $405 $61930 $208 $418 $814 $1,54140 $339 $1,083 $3,292 $9,54050 $552 $2,810 $13,318 $59,06760 $899 $7,298 $53,877 $365,72665 $1,147 $11,739 $108,366 $910,044Regarding the factors that has been said it is best to ask yourself why should i invest?If investments, no matter how little are manufactured from an earlier age, experiencing over-spending is less expensive, since your initial investment remains locked on the market. Even though cash is easy to spend and lose, your base is still existing and you’ve got enough time to recuperate by investing once more.In contrast, somebody that overspends from an earlier life, and starts sinking large measures of money into the market at middle-age, will generate a lot less revenue than the first circumstance.Investing early is therefore more rewarding than investing drastically, since compounding is more effective then. Once your money is in the market, it starts providing more income in your case, and it doesn’t stop.Frequent mistakes madeYou don’t have to observe the market all day long and each day, but doing nothing will not make your retirement easier.Start to make investments late in life will produce inadequate and unsatisfying final results, as well as tie up money you may have expended more wisely.If you invest while owing funds to the creditors, the interest you’ll accrue over the same time frame stretch will far be greater than your profits.Do not commit short-term looking to produce a quick sale, since outcomes will be small in comparison to long-term patient investment.Investing in your company’s plan could be an extremely good chance, and since you aren’t dropping anything at all by not investing, it is unreasonable to not be involved.Invest into stocks and be patient with the rougher periods, if you have the time to wait around. The final results will balance the tension.Do not gamble with your cash by making foolish, badly-researched investments.Getting antiques, collectibles and trying to play the lottery aren’t what make up solid investments.Once your savings is done, stick to your stock, since fees you are going to incur while switching among firms will ruin what ever dollars you’ll make.Start thinking today why should i invest in oil and gas business.
November 5th, 2010
posted in Investment Theory
Disclaimer
Present review has been based on available documents and written with the intention of giving a comprehensive introduction. However, it shall not be deemed as an official offer—it is solely for information purposes.
Short Summary
Socially responsible, two-year investment opportunity with an outstanding fixed return (vineyard and winery). This opportunity can serve as an entry point for investment in next development phases of a planned eco-village for the next 10–12 years.
Major Characteristics
Analysis
This opportunity offers the investor outstanding returns through investing in vineyard- and winery development, eco-production and extensive real estate development—all of these in the spirit of sustainable development.
Presently there are 180 thousand excellent vines planted in one tenth of the 830-hectare (2050-acre) land under Mediterranean climate exclusively owned by the development company in Southern Europe. The area is located in a famous wine-producing region of an EU member state—a region once giving the best quality wines in that country—, and it is within one hour’s reach from several airports and seaports. In terms of quantity it is still the country’s largest wine-producing region, but since the time when quantity overtook quality in priority, the region has lost its number one position in offering quality wines. It is the development company’s aim to once again provide customers with the best quality wines in the country.
Nearly half a million Euros worth of grapes and other produce grown in eco-production that has provided steady results for over twenty years are sold to nearby food processing plants.
The first phase in development will be the relaunching of the winery on the ranch by using the results of geological and meteorological research. Using cutting-edge urban planning methods, a complex eco-village system will be built around the winery in next development phases. It will create a well-planned environment for living, working and leisure while bringing about substantial employment in the area.
Strengths
Duration and Return
The investment duration and return are fixed in advance in the loan agreement; they are not dependent on external factors. Investment period: 24 months from the date of receiving invested funds on development company’s bank account. The development company will pay back the invested amount with agreed interest within 30 days after the investment period ends. Interest receivable depend on invested amount:5000–15,000 Euros: 15.00% (for 24 months)15,001–30,000 Euros: 19.00% (for 24 months)30,001–50,000 Euros: 21.00% (for 24 months)50,001–75,000 Euros: 23.00% (for 24 months)above 75,000 Euros: 25.00% (for 24 months)The investor will receive quarterly development reports throughout the investment period.
Guarantee
Investor’s capital and interest receivable are guaranteed by considerable factors and collaterals:– Recognition of debt is signed in front of a public notary.– A unilateral mortgage charge is secured in the land registry against the land exclusively owned by the development company for the benefit of each investor and for the amounts invested plus interests receivable. (The estate is free from all other encumbrances.)– Current farm and vineyard profits totaled 423 thousand Euros last year—the market is secure.– The Regional Government will provide a grant of up to 50 percent of the costs on completing of building.– The winery project is only part of the next 10–12 years of development. The company has contracted revenues in excess of 14 million Euros, which they will receive in the next 12 months.– The development company does not build on traditional financing from money markets. Knowing the present state of banking, this strengthens viability and sustainability of the project.
Partnership
Among contracted partners (eco-planning, energy, environmental preservation, leisure development, real estate) there are world-famous, award-winning institutions, which further improve project outcome.
SIPP- and SSAS-Approval
The investment is approved for SIPP (Self-Invested Personal Pension) and SSAS (Small Self-Administered Scheme) in the United Kingdom.
Site Visit
The development company can make arrangements for investors to visit the development estate (with prior appointment).
Future Investment Opportunities
Estate development over the next 10–12 years has pleasant opportunities in store for the investor. The development company plans to cover future financing needs primarily through involving investing partners.
Socially Responsible Investment
The project is not only intended for financial benefits, but in line with the developer company’s business philosophy, it also generates a wealth of social benefits. Through employing worldclass urban planning methods the project is intended to be a good example of sustainable development.
Risks and Weaknesses
Crop Failure
One income source for the project is selling produce. Crop failure could be a potential risk factor. However, according to data from the developer company crop yields have been steady since starting production over twenty years ago; there has been no crop failure so far. A project objective is to improve production yields and crop cultures by using scientific methods.
Liquidation
The issues of debtor’s insolvency and liquidation are obviously very fundamental for all investments. In our case the land estate exclusively owned by the development company is valued at multiple times of the project value. The estate is located within the European Union and this fact provides the unilateral mortgage charge’s beneficiaries with a firm legal framework.
Liquidity
Even though the development company’s preferred investor will not want to withdraw funds prematurely—because funds are used as working capital within the project—, it is possible that another investor takes contracted position over should an existing investor decide to withdraw.
Contact
If you need further details about the above opportunity, please, don’t hesitate to contact me by email at the address above (top). If you would like to take hold of this investment opportunity, please, don’t hesitate to contact me and I will send you the documentation package (e.g. fact sheet, brochure, contract).
http://wisenvst.wordpress.com/2010/02/10/nvy-001-25-2y-eur-5000/
November 4th, 2010
posted in Investment Theory
Every investor has had to go through the phase of first time investment. The most successful people in the investment market has been through this tricky junction at some point of their life. So, how does one get the best out of the inevitable first time to invest? We will turn over deeper into the subject of first time trading and how one can prepare himself/herself for the best possible result.
1. Determine the way of investment: If it’s the first time to invest, it would be a good idea to choose a solid way of investment. The most basic method of safe investing is by opening a savings account of a bank, which would hand you good returns which is generally not much compared to other means of investment. There are other ways to ensure higher returns, but it becomes quite risky for the first time investor. So, only after having complete knowledge of all the investment options disposable, one must choose the option that suits his/her needs the best.
2. Proper knowledge about the best investments option: Without proper knowledge, an investor cannot dream of making it big. If one is investing in a bank, he/she must be clear about the rules and policies associated with the investments option, and must plan according. If investing in the stock market or Forex, it is extremely important to know the market properly. One must be utterly sure about the basics of the market, and its functioning before making an investment in the extremely volatile market.
3.Choosing the best broker or financial advisor: If you are investing in stock market, you need to search for a good broking firm that would offer the best online trading facilities at the lowest possible commission rate. There are some broking firms that provide special program for first-time investors. These are the factors to look for while choosing a broker. In case of other forms of investments, it is better to consult a financial advisor. Nevertheless, one must be careful to select a good and faithful financial consultant, which would guide him/her through the initial phase.
4.Being confident and dedicated about the investment: The fear of making losses ideally should not stops one from taking investment decisions. Some investors are over cautious and the fear of losing money creates a situation where they fail to act. Particularly in stock market, in the most likely case, people are sure to incur losses at the beginning, but once the basics are grasped, the profits that follow make more than enough to cover the initial losses. Therefore, one should be completely confident about their decisions, and the fear of losing money should never dent their confidence. Moreover, an investor should commit his energy and time along with money while making an investment. This is because of the simple fact that money cannot make money, unless it is being worked upon and that can only happen when our complete efforts are committed to the cause.
If you are about to make your first time investment learn about different investments options by visiting us now.
Article Source: http://EzineArticles.com/?expert=Erick_Feskey
November 3rd, 2010
posted in Investment Theory
It is the ultimate aim of a man to plan his future, and this is why long-term investments are so important. If you choose the perfect investment plan, it would mean that when you retire, you will still have the financial freedom that you wished for while investing for a long period. Long-term investments also act as a security measure at a time when you don’t have a fixed income anymore and can take care of your health, which is surely not going to be as good as the time you started investing. Therefore making a long-term investment plan is similar to planning one’s future.
So, where is the starting point of investing for a long period? There are certain doubts that will surface before investing: What is the best long-term investment plan available? Should one ask for the external help from a financial advisor or go ahead alone? This article gives you certain tips to excel in the long-term investment market.
There are many investment options to consider when planning for your retirement. It could get to be very confusing at times. Be sure to check out the different long term investing possibilities that best fit you, your plans, your family and your future.
Article Source: http://EzineArticles.com/?expert=Erick_Feskey
November 2nd, 2010
posted in Investment Theory
Online investing is a relatively new way for individuals to establish or build investment portfolios. Members can open new accounts, fund existing accounts, and engage in trading activities 24 hours a day, 7 days a week from the comfort of home.
Online investing provides newbie investors with the necessary tools to become educated about the different types of investment products. Seasoned investors find online investing a convenient option which allows them to buy, trade, or sell when the stock market reveals fluctuations.
Individuals should become familiar with the various types of investment products prior to establishing an online investment account. Most of the major investment firms offer online investing tools to help clients determine which products are best suited for their personal investment goals.
Common investment products include: certificates of deposit (CDs), treasury bonds, stocks and options, life insurance annuities, mutual funds, and tax-deferred income annuities.
Some of the most recognizable investment firms offering the option to establish online accounts include: Fidelity Investments, Edward Jones, Merrill Lynch, and Charles Schwab. Each investment website offers an array of interactive tools, online webinars, and article libraries to help clients become familiar with their company and available services.
In addition to offering online tools, many investment companies also have physical locations where clients can meet with brokers to discuss their goals and develop short- and long-term investing plans. Most investment brokers offer complimentary consultations to potential clients. Consultations can take place by phone, in person, or via instant messaging systems.
Investors should take time to research each company and available products. Considerations should include the anticipated return on investment; fees associated with online investing activities; potential risks of each product; and tax consequences.
Both newbie and seasoned investors may find online investing to be intimidating. They are often concerned about security breaches, identity theft, and potential financial problems that could occur by exposing personal information. Suffice it to say that nothing is immune to computer hacking, but investment companies go to great lengths to protect their clients financial portfolios.
One reliable source for learning about security features and investment products is InvestingOnline.org. The website includes an investing simulator tool which allows visitors to buy, sell and trade virtual stocks to learn how the process works. Visitors can also take quizzes to determine their level of online investing skills and review sections which discuss how to avoid being scammed, along with tips for keeping information safe.
Everyone has their own unique approach to investing. Some people prefer to invest in one type of product. Others like to incorporate different products with profits they earn from their first investment. While other investors use two or more brokerage firms to purchase multiple products. The choice is completely up to you and what you feel comfortable doing.
Online investing has opened up a new world of opportunities and leveled the field so that everyone can capitalize on the various types of investment products. Investors who take time to become educated about the process and learn which products pay the highest return can build a strong financial portfolio that can help achieve their goals.
October 31st, 2010
posted in Investment Theory
Investing, why should i invest?
Investing can offer you an appropriate retirement fund, and also help you with your kids futures. If done smartly, it might offer you great incentives for little effort.
Realize your targets
If you have been working for some years and you’re organising a retirement fund, developing a huge amount to invest would probably assist you tremendously. As you’ll likely spend your investment in a number of decades, the return, if not enough to furnish a paid-for retirement home, will at least start for your way.
If you are young, having time in your favor is an excellent benefit, since you can invest comparatively small amounts of income, that will then give a large return if you are ready to retire in 45 years or so. If you grow your investments as your monetary capacities grow, the time it will take for you to build a secure retired living will decrease to thirty-nine years.
The effectiveness of compounding
Under is a description of how a good investment of $100 will grow in various scenarios:
Year 5% 10% 15% 20%1 $100 $100 $100 $1005 $128 $161 $201 $24910 $163 $259 $405 $61915 $208 $418 $814 $1,54125 $339 $1,083 $3,292 $9,540
The reason this type of severe boost in earnings is generated is due to a term referred to as compounding. Once your first returns are generated, they start yielding income as well, creating a snowballing result.
Age 5% 10% 15% 20%15 $100 $100 $100 $10020 $128 $161 $201 $24925 $163 $259 $405 $61930 $208 $418 $814 $1,54140 $339 $1,083 $3,292 $9,54050 $552 $2,810 $13,318 $59,06760 $899 $7,298 $53,877 $365,72665 $1,147 $11,739 $108,366 $910,044
Regarding the factors that has been said it is best to ask yourself why should i invest?
If investments, regardless of how small are produced from an earlier age, indulging in over-expenses are more affordable, since your initial investment remains to be locked on the market. Although money is easy to spend and lose, your base is still existing and you have time to recover by investing again.
In comparison, somebody who overspends from an earlier life, then begins sinking considerable amounts of cash in the current market at middle-age, will make a lot less income than the first situation.
Investing early is therefore more worthwhile than investing drastically, since compounding works more effectively then. Once your cash is in the market, it starts generating more earnings for you, and it does not stop.
Frequent mistakes made
There’s no need to observe the market industry all day long and every single day, but doing nothing will definitely not make your retirement easier.
Starting out make investments late in your life will produce unproductive and unsatisfying final results, as well as tie up money you might have put in more wisely.
If you invest while owing dollars to credit card issuers, the interest you will accrue over one time stretch will far be greater than your profits.
Tend not to make investments short-term looking to produce a quick buck, since the final results will be minuscule when compared with long-term patient investing.
Investing in your business’ plan may be an extremely good possibility, and since you aren’t burning off anything at all by not investing, it is unreasonable to not take part.
Invest into stocks and be patient with all the harder times, if you have the time and energy to wait around. The end effects will stablize the strain.
Tend not to risk with your money by making foolish, badly-researched investments.
Acquiring antiques, collectibles and trying to play the lottery aren’t what comprises strong investments.
Once your investing is made, stick to your stock, since fees you’ll incur while switching among organizations will wreck what ever money you will make.
Start thinking today why should i invest in oil and gas business.
October 30th, 2010
posted in Investment Theory
As of last year, finance and retirement experts suggest that approximately 2% of the nations $3 trillion in IRA investment is stashed in real estate and other non-traditional investment vehicles. If you’re considering using your IRA savings to invest in real estate, there are some excellent reasons that you should choose Philippine Condotel Investment real estate to drive your retirement portfolio into high profit margins.Beth Collingz, PLC Global Marketing Director for the Lancaster Brand of Condotels in the Philippines, said Investing in foreign real estate is neither as risky nor as tricky as a lot of people would have you believe. While land and housing prices in the U.S. have soared astronomically in the past decade, the world real estate market is a far different story. It’s still possible to buy a preconstruction Condotel suite at Lancaster The Atrium located in Metro Manila, Philippines, for less than $50,000. Lancaster Manila Atrium Tower A, Shaw Boulevard, Metro Manila, Philippines is a “Full Service” Condominium Hotel ["Condotel"] offering Studio, One, Two and Three Bedroom Suites for sale. To be completed and ready for turnover from December 2010, the Lancaster Suites Manila Atrium Tower II will provide unit owners with premier residential condo units with the option of enrolling their units in the Lancaster Condotel Rental Pool and earn Rental Incomes [at current purchase levels] of some 12-16% ROI per annum as Owner Non-Residents when not using their units through Condotel Management and reciprocal arrangement with Lancaster Cebu Resort Residences. This makes Lancaster Suites one of the Hottest Investment Opportunities in the Philippines. The beauty of holding property in the Philippines is the low cost of property taxes and maintenance. A $50,000 Condotel suite may set you back $200 in property taxes per year, and maintenance costs are similarly low. When you add in the tax-protected status of investments made in your IRA, and the 12-16% returns through rental income through the Condotel advantage, you have an incredible ROI on a purchase of Philippine Condotel investment real estate” enthused Collingz.What’s the downside about owning Philippine Condotel Investment real estate as an IRA investment? You cannot reside at your investment property as long as the IRA retirement account is titled as the owner of the property. The self directed IRA rules about benefiting personally from your IRA investments are strict – you are not allowed to make use of any property owned by your IRA, or you risk losing its tax-protected status and worse yet you could face penalties from the IRS. You can, however, rent out your IRA investment for steady income – putting the profits and cash flow into your IRA, or sell your Philippine Real Estate Investment for immediate profit, as long as those profits remain inside the IRA.If you’re looking for an unusual and high earning investment for your IRA, then take a serious look at owning Philippine Condotel investment real estate. It can help kick your IRA earnings into high gear.Global Life Management, Inc., PLC Internationals Marketing Partner based in the U.S recently announced its Self-Directed IRA Affiliate Program Available to US buyers of the Lancaster Brand of Condo Hotels in the Philippines.With the impending slowdown of the U.S. housing market and failing pension plans, many investors are turning to using their IRAs to invest in overseas properties and earn tax-free or tax-deferred income. This creates an outstanding opportunity for by offering self-directed IRAs to invest in the Lancaster Suites Atrium Tower preconstruction units.With preconstruction property appreciating at some 20-30% per annum not only does the Real Estate Appreciation look good but the rental income is in excess of what many IRA and Pension Plans offer for the same or similar investment.Jeffrey Clarke, President of Global Life Management, a company specializing in Philippine businesses and investments, is now offering its affiliate program to interested clients based in the U.S, announced that We handle all the paperwork, answer any client questions and can even setup a LLC driven IRA with checkbook control all for a price $1,775 less expensive than our major competitors. We’re finding clients, who previously were undecided, are now very interested in using a Self-Directed IRA to purchase a Condo Hotel unit. Not only can they qualify for the 20% discount, in many cases, but they are excited to learn they can earn rental income tax-free or tax-deferred, saving them tax dollars on capital gains; says Jeffrey.Beth Collingz says that many new investors are looking to replace failed pension plans and other future saving schemes with a solid investment in Real Estate. Clients are looking for investments that will give them an income for retirement as an alternative to traditional private pension plans that have failed. Most company pension plans are insufficient as are Government Pensions. Bank rates for Savings accounts are at record lows. Savvy investors are now looking for a more solid investment with potential for monthly income. Condotels in the Philippines fit the billThis potential, high rates of rental returns from Condotel Investments, currently from 12% up to 16% per annum, opens up a huge market not traditionally looked at by Real Estate Agents and Brokers whom all so often run around looking for normal residential profile buyers without looking at the by far bigger picture of investments, investing and retirement. “We’re here to help our clients, educating our clients and advising them of emerging investment opportunities. Self-Directed IRAs and the Lancaster Suites Atrium Condotels, fit this bill exactly; adds Jeffrey.GLM is a global investment consulting company, specializing in educating its clients on emerging investment opportunities, metals, currencies and self-directed IRAs
October 29th, 2010
posted in Investment Theory
Beth Collingz, PLC International Marketing Director for Pacific Concord Properties Lancaster Brand of Condotels in the Philippines in a Press Conference with International Investors from the United Kingdom held recently at Shangri-La Mactan Resort Hotel in Cebu, reckoned – “Thousands of people in the UK are beginning to catch on” A Self Invested Pension Plan [SIPP] is a personal pension plan but with one very significant difference: administration is separate from investment content, giving the plan holder freedom to choose for himself and change the investments within it. The long-awaited rules on what savers can include in their personal pension plans were unveiled in April 2006 by HM Revenue & Customs. The Guidance Notes confirm that the Chancellor is permitting Self Invested Pension Plan [SIPP] holders to invest in hotels such as the Lancaster Brand of Condo Hotels in the Philippines. The only stipulation is that SIPP holders may not stay in their rooms. With more nights available for paying guests, this not surprisingly increases the room owners’ returns. It is estimated there are now more than 70,000 plans holding over £14bn.A year or so ago, few people in the UK realized that they could manage their Pension Plan portfolios themselves, and even fewer knew that they could invest their SIPP retirement money in homes in the sun which now prove to be among the most popular potential investments to include in a SIPP If you’re considering using your SIPP to invest in real estate, there are some excellent reasons that you should choose Philippine Condotel Investment real estate to drive your retirement portfolio into high profit margins. The Philippines is ideal for this type of investment because a SIPP can establish title to a property in a country whose legal framework recognizes trusts and a SIPP is simply another form of trust.Investing in foreign real estate is neither as risky nor as tricky as a lot of people would have you believe. While land and housing prices in the U.K. have soared astronomically in the past decade, the world real estate market is a far different story. It’s still possible to buy a preconstruction Condotel suite at Lancaster The Atrium located in Metro Manila, Philippines, for less than GBP £25,000.00Lancaster Manila Atrium Tower A, Shaw Boulevard, Metro Manila, Philippines is a “Full Service” Condominium Hotel ["Condotel"] offering Studio, One, Two and Three Bedroom Suites for sale. To be completed and ready for turnover from December 2010, the Lancaster Suites Manila Atrium Tower II will provide unit owners with premier residential condo units with the option of enrolling their units in the Lancaster Condotel Rental Pool and earn Rental Incomes [at current purchase levels] of some 8-16% ROI per annum as Owner Non-Residents when not using their units through Condotel Management. This makes Lancaster Suites one of the Hottest Investment Opportunities in the Philippines.The beauty of holding property in the Philippines is the low cost of property taxes and maintenance. A GBP £25,000 Condotel suite may set you back GBP £100 in property taxes per year, and maintenance costs are similarly low. When you add in the tax-protected status of investments made in your IRA, and the 12-16% returns through rental income through the Condotel advantage, you have an incredible ROI on a purchase of Philippine Condotel investment real estate enthused Collingz.What’s the downside about owning Philippine Condotel Investment real estate as an SIPP investment? You cannot reside at your investment property as long as the SIPP is titled as the owner of the property. The self directed pension plan rules about benefiting personally from your investments are strict – you are not allowed to make use of any property owned by your SIPP, or you risk losing its tax-protected status and worse yet you could face penalties from HM Customs & Excise. You can, however, rent out your SIPP investment for steady income – putting the profits and cash flow into your SIPP, or sell your Philippine Real Estate Investment for immediate profit, as long as those profits remain inside the SIPP.If you’re looking for an unusual and high earning investment for your SIPP, then take a serious look at owning Philippine Condotel investment real estate. It can help kick your SIPP earnings into high gear.With the impending slowdown of the UK. housing market and failing pension plans, many investors are turning to using their SIPP’s to invest in overseas properties and earn tax-free or tax-deferred income. This creates an outstanding opportunity for by offering self-directed pension plan vehicle to invest in the Lancaster Suites Atrium Tower preconstruction units.With preconstruction property appreciating at some 20-30% per annum not only does the Real Estate Appreciation look good but the rental income is in excess of what many Pension Plans offer for the same or similar investment.Beth Collingz says that many new investors are looking to replace failed pension plans and other future saving schemes with a solid investment in Real Estate. Clients are looking for investments that will give them an income for retirement as an alternative to traditional private pension plans that have failed. Most company pension plans are insufficient as are Government Pensions. Bank rates for Savings accounts are at record lows. Savvy investors are now looking for a more solid investment with potential for monthly income. Condotels in the Philippines fit the billThis potential, high rates of rental returns from Condotel Investments, currently from 8% up to 16% per annum, opens up a huge market not traditionally looked at by Real Estate Agents and Brokers whom all so often run around looking for normal residential profile buyers without looking at the by far bigger picture of investments, investing and retirement. “We’re here to help our clients, educating our clients and advising them of emerging investment opportunities. Self-Invested Pension Plans and the Lancaster Suites Atrium Condotels, fit this bill exactly; adds Collingz
October 28th, 2010
posted in Investment Theory
What Is Investing In Options
In your 401k plan both the best investment options and the worst investment might surprise you. Don’t take this personal, but your best investment is probably not your company’s stock.
So, you work for a good company and corporate stock is one of your 401k investment options. Believe it or not, this is not one of your best investment options and is probably your worst. No matter how successful the company you work for has been, virtually any corporation can find itself in financial trouble at one time or another. If you bet too heavily on company stock you could end up both out of a job and with heavy losses in your retirement plan if your employer falls upon hard times. If you want to come across as a team player put 10% in this investment choice, but no more.
Many 401k plans have a safe investment choice called a STABLE ACCOUNT or fund that simply pays interest. This is your best safe investment for the money you want to be conservative with. The big advantage here is the interest rate, which is often considerably higher than you can get outside of your plan. You may also have a money market fund as a safe investment choice. The problem here is that these funds are paying virtually nothing these days, so they are only your best safe investment if your plan does not offer a stable account option. What Is Investing In Options
Your other investment options are most likely mutual funds: bond funds, stock funds, and maybe balanced funds called TARGET funds. Target funds have become very popular with investors because they make investing easy. For example, if you plan to retire in about the year 2040, if you put your money in Target 2040 Fund they will manage it for you by investing in both stock funds and bond funds. I don’t see these funds as one of your best investment options. Yearly expenses can be higher than average. Plus, many of these funds, like a 2040 target fund, are more aggressive and more heavily invested in stock funds than many investors are comfortable with.
In search of your 401k best investment options there are two major choices left, bond funds and stock funds. Bond funds are not the safe investment many people like to think they are, but are safer than stock funds. The bond fund advantage is higher interest income. To keep your risk moderate go with a high-quality, intermediate-term bond fund vs. a long-term fund. Look for an average maturity of 5 to 10 years. This info is in your information package.
Stock funds are the best investment options for growth and higher investment returns over the long term. For most people I suggest going with a large-cap diversified growth and income or equity income fund with a dividend yield of about 2% (a year). In plain English, a fund that invests in large well known company stocks like IBM and General Electric. A dividend of 2% might not sound like much, but many stock funds pay virtually no dividends at all. Real growth in stocks funds comes from price appreciation… the value of stock prices going up. In a declining stock market it helps to have a dividend to help offset market losses.
Why are stock funds the best investment options for growth and higher returns vs. stock in the company you work for? In a fund you are diversified and own part of a large portfolio of different stocks… instead of just one. What Is Investing In Options
October 27th, 2010
posted in Investment Theory
A safety-critical component is defined as a component where the performance or tolerance is essential to the safe operation of the system to avoid death, injury, loss of equipment or property, or damage to the environment.
Examples of investment casting safety-critical components would be nuclear power plant pump assemblies, aerospace fan blades, and automotive brake components. These are the types of components that you do not want to fail under any circumstances. The importance of traceability has been well documented in the crash of United Airlines Flight 232 at Sioux City, Iowa on July 19, 1989 and the subsequent investigation by the National Transportation Safety Board (NTSB). Although the root cause of failure in this crash was a titanium forging, lessons from this failure apply equally as well to the investment casting industry and stress the need for traceability. In the crash of UAL232, the fault was traced to a critical failure of a fan disk caused by a bore-to-rim fracture. According to the NTSB Aircraft Accident Report issued Nov. 1, 1990, the fan disk had a serial number of MPO 00385 and a heat number of K8283 melted on Feb. 23, 1971. Each investment caster involved in making critical components should question if he can truly provide the traceability required in the manufacture of safety – related parts. Modern generic enterprise resource planning (ERP), and material requirements planning (MRP) computer systems often lack the ability to provide the full traceability required in the investment casting industry. However, several metalcasting-specific software suites are available to investment casters.ie Syncho32 is a specific ERP/MRP system, a global company providing a stable, integrated system. Established in 1975… the software completely fulfills the very specific requirements of the casting manufacturer and particularly the Investment casting manufacturers.
The market is full of ERP providers who maintain a specific label, they cannot compete with the pure and total specific nature and team skill which back up this software.
The ability to use an ERP/MRP system tailored specifically to the industry is of upmost importance. Metalcasting is unlike any other manufacturing process in that liquid metal forms the basis of the end product ,and molds that are used in the process are destroyed during the creation of the end product. Investment casting stands apart from other metalcasting manufacturing processes in that the castings have the qualities of complexity, superb surface finish, high dimensional accuracy, and no flash or parting lines.The benefits of investment casting, however, come hand-in-hand with a complex process.Within the investment casting industry, the ability to trace a part from inception, through investment, all the way through the final product is often a prerequisite for doing business involving safety related components. Most traceable parts only require traceability from the metal pouring stage onwards as there is not a unique identification number available until after the casting has been poured. There are two broad process control methodologies regarding the serialization of castings. In order for a casting to be serialized, it must be marked with a serial number or a unique identification number. Generally, this identification is embedded into the casting at the commencement of the investment casting process. Although technology does exist to laser etch identifications into the casting after the investment process itself, the unique identification is generally incorporated atinvestment time. Decisions must be made as to when the recording of the unique identification is made into the computer system for tracking and analysis. The decision is ultimately based on the nature of the safety-related component and the customer specifications. By performing the recording of the unique identification number from the commencement of the process, a full traceability of the casting is assured. The advantage that metalcasting- specific ERP/MRP software has over generic software solutions is that the specific needs of the investment caster are taken into account. As previously noted, metalcasting is uniquely different from other production manufacturing processes and investment casting is a specific individualized subset of metalcasting. In evaluating software solutions for investment casting operations, the following points should be considered:
Synchro32 has the full capability of meeting all the above requirements (1 > 10)
Investment casting is a special subset of the metalcasting industry. It is often necessary for the investment caster to be able to provide full traceability for the casting, especially when the casting is a safety related component. ModernInformation obtained from: Na- metalcasting specific ERP/MRP software tional Transportation Safety Board PB90- can provide the tools necessary to meet 910406 NTSB/AAR-90/06; AirDisaster; performingincreasing global the uniquefor Aero-News; Planecrashinfo; Synchro32.the ever the recording of demands identification number from the commencement of the process, a full traceability of the casting is assured. quality castings.
Specific investment casting needs and multiple IDs can be accommodated softwareThe advantage that metalcasting specific ERP/MRP software has over generic with solutions is that the specific needs of the investment caster are taken into account. Asmodern metalcasting-specific ERP/MRP software. previously mentioned, metalcasting is uniquely different from other production manufacturing processes and investment casting is a specific individualized subset of metalcasting. In evaluating software solutions for your investment casting operations, you need to consider the following points:
Author: B Nolan and Shane Allen
www.synchro32.com
October 26th, 2010
posted in Investment Theory
Over the past few years, the world has become obsessed with China and its growth. Just recently China has overtaken Japan as the second largest economy in the world and it won’t be long until it trails closely behind the United States. Over the last few years alone we’ve literally seen cities like Shanghai and Beijing go from “rags to riches”. More millionaires are created each day then any other country in the world, and it seems that everyone is cashing in on the China dream. There’s just one problem though. It’s virtually impossible to invest in China unless you’re Chinese or you have the connections needed to get you in on the wealth.
Unlike most countries, China restricts foreign nationals from investing directly into the stock market. For example, only the Chinese are able to invest in the Shanghai A Share market which means that unless you are a Chinese national, you’re not allowed in on the action. The only way to go about this is to trust a Chinese friend or family member to invest for you in their name (NOT advised for obvious reasons). Another way to invest in China is to convert your money to RMB and take advantage of the capital appreciation the yuan is predicted to experience over the next few years, but with an annual limit of $50,000 per year and a very complicated process to convert RMB back to a foreign currency, this too is highly advised against. You can invest in the property market, but unless you got in five years ago, you missed that opportunity. Besides, the profit margins aren’t as attractive as they used to be and according to the China Business News, experts are predicting a 20-30 percent decline in the second half of this year. Another way to invest in China is start a company, but unless you are willing to go through the most complicated process ever imaginable, forget it! It’s costs thousands of dollars, a tremendous amount of energy and time, and unless you have the connections to get you through the start of phase of your business, the odds are seriously stacked against you.
So how do you invest in China? How do you take advantage of the most cash rich economy in the world without jumping through a million and one hoops just to make a dollar? The answer to this question is simple. Invest in China without investing in China. First, forget about the property market, forget about starting a local business, and forget about the local Shanghai A Share market for reasons mentioned above. I’m going to show you a very simple and easy way to get your money in to the markets, make a tremendous profit, and get your money back as easy as you got it in.
Remember, investing is supposed to be an easy, efficient and comfortable process. It doesn’t have to be complicated nor should it be. The most important factor you need to take into consideration when investing in China or any developing country for that matter is SAFETY! Now don’t get me wrong, China is a wonderful place to live and it presents itself with more opportunities then most countries have to offer today. If you know what you’re doing and you have the right people on your team, you can accomplish big things. I’ve lived in Shanghai myself for six years now and have a great team working for me who have helped get my business to where it needs to be today. But this is only one way I have invested in China.
From January 2006 – October 2007, the Shanghai A Share market rallied nearly 500%. Everybody was making money during that time period including the taxi drivers and Ayi’s (Chinese maids) who were lining up at the bank to put their entire life savings into the markets. As a financial services company we knew it was not sustainable and strongly advised our clients to NOT get caught up in the hype. However, at the same time, we needed to come up with a way to get them in on the action without taking on the local risks involved. So, we turned to international stock exchanges such as the Hang Seng and began investing our clients’ cash into funds that held Chinese companies that were sure to see tremendous growth during that time period. For example, HSBC’s China Equity Fund was a big part of our portfolio during those two years and our client’s experienced an 82.8% return in 06′ and further 55.4% in 07′. The cumulative return over those two years was a staggering 138.2% and the best part about this was that their money was safely invested through the Hang Seng market in Hong Kong. Our client’s were able to and continue to be able to take advantage of China’s growth by investing in funds through international markets that hold the same exact companies that the Chinese are investing into locally.
But mutual funds aren’t the only way to invest in China without actually investing in China. Purchasing stocks directly in one particular company is another way to invest in Chinese companies that are predicted to yield phenomenal returns over the next couple of years. Savvy investors willing to take on the risk of investing directly into Chinese stocks can do so by investing via American Depository Receipts (ADR’s). An ADR represents ownership of shares in a foreign company, but it can be bought and sold just like any U.S. stock, allowing investors to diversify their portfolios with foreign assets, but skip the hassle of a foreign brokerage account. For example, a couple of years ago, I saw the direction the telecom industry in China was headed. With only two companies, China Mobile and China Telecom, I put two and two together and figured that when 1.6 billion people are forced to chose between just two companies that there was no other direction these companies could go but up. So I did my research and concluded that between the two, China Mobile (CHL) was going to be my telecom play. But I couldn’t invest directly in China Mobile via the Shanghai A share market so I looked up the ADR on the NYSE and purchased it that way. Over the same time period between 2006 – 2007, the stock price went from $25 per share to just over $100 per share. The cumulative return: 303.03%.
Now, returns like the ones mentioned above are obviously not sustainable and I would never suggest otherwise, but the point is that when the markets rally locally here in China, there are plenty of safe and reliable ways to take advantage of the growth and cash in on the opportunities presented. China Mobile and HSBC’s Chinese Equity Fund are only two examples of how to invest in China without investing in China, but there are hundreds of funds and companies that you would be able to invest in using the same approach. ADR’s and mutual funds listed on reputable and established stock exchanges mentioned above are great ways to capitalize on the growth China is expected to experience over the many years to come.
October 25th, 2010
posted in Investment Theory
There are two major types of investments done in the stock trading arena these days –short-term investments and long-term investments. If you find yourself overwhelmed and confused in choosing which type would be best, simply take note of the differences between these two varieties and consider the advantages and disadvantages of each to be guided in making the right decisions.Basically, the major difference between the two investments is the fact that short-term plans are actually designed to show a substantial yield in a short time period. While long-term investments, on the other hand, are designed to last for quite a few years and present a slow yet progressive increase in its yield.Let us discover more about the differences when it comes to the disadvantages and advantages of each type of investment.Short Term InvestmentsThe major advantages of investing for a short-term plan are the potentials for growth at a very fast period of time, ranging from a few weeks to a few months. Although there may be fluctuating trends that could affect the market, short-term loans can still allow you more control over your money and you it is more likely that you can keep a more watchful eye on your investment.However, this type of investment may be a bit riskier due to the fluctuations present in such a volatile stock market, as mentioned above. As compared to its long-term counterpart, this type of investment may much easily be affected by unpredictable circumstances because it is in a shorter period of time. And so, even if there is a very huge chance that you can make a lot of money in this type of investment, there are also great chances that you can lose a lot.Long-Term InvestmentsFor long-term investment plans on the other hand, there is a greater ability for this type of investment to gain small and distributed profits over a longer time frame. And because it has a slow-but-steady pace, it becomes more stable and involves fewer risks.But of course, a disadvantage for the slow growth of your investments may indicate that you cannot expect to earn profit right away especially when you are badly in need of money. In addition, you may also have less control over your money because your investment would not mature right away.Also take note that because investments may require a lot of fees to be paid as it progresses and due to occurring fluctuations in the market, most long-term investments may experience down time before they can actually climb up and become productive.In choosing between these two major types of investments, the most important thing you have to consider in order to gauge which plan would become more beneficial to you is to contemplate on your reasons for investing.If you invested in stocks with the ultimate goal to earn money fast then surely a short-term plan would suit you. But on the other hand, if you want to invest for future and insurance purposes like in cases wherein you want to have money when you grow old, then a long-term plan for investing is best.Whatever your decision may be, always remember that there are advantages and disadvantage in all kinds of investments. And ultimately, to become successful in your endeavor, you must be willing to take on minimal risks and make smart decisions in order to manage your trades.
October 24th, 2010
posted in Investment Theory
Investments can be helpful in achieving financial stability. They should be explored by individuals who are planning ahead. Helpful tips in this area can assist in choosing the best investment tool to use. There are a number of investment instruments available for individuals to take advantage of; however, prudence must be exercised when choosing. This article will act as a guide in assisting individuals to make the right choice.
An investment can be defined as the commitment of money or capital to purchase financial instruments or other assets in order to gain profitable returns in the form of interest, income or increase of the value of the instrument. Investments includes, using the good produced or its money equivalent, to create a durable consumer or producer good or the investor may choose to lend the original good to another in exchange for either interest or a share of the profit.
Financial investments can be extremely beneficial to individuals who seek good advice on identifying a good investment product. With this in mind investors can apply certain principles in order to benefit from their work. First of all, investors need to invest with a margin of safety. This principle is particularly useful when seeking to identify safe investments, and involves the purchase of securities at significant discount to its intrinsic or true value. Applying this principle can benefit the investor in two ways, for one, it may provide high return investment opportunities; it may also minimize the downside risk of an investment.
High return investment products are usually sought after by investors, however, individuals need to be aware that there are certain strategies that when applied, can increase the rate of return on their investment, these includes; increasing savings; investing in a manner that will result in a reduction in the amount of tax paid; invest in a variety of safe investment products; getting involved in international investments, and doing a revision of your portfolio’s performance each year.
Investment options will always be available for investors to take advantage of. These options, when carefully selected, can provide a steady source of income. It is the responsibility of each investor to do the necessary research and seek the necessary professional advice in order to land a good investment.
October 23rd, 2010
posted in Investment Theory
Whatever be your future objective of systematic investment planning-child’s education, marriage, buying a house, or retirement planning, it is imperative to handle your available financial resources in such a way that it generates the maximum possible returns with minimal risks.
For investment planning, it is important for you to analyze first how much money you can afford to invest monthly or quarterly. This is because incapability to pay for the investment will force you to pull out your investments early, which will cause you huge financial loss. So, before you purchase any systematic investment plan, budget your expenses well. This should include both, expected and unforeseen expenses.
Next, it is advisable to look for profitable stocks and securities in the market. Before you choose any particular stock, find out its past performance in the financial market. Even if a particular stock or bond is expensive, but has done well in the past, don’t think twice in buying it, since it will promise you profitable returns in future.
KPI Investment Managementbelieve that diversification is the key to investment planning success. By adding varied stocks and bonds to your profile, you can increase your investment profits.
Those of you, who can’t handle investment planning on your own, may consult KPI Investment Management. They are expert who can handle your investments wisely and can assure you of substantial earnings on your investments.
KPI Investment Management of repute keeps a close watch on his client’s investment portfolio and its performance so as not to miss any lucrative investment opportunity, and at the same time, helps avoid any undue risks on his portfolio. Further, he works towards aligning your investments with your investment goals to help you achieve your investment goals and objectives.
For more information you may visit www.kpicapital.com
October 22nd, 2010
posted in Investment Theory
Analyzing ROI, or Return on Investment, is one of the most important things that you can do to evaluate the consequences of a financial investment or decision. ROI analysis is used when deciding whether or not to invest in the stock market, bonds or any other financial decision, including starting a business. It is extremely important to know what the return of investment is, to determine whether or not the decision is sound. Learning how to do a proper ROI analysis can help you to determine whether or not you want to make the investment.
Return of Investment analysis takes many forms but most work by figuring out a ratio, or percentage to use. Anytime that a ROI is more than 0.00 for ration, or a percentage greater than zero percent on percentages that means that the investment will return more than it initially costs. This tiny number is often how financial experts come up with which investments to go with, and your financial adviser may recommend a certain investment simply because it offers a better ROI, even if it is only better by a very small ratio or percentage.
However, one thing that you should keep in mind is that while ROI is a great way to analyze investments, it does not tel you how risky the investment will be. This has nothing whatsoever to do with the return of investment ratio, because the ROI simply predicts what the investment will return if it performs as you think it will. There is still a risk of investing and that can be calculated differently. Other financial measuring tools such as Net Present Value and Internal ROR (rate of return) also do not calculate the risk.
Learning how to use ROI for investments is fairly simple if you can do some math. Basically, it is the return divided by the cost of the action, which is the simple way to do it. For instance, if you invested $100,000 into an advertising campaign that will probably bring in additional revenue of $180,000 then your simple ROI would be 1.8, or one and a 8/10 return on your investment. In percentages that would be 180% return on your investment. This is obviously a very good return, as it is almost $100,000 in profit from that advertising campaign.
Knowing the ROI of an investment does not mean that the investment is sound however. It is only part of the story. There are many financial metrics such as Net Present Value or NPV, Internal Rate of Return (IRR) and payback period. Each one tells a different part of the story as well as the risk of the investment and several other factors. A professional investment consultant is needed to determine whether or not an investment is a good idea. Finding a qualified Fort Worth Financial Adviser is important to protect your money.
October 21st, 2010
posted in Investment Theory
Determining which real estate property to take among numerous real estate investments can be accomplished by assessing which projects should be accepted or rejected when doing budging. The costs associated with apiece real estate property can be a determinative figure in choosing the best real estate investment; each real estate investment has its own characteristics when the properties are similar models. The real estate investment property costs associated with two real estate investments of similar type can be determined even if the two have the same physical characteristics. Real estate investment software can be used to determine the desirability of prospect investing property options. Cost is a good indicator of the profit of a real estate investment; it establishes the impact on cash flows among multifold properties symmetrical if all another variables remain equal. Yet there are both elements that penury to be confiscated into consideration when comparing two or more possibility real estate investment property to see which one would be the best investment and should be undertaken. Many hidden expenditures termed accubation real estate investment costs are those unnoticed costs sometimes misinterpreted when assessing investments. The succeeding are the rules when identifying incremental property expenses associated with a real estate investment to cause profit: 1. Sunk costs are not incremental efflux:Unsuccessful costs are not incremental expenses, hence should not be advised when identifying the cash expenditures associated with a real estate property in organization to guess the investment good. Undone costs are those that possess already occurred and faculty not goes departed whether the real estate investment property is good or not. These includes cash expenses such as payments already postpaid to the real estate medicament who launch the property, or payments to online real estate investment directory utilized to research locations. There is software tools that appropriate property investors displace the cash expenses related with the investment property. 2. Not all transparency costs are incremental outflows:Also transparent costs can be incremental expenditures in organization to be considered in the calculations for the oomph of a property. Overhead cash expenditures specified as utilities and gas may not be fully incremental. Transparencies expenditures are can be identified with software seem they are usually depending on the utilization. 3. Interest payment and financial outflows must not be considered:When evaluating new property and determining its cash outflows, the investment firmness can be separated from the financing judgment. Refer payments and otherwise financing expenditures that mightiness outcome from upbringing funds to economics a property should not be wise incremental expenses. This does not signify that one can assure, portion payments and separate financing expenses are not thoughtful at all in the gross income when calculating the desirableness of a property. Interest rates and payments and all otherwise finance expenses can be utilized when scrutinizing properties using added models. These are by far the easier property expenditures to anticipate some times already built-in into software packages. The real good news of comparing real estate investment using the aforesaid methods utilized by firm when determining the advisable substance investment properties can be compared against others, but it provides an opening bounce looking into how the cash rate might see and set with properties could create the highest profits. Real profits are the ending of the compounding of low expenditures and squealing macroscopic income; this is actual in most investments advisable. Software programs allows for undemanding equivalence of multiplex investments back by using built-in calculations. Comparing real estate properties supported on their expenditure has the benefit of existence simpler than other comparison methods, and though there is real estate investment software that makes the calculations common sense is still valuable. The representation of the similarity of the valuation provides a good added value when comparing the characteristics multiple properties, it removes the emotions from the investment becomes. The drawing makes when archer the news and the investors whom they equip supported in the increase of the results improve decisions investment, but the writer of the needs notice but to the close fitting jacket. Because the emotions of the occurrence can variety that a regular investor of the commercial center obtains neaten a purchase of the investor of real estate a property because he is splendid regularized the intellection renders destructive cash flows. Value real of a property depends on him ability to generate current constructive cash, in smallest when it is predicted for intentions. Tools Software can be used to make the prognosis for flows next cash, nevertheless tools software are not all prefabricated isometric, optimal degree software are those that offer to advantage the equivalence marionette, in addition the software if somebody the immediate capacity to the results in humanity to the Earth. Additionally the expenses construction mix of a property and the timing when they occur is a big constant that needs to be usurped into thoughtfulness, the justification for this can be found in the old saying “a dollar received today is worth more than the same dollar received tomorrow” AKA the time value of money. Thus the newest expenditures become more desirable, and the older ones less. The construct is based on the rationale that if one can postpone payment for a year the payment will be less than if one had to make the same payment today, because one could earn interest in the payment for twelve months.
October 20th, 2010
posted in Investment Theory
The main objective of any investment is to make money and gain from a profit. Experienced investors usually study market trends before investing. However, inexperienced investors depend on the advice from financial advisors and brokers to guide their investments. Money always grows with time in the stock markets. A successful and profitable investment involves a lot of patience and constant monitoring of market fluctuations. In order for an investment to be profitable, it is important to adopt flexibility and diversification of funds. Listed below are some important points-to-remember:Flexibility: Investors need to be flexible with their investments. Investment strategies involve regular analysis and reviews of the financial market. Amateur investors should seek help from financial advisors on their investment portfolio. Long-term planning and asset allocation are very important to an investment portfolio. Mutual funds, variable annuities and variable universal life insurance or VUL products provide good ground for investment flexibility. Another type of investment is Survivorship Variable Universal Life Insurance or SVUL. SVUL covers two people in one life insurance policy. The benefit is payable after the death of the last surviving insured person. The investment portfolio should be designed to help diversify the investments.Diversification: Diversification involves making different investments to gain from higher returns. This risk-management technique of investing helps to diversify the investments in stocks, bonds and cash. It does not waive off the risk of loss totally, but it definitely creates more avenues for profit. The investor can invest in a number of different companies, foreign securities and mutual funds. Even if one company declares a loss, the investor still has the other investments to fall back on. Diversification is a good method to counter the risk involved in the total loss of an investment.Simple Approach: It is safe for amateur investors to follow simple guidelines for investing money. Immature investors should not invest in companies that they are not very sure about and haven’t researched. A simple approach to investment is to stake money in recognized companies that offer high returns and show a consistent growth pattern. It pays to conduct a research on the company before making an investment.Be Disciplined: Market trends fluctuate due to several reasons. An investor’s judgment should not be based on momentary instability. It is not advisable to make a change in the adopted strategy mid way. However, regular analysis and timely reviews help to keep abreast with important information of the stock market.Invest Smartly: Investors need to be well informed and alert all the time. Cautious long-term planning is as important as being patient. Investors ought to be methodical when following an investment strategy. It is equally important to understand and monitor the economics and trend of a company. The investor should be updated regularly on business, political and stock related news to learn the political implications that may affect the company in future.Investments carry the element of risk and therefore investors are advised to investigate before investing. It helps to follow the general guidelines of investment and invest smartly.
October 19th, 2010
posted in Investment Theory
The Brazilian real estate industry offers attractive investment opportunities for foreign investors. For any foreign investor looking for investment opportunity in Brazil, the real estate industry of the country would fetch greater returns. In fact, if the real estate sector in Brazil is compared to its counterpart in the United States, you can see Brazil is a low risk investment opportunity.
Moreover, real estate is less volatile in comparison to other investments such as stocks and hence, you can achieve stability in your investments by investing in Brazil real estate. Brazil has recorded a steady flow of foreign investment in this sector and there is a speculation that this is likely to grow in future. The foreign investment in Brazil’s real estate is mainly seen in construction of office buildings.
There are two primary opportunities for foreign investment in Brazilian real estate sector
Alternatively, Investor can remain alert and take an exit before the project ends which also guarantees good returns.
The Foreign Institutional Investor (FII) in Brazil has a typical structure in the Brazilian market that offers fiscal advantages in investment sharing in real estate sector. Such advantages are not found in other forms of securitization in Brazil. The Brazilian Law8.668 (1993) defines all the operations such as buying and selling of assets and profit sharing of FII as tax-free. The current legislation clearly mentions that private investors are exempted from tax as long as they follow the rules of distribution that says they cannot own more than 10% shares in FII. The FII continues to make investment in shopping centers, office buildings and hotels in Brazil.
The Brazilian real estate market is likely to give you more than 10% annual return on your investments in real estate sector even after considering greatest market fluctuations and critical market conditions. If you decide to sell your shares in FII in the secondary market, you can expect annual return rate of 19.67% for an investment cycle of 37 months. Hence, Foreign investors are likely to make profit even if they decide to take an exit from the FII investment in shorter period of time.
The Brazil real estate market offers a good risk/benefit quotient to all its investors. The investment in Brazil Real Estate is real. Hence, an investment in Brazilian real estate is likely to get you more annual income in comparison to similar investment in America. Brazil has seen rapid development in recent years and the country is seen as a viable property investment destination. Some of the economic factors that favor real estate investment in Brazil are
You are likely to get return of 20% per annum on property process
Market analysts have given evidence that Brazil’s industry and tourism sectors are growing at a rapid pace. It is necessary that Foreign Investors seize the opportunity to make investment in real estate sector when the prices are low and get high return on their investments.
October 18th, 2010
posted in Investment Theory
Investing and investing online in particular may be quite confusing to first time investors. In order to learn how to invest and a good investment strategy, most investment funds and stock investment investors hire professional stock brokers that are educated in stock investments. Personal brokers are able to give professional advice when it comes to deciding on investment funds or mutual funds, and are able to achieve a highly successful investment strategy.
The main job of a stock broker or investment advisor is to act as a middleman between companies and stock investment investors. Also, an investment advisor may help you plan for retirement. First, anyone interested in investing, whether it is investment funds or investing in mutual funds, has to open an account with a brokerage firm. After this first step is out of the way, the investor is taught the basics of how to invest and after that he or she is free to start buying and selling on the stock market.
Good advice for anyone that is just starting to enter the world of mutual funds, stock investment, and investment funds is to practice a little before starting to actually invest their own money. With the current options that investing online brings, investors can now perform dry investments, meaning taking part in simulated stock experiences. Also, keep in mind that most brokerage firms and brokering agents are willing to offer discounts on the fees they charge you.
While some companies have offers that allow their clients to invest in mutual funds through them without opening an account, a brokerage account brings many more benefits than just learning how to invest. Many brokerage firms also provide assistance so that tax problems are avoided and they offer many other special services. For example, many brokerage companies these days offer assistance with retirement planning.
To pull away a little from regular investments and investment funds, here are some of most appealing facts about investing online. First of all, when investing online you pay very low commissions, if any. The commissions for investing online can be anywhere from 1 to 10 dollars, while broker fees range anywhere from 7 to 70 dollars depending on your trade size. In terms of trading speed, investing online is a bit faster, but not by much. Still, usually in stock trading time is of the essence, so every minute counts.
When investing online, you also have the internet at your finger tips, so research is also done in real time. Company information, analyst reports, and everything else that could help you make a good investment is just a few clicks away. In conclusion, anyone new to online investing, and investing in general is strongly advised to do research and learn how to invest before actually investing their own hard earned money. There are many good resources on the internet to help you learn about investing and will help you increase your investment education.
October 11th, 2010
posted in Investment Theory
SO YOU THOUGHT YOU WERE SAFE WITH A REGISTERED INVESTMENT ADVISER, THINK AGAIN!
By A. Daniel Woska
The object of your affection, your most precious property, the thing you have worked to accumulate for years is systematically and intentionally placed in the hands of someone who professes to be an expert in investing your property. The person has explained that he is a “Registered Investment Adviser” licensed pursuant to the 1940 Investment Adviser’s Act and someone who had to study for a very difficult exam. He looks good, he sounds good, he explains he is investing money for hundreds of clients in one thousand different accounts. You have previously interviewed three other prospects and you are weary of the interviewing prospect and all these RIA’s sound the same and this one has a large office with nice furniture and a radio show as well as very plush furniture and surroundings so you say “OK, I will hire you to be my “Registered Investment Adviser”.
A contract is presented that contains multiple pages and says it is an “Investment Advisory Contract” so it must be some protection for you. You never consult with an attorney who is familiar with the narrowly practiced areas of “Securities Law” or “Investment Law” to gather even a minimal understanding of the contract. You fail to call your CPA to discuss what this Registered Investment Adviser is proposing for you to do with your hard earned money before you accept his proposed investment portfolio. Nope, you do nothing to better understand what this professional sounding person is getting ready to do with your money and to you.
The truth is you have no idea, not even a rough understanding of what you should be asking this Registered Investment Advisor. You are so unsure of what technically is required to make appropriate investments that you are forced to rely on a third party to make the decisions. When a stock broker or a financial expert begins to talk about the fundamentals of an investment strategy you hear things that remind you of your last algebra, trigonometry or calculus class. You were not fond of those particular subjects when you took them 30 or 40 years ago and are even less interested in trying to embrace these complex mathematical functions today.
This is the “Investment Understanding Gap” that produces billions of dollars in losses to millions of investors. The average citizen of the United States of America has not spent a lifetime investing, they have spent a lifetime working and earning. The average American invests substantial monies with a Registered Investment Advisor, a Certified Financial Planner or a Stock Broker once in their lifetime, when they retire. Therefore not only are virtually all Americans financially illiterate but more than half are “sucker” for overblown charlatans who impose their appearance of success on the unsuspecting retiring man who has money, stock or stock options which have been accumulated over years of hard work to earn this money to live on in retirement.
Remember one thing and it is one very important thing to remember: “If your Registered Investment Advisor, Certified Financial Planner or Stockbroker guide you into incorrect and risky investments they will disavow any responsibility 99.9% of time.” Think about that for a minute you are turning over all your hard earned money which you cannot go back earn again, to a stranger who talks about things you do not understand and you believe you are safe for the long run. You are not just incorrect, you are financially dead wrong. These people will not cause you to die physically, but they nhave no reservation or hesitation in telling you you have died financially and that you need to save more money because you have been so foolish with your investments.
So let me say it this way. If you have loaded up the wheelbarrow full of money you have been hiding in your employers 401k or pension plan you are in serious danger. If you tell the Registered Investment Advisor, Certified Financial Planner or Stockbroker that you are willing to take “any” risk with your money, you have now given this trusted advisor the right to lose all your money in exceedingly risky investments with impunity and then tell you when you ask for an explanation that “You said you wanted to take risk, you did and it turned out bad for you.” They will never say “I made a mistake let me refund your money”, never.
If you are even considering investing with a Registered Investment Adviser there are things you absolutely need to request to be reviewed by you and either a knowledgeable Securities Attorney or a knowledgeable CPA or someone with detailed understanding of alpha, beta, asset allocation, the modern portfolio theory, standard deviation, correlation, morning star and index funds. If the person you choose to talk to cannot easily explain these things to you, they will really n ot be much help in your analysis. You should seek someone who understands the risk side of investments, the regulatory side of the Registered Investment Adviser world and someone who is not interested in selling you anything.
Registered Investment Advisors, Certified Financial Planners and Stockbrokers may be wonderful, kind, caring, friendly and considerate people and know absolutely nothing about how to ask you the questions that need to be asked before proposing any type of investment portfolio. These folks may seem smart and knowledgeable and still know nothing about proper asset allocation, modern portfolio theory or correlation. These professional sounding people who wear nice clothes and drive nice cars are simply sale pitch men and women who honestly believe they can help you but actually have no way to accomplish real help in most cases.
Let me use an analogy. If you go to a dentist you believe he is trained and licensed to work on teeth, same with a doctor of medicine, same with a professional architect attorney or engineer. When you you go to people for professional help you expect them to be professionally skilled. While there are certainly bad dentists, doctors, lawyers, engineers, and architects they have been trained and licensed in the practice of an area of the professional realm that required hard study of difficult concepts over many years of fulltime classroom study and years and years of additional graduate school studies and additional testing and then eventually the big test needed to get licensed by the state in which they practice. Registered Investment Advisers, Certified Financial Planners are not required to do much more then attend some classes a few times a month and then take a licensure test like a real estate salesperson or an insurance salesman. This is not meant to say that sales people are undereducated, it is to say watch out before you choose to invest your money with someone claiming to be a Certified Financial Planner because they may have little or no real appreciation of how to do anything but sell you a group of arguably diverse mutual funds and tell you that is asset allocation, and truly believe it in their hearts making their sales pitch to you even more convincing.
Before choosing anyone to professionally invest your money please cautiously and humbly ask for the following information:
If your Registered Investment Advisor is still interested in helping you after these document ts are requested you may be making progress in your decision making. If your proposed Registered Investment Advisor is unable or unwilling to produce any of these documents due to confidentiality problems you better tread lightly. This type of attitude is likely caused by something and perhaps many things which the wire house, the mutual fund company or the Registered Investment Advisor want to keep from you.
A Registered Investment Advisor is not just a stockbroker placing trades, he is your fiduciary who has to always, 100% of the time, put your interests in front of his own professional interests. It is rare for a Registered Investment Adviser to grasp this concept due to all of the conflicts of interest which are typically part of their practice. The Registered Investment Adviser will always have conflicts on the fees and commissions you pay to him and the funds he picks. The funds all charge different 12b-1 fees some higher than others. There are funds that actually provide trips, parties and traveling seminars to Registered Investment Advisors in order to generate business. Obviously there is no math involved in a decision to sell funds for a company that provides great perks for him and a significant other. These Registered Investment Advisor fiduciaries often have secret unknown financial deals with wire houses, fund managers, and even themselves. For example, I am aware of a very popular and well known East Coast Registered Investment Advisor who actually charged clients a management fee on their personal cash account ts and thon the value of the personal stocks they simply placed in the account t he opened for them. The clients never understood that not only were they not making money on this cash, he was charging them almost 1% annually to hold their cash. Again, legally speaking, as a fiduciary, this person was supposed to put the best interests of the client in front of his own. Perhaps the most troubling aspect of this revelation is that this particular Registered Investment Advisor has 500 accounts and hundreds of millions of dollars under management in probably the exact same way.
In addition to the questions above you must also consider the regulatory side of the life of a Registered Investment Advisor. Who is responsible for catching and weeding out the charlatans? The first line of weeders are the compliance officers responsible for the actual compliance with the rules and the law by the SEC, NASD and NYSE. Unfortunately this is a go along and get along business and when the charlatan is a big producer paying lots of salaries, the first line of weeders is willing to look the other way until the Registered Investment Adviser is caught by an arbitration panel in a case by a public customer. Once the charlatan is exposed by the customer, things may change.
October 9th, 2010
posted in Investment Theory
Every one makes investment mistakes. From the time we were born, we learned from the mistakes we made. As investors, we need to learn from our investment mistakes by recognizing when we make them and make the appropriate adjustments to our investing discipline. When we make a losing investment, do we recognize our investing mistake and learn from it, or do we attribute it to some outside factor, like bad luck or the market? To make money from your investments and beat the market, we must recognize our investing mistakes and then learn from them. Unfortunately, learning from these investing mistakes is much harder than it seems.
Some of you may have heard of this experiment. It is an example of a failure to learn from investing mistakes during a simple game devised by Antoine Bechara. Each player received $20. They had to make a decision on each round of the game: invest $1 or not invest. If the decision was not to invest, the task advanced to the next round. If the decision was to invest, players would hand over one dollar to the experimenter. The experimenter would then toss a coin in view of the players. If the outcome was heads, the player lost the dollar. If the outcome landed tails up then $2.50 was added to the player’s account. The task would then move to the next round. Overall, 20 rounds were played.
The chart below shows there was no evidence of learning as the game went on. If players learned over time, they would have realized that it was optimal to invest in all rounds. However, as the game went on, fewer and fewer players made decisions to invest. They were actually becoming worse with each round. When they lost, they assumed they made an investing mistake and decided to not play the next time.
So how do we learn from our investing mistakes? What techniques can we use to overcome our “bad” behavior and become better investors? The major reason we don’t learn from our mistakes (or the mistakes of others) is that we simply don’t recognize them as such. We have a gamut of mental devices set up to protect us from the terrible truth that we regularly make mistakes. We also become afraid to invest, when we have a losing experience, as in the experiment above. Let’s look at several of the investing mistake behaviors we need to overcome.
I Knew That
Hindsight is a wonderful thing. As a Monday morning quarterback, we can always say we would have made the right decision. Looking again at the experiment mentioned above, it is easy to say, “I knew that, so I would have invested on each flip of the dice”. So why didn’t everyone do just that? In my opinion, they let their emotions rule over logical decision-making. Maybe their last several trades were losers, so they decided it was an investing mistake and they become afraid to experience another losing trade.
The advantage of hindsight is we can employ logic as we evaluate the decision we should have made. This allows us to avoid the emotion that gets in our way. Emotion is one of the most common investing mistake and it is the worst enemy of any good investor. To help overcome this emotion, I recommend that every investor write down the reason you are making the decision to invest. Documenting the logic used to make an investment decision goes a long way to remove the emotion that leads to investment mistakes. To me the idea is to get into the position where you can say “I know that” rather than I knew that. By removing the emotion from your decision, you are using the logic you typically use in hindsight to your advantage.
Self Congratulations
Whenever we make a winning investment, we congratulate ourselves for making such a good decision based on our investing prowess. However, if the investment goes bad, then we often blame it on bad luck. According to psychologists, this is a natural mechanism that we, as humans possess. As investors, it is a bad trait to have as it leads to additional investing mistakes.
To combat this unfortunate human trait, I have found that I must document each of my trades, especially the reason I am making the decision. I can then assess my decisions based on the outcome. Was I right for the right reason? If so, then I can claim some skill, it could still be luck, but at least I can claim skill. Was I right for some spurious reason? In which case I will keep the result because it makes me a profit, but I shouldn’t fool myself into thinking that I really knew what I was doing. I need to analyze what I missed.
Was I wrong for the wrong reason? I made an investing mistake, I need to learn from it, or was I wrong for the right reason? After all, bad luck does occur. Only by analyzing my investment decisions and the reasons for those decisions, can I hope to learn from my investing mistakes. This is an important step toward building genuine investment skill.
Luck Becomes Insight
The market is comprised of a series of cause and effect actions, which are not always transparent. This cause and effect has created some interesting behaviors by some very successful people. For example, some baseball pitchers are known to not step on the white chalk line when they are playing. I am sure you have heard of many “superstitions” that people hold to be true to help them perform well.
In an experiment by Koichi Ono’s in 1987, subjects were asked to earn points in response to a signal light. They could pull three levers, though they were not told to do anything in particular. They could see their score on a counter, but did not know that points were awarded completely independent of what they did. Nothing they did influenced the outcome in terms of points awarded. During the experiment, they observed some odd behavior as the participants tried to make the most points possible. Most subjects developed superstitious behavior, mainly in patterns of lever pulling, but in some cases, they performed elaborate or even strenuous actions. Each of these superstitions began with a coincidence. In some cases, the participants would pull levers in a particular sequence. In other cases, even more odd behavior was observed, including a person who jumped off a table and then later jumped up to touch the ceiling to “score” points. Keep in mind the points were awarded either on a fixed time schedule or on a variable time schedule, not based on the action of the participant.
The point of this is that as humans we tend to think that luck is insight. We fail to analyze effectively the situation and the real reason for our success or failure. In investing this behavior will lead to ruin. To help overcome our natural tendency, we must document our investing decisions and then assess the results. This assessment process helps us learn from our success and from our failures and is critical for each of us if we hope to become successful investors.
Conclusion
To help avoid investing mistakes, what should you document before you make an trade? I like to look at three categories regarding a stock I am considering. First, I look at a series of fundamental information such as earnings yield, return on capital, revenue growth, insider holdings, sector, and free cash flow. The fundamental information helps me identify if this is a good company with growing earnings, good management and has potential. After reviewing the appropriate financial information including SEC documents, I identify the risks inherent in the company. These risks might include competition, market share, insider transactions, and any litigation that the company is experiencing. Here one needs to try to identify every possible risk and assess them critically. Finally, I look at the chart of the stock, seeking to identify support and resistance zones. This gives me potential entry points, exit targets, and the trailing stop loss. I complete these sections with a written trading strategy describing how I expect to make my trades. All these investment factors should be documented before making a trade. Once the trade is complete, I review them to see what I can learn so I can avoid any investing mistakes in the future.
To learn from our investing mistakes, we need to document our actions before we make the decision. We also need to be honest with ourselves when assessing our results. As we have seen, it is quite easy for each of us to put on rose-colored glasses and think we are better investors than we really are. We need to assess critically our investing abilities without distorting the feedback we receive from our decisions. Those of us who are able to learn this valuable skill will benefit greatly. Those of us who are unable to apply this learning will be destined to mediocrity at best and likely lose much of their capital before they quite investing.
October 6th, 2010
posted in Investment Theory
There is a reason most of us depend on our friends or ourselves for making important investment decisions. It’s hard to find a dependable professional source of investment advice. There is no dearth of places to turn to for investment advice, but the decision to put your financial future in someone’s hands should be made very carefully after collecting sufficient information.
What are the different types of financial and investment advisers?
Investment Adviser is a professional firm or an individual that advises clients on investment matters. They may manage trust funds, pension funds and personal investments like stocks and mutual funds on their customer’s behalf.
Financial planners offer investment advice and help clients with savings, taxes, insurance, estate planning and retirement.
Brokers buy or sell stocks, mutual funds, bonds on their customer’s behalf.
How do I pick a good investment adviser?
Ask your friends and family if they know a good investment adviser. Also compare price quotes from multiple qualified investment advisers listed on B2B marketplaces and ask them for an appointment.
Interview your financial adviser extensively, judging their professionalism and experience. Let him or her learn about your tax situation, fiscal health and long term goals.
Ask the following questions to narrow your search for an investment adviser.
What experience do you have?
Where are you registered?
What investment services do you extend?
Do you have all the required licenses?
How much money do you manage for other clients?
How have your investments performed in the past one to ten years?
How will you assist me with my investments?
How are you paid?
Do you require a minimum investment?
How are you different from other investment or financial advisers?
Learn how your adviser gains from you
Investment advisers are paid either a percent of the asset value they handle for a customer, a fixed or hourly fee, or a combination of all. They have a fiduciary responsibility to act in your best interest while making investment decisions on your behalf. It is best to at least partially compensate the investment adviser based on his or her performance. In such an arrangement, the investment adviser makes a commission only if he or she meets your investment goals. Be wary of investments that pay a large upfront fee to the investment adviser or lock you into investments that levy a withdrawal penalty.
Check credentials and references
It is important to check references and credentials. For example in the US ask for ‘Form ADV’ for the advisers, which provides you with the advisers background, services offered, mode of payment and strategies used. Form is obtainable from the advisers, the SEC, state security regulator or those advisers managing $25 million or more in client assets. Also inquire about the advisers educational and professional background.
Know how to evaluate your advisers
Once you have hired an investment adviser, remember to evaluate his or her performance at regular interval. It is also important to meet with them regularly to review short and long term goals and to adjust your investment portfolio. Apply the following standards for evaluation.
Review performance: Check regularly how your money is doing in the investments advocated by your adviser. Evaluate portfolio performance with regard to investment goal and risk tolerance for invested assets. Use a proper benchmark or metric matching your investment strategy for various assets. For example if you have invested in stocks, use the market index as the benchmark for comparison.
Cost-benefit ratio: Though your money maybe doing well, it’s important to ascertain the ratio of investment return delivered by your adviser to his or her earnings. Are you paying more than you thought for the investment return?
Quality of investment recommendations: Evaluate and test your advisers knowledge of the latest investment approaches, preparedness to stay above the rest in the changing market and insights or suggestions on new investment strategies.
Working relationship: Your investment adviser should regularly communicate and update you about your investments.
Personalized service: Adviser should regularly review your investment goals and preferences and tailor the investments accordingly. You should be wary of investment advisers who show too much reliance on software programs to create your portfolio.
Hiring a good investment adviser is important to secure your financial future. Hire someone you can trust and can easily communicate with. If you adviser does not perform as expected, set up a meeting to rectify the situation else find someone who could be more helpful.
October 1st, 2010
posted in Investment Theory
Nothing compares to Real Estate Investment Opportunities in Kenya if you have enough money to engage in it. There are many business opportunist but so far property investment in Kenya brings back your capital with profits sooner compared to other businesses in Kenya..
For those who haven’t heard about it, real estate investment in Kenya has taken a positive trend compared to other businesses investments in Kenya.
No matter what, Real Estate Investment in Kenya is the best business you should put into account. Kenya has a best conducive environment for business and investment compare to other countries in East Africa and as the country grows, many people tend to leave rural life to urban life and for that reason, there is always a shortage of housing in every city and town in Kenya.
There are many business opportunities in Kenya but real estate investment out competes them all. On this article therefore, we bring you the advantage of investing in real estate in Kenya compared to other businesses. There are many advantages of real estate investment compared to other investments in Kenya. For example, if you buy stocks from a stockist, you may aim to get profits when that stock appreciates. You may also have the dividends announced by the company in mind. If you invest in bonds, the interest earnings from the bonds may be the aim with which you make the investment. But, in real estate investment, you get more number of advantages.
Let us have a look.
- Every investor wants his cash back as quick as possible and for that matter, real estate investment in Kenya gives the quickest money garant. After investing your money, the first income you may get from making an investment in a property is the rental income. Some investor are luck and get good locality like city centers, near universities which can he rented by colleges as hostels. Here your rental income will be quite substantial and the profits will be quicker.
You can also have a good control over your cash flow if you invest in properties in Kenya that fetch you rental incomes month after month. If you go through the statistics, rental incomes have always been much greater than the dividend incomes you get by investing in stocks. Of course, in stocks, if you are extremely lucky, a sudden surge in the value of your stocks may get you good returns if you sell the stocks at the most opportune time.
If you are keen enough, you may have observed that the real estate investments in Kenya appreciate to a reasonable extent over a period, in every 3 years, the rental dues doubles depending on the area in which your property is situated. If the property is situated in a developing area like Nairobi and Mombasa where many projects are coming up, the appreciation will be quite high.
Another reason why you should invest in Real Estate is that Rental income will act as a good protection against inflation. Even if inflationary trends prevail, when you get rental income from your real estate investment, it will act as a cushion because your mortgage payment will not undergo a change due to inflation.
You know property investment or real estate investment appreciates over and over again and as you keep paying off your mortgage amounts, the equity value of your real estate investment will be increasing. This can be utilized by taking a loan equivalent to the equity value of the property. Any financial institution or bank will be ready to extend loans to you.
For your information, if you blessed enough to get a property in a good locality like Nairobi and Mombasa at a good price, may be less than market value, you can make good money out of it. There are some people who buy properties at lower prices and flip them within a short time of about six months to make good profits. This business is highly lucrative but you need to tread with caution if you want to do it. You must choose the properties that are certain to appreciate and further, the properties must have a clear title. If you patiently search, you are sure to clinch such deals.
Notwithstanding some small loopholes like property investment scammers, a real estate investment in Kenya is one of the wisest investments that can get you many advantages on the financial front.
September 28th, 2010
posted in Investment Theory
Different Types of Investments: As we said last time, owning a stock is like owning part of a company. As the company rises or falls in value, so does the price of it’s stock. A key distinction is that the value of the stock is not only driven by the fundamental value of the company, but by other factors as well. These factors may include overall stock market trends, domestic versus foreign trade issues, business sector climate, etc. Owning a bond, is like owning part of a loan to a company or institution, like the State of Texas. Bonds typically pay a fixed amount of dividend as the loan is repaid. The bond’s value is determined by the interest rate on the underlying loan, and the current interest rates and trends in the marketplace. For example, who would not want own a 10% bond right now, when the money markets or bank passbook savings accounts are paying 3%? Should the institution or company fail or default on the loan, you could lose all or most of your bond’s value. Large companies or institutions usually issue bonds; so the risk is greatly reduced over owning a company’s stock share. A stock mutual fund, is a group of stocks owned by a fund company to achieve certain investment objectives. Likewise a bond mutual fund is a group of bonds held to achieve a certain investment objective. Mutual funds, in both stock and bond types exist in many styles and forms. Fundamentally they are a savvy collection of stocks or bonds assembled and professionally managed for a specific or combination of investment aims. These typically diversify your investments so that no one particular company can sink your entire investment. The converse is that no one single stock can shoot your mutual fund up to a huge return. Typically each mutual fund focuses upon growth, income, value, large, small or mid-capitalization companies, or a combination of these objectives. There are thousands of different funds and dozens of fund families to choose from. There are also companies that rate mutual funds, like Morningstar (www.morningstar.com ). Some mutual funds use a management team to select and prune stocks in the portfolio, some use certain methods, and some follow the leadership of a single fund manager. You should check these out before investing in a particular fund. An oft-overlooked mutual fund consideration is the management fee or what are referred to as 12b-1 fees. Most fees are in the range of 1 to 2%. Be wary of any fund outside that range. The United States Securities and Exchange Commission can help unravel some of these issues for you. A good starting point is their investor section on mutual fund performance, specifically www.sec.gov/investor/pubs/mperform.htm . They also have a fund cost calculator to help take into account the fund management fees. Some funds are no-load mutual funds because they do not pay a sales person any commissions for selling fund shares. These are typically lower in cost, and if you own them for a long time, they can make a difference in the net return on your mutual fund investment. Conversely, there are loaded funds, which charge a commission when you invest in their fund. These vary widely in amounts, so ask for exact details before investing. Some require you to pay the sales commissions; others add that to the fund expenses. Either way it’s a cost to you. The Vanguard Funds (www.vanguard.com ) are often mentioned as a leader in creating no-load, low cost mutual funds. You will find compelling arguments at their website for owning no-load funds. You should check carefully on overall fund performance including fees when evaluating fund choices. Measuring Risk: Most mutual fund and stock tables and resources will list something called the beta or volatility of the items listed. Beta is a measure of the risk of the security listed associated with variation of the security when compared to the overall stock market. If beta is 1, then the stock or mutual fund varies about the same as the general market index. If less than 1, then the security is less volatile than the general index of comparison, with higher than 1 meaning more risk. Measuring Risk-adjusted Returns: There is also parameter called alpha, which is the market-adjusted return of the security. If alpha is positive, then the security earned a higher return than the relative market index of comparison. If alpha is negative, then the security earned less than the market did. Minimizing Overall Risk: Risks in the future may be reduced in the present only through preparation, planning and actions! We discussed preparation and planning for the future in the last Investment Corner, which is a key risk-reduction strategy. Risk reduction for investing is typically achieved through: • Diversification, • Portfolio Allocation, • Pre-determined buying and selling prices, and • Adherence to personal investing rules. Now let’s look at the first part of risk reduction strategy for investing. Diversification: Diversification is spreading out your investments across several areas to reduce risk and capture growth in multiple places. Diversification is typically done at several levels. At the uppermost level, we typically diversify investments across different investment vehicles, such as cash, stocks, bonds and real estate. By doing this, we reduce several important risks. Inflation can reduce the value of cash on hand over time, which is why smart folks do not keep their life savings in cash hidden in a mattress! On the other hand, inflation can drive down the value of fixed dividend investments like bonds as well. Real estate may rise or decline with inflation, depending upon the health of both the local and the greater economies. Fixed hard assets like precious metals funds (gold) will usually rise on inflation or fears of inflation. Other risks include stock market declines, individual company bankruptcies, and so on…. By not “placing all the eggs in one basket” we lower our exposure to risks through diversification. During broad stock market declines, many folks move assets from stocks to cash or bonds. And of course the opposite during bull market runs. Another diversification notion is that of slicing up your investment by specific growth sectors. Within a specific type of investment vehicle, say Mutual Funds, we diversify across the available growth and income sectors. Typically this is large, medium and small companies, as well as high dividend or high growth type stocks. You also could look into diversifying into domestic or international companies such as Asia-Pacific. At the lower levels of investment diversification are multiple choices within a specific growth target. Most advisors strongly recommend diversification within a stock or bond market holding. If you feel for example that the Internet’s growth will continue or expand soon, buying stock in several companies who offer Internet products would help lower risk of any one company not doing too well. Diversification across several stocks is usually done in simple form through equal partitioning. If for example you had $10,000 to invest, how would you do it? You could place 20% of your total investment amount in each of 5 different Internet stocks as in Table I: Table I –Stock Investment Diversification Stock Name Current Price 90 Day High 90 Day Low Amount Invested ~ Shares Company A $25 $28 $20 $2000 80 Company B $40 $40 $20 $2000 50 Company C $60 $60 $20 $2000 33 Company D $300 $300 $198 $2000 7 Company E $8 $9 $3 $2000 250 By looking at the trading ranges across the 90-day history, you can estimate the risks or volatility of each stock. Do the stocks have the same risks? Do they all have the same growth potential? One approach would be to allocate risks equally, as opposed to allocating investment equally. You would be to use the information in the range of stock trading prices to assess risk and re-allocate your investments as this diversification calculator shows below in table II: Table II – Risk Diversification Calculator Risk Diversification Calculator Investment Amount $10,000 Stocks 5 Stock_1 Stock_2 Stock_3 Stock_4 Stock_5 90-day Max $28 $40 $60 $300 $9 90-day Min $20 $20 $20 $198 $3 Cur. Price $25 $40 $60 $300 $8 Trade Rnge 32% 50% 67% 41% 100% Eq. Amt $2,000 $2,000 $2,000 $2,000 $2,000 $$ at Risk $640 $1,000 $1,333 $819 $2,000 Risk Ratio 1 1.5625 2.083 1.28 3.125 Risk-Red. $2,000 $1,280 $960 $1,562 $640 Adj. Inv.$3,104 $1,987 $1,490 $2,425 $993 If you do not want to do the research and monitoring required for several individual stocks or bonds, choosing a mutual fund may be the wisest choice, with a smaller but usually acceptable return on your investment. The key question you need to answer is not “Should I diversify?”, but rather “How will I diversify my investments?” About YOU The primary things you should know about yourself before selecting among the different types of investments are: I. How much of my time is available to monitor/manage my investments? II. How often do I want to change my investment choices? III. Do I want help and advice from investment professionals? These are important questions you need to answer for yourself. All investment requires some time commitments to monitor and manage. When stock markets or life situations begin to change, you may need to change your investment choices. If your experience level does not warrant it, getting professional help may increase both your results and comfort level. I. Time to manage your investments: Your time is worth money! At least if you can put it to good use in managing your investments… but do not become obsessive with it. Investments take time to grow. Every investment portfolio must be watched and pruned from time to time. You wouldn’t want to look back after 5 years and find that right after your investment choices were made, that the business climate changed and those choices had become poor performers. Two typical uses of your time applied to investment managing: • Weekly, monthly or quarterly checking for: o Stock movements o Business climate changes, o Company news • Annual or quarterly allocation changes o Re-planning or shifting your plans o Pruning and re-diversification o Reallocation of investment amounts Weekly or Monthly Check-ups If you buy individual stocks and bonds, these will need monitoring more often than if you had purchased mutual funds. However, stock and bond funds need attention too, just less often. Some questions you should answer for yourself are: • Can I afford time each week to check investments (Friday night or Saturday morning)? This is important for individual stocks and bonds. •Am I disciplined enough to check my investments periodically? This is critically important, as the business environments are constantly changing. • Can I put this on a monthly calendar and stick with it? Monthly checkups are important no matter what your investments may be… • If I get an automatic e-mail sent will I read it? Many investment houses will do this for all accounts above a certain size limit. You can pool your investments under one roof, usually with savings in cost plus perks for research, quotes, e-mails, etc. Both Fidelity and Schwab are good examples of these services once you reach certain size limits. Quarterly or Annual Check-ups If you are only into mutual funds as investment vehicles, then you need check them only quarterly or annually. After all you are giving up some small amount of income to pay for professionally managed investments, right? You may want to keep up with monthly or weekly news on the investment fund management team, however, as management team shakeups there could cost you. The key thing is disciplined reviews and setting a schedule that you can stick to. Ignorance in this case can be dangerous, so do it together with your spouse or a family member that you trust. As you get good at it, the time required to do these should drop from several hours to perhaps an hour to review all your investments. If you have been keeping tabs on things, it can be shorter still. “Even if you’re on the right track you will get run over if you just sit there!” – Will Rogers. II. Changing your investment choices: The challenge when deciding to change investments is often the emotional content. “We had a return of say 7%, when the broader markets got only 5%”. How did the overall group for your investment vehicle do? Morningstar provides good index comparisons, as do other groups. If your choices did not perform above the class average for 1 or 2 quarters in a row, it’s probably a good idea to consider other alternatives. That may require all the same diligence of researching an investment as you did originally. If you are seriously concerned and need to act quickly, you can always sell and put the proceeds into cash or a money market for a short time while you do the research. III. Getting help from professionals: I have often found the larger funds and investment houses to be a plethora of information via the Internet. They have how-to guides, acronym explanations, and in general some great advice. If however, these seem to complex for you, or you would prefer to seek out a single person with whom to deal, then find a Certified Financial Planner. The best ones should be able to provide references, a track record, and a good deal of services all at your doorstep. These services do not come free and can be in the thousands of dollars to set up your initial plans. Be certain to check 3 to 5 references and interview several planners before deciding. Determine what you pay exactly and what you get exactly after your selection is made. Be certain that they are certified, a place to begin is: http://www.cfp.net/ . Summary We’ve covered a lot of ground in this topic of stock and bonds versus mutual funds. Primarily remember that individual stocks require more monitoring, but can yield higher returns. The same applies somewhat to individual bonds. Newer investors to these may want to start with mutual funds, Money magazine has an annual issue every February that is very helpful and is usually available at public libraries. Finally remember to lower your risks by diversification, no matter what investments you make. Ask yourself the questions we reviewed about your time commitments and discipline for monitoring as part of the investing process. And of course, read-up on the Internet and some of the books listed below. Next time – Portfolio Allocation, Pre-determined trigger points, and Personal investing rules … Self-Study: Some great resources to continue your journey are located on the web. Try visiting these sites: •http://www.greatcompaniesgreatcharts.com/archives/001864.html •http://www.rightline.net/home/gate_rm.html •http://www.investorguide.com/stockfaq.html •http://www.pascoresearch.com/int_alpha.asp •http://www.stockbook.com/Evaluator/ Or read these well known authors and books: • William J. O’Neil: How to Make Money in Stocks • John Boik: Lessons from the Greatest Stock Traders of All Time • John C. Bogle: Common Sense on Mutual Funds : New Imperatives for the Intelligent Investor Additional info from this author may be found at http://www.green-energyNJ.com
September 22nd, 2010
posted in Investment Theory
If you are going to college or just sarting in your career, you might want to consider investing in the stork market for a little extra cash. It is important for young people to start investing wisely in order to secure their financial future. Investment clubs are a great way to learn the ropes until you can do everything on your own.Not all investment clubs are created equal. The first is mainly concerned with teaching about investing and the concepts of the stock market. They use simulations rather than real money to illustrate the way that the stock market works. You can learn the principles before you put any of your hard earned money at risk.Virtual investment clubs simulate actual trades and trading stocks. These virtual clubs are like an investing œschool. There are several websites available for testing out stock market principles such as MarketWatch (TM)s Virtual Stock Exchange. The Virtual Stock Exchange performs market simulations.Many universities are establishing virtual investment clubs for the purpose of teaching stock market strategies. It provides students with a familiarity for financial terms and the financial institutions available to help them.Virtual investment clubs can also learn many things beyond investing to learn about the way the stock market works. Many clubs host investment relations representatives to make presentations at their meetings. Brokers are also excellent guests at club meetings for speaking about how brokerage firms work and networking with club members.The second type of investment club is the type that actually puts forth money into the market. Their purpose is to pool the money of the group so the members have more leverage in the market than they would if they had invested individually. The investment clubs that actually put forth money form a legal partnership between the members so that each member is protected.To start a legal investment club, each member fills out partnership agreements. The documents are available from the National Association of Investors Corporation (or NAIC), that is a non- profit organization. Belonging to the NAIC is also recommended because the organization provides special services. The NAIC charges $40 for the establishment of the club plus $14 per member, per year. There is NAIC Club Accounting Software available to keep everything in order for $159.The investment club will then open a brokerage account with a firm of their choice and appoint a treasurer for the club. The treasurer will maintain and report tax information to each individual member so all members are well informed of what is going on with the clubs investment. This also allows each member to report their share of the club (TM)s earnings and pay their portion of taxes.Investing with a club has several advantages. When you are part of an investment club, you are able to get different perspectives on a variety of stocks. Each investment is a group decision and this allows for a broader input on the stocks that are invested in. The club benefits from the variety of experiences and knowledge of the group. Each member gains a broader understanding of the market by hearing that stocks appeal to certain people. The investment club also allows investors to spread their money out over a variety of stocks and therefore, own a portion of many companies.Most investment clubs have a dozen or more members, one treasurer, and one president to plan and arrange everything. A secretary is also helpful in taking minutes for the meetings. The other members of the club are responsible for researching and bringing information regarding different stocks. Most clubs meet once a month to discuss the investments and hear new stock investing ideas. An investing club is a great way to go about learning the ins and outs of investing in the stock market.
September 9th, 2010
posted in Investment Theory
There are two main types of investments done in the inventory-buying and selling arena today -short-term investments and long-time period investments. If you end up overwhelmed and confused in choosing which kind could be best, merely take note of the differences between these two varieties and take into account the advantages and disadvantages of every to be guided in making the suitable decisions. Principally, the key distinction between the two investments is the fact that short-term plans are literally designed to show a substantial yield in a short while period. While lengthy-time period investments, then again, are designed to last for quite a number of years and present a sluggish yet progressive improve in its yield. Let us discover more concerning the differences when it comes to the disadvantages and advantages of every kind of investment.Short-Term InvestmentsThe major advantages of investing for a short-term period plan are the potentials for development at a very quick time frame, starting from a couple of weeks to a few months. Although there could also be fluctuating traits that would have an effect on the market, short-time period loans can nonetheless allow you more management over your money and you it is extra possible that you may preserve a extra watchful eye on your investment. Nevertheless, any such funding could also be a bit riskier as a result of fluctuations present in such a risky stock market, as mentioned above. As compared to its long-time period counterpart, this sort of investment may much easily be affected by unpredictable circumstances as a result of it’s in a shorter interval of time. And so, even if there is a very huge chance that you could make some huge cash in the sort of investment, there are also great possibilities that you may lose a lot. Long-Term InvestmentsFor long-term period investment plans on the other hand, there is a larger capability for this type of investment to gain small and distributed earnings over a longer time frame. And because it has a slow-but-steady pace, it turns into more stable and involves fewer risks. However in fact, a drawback for the sluggish growth of your investments could indicate that you can not count on to earn profit straight away especially when you find yourself badly in need of money. As well as, you might also have much less control over your money as a result of your funding would not mature right away.Additionally take notice that as a result of investments might require lots of charges to be paid because it progresses and attributable to occurring fluctuations out there, most long-term investments may expertise down time before they’ll really climb up and become productive. In choosing between these two major varieties of investments, crucial thing you have to take into account in an effort to gauge which plan would change into more useful to you is to ponder in your reasons for investing. In the event you invested in stocks with the last word aim to earn cash quick then certainly a short-term plan would suit you. But however, if you wish to make investments for future and insurance purposes like in cases whereby you need to have money whenever you grow outdated, then an long-term plan for investing is best. Whatever your resolution could also be, all the time remember that there are benefits and disadvantage in all types of investments. And finally, to turn out to be profitable in your endeavor, you should be keen to tackle minimal dangers and make sensible decisions with a view to handle your trades.
September 4th, 2010
posted in Investment Theory
The Indian economy has crossed a significant landmark with the SENSEX crossing the 20, 000 mark in September 2010, majorly due to high influx of foreign institutional investors (FIIs) investing in India. The Indian economy is being praised globally as it emerged as one of the most effective stabilisers during the global recession. The business in India has been surpassing in most of the fronts. The investments in India are registering a never before response.Moreover, on the back of robust growth in Indian economy activities, the Centre for Monitoring Indian Economy (CMIE), in its monthly review estimated India’s gross domestic product (GDP) to grow by 9.2 per cent in 2010-11. The investments in India are significantly on a rampant growth. Business in India has been one of the least recession hit industries. This is one reason the West is looking towards the Sub continent with such keen interest to investing in India. The business in India assists in showcasing a detailed Indian economy overview of growth, besides supporting as a reference feature for further investment guidance to invest in India.The FIIs have net infused US$ 17.9 billion so far in 2010 into the Indian economy, the highest ever yearly inflow since foreign funds were allowed to investing in India in 1992, according to the Securities and Exchange Board of India (SEBI) data. Investments in India are being routed mostly through the private equity (PE) and venture capitalists (VC), besides the increasing number of mergers and acquisitions (M&A’s).It is apparently the need of foreign companies to be assisted through proper investment guidance modes and in contributing to the Indian economy by attracting more investments in India.Significantly, there is also an increase in the number of foreign firms investing in India in all sectors. The scope of business in India is majorly revolving around the automobile industry, retailing sector, FMCG, besides retail and telecommunication. The number of manufacturing units coming up in India has also increased, lucidly indicating the high potential of business in India.Furthermore, To start a business in India it is required that the person receives proper investment guidance. The availability and sourcing of investment guidance forms one of the important components in properly channelizing the investments in India. Investment guidance is also provided by many firms in order to assist the investor put his share in a suitable and performing sector. Investment guidance in markets, investment guidance with respect to mutual funds, PE, VC etc can also be asked from various investment guidance companies. The demand for investment guidance is ever increasing in Indian economy.
September 1st, 2010
posted in Investment Theory
Albania is a South Eastern Balkan country situated on the eastern Adriatic Coast in Europe. The country borders the former Yugoslav provinces of Montenegro, FYR-Macedonia, Serbia and Greece to the South. The capital is Tirana. (The World Bank Group, 2009).
Personal foreign direct investment (FDI) interest in Albania is derived from closely monitoring Albania’s transition into a NATO country and prospective European Union (EU) member. The process of accession of Albania to the EU started in January 2003. Albania’s admission to the EU depends on the countries future economic and political stability. Albania has been engaged with EU institutions and joined NATO (North Atlantic Treaty Organization) April 1, 2009. (Wikipedia Contributors cited 2009). Albania formally applied for EU membership 28 April 2009.
Ranked as one of the poorest European countries, numerous Albanian ex-patriots reside and work throughout the EU and Switzerland. A contributing high birth rate, the country has vast foreign direct investment potential considering its prospective EU status, geographical and geopolitical location. Albania is a distinctive classification of an emerging market and future currency change from the Lek to the Euro (improving the countries purchasing power and wealth), reveals there is a vast monetary opportunity for multinational Australian business to invest in a venture with a controlling interest.
FDI occurs when a firm invests resources in business activities in countries outside its home base (Hill 2009, p11), such as Albania. The main foreign direct investment areas that Australian Multinationals should be considering are Construction (highways, infrastructure), Property, Renewable Energy, Finance and Tourism. The types of companies that may be interested in this type of investment are the likes of Origin Energy, McMahon holdings, Raine and Horne.
Historically, most FDI has been directed at developed nations. FDI into developing or emerging nations has traditionally increased substantially (Refer to Graph 1, Appendix 1) since 1990 (Hill 2009, p243-244). Therefore Albania is an excellent FDI opportunity that may provide substantial profitability for Australian firms. Most recent inflows have been targeted at the emerging economies of South East Asia, hence there is an unexplored potential for Australian firms to invest in Albania.
Real GDP in Albania has averaged 6% in previous years due to a surge in public investment. Consumer price inflation is under the 4 per cent upper limit of the central bank’s informal target. (Refer to Graph 1, Appendix 2). The Albanian LEK will continue to be supported in 2009 by large foreign-currency remittances from Albanians living abroad as well as relatively high interest rates. Exports should grow relatively strongly in 2009 and forecasted current account deficits averaging around 11% of GDP. (Business Eastern Europe, 2008). (Refer to Table 2, Appendix 2).
The feasibility of the client company to enter the Albanian market is positive. The democratic Albanian government encourages foreign investment, thus in an ongoing effort to privatize public enterprises, the government is seeking qualified foreign investors in key sectors, including telecommunications, energy, oil and gas, finance, and construction. (Foreign Investment Climate, 2008)
Albania’s infrastructure is currently inadequate, and there is little budgetary money for improvements. The government inherited a poor highway system from the Communist period. Major road building projects are currently underway, and an estimated 6000 kilometres of roadway will be implemented by 2013. (Euromonitor International, 2009). Therefore there is an immense opportunity for Australian based Civil Engineering/construction firms to tender for a substantial sector of work, and scope for profitable investment.
Feasibility of the client company entering the Albanian markets in a Greenfield capacity is varied. Currently, Albania ranks 89th out of 183 countries in the benchmark of Ease of doing business. Starting a business, Albania rank’s 68th in 2009 and set to move to 46th in 2010. (Refer to Table 1 in Appendix 3). The average time in days for Starting a business is 5 days as compared to 13 days for the overall OECD Average. This demonstrates that the Albanian government is moving in a positive direction to attract foreign investment. (The World Bank Group, 2009). However, the cost of starting a business Cost (% of income per capita) is substantially higher than the OECD Average (Refer to Table 1 in Appendix 4).
“Foreign firms obtaining credit” and “protecting investors” demonstrates that Albania is advanced in certain business investment areas – projected ranking 15th out of 183 country’s in both these facets in 2010, placing Albania in the top 10%. On the contrary, dealing with construction Permits (173rd in year 2010) and Employing workers (105th in year 2010) demonstrates that the foreign direct investment firms specialising in renewable energy and civil construction will need to take these important factors into consideration when investing and starting a Greenfield project. (The World Bank Group, 2009).
The types of business ventures that are attractive for FDI are centred on construction infrastructure and energy. Albania’s energy crisis has been caused by the annual growth rate in the demand for power. The rate has been in excess of 8% and generation has struggled to keep pace. In a recent EU report it is acknowledged that Albania had undertaken some bold steps to restructure and liberalise the energy sector. The European Bank for Reconstruction and Development (EBRD) indicates that it will provide immense financing for new power generation. Therefore, renewable energy is also an extremely attractive foreign investment option. (GMB Publishing 2009).
Hydroelectricity generation has historically provided the majority of Albania’s energy capacity and continues to represent its main generation source. Through a lack of investment funds, only 35 per cent of potential capacity for development is currently being exploited. (GMB Publishing 2009). Australian based hydroelectric energy firms have a substantial advantage in expertise in exploiting the Albanian market. Studies show that Albania has a good solar energy potential. There are no large scale PV projects currently in operation; however the installation of major solar energy projects in planned by the Albanian government in 2015. (GMB Publishing 2009). Australian solar firms have the opportunity to explore Greenfield solar energy projects.
Various US Asset Management firms are launching into the fledgling Albanian property market to take advantage of the growing mortgage market. Albania is set to benefit from its planned accession to the EU, which it expects to be completed by 2014 and has already received €100m in funding. A 2007 World Bank report highlighted Albania’s high GDP growth and a dramatic decrease in poverty. Albania has received significant investment from international bodies such as International Bank for Reconstruction and Development. (Hirst, T, 2008). Commercial and residential property is an area of foreign direct investment that is attractive with the high power of the $A as compared to the Albanian LEK currency. Currently $1A = 85.01 ALL (Albanian LEK) and 1ALL = 0.1177 $A. (Quick Cross Rates, 2009). When Albania enters the EU zone, their currency will become stronger and inline with Euro zone parity.
Albania’s capital markets remain amongst the most embryonic within the whole of the central and Eastern Europe region. There are encouraging steps taken to put in place the legal and regulatory framework to build a functioning stock exchange. This makes convergence with the EU easier and provides financial and banking opportunities through a foreign investment framework to operate within. (Market Access 2008).
Albania recently witnessed an impressive growth in tourism in 2009. The government of Albania announced that there was a 42 percent increase in the number of tourists visiting the country, AENews reported. Albanian government is claiming its coasts are more beautiful than those of the Riviera. (Forbes S, 2008). With new hotels, resorts, and restaurants, the Albanian private sector in tourism has been growing an average of 30 percent for five years. The Albanian economy had the best growth in Europe; foreign investments in Albania have increased 59 percent this year. Australian firms can invest in the infant tourism industry by providing expertise, with huge profit potential. (New Europe 2009).
The Albanian government has induced an affirmative attitude towards foreign investment; its strategy to strengthen the business environment was incorporated by the removal of administrative barriers to investment. The privatisation agenda is gaining momentum and the government is encouraging foreign investment. Almost one-third of the country’s population works outside the country. The remittances they provide help alleviate poverty and drive a boom in housing construction as well as infrastructure (Euromonitor International, 2009).
Albania’s Albania’s Democratic Party government knows full well that a battle for foreign investment looms and that Albania has some catching up to do. The previous low level of foreign interest is largely due to the fact that Albania’s international image is poor, but wrongly so. Albania’s service sector, especially its restaurants and hotels, are exceptional. The hospitality is great and Albanians are an outward-looking people. They are ready for an influx of tourists. Albania is also rich in natural resources, such as oil, gas, copper, chrome and hydroelectric potential. (Austin RC 2006)
The Albanian government under Prime Minister Berisha has created an excellent environment to attract investors to Albania. Special emphasis was paid improving infrastructure. The efforts on improving the legal system to protect investors also proved significant. It was also reported that many Western European companies have chosen to escape the high taxes in Europe by investing in Albania as the latter offers the best tax system in Europe with a 10 percent flat tax. (NEWEUROPE 2009).
The Albanian government has worked to make it easier to invest and do business in Albania, instituting a one-stop shop for registering a new business. Education is also emphasized, particularly by the private sector. Since the fall of communism, Albania has been an ally of the US, supplying troops. Its positive foreign policy attitude, economic and anticorruption successes are models for other Muslim nations. (Forbes S, 2008).
Foreign firms experience various investment restrictions in Albania. Despite some recent improvement, Albania’s business freedom remains constrained by a burdensome regulatory environment. Even though starting a business is relatively quick, obtaining a business license requires 24 additional procedures and almost 100 more days than the world average of 225 days. (The Heritage Foundation, 2009).
Foreign and domestic firms are treated equally under the law, and nearly all sectors are open to foreign investment. Agricultural land may not be purchased by foreign investors but may be leased for up to 99 years. The Albanian state can expropriate an investment or asset for the purpose of public interest, but there are no legal provisions for compensation. This can be a deterrent or restriction for an Australian firm specialising in niche Albanian markets. Non-transparent regulations, inefficient bureaucracy, and corruption also restrict and discourage foreign investment in Albania. (The Heritage Foundation, 2009).
The financial system is relatively underdeveloped by western standards, even though progress has been made. Even though many banks have expanded their services, the use of cheques and credit cards is still not widespread. Although short-term credit is available, it is extremely expensive and difficult to obtain without large collateral security. This can restrict foreign investment for an Australian firm. In addition customer service is relatively poor compared to western standards. (Macro-Accessibility 2007).
The government has separated the Tirana Stock Exchange from the central bank, but the stock market remains inactive, and no shares are listed yet. Australian financial investment firms are currently restricted considering the Stock exchange is at an infant stage. Albania’s judicial system enforces the law weakly and is one of the country’s most tainted institutions. Judges are often appointed strictly for political reasons and can be corrupt. Protection of intellectual property rights is weak, and violations of copyrights and trademarks are common, therefore Australian and foreign firms with patented investments are subject to infringements without legal protection. (The Heritage Foundation, 2009). Land rights are not well defined, especially in coastal areas, and 70 percent of all civil court cases involve property disputes. This could have adverse effects for civil engineering organisations. (The Heritage Foundation, 2009).
Corruption in Albania is perceived as widespread. Albania ranks 105th out of 179 countries in Transparency International’s Corruption Perceptions Index for 2007, a very slight improvement from previous years. Corruption pervades all sectors and levels of government. Albania is a major transit country for the traffic in arms, narcotics, contraband, and humans. (The Heritage Foundation, 2009).
There a vast advantages and gains of FDI into Albania. It stimulates economic development and has helped developing countries such as Albania when faced with economic hardship previously. (Economy Watch 2009). Multi-billion dollar projects are underway in the energy sector to produce energy from wind, and solar sources, in addition to road and infrastructure construction. With FDI in the tourism industry, construction jobs in hotels and resorts are underway, also generating employment in the Albanian services sector. (New Europe 2009).
FDI into Albania permits the transfer of technologies and assists in competition between producers within the local market. Gains in the economy include the development of skills, and human capital resources by Albanian employees of Energy, Construction and Engineering firms receiving training on the operations of a business. The creation of new jobs, and increases the salaries of workers leads to lifestyle enhancement. (Economy Watch 2009).
The profits that are generated by FDIs that are made in Albania can be used for the purpose of making contributions to the revenues of corporate taxes. FDI allows for the development of the manufacturing sector. (Economy Watch 2009).
The Albanian economy has been on the rise, with an average annual GDP growth higher than anywhere else in the region. Such impressive growth has been largely due to controlling inflation in addition to investment. Previously, Albanian professionals would immigrate to other nations. “Brain drain” is used to describe the phenomenon of emigration of highly qualified professionals from Albania to other EU nations. FDI in Albania contributes to positive economic growth, and professionals are a source of capital for developing countries such as Albania. Reversing the brain drain has had positive effects on education, income distribution and economic welfare. (Centre for Social and Economic Studies, 2006)
A country’s balance of Payments accounts calculates its payments to and receipts from other countries. If the FDI in Albania is a substitute for goods and services, the effect can positively improve the current account of the host countries balance of payments. (Hill CW, 2009). According to a UN report, inward FDI by foreign multinationals has been a major driver of export led economic growth, which can be utilised by Albania.
Adverse effects of foreign investment in Albania mean that enhanced competition as well as being a positive aspect could drive indigenous companies out of business. Additionally, foreign multinationals could raise prices, causing inflationary pressure within the Albanian economy. Key decisions affecting the host country’s (Albania) economy may be made by a foreign investment company that does not have total commitment to the Albanian economy. (Hill, CW, 2009)
Considering there are minimal well established incumbent enterprises in Albania, a Greenfield investment may be an option, even though there may be benefits in acquiring an existing firms skill’s, embedded competencies and culture through purchasing an established organisation. (Hill 2009, p506). However, the process of setting up a new Greenfield hierarchy may be the only viable mode in certain instances in Albania within engineering and construction due to lack of infrastructure and expertise in an ex-communist nation.
Appropriate entry modes of investment into Albania include investing with the Overseas Private Investment Corporation (OPIC) which is a US government agency that sells investment services into emerging markets. The most important fund for the region is the $US 150 million Southeast Europe Equity Fund (SEEF), managed by Soros Private Funds Management. (Macro-Accessibility 2007).
The Trade and Development Agency is also a US government agency which promotes private sector participation in developing countries. In Albania, TDA has recently financed projects to implement roads, ports, the energy sector as well as various private sector projects. (Macro-Accessibility 2007).
The International Finance Corporation (IFC) is a member of the World Bank Group that offers a full array of financial products to companies in developing member countries such as Albania. The European Bank for Reconstruction and Development (EBRD) promotes competition, privatisation and entrepreneurship taking into account different stages of transition of developing countries. The EBRD has equity positions with the Albanian National Commercial Bank, and the Albanian Reconstruction Equity Fund and the Italian-Albanian bank. (Macro-Accessibility 2007). In addition to acquiring an existing company, obtaining finance from these corporations is a feasible entry point for an Australian firm entering a Greenfield project in Albania.
Poor transport, telecommunications and other infrastructure are considered to be the main obstacles and barriers to investment. Albania was Europe’s poorest country, but levels of per capita income have more than doubled over the past 10 years. Despite this, the economy remains vulnerable on several fronts due to a culture of tax evasion, significant amounts of long term domestic debt and weak anti-money laundering laws. (Euromonitor International, 2009).
Corruption issues within the government and a weak judiciary system pose problems in Albania’s efforts to achieve greater cooperation with the EU. The EU’s members are concerned about the countries commitment to improving the rule of law and crime. (The World Bank Group, 2009). Multinational businesses may consider the lack of law as an impediment to a foreign direct investment. (Euromonitor International, 2009).
A major barrier to investment may be the issue of developing free trade zones to attract foreign investment. Existing law provides the authority to establish free trade zones and a special zone commission has been established by the Albanian government to identify potential free zone sites. However, no free trade zones have yet been established. (Macro-Accessibility 2007).
Apart from the monetary opportunities and profit yields that Australian firms and the home countries establishing FDI’s receive, there are opportunities for the host country (Albania) of such foreign investments. Albania’s young, literate populace represents a surplus of labour, reflected in the unemployment rate of 14 percent. While some members of the labour force are highly skilled, many work in inefficient industries with outdated technology. Via foreign firms investing in Albania, the skill sets and technological capabilities of the Albania’s young work force is enhanced. (Macro-Accessibility 2007). Albania’s are rapidly learning market economic practices and often display impressive entrepreneurship. (Macro-Accessibility 2007). There are definitely significant opportunities for the host country Albania through FDI.
References
Austin RC 2006, ‘Albania’s new investment strategies’, SETimes.com, viewed 22 October 2009,
Business Eastern Europe, 2008, ‘Business outlook – Albania’, 10 Oct 2008, Vol. 37 Issue 377, p3-3.
Centre for Social and Economic Studies, 2006, ‘From Brain Drain to Brain Gain: Mobilising Albania’s Skilled Diaspora’, Development Research Centre on Migration, Globalisation and Poverty, University of Sussex, UK
Economy Watch, 2009, ‘Benefits of Foreign Direct Investment’, viewed 23 October 2009, < http://www.economywatch.com/foreign-direct-investment/benefits.html>
Euromonitor International, 3 Jul 2009, ‘Albania: Country profile’ viewed 21 October 2009,
Forbes, S 2008, ‘Muslim Success Story’, Business Source Complete, 4 Jul 2008, Vol. 181 Issue 7, p15-16
Foreign Investment Climate, 2008, ‘Albanian Investment Overview’ Albania Review 2008, viewed 21 October 2009.
GM Publishing, 2009, ‘Renewable Energy in SEE – Albania, viewed 21 October 2009.
Hill, CWL, 2009, International Business – Competing in the Global Marketplace, 7th edn, McGraw-Hill Internation Edition, Washington USA.
Hirst, T, 2008, ‘Fund Launch’, Fund Strategy, viewed 20 October 2009.
Macro-Accessibility 2007, ‘ICON Group International, Inc’, viewed 23 October 2009,
Market Access, 2008, ‘Albania: Building a Stock Market’ viewed 20 October 2009,
NEWEUROPE 2009, ‘Albania has the world’s best growth in tourism investment’, neurope.eu, viewed 23 October 2009,
Quick Cross Rates, 2009, ‘XE.COM exchange rates’, viewed 25 October 2009,
The Heritage Foundation, 2009, ‘Index of Economic Freedom – Albania’, viewed 22 Oct 2009,
The World Bank Group, 2009, ‘Doing Business in Albania’ viewed 18 October 2009,
Wikipedia Contributors, 2009 September 30, ‘Accession of Albania to the European Union’. [Internet]. Wikipedia The Free Encyclopaedia, viewed 21 October 2009, http://en.wikipedia.org/w/index.php?title=Accession_of_Albania_to_the_European_Union&oldid=305088136
Appendix 1
Graph 1 – Foreign Direct Investment Inflows by Region ($US Billions). (Hill 2009, p244).
Appendix 2
Graph 1 – ALBANIA. GDP and Consumer Prices % Change, Year. (Business Eastern Europe, 2008).
Table 2. Albania – Data and Forecasts. (Business Eastern Europe, 2008).
Category
2008 Rank
2009 Rank
2009 Rank
Population, mn
3.10
3.11
3.12
Exchange rate ALL/EUR
120.25
119.40
119.45
Imports, US$bn
4.50
4.90
5.30
Exports, US$bn
1.30
1.50
1.70
Trade Balance, US$bn
-3.20
-3.40
-3.60
Current account, % of GDP
-6.90
-5.50
-4.20
Forex reserves (gold) US$bn
2.50
2.95
3.43
Foreign debt, % of GDP
18.2
17.5
16.3
Appendix 3
Table 1. This table shows summary Albania Doing Business 2010/2009 data for the selected economy (out of 183 countries), and the rankings by each topic. (The World Bank Group, 2009)
Ease of…….
Doing Business 2010 Rank
Doing Business 2010 Rank
Change in rank
Doing Business
82
89
+7
Starting a Business
46
68
+22
Getting Credit
15
12
+3
Protecting Investors
15
14
-1
Employing Workers
105
105
0
Dealing with Construction permits
173
170
-3
Appendix 4
Table 2. This table shows the challenges of launching a business in Albania. Included are the steps entrepreneurs can expect, the time it takes on average, and the cost and minimum capital required as a % of GNI capital. (The World Bank Group, 2009).
Indicator
Albania
Eastern Europe & Central Asia
OECD Average
Procedures (number)
5
6.7
5.7
Time (days)
5
17.4
13.0
Cost (% of income per capita)
17.0
8.3
4.7
Min. capital (% of income per capita)
0.0
21.5
15.5
August 29th, 2010
posted in Investment Theory
Traditional Investments Used for Retirement Investing
Saving for retirement is similar to saving for other things in that you have similar investment options. Here is a run-down of the traditional investments and how they can work as retirement investments.
Stocks
Stocks provide the highest potential growth of all retirement investments but also come with the highest potential risk. A higher allocation of stocks is best early in your career when there is plenty of time before retirement to deal with any downturns in the market.
Bonds
As a retirement investment, bonds provide a lower growth rate than stocks but are much less risky in an economic downturn. It is a good idea when saving for retirement, to increase your allocation into bonds while decrease retirement investment allocation of stocks.
Mutual Funds
Mutual funds encompass a wide range of different types of funds available. This can include anything from an actively managed fund to an indexed fund. Actively managed funds will typically invest in a mixture of both bonds and stocks in an attempt to beat the market. Index funds are cheaper because they are not actively managed and attempt to hold stocks or bonds as a mirror of the market and tend to perform close to the performance of the market.
As a retirement investment, mutual funds can be a good way to diversity your portfolio without the micromanagement that may be involved. Mutual fund allocation decisions should be made based on what types of stocks or bonds they invest in along with what type of asset allocation there is within the mutual fund itself.
Retirement Investing with Retirement Accounts
When saving for retirement, you have a few tools that are not available for other type of investments. These retirement accounts are built specifically to support your retirement investing. Here is a quick rundown of the different types of retirement investment accounts available.
401k
The 401k is an employer sponsored retirement investing account. Like all three of these investments, it is tax-deferred meaning that you are not taxed on the funds you place into these accounts until you withdraw them. 401k is the most popular retirement investment account and should be exhausted first because of the potential for employer deposit matches or contributions. There is a limit of $16,500 a year that can be put into your 401k.
IRA
An Individual Retirement Account (IRA) is similar to a 401k with the tax deferral feature. It only has a $5,000 yearly contribution limit and there is no chance for employer contributions. Once your 401k has been fully contributed to, you should put remaining money into your IRA until the limit is reached.
Annuities
Retirement Annuities are offered by life insurance companies and have very high fees of around 3% a year. These instruments should only be used for retirement investing if the specific features offered are worth the 3% fee. These retirement investments are rather heavily pushed by financial salespeople because of the very high commissions they provide. Make sure you are informed before diving headlong into something that could very well be a poor retirement investment choice for you.
Asset Allocation Strategies
Asset allocation for your retirement investing should depend primarily on age and distance from retirement. It is always a good idea to have a mixture of different retirement investments rather than focusing exclusively on one so you can diversify your portfolio and control for risk more effectively.
There are three phases of your life you should focus on when allocating your retirement investments.
Early Career
In your early career you want to build up your wealth through investments as quickly as possible. You also have a long time before retirement giving you ample room to regain any losses in the market. This is the time where you want to allocate the largest percentage of your retirement investments into high growth investments such as stocks. Always make sure to diversity and not put all of your retirement savings into just a few stocks to avoid unnecessary risk.
Mid Career
The middle of your career is when you want to start reducing your risk as to not wipe out a large portion of your retirement savings when you are preparing to retire. This phase is around 7-20 years before you are preparing for retirement. The range is rather large because as with all retirement investing, it depends heavily on your circumstances and we can only give general guidelines and things to consider.
At this point you want to tone down the level of allocation put into high risk and high growth retirement investments such as stocks. It may be tempting to keep a large portion there for the high potential growth, but if a market downturn similar to this recent one hits you at a bad time, you may have to spend more years working to make up those losses or deal with a reduced income or running out of money upon retirement.
Retirement
At this point of your life, you should already have a healthy amount of retirement savings due to your smart retirement investing. The goal at this point is to protect the money you have from loss and also from inflation. It is not enough to just put it into a bank account because your retirement savings will be chewed up by the average inflation rate of 3% per year.
To meet this goal you want to have a portfolio more heavily allocated to retirement investments that will hold your wealth steady. This means less in stock and more in bonds and indexed mutual funds.
Withdrawal Strategies
Upon retirement you will have your nest egg of retirement savings, but what is the best way to make it last? The general rule based on studies is that withdrawing 4% of the total each year and increasing the percentage with inflation is likely to net about 30 years of income from your savings. We can’t predict how long we will live so this step can be very difficult because if you live longer than expected you may run out of funds.
Additionally, if you are hedging against inflation in your account, there will still be upturns and downturns in the market. Not enough to wipe out your retirement savings but there will be fluctuations. To compensate, you can withdraw more of your retirement savings in boom periods and less in bust periods.
Withdrawal from your retirement savings can be further supplemented by other income sources. This could include a small business run by the retiree as a hobby / income source. The retiree can also work a part time job to bring in more money to allow the retirement investments more time to grow.
Conclusion
There are a variety of retirement investments available for the different life circumstances someone may be in. This article gives you an overview of your options and different things to consider when planning your retirement investments. It may be a good idea to hire a professional financial planner to help you assess which retirement investments best fit your life. Make sure this is a legitimate financial planner and they aren’t trying to sell you on things you don’t need to inflate their commission. The best protection against that is having base knowledge of the different options available yourself to avoid any major pitfalls. Saving for retirement is a very involved process and you should make sure you are putting in the time necessary to pick the best plan for your own retirement investing.
August 21st, 2010
posted in Investment Theory
Buying income producing property is becoming a popular choice for people seeking to supplement their income creating an additional revenue stream. Real estate purchases will typically grow in value. Yet, many properties acquired through a structured financial plan using funds from an investment loan can produce income both part time and a full time.
An Investment Loan as Part of a Personal Growth Plan
As part of a strategic personal financial growth plan, an investment loan can be a valuable method toward obtaining financial independence. The actual structure of your investment loan is an important aspect affecting the return on your investment. Options available to investors today are quite similar in the same loans available for owner-occupied dwellings. A person seeking to invest in a secondary, or income-producing, property can use the same standard fixed and variable rates for home purchase. Not only will the same rates be available but the same loan features as well.
What are Investment Loan Features?
Just as is available for owner-occupied home loans, an investment loan will have the following features:
Planning Considerations for Investment Loan Funds
There also exist many traditional tax advantages when obtaining an investment loan. Before venturing into the world of purchasing property through the funds available from an investment loan, consulting a financial planner to ensure any purchase from you investment loan is a financially wise long-term choice. There are key factors to consider when investing in property including:
Use Internet resources to locate an investment loan suitable for your wealth creation planning needs.
Buying income producing property is becoming a popular choice for people seeking to supplement their income creating an additional revenue stream. Real estate purchases will typically grow in value. Yet, many properties acquired through a structured financial plan using funds from an investment loan can produce income both part time and a full time.
An Investment Loan as Part of a Personal Growth Plan
As part of a strategic personal financial growth plan, an investment loan can be a valuable method toward obtaining financial independence. The actual structure of your investment loan is an important aspect affecting the return on your investment. Options available to investors today are quite similar in the same loans available for owner-occupied dwellings. A person seeking to invest in a secondary, or income-producing, property can use the same standard fixed and variable rates for home purchase. Not only will the same rates be available but the same loan features as well.
What are Investment Loan Features?
Just as is available for owner-occupied home loans, an investment loan will have the following features:
Planning Considerations for Investment Loan Funds
There also exist many traditional tax advantages when obtaining an investment loan. Before venturing into the world of purchasing property through the funds available from an investment loan, consulting a financial planner to ensure any purchase from you investment loan is a financially wise long-term choice. There are key factors to consider when investing in property including:
Use Internet resources to locate an investment loan suitable for your wealth creation planning needs.
August 21st, 2010
posted in Investment Theory
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