Investment Articles

You do what you think is a basic search for basic Investing principles and guidelines and you may very well be overwhelmed with the amount of information that you try to sift through. It may also seem like there are more rules and regulations on how to invest as there are on what not to do when you are trying to earn more on your money. Take a deep breath, sit back, and do not worry about every detail. Getting the broad scope on the money market may be all you need to make your first deposit on investment.

The first rule of thumb is that you should not use Investing as a way to make money overnight. As a matter of fact plan to not even look at your money for awhile as this simple obsessive compulsive trait may have you questioning why you thought your money would grow in the stock market in the first place. Do you have the spare money to invest? Then consider it spent when you place it in a stock and don’t bother worrying about its daily activities.

Secondly, when do you plan to use the money you are Investing? Do you have a short term, middle of the road, or long term plan for this money? What you invest in depends on when you are going to need the money? Are you saving up for a first house or are you saving for retirement. Know what your goals are with the money so that you can place the money in the funds that will work accordingly to your schedule.

Once you have worked well with the first two bits of advice, then consider taking the next step in investing. If you have developed a thicker skin and are not prone to watching your stocks gain and lose money possibly on a daily basis then maybe you are ready for a risky challenge like on line trading or stocks.. If you still worry, then stick with the safer bet like mutual funds and hold.

Investing is good for everybody but not everybody knows how to invest. Do not get overwhelmed with the rules and consider whatever you are willing to risk. Sticking to what makes you comfortable will be the only way it is worth it on the bigger challenges.

Patrick Cranley is an avid investor in penny stocks.
Patrick also likes to write on health related topics.
Check out his popular blog on rogaine does it work, where you will find excellent stories at http://www.rogainedoesitwork.com

“Winning conditions” is a combination of factors to look for when choosing investments. By observing conditions which repeat themselves, your financial advisor may be able to predict results when certain “conditions” are in place. One example; a few years ago a well known mutual fund had an impeccable 10 year performance record. It consistently outperformed the market by over 2%. It was about one billion dollars in size. Within one year it grew to about three billion because everyone started buying it. Past returns attract buyers like dung attracts flies.

Afterwards that fund performed below average for several years. The fund company increased advertising to try to slow the exodus and finally overcame their sudden growth hurdle. It has begun to perform well again after nearly a decade. The success of the fund was its downfall. It attracted deposits way faster than it could find great investment opportunities. It grew way too fast for the managers to be able to continue delivering consistent performance.

This also happened to several other well known funds. This pattern involves some conditions worth watching which go beyond evaluating the stocks that fund holds. There is more to choosing an investment than looking at past performance. When a fund that has been in existence for more than five years triples in size within a year, I would expect it to disappoint investors for about three years.

Oh well, using past history makes for easy sales for advisers who focus on selling and are not so concerned about in depth research. No advice wanted by buyers is sometimes a problem. When you are investing take the time to ask questions, if you don’t your adviser may get the idea you really don’t want to know much about the investment. Deal with an adviser who looks beyond past returns and the content of the fund to estimate the probability of future returns.

The more you read the more you will understand what questions to ask if the material you read is not a regurgitation of what the fund managers and financial gurus are feeding us. Read writers who are original in their thinking and who look at the big picture not just the ones who analyze the individual stocks.

Emotions can get in the way of brains when you try do-it-yourself investment planning. As my mom used to say “a doctor who has himself for a patient has a fool for a doctor”.

Conditions in this decade dictate that equity markets are in for an uncertain ride. Low interest rates tempt investors to consider equity investments. Especially since Last year was such a good year. Personally I am not investing in mutual funds. The investment of my choice is a special type of segregated fund which allows participation in equity markets and also guarantee 5% increase per year for retirement funds.

On the other hand larger amounts of non retirement funds are being placed in bonds or guaranteed short term certificates. I still recommend leaving at least 10% in a daily interest account that pays a high (not real high these days) interest rate. Depending on the style, attitude and risk tolerance level of the investor I might suggest as much as 50% of their portfolio in such open accounts. If they are opportunists there will be many buying opportunities in the next few years.

NOTE: There are no guarantees.

Timeless advice would be; the faster the growth rate in the markets – the quicker we will arrive at the inevitable drop.

The retirement boom was to begin at the end of the last growth spurt. Hopefully the baby boomers had the wisdom to move from equity markets to safer investments with guarantees. Fortunately the new generation of segregated funds with lifetime guarantees allow investors to still participate in the equity investments they are used to, but with guarantees. Many people changed their retirement plans after 2008.

The following is a quote from my article published in the Daily Gleaner newspaper in 1999: “WARNING: UNDERSTAND THE NUMBERS: If $10,000 is invested and grows 30% in one year it becomes $13,000. In year two if it earns 40% it becomes $18,200. In year three the markets soar and it earns 50% to become $27,300. Now comes the drop!

A drop of 60% in the fourth year turns the fund into $10,920. Now $920 is a 2.2% return for a four year period. Low isn’t it? “The market has never stayed down for ten years before in North America” – Of course it didn’t! That is because we never had a retirement boom before in North America! “That was written in 1999. Since then we have seen a ten year negative return period from 1998 to 2008

Still think you do not need segregated fund guarantees? Sag. funds can protect you from such a market drop. Best wishes for good investing this decade. Today, more than ever you need a capable financial advisor.

Hopefully this article will help you to avoid one common mistake in financial planning. There are other articles at http://www.smartchoicelife.com/blog/ While you are on this site go to the home page and check out my e-books some are free all you need do is download them. I have over 30 years experience in banking and financial services industry. Now I like to share his awareness of behind the scenes practices that work to the advantage of banks, investment houses, and big business in general but seldom benefit consumers. In these books and articles I also shares insights into how to improve your financial health and wealth without worry and stress. Give a F R E E ebook to a teenager or young adult. Help them to appreciate the value of money and avoid common financial mistakes. They’ll appreciate it. While you are there check out our unique,awesome financial planning system where you get your own plan done by a professional certified financial planner. Plus you get ongoing personal access to Gordon and coaching for up to one year.

There is a tremendous daily market of discounted bank instruments like SBLC, Bonds, MTN, BG, etc. involving issuing banks and long chains of what are called “exit-buyers”, which include huge financial institutions, Pension Funds, etc. in an exclusive Private Placement Program arena.

These activities on the bank side are done as “Off-Balance Sheet Activities”, which allow the banks to benefit in many ways. So, what are “Off-Balance Sheet Activities”? Basically, they are contingent liabilities and assets, where the value depends upon the outcome upon which the claim is based, similar to that of an option. These “Off-Balance Sheet Activities” show up on the balance sheet merely as memoranda items. When they cause a cash flow, they will show up as a debit or credit on the balance sheet. Since there is no deposit liability, the bank does not have to consider binding capital constraints.

So, what is the difference between private placement programs and normal trading?

Since all Private Placement Programs involve trading with discounted debt instruments (notes) and can only be done on a private level in order to bypass legal restrictions, these types of trades are different from the highly regulated “normal” trading. Said another way, these Private Placement Programs are done and restricted on a private level only without all of the restrictions that are present in the securities market.

What is “normal trading”? It is what the majority of the public is aware of and is known as the open market (or spot market) under which bids and offers are used to buy and sell discounted instruments. Kind of like an auction.

To play here the traders must have full control of the funds, if they don’t, they cannot buy the instruments and sell them to others. Also, there are no arbitrage buy-sell transactions in this market because all players have a clear view of the instrument and its price.

There is also something called a “closed, private market” where an inner circle exists and is made up of a restricted number of “master commitment holders”. These are basically trusts with large amounts of money that agree (through contracts) to purchase a specified number of fresh-cut instruments at a set price during a set period of time. Their purpose is to sell these fresh-cut instruments on, so they contract sub-commitment holders, who contract with exit-buyers they find.

Because all of these programs all based on arbitrage buy-sell transactions with preset prices, the traders do not have to be in control of the investor’s funds. But in order for a program to start, there has to be enough money behind each buy-sell transaction. That’s why the investors are needed. The involved banks and commitment holders are not permitted to trade with their own money unless they have reserved enough funds on the market, and that money belongs to the investors which is never used, and never put at risk.

These Trading Banks can lend out money to the “traders” usually at 1: 1 0 ratio, but under certain conditions, they go as high as 20: 1. That means that if a trader can “reserve” $100M, then the bank can lend out $1 Billion. This is accomplished through a line of credit based on how much money the trader (the commitment holder) has, since the banks don’t lend out that much money without collateral.

Any trader that requires he be in control of the investor’s fund, is not one of the major players, but rather plays in the open spot market where lots of different instruments are traded.

Now if the trader only has to reserve the client’s funds without being in control of those funds, he is participating in this private market of private placement programs.

Since many bankers and others in the financial arena are exposed to the open market but are not allowed into the private market, they find it difficult to believe that a private market exists and that is often the reason they think private placement programs are scams.

As my grand pappy used to say, “Ignorance is a voluntary misfortune”!!!

To get started with a Private Placement Program requires at least 1M USD and the client must submit a Proof of Funds, CIS (client information sheet) and a copy of a passport

Larry Potter is president of Kim-Lar Inc. which specializes in private placement programs, bullet trades and the monetization of bank instruments to place into trade and can be reached at kimlar92 over at gmail.

Startup businesses may not be the most reliable sources of investment ever, but they can be profitable if you look at the right ones. While this is not something that a beginning investor would want to get into, a seasoned veteran may see great profits come about. If you want to invest in a startup business, you need to know about the different ways to go about doing this. Your level of participation with the business will likely be linked to the money you have invested with it.

For minimal investment options, consider the idea of a joint venture group. This would allow you to invest in a business with a set of other people so that you do not become a primary source of money. This is often the best route for beginners to take because it minimizes their chance of losing money with the business. You will not make as much money this way, but greater rewards will only come with greater risks. You can choose if you want to be a part of a joint venture group or if there is a better place for you to spend your money.

Instead of relying on someone else’s business to succeed, you could invest money into your own startup business instead. The problem that comes when you invest in a business of this type is that you are not in control of where your money goes. Thus you have no say in how people use your money and have no options to prevent the business from potential failure. Investing in your own business is not always ideal because of the work load that will be involved, but more work will yield greater rewards in the end. If you have a good idea you want to run with, you might as well give it a go.

It is your decision if you want to make a onetime investment or if you want to be a frequent financial contributor when you invest in a startup business. Most up and coming companies need more than one round of money to make themselves secure for the future, but that is not always the case. The more you invest in a company, the greater shareholder you will become. That will give you a better say in what goes on with the money you put in. Start off slow and you should find a balance that works for you. For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!

Sean Johnson is an Investment Advisor for http://www.inquest.biz an Investment Referral Service for investors requesting information on specific investments.

Startup companies come and go. In this fast paced society, only the strong and well-funded survive. A start-up company is just what it says, a company that is just in its beginning phases. Realize that while investing in these companies can be lucrative for investors, it can also be quite risky. Many companies fail within the first year, whether traditional bricks and mortar companies or online ones. Unfortunately, there is no way to tell on paper which ones will succeed, which ones will fail and which will make you the next dot com millionaire.

Investing in these companies can be done alone, as the primary investor or as a silent partner. This, however, requires you to have your eyes and ears open and to be actively searching out people who have a great idea or invented a unique product and want to start a business. Unfortunately, it also requires you to know where to look, which can be labor intensive. As an investor, you may have a day job and not have time to do hours of research and legwork just to find your next deal.

Many investors choose instead to work with venture capital groups. A venture capital group or a venture capital company pools the money of several investors together to fund the next big idea. It also allows you to invest in more expensive companies by joining several other investors. More importantly, working with other venture capitalists gives you access to a fund manager, who does all the research, negotiations and analysis in order to protect your money and ensure that it is invested in a sound business. Do not just hand your money over to the fund manager. Study each suggestion well and do your own research.

In the excitement of the dot com boom several years ago, some investors got caught up in the frenzy and invested their money in startups destined to fail. Usually, members of venture capital groups have the same goal for the future, to get in on the ground floor of a company and reap the rewards.

Investing in these type of business also requires patience. Waiting until a company turns a profit can happen immediately but, more likely, will take many years. Pulling out your support too soon can rob you of unexpected profits; yet, pulling out too late can cause an investor to lose their initial investment. And, while it is possible to fund a startup on your own, investors should stick with the convenience and relative safety of a venture capital group for their investment strategy.For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!

Sean Johnson is an Investment Advisor for http://www.inquest.biz an Investment Referral Service for investors requesting information on specific investments.

If you take a survey of 100 people in the general public, most would not know how investing in this type of loan programs was. In fact, they may have never even heard of this type of loan before your conversation. A few might consider it to be a loan from a so-called loan shark but that would not be an accurate description either. A hard money loan is a loan made by a reputable company or group of investors for the purchase of land, commercial or residential real estate or to finance the construction of a building. Generally, the risk to the lenders or investors is higher and, in turn, the points and interest rate are higher.

The length of the loan is usually less than three to five years, with no pre-payment penalty.

These loans work great for investors because they understand the ease and convenience of them compared to a standard bank loan. They understand that the higher interest rates, points and closing costs are all part of doing business. In fact, they roll these costs into their planned expenses when analyzing the expected profit from a deal. However, the main benefit is the speed at which a loan of this type can be turned around. Generally, a straight-forward deal can close in less than a week, some of these lenders even promise 48 hours. In fact, investing in these money loan programs themselves may be another alternative for real estate investors willing to think outside the box.

In fact, those that are investing in these programs can expect to see a healthy 12% return on their money, which is beyond the expectations of any savings account. Each investor is scrutinized and each deal is researched, especially in this economy, to try to minimize failure and guarantee success. Most programs are set up to include money from several investors in each deal to minimize the risk even further or investors can pick and choose from deals that they are interested in participating in.

Anyone interested in investing in real estate but unsure of how or where to start should research investing in these loan programs. They offer a great return on an investment and help out fellow investors, businessmen and builders in the process. Hard money lenders are always happy to add someone to their team of investors with deep pockets and are willing to share the profits of this lucrative field.For more information on investing in investment opportunities usually or normally not found in the marketplace, click here!

Sean Johnson is an Investment Advisor for http://www.inquest.biz an Investment Referral Service for investors requesting information on specific investments.

The public is being warned of investing in timeshares, with payments based on an “in perpetuity” basis.

In one example, a couple bought such a timeshare in Stirlingshire, with annual management fees exceeding £500.

Eventually, the husband passed away leaving outstanding debts. In an attempt to address the situation, his wife inquired as to how she could cancel the management fees. Unfortunately, the managing director of the timeshare company stated that in his opinion, it was the responsibility of the Executors of the deceased’s Estate to make provision for such debts. The victim has been advised that she must declare bankruptcy and that any monies left over in the Estate will be frozen accordingly, so that the timeshare company can continue to recover their fees on a yearly basis.

Of course, one viable option would be to sell on the timeshare. However, the current property climate means there is almost no market for second-hand timeshares, and relatives will of course not want to inherit a timeshare and its substantial costs.

The advice then is to be wary of entering into any “in perpetuity” financial commitment which may well prove to be extremely difficult to settle. Do not be fooled either into thinking that if you enter into a joint agreement, that this type of contract will be settled on the death of your partner. Make a point of asking the timeshare company about such eventualities, before you are persuaded to sign on the dotted line and potentially find yourself in considerable debt.

The public is being warned of investing in timeshares, with payments based on an “in perpetuity” basis.

In one example, a couple bought such a timeshare in Stirlingshire, with annual management fees exceeding £500.

Eventually, the husband passed away leaving outstanding debts. In an attempt to address the situation, his wife inquired as to how she could cancel the management fees. Unfortunately, the managing director of the timeshare company stated that in his opinion, it was the responsibility of the Executors of the deceased’s Estate to make provision for such debts. The victim has been advised that she must declare bankruptcy and that any monies left over in the Estate will be frozen accordingly, so that the timeshare company can continue to recover their fees on a yearly basis.

Of course, one viable option would be to sell on the timeshare. However, the current property climate means there is almost no market for second-hand timeshares, and relatives will of course not want to inherit a timeshare and its substantial costs.

The advice then is to be wary of entering into any “in perpetuity” financial commitment which may well prove to be extremely difficult to settle. Do not be fooled either into thinking that if you enter into a joint agreement, that this type of contract will be settled on the death of your partner. Make a point of asking the timeshare company about such eventualities, before you are persuaded to sign on the dotted line and potentially find yourself in considerable debt.

Wealthy clients who require advanced investment planning and wealth management services should be concerned the next time they talk to the financial advisor at their bank, or the broker at the big Wall Street firm. Concerned that is, if they value independent and transparent advice on their accounts and wealth management plan. When it comes to providing affluent clients the types of services they need most: investment transparency, elimination of conflicts of interests, fiduciary responsibility, independent financial information, accountable compensation structures, these companies fall short on all of the above. Hidden fee share arrangements, high commissions, pay to play investment products, no fiduciary responsibility to the client and firm reviewed policies on what employees can discuss all play a very critical role in diminishing the affluent client’s ability to get transparent and accountable advice.

Many large private clients have much too much wealth to be advised by a bank, where the average account size is rarely above a few million dollars. Besides the obvious conflicts of interest that banks have, another concern for affluent investors is the inability of these companies to build sustainable advisory teams. Big banks and Wall Street firms do not want to build dedicated teams of highly qualified advisers. It is expensive and an administrative headache. Plus, the top financial talent usually does not want to work in a captive-firm environment, where profit margins are cut and turnover is high.

Another big concern with banks and big Wall Street firms is of course, conflicts of interest. How can a company provide independent advice when they have their own products to sell? How can an adviser provide independent advice when they are paid a commission by a third party to place its products, or are paid more when they trade more? What affluent clients really need a bank or big Wall Street firm for is asset custody and borrowing money. Investment advisory is a very tricky business for them, because they are not held to a fiduciary standard for their clients, they are not required by law to place the client’s interests above their own.

That is where a true investment fiduciary can help. A fee only Registered Investment Advisory (RIA) firm functions much differently than a traditional Wall Street firm or bank. A fee only Registered Investment Advisor does not manufacture any products in house and has no ties to any institution or investment products: Not a single investor should be a shareholder in the business and the firm should not be affiliated with any asset managers. This guarantees total independence in the choice of investments and fairness in the allocation of opportunities. Fee only advisors are only paid by their clients and pass savings onto them. A quality fee only RIA firm should provide affluent clients with a step by step and very thorough process that systematically explores their complete financial picture and outlines a true wealth management plan that best suits their needs.

Tony DePasquale is the President of Elysien Private Wealth & Real Property. An independent forensic investment auditing & advisory firm headquartered in Henderson, Nevada. Tony can be reached by email at tony@elysien.com or through the company web at http://www.elysien.com

As I heard my wife open our front door one morning over the weekend I heeded her emotional outburst. You never know what kind of havoc or mischief people choose to inflict on your property in the middle of the night. Surprises have run from being “toilet papered” to much less innocent pranks. The last thing I wanted to do in the middle of NFL playoff weekend was clean up some pranksters mess. To her surprise, (and mine) we had a flock of beautiful plastic pink flamingos sticking out of our lawn.

After the initial astonishment wore down we found a gift package nearby. We had been “Flocked” by our local private school and were recipients of a very creative fundraising campaign. The gift bag provided instructions on how to proceed with our contribution and when the flock could be picked up. We had the opportunity to provide the location of someone else who might appreciate waking up to the Flamingo Campaign.

In today’s economy I am sure paying for private education is a serious budget concern for many households. I am pretty sure the costs of private elementary or high school have risen along with college tuition in spite of the financial meltdown the country recently experienced. It is obviously also more difficult for today’s private schools to fund extracurricular activities. This creates the need for potentially seeking more in the way of donations or contributions and fosters the creativity involved in this process. Needless to say, this “flocking” made an impression on both of us and trumped the normal fundraising campaigns I have either witnessed or been actively involved in.

Continuing on the need of revenue themes, the financial media is continually mentioning the municipal bond market lately. Analyst’s expectations range from a municipal meltdown initiating another credit crisis to others indicating the great buying potential. It seems most city, county, and state organizations are in need of more revenue and finding it extremely difficult to raise taxes causing further strain on pocketbooks. Any hint of a backstop bailout for the states by the Federal Reserve would seriously negatively impact the dollar and definitely create some type of asset market chaos. Just the fact everybody is weighing in on the potential problem makes me wonder if the meltdown will come, as it just seems too obvious. Remember, when everybody is pounding the table on one particular theme in the investment world it usually forecasts the opposite, (sooner or later). We have to grow our way out of our debt problem and if pro growth agendas are not being emphasized or implemented than we will not receive a large boost from tax revenues. I believe the Federal Reserve has backed themselves into a very precarious, (if not outright dangerous) corner.

As I write this on Wednesday Jan. 19th the market appears very tired. Recent earnings from tech giants IBM and Apple beat estimates and yet currently the NASDAQ is down approximately 1%. This might be the start of the correction I have been worried about. Of course, with the Federal Reserve continuing to act as a liquidity backstop it will be interesting to see if institutions continue “to buy the dips” as we have seen throughout this cyclical bull rally. Maybe the Federal Reserve and our Political Leaders need to start thinking outside the box, just like the creative fundraising campaign alluded to earlier. Temporary Pink Flamingos on your lawn will be much better received than something postmarked from the Internal Revenue Service, unless you might be expecting a refund.

Written By: Daniel Petrey, CFO, MBA