Investment Articles

Alternative Investing has become a trend in recent years. The traditional market cannot compete with the returns available, which is why investors turn to alternative projects to make their money work harder for them.

A quick look at the investments available on the traditional market shows that the only way in which investors are making returns is to enter into high risk projects over a long period of time. The returns being seen are also reasonably meagre. With the rising cost of living and inflation, people cannot afford to lose money on investments. Now more than ever people need their money working harder for them, generating income and creating high returns. The stock market is underperforming and the traditional market faces issues of volatility and cannot deliver rates that are so needed.

Over ten years the S&P 500 is up just over 10 %, or about 1 % a year. On a five year basis it’s down about 18 %. Similarly the Australian Super this year has made a loss of 2%, and investors are told that they should be thankful that this was the only loss made.

The instability of the traditional market has smart investors turning away. Turning to other projects to diversify their portfolio and have their money working harder for them. A direction in which many smart investors are turning is towards the alternative investment market.

Due to the fact that alternative investments have low market correlation, they are safely distanced from the traditional investments and have therefore been far outperforming anything available on the investment market.

The most commonly approached Alternative Investment is that of property. However the Australian property market has taken a downturn lately. House prices are dropping and we are not seeing the stability that we have become accustomed to over previous years. Meanwhile other Alternative Investments are creating returns that are unsurpassed.

The Carbon Market for example is set to become the fastest growing market in the world. As a tradable commodity Carbon Credits are going to be the most sought after tangible asset. The introduction of the Carbon Tax in Australia on the 1st July 2012 has created an opportunity for Carbon Credits to be created and then traded on the open market; creating massive profits for those who own them. Capital Carbon Credits is an alternative project which creates these Carbon Credits. With the ‘Top 500′ emitters being forced to purchase Carbon Credits, this is a commodity market which is in high demand yet very low supply.

Another great example of an alternative commodity which is in high demand but in low supply is actually the commodity of food. 3.6 billion people in the world rely on rice as a staple of their diet, creating a yearly demand of 437 million tonnes of rice. Currently the world can only create 381 million tonnes a year, leaving a vast shortfall. Agri Capital is a project which is creating the biggest commercial harvest in West Africa, a harvest which will create 9000 tonnes of rice per year. Winning ‘Best Alternative Product of the Year 2011′ and with projected returns of 15 % per harvest with the last harvest creating 16.2%; this is an alternative investment which is outperforming anything on the traditional market.

A further reason that people are turning to Alternative Investments is due to the ethical side of the investments available. In recent years a lot of the big profits being made have been through mining and oil companies. Companies which pollute our atmosphere; destroying our environment.

The Capital Carbon Credits is creating clean air for Australia. Growing trees in the Gippsland of Victoria the project is taking pollutions out of the atmosphere and offsetting the damage that the ‘Top 500′ emitters are creating.

The Agri Capital Investment has an enormous social impact on the area in which it operates. Whilst generating rice, it also creates jobs, healthcare, education and local markets for the community in which it is based. Also Agri Capital set aside 60 metric tonnes of rice per year to be given back to the community at no charge. Feeding the poor and improving the lives of those in the community surrounding the project.

These investment opportunities are not only greatly surpassing any of the returns that people are managing to get on the traditional market but they are also low risk. With guaranteed exit plans and insurance in place for varying projects; Alternative Investments deliver high returns in an ethical project whilst safeguarding your initial investment.

For a free report on an ethical, safe and highly lucrative rice market which is available for a limited time visit http://www.capitalalternatives.co/australia/

Many people go cold at the idea of options trading…it sounds complex, risky and of course it does take some capital investment. But if you own or are thinking of owning shares, you could be earning a monthly income right now. The covered call strategy is effective and really easy to understand and implement. Basically you are writing a contract in which you agree to sell your shares at a set price on or (in some markets) by a set date. For this agreement, you are paid a premium or income. You get to keep this income whether or not the buyer chooses to exercise their right to buy the shares off you.

In a scenario where the share price goes up, you will likely be exercised and your shares are bought from you at the agreed price irrespective of the actual price on that day. If the share price goes down and the buyer can buy the shares at market for a cheaper price, the calls will likely not be exercised. You get to keep the income and the shares and you can repeat the whole thing again the next month! In this way, you collect income from your capital investment, a bit like collecting rent from a property. Sound complicated…it really isn’t and with online brokers putting on the trades is quick and easy.

So what’s the downside? Well, owning shares always carries some element of risk. Of course the underlying value of the shares can go down as well as up and erode your capital investment? Also if the share price goes up, you may be missing out on the capital gain as you will have to sell your shares at the price agreed regardless. However, if you choose your stocks wisely, diversify across categories and put some stop losses in place to protect against a particularly badly performing stock (or buy put options), then you can mitigate your risk. If not exercised you can repeat the process month on month slowly milking your investment and compounding your investment (i.e. buying more shares with the accumulated income) for a very healthy overall return. You also have to remember that you only realize your share gains when you sell your stocks whether the covered call strategy generates actual monthly income.

In short, covered call writing is actually a pretty conservative and effective income strategy. It takes a little bit of work and knowledge investment to understand the concept and select the right stocks but once you have your formula, it can be surprisingly easy to implement.

For more information on investment strategies, returning to work after kids, interview tips, resume writing or research into legitimate ways to make income from home, please visit http://www.worklifeafterkids.com/

The current economic climate, defined by low interest rates, volatile equity markets and poor short-term visibility, is leading Investors of all shapes and sizes to investigate alternative investment assets in an effort to boost portfolio performance whilst also reducing exposure to traditional assets like equities.

Forestry is one sector where investment returns are driven more by the biological growth of trees into valuable timber than traditional growth fundamentals. Forestry also provides a shelter for capital, and superior compound growth, even during falling markets.

Institutional Investors have led the charge into forestry investments with Pension Funds and Hedge Funds acquiring timberland properties as part of their diversification strategy. This has led to the emergence of a plethora of forestry investment products aimed at the retail Investor.

With options to acquire small forestry plots within large, managed plantations in Brazil, Costa Rica, Panama, Sri Lanka, Fiji, Thailand, Nicaragua, Australia and New Zealand, potential Investors could be forgiven for feeling confused, and the lack of quality information about the sector for Financial Advisors leads many to divert their Clients attention to other, more traditional investment assets like residential or commercial property, or even equities.

In this article we look into the main concerns regarding these retail forestry investments, and look to how risk can be properly assessed and mitigated.

The main issue regarding the vast majority of direct forestry investment products on the market is the basic structuring of the product. To avoid being classified as a collective investment scheme, many of the projects mean individual Investors purchase or lease a defined individual plot within a larger plantation, and having a notional choice of Forest Manager to look after the property and harvest / sell timber at the relevant point in the life cycle of the Forest.

Avoiding collective investment regulations means that Promoters can market and sell to any Investors freely, without the restrictions associated with collective investments which allow only certified sophisticated or high net worth individuals participate.

In reality, only two such schemes have been found to be operated in the way laid out in the marketing material, whereas the majority, it seems, do in fact manage the entire plantation as a whole, pool all plantation income and distribute to individual Investors based on their proportional ownership. Investors do not in fact receive income from their own, individual plot.

Whilst actually more secure (no physical risk to your individual plot), this structure managed in this way is quite simply a collective investment scheme. No commercial forest can be operated in any other way, fact. Most forestry investments therefore, should be collectives.

It is this collective management, combined with the fact that most of these investment opportunities are heavily front-loaded with profit for the Promoter and Project Developer that make for a huge counterparty risk. One such scheme in Brazil is selling a hectare of young teak trees (worth no more than $5,000 in the real estate market) to Investors for £100,000 on the basis that the timber sold will generate a profit.

Of course, investing in forestry is not a one-off capital investment; trees must be expertly managed over long periods of time and this requires capital. So the bulk of the invested capital is likely to be required to fund the on-going management of the trees and infrastructure. However only one company out of 9 assessed has been able to show that the majority of invested capital is ring-fenced for property management, in fact much of the revenue from Investors ends up in the salesmen’s pocket, earning up to 20 per cent of invested capital commissions. A different project identified in Brazil offered a 40% commission to interested Brokers!

Let’s look at the numbers and run a very basic feasibility study. One hectare of established teak will encompass circa 1,250 trees, with around 400 trees making it to year 25, at which point they will yield something like 1 cubic metre of commercially viable timber per tree. Teak timber trades at about $400 per cubic metre for processed wood and about $250 for logs, so one hectare will produce about $100,000 worth of logs to be sold at the farm gate, minus the cost of harvesting.

How then is an Investor paying the equivalent $155,000 for this hectare today supposed to make a profit if total revenue (excluding any residual revenue from intermittent thinning) is less than $100,000? Are investors reliant on timber prices increasing?

Well, if timber price were to increase at a rate of 6% per annum, then plantation income would jump up to $300,000 at harvest ($756 per log) in 25 years’ time, but factor in inflation at then current rate of 5% per annum and the income in real terms (inflation adjusted), falls back to $120,000. A 20 per cent return over 25 years equates to a simple annualised rate of less than 1%.

It is extremely likely that, once Investment eventually dries up as Investor appetite is satiated (as in the case of many similar failed Managed Investment Schemes in Australia), then the Project Developer has no economic incentive to continue, and there is no capital left to fund the continual management of the property.

At this point the Project Developer disappears and Investor are left with a few trees worth much less than they paid for them, with no way of accessing them or managing them, or even disposing of them. It is in fact most likely that the assets would be sold by receivers to recoup some capital and in that instance, Investors would get back only the real estate value of the property (remember the $5,000 per hectare).

In short, there is a huge economic incentive for Promoters to establish and sell such schemes as they make huge profits up front, but very little incentive to continue to operate them after the lion’s share of capital is invested (and syphoned off).

There is a huge risk that Investors could be left high and dry with notional ownership of assets worth nothing and no way to access them.

Although one or two good schemes do exist, the majority we have assessed have demonstrated nothing but the willingness of some ‘entrepreneurs’ to jump on the bandwagon and cash in on unsuspecting Investors.

For further information about direct forestry investments involving the acquisition of timber properties, including direct investments in UK forestry properties, please contact DGC Asset Management.

DGC Asset Management offer research, due diligence and opportunities to invest in real-assets in the agriculture, forestry and renewable energy sectors.

Download your FREE Forestry Investment Report from DGC Asset Management.

One of the ideas that has become quite pervasive within the minds of investors is the notion of a “good stock” or a “good property” to own. This notion stems from a general desire on the part of most people to own things of quality. In our personal life, this frequently manifests itself as a desire to own a comfortable home, and a reliable automobile. Quality gives us a feeling of safety and security. Thus, it seems completely natural to want our investments to be the stock of a high quality company, the bonds of a high quality corporation of government, or a property that is desirable in both its quality of construction and location. The problem with this view is that it only provides one half of the information that you need to determine whether an investment is a good deal.

The second half of this investing puzzle is price. Put bluntly, the quality of a stock, bond, or property investment only matters in relation to its price. This means that a ram shackled, blighted property can be a phenomenal deal at a certain price. The stock of media darling companies such as Apple, Google, and Amazon can all be terrible investments at a certain price. It is certainly true that high-quality investments can frequently justify a higher price than lower quality investments. However, it is equally true that any investment can be a spectacular deal if the price is right.

The key for investors is to determine when the price of a high-quality stock, bond, or property is over-valued, or conversely when the price of a lower quality stock, bond, or property is under-valued. Any investment is a good deal at one price, and a poor deal at a different price. Unfortunately, it is frequently very difficult to determine exactly where these two boundaries are drawn for any particular investment.

When estimating the appropriate price for a particular investment, there are two relevant factors that need to be considered. The first is the expected future price, the second is expected future cash flow, and the third is taxes and inflation. When combined, they will create a holistic picture of the value for any particular investment.

Expected Future Price

In the world of stock and real estate investing, this is referred to as appreciation. Fundamentally, it represents the expectation that the future price of an investment will be higher than the price you paid to purchase it. This is frequently referred to as the ‘buy low, sell high’ philosophy. For most investors, this is the primary source of value that they see. Stock market tickers report the price of securities, and the Multiple Listing Service reports the price of properties.
However, the ubiquitous availability of price information frequently causes people to over-emphasize price appreciation as a source of value. It is most certain that price appreciation is an important source of value for investments, but it is certainly not the only value vector. The fact that so many people focus on market prices has made them become very volatile over the past few years. Values for stocks, bonds, and real estate have all fluctuated significantly. This has made future price appreciation very difficult to predict.
In addition to all of this, there is one further characteristic of price that investors must take into consideration. In order to capture the benefit of price appreciation, you must sell the investment. This means that watching the value of your stocks or real estate skyrocket means absolutely nothing unless you sell and lock-in the gain. Thus, in order to realize the full gains from future price appreciation, it means that you must sell at the right time. In practice, this is very difficult to do and frequently results in selling while values are still going up.

Expected Future Cash Flow

Another key characteristic of what makes a good vs. bad deal for investors is the cash flow that is produced. In the case of stocks, this comes from dividends. In the case of bonds, this comes from interest payments and the future return of the bond face amount. In the case of real estate, this comes from rents that are paid by tenants for the use of your property. The importance of cash flow to the value of an investment is that it represents a current, tangible return. Typically, investments that produce the best cash flow don’t always have the best appreciation. However, they also tend to be less volatile since the price tends to be more highly correlated with the rate of cash generation than the market expectations for future price increases.
The way that most investors articulate the future cash flow of an investment is through its yield. In simple terms, the yield of an investment represents its annual cash flow divided by the price paid for the asset. In the case of stocks, the “dividend yield” is the annual dividends divided by the current market price. In the case of rental real estate, the “capitalization rate” is calculated by dividing the annual net operating income of the property by the purchase price. In the case of bonds, the discounted future value of all payments is compressed into an internal rate of return, which is articulated as the bond yield.
In most cases, the rate of cash generation for an investment is much less volatile than the market price of that investment. Stocks that pay dividends tend to adjust their dividend rate at a much slower rate than the market value gyrations of its price. Rents from income properties tend to shift much more slowly than the value of the property. Bonds typically feature a fixed interest and repayment price, with their market value being determined by the movement in yield rates for similar instruments. When market yields increase, the price of bonds currently on the market go down. When market yields decrease, the price of bonds currently on the market go up.

Taxes and Inflation

The final key characteristic that differentiates good vs. bad investments is inflation and taxes. Inflation represents the erosion of you investment’s purchasing power and taxes represent the amount of your gains that need to be paid to the government. One of the oldest and most important concepts in finance is that “It’s not what you make, it’s what you keep”… fundamentally, this means that the “real” rate of return for your investments is much more important than the “nominal” performance.
Starting with inflation, it is important to understand that when the amount of money in circulation expands more quickly than the amount of goods and services being traded, it creates upward pressure on prices. For some asset classes, the effect of inflation is relatively benign, for others it is beneficial, and for some it is devastating. By and large, property values tend to be lifted in proportion with inflation, while cash flows from dividends and rents are also increased by inflation. Some stocks move up with inflation, but certainly not all. On the other hand, bonds with a fixed interest rate are destroyed by inflation since it de-values the interest payments. Conversely, fixed-rate debt that you owe is wiped away by inflation as the dollars you use to re-pay the loan become less valuable.
Another key characteristic to understand is taxes. Different types of income are subject to different rates of taxation. Generally speaking, income that is earned from a job encounters the most taxes. Income that is earned passively encounters less taxes, and income earned from capital investment encounters the least taxes. Astute investors also understand the impact of legitimate business deductions, non-cash expenses such as depreciation, and deferring capital gains through a 1031 exchange to reduce their tax burden down to the legal minimum. In many cases, it is tax advantages that turn a good investment into a great investment.

Ultimately, it is the responsibility of each person to determine what constitutes a superior investment deal. Since people have different appetites for risk, there will always be a variety of investors bidding for a variety of assets. What is most important for the individual investor to do is take an honest assessment of their personal investment tolerance and make decisions that incorporate all of the major value factors. By balancing the future price, future cash flow, inflation risk, and tax characteristics, it will allow you to build a strong portfolio of optimized deals.

Sincere Thanks, Douglas J Utberg, MBA

“Business, Life, and Everything In-Between”

The immigrant investor program requires that a foreign national applying for a United States visa, invest in a new business, or expand an existing business in the United States, facilitating, in the process, job creation and increased domestic capital investment. However, the job creation aspect of the program tends to discourage many investors. As a measure to surmount this reluctance in potential foreign investors, the regional center program was created.

The regional centers can be defined as any project, either private or public, that benefits the American economy and creates employment in a particular region of the United States. The EB-5 pilot program was created in 1993. Currently, there are 10,000 EB-5 green cards issued annually in the USA of which 3000 are earmarked for foreign nationals who invest into a regional center program. An unofficial estimate indicates that nearly 90% of EB-5 visas are issued based on investment in a regional center. The program is set to expire September 30, 2012.

This program makes it possible for foreign investors who have the required funds, but are not keen on managing an American business and hiring American workers, to still be eligible for green cards. They are required to deposit their investment capital into a specially created escrow account. On deposit of the required funds, they can immediately apply for a green card. As soon as the visa is approved, these funds are released to the earmarked project.

The regional center program does not put the onus on the investor to prove the required employment level. Instead, the project can rely on the direct as well as the indirect employment created by its existence. In most cases, such projects would be on much larger scales than in the scenario of an investor investing directly into a business or expanding an existing business. In such cases, if the job multiplier statistics (provided by the state development agencies) indicates that the particular regional center has the potential to create, say, 800 direct and indirect employments, the project may look for 80 investors. The governance of a regional center program can be assumed by individuals, corporations or government agencies.

A regional center is designated by submitting a detailed proposal to the US Citizenship and Immigration Services (USCIS). The proposal must clearly state the types of businesses in which the capital will be invested, the expected number of new employment generated and any other possibilities that will impact the American economy positively.

The minimum required capital for the immigrant investor program is $500,000. This program is most suited for, and has been most often utilized by retirees looking to permanently reside in the USA. The program has also been popular with parents who are interested in giving their children an American education with all its benefits like lower tuition fees and excellent state universities. The other category of people who have been found to favor this program are wealthy young people wanting to live the American dream.

Foreign investment in Brazil in 2010 was the fifth highest in the world. Within South America, Brazilian investment is the main focus for foreigners.

In the latest World Investment Report issued by the United Nations Conference on Trade and Development (UNCTAD), Brazil lies in fifth position in terms of the world’s top host economies. Ahead of Brazil in investment are the US, China, Hong Kong and Belgium.

With US$86 billion last year in foreign investment, Brazil has climbed ten places up the global ranking, this clearly indicating Brazil’s higher profile among investors, which is being reinforced this year. According to UNCTAD, foreign direct investment (FDI) into Brazil from January to April this year reached US$23 billion, three times higher than the same period in 2010.

Biggest Player in South America

South America was a magnet for FDI in 2010 when investment levels were 56% higher than the previous year with Brazil attracting the bulk of foreign interest. According to UNCTAD, there was an “unprecedented surge of investment” in Brazil and Latin America as a whole from developing Asian countries, particularly China and India.

FDI inflows to Brazil were concentrated in two main areas – equity capital and the manufacturing sector. Equity capital investment in Brazil doubled during 2010 and FDI into manufacturing grew by 16%. Substantial amounts of foreign equity capital have entered Brazilian real estate funds, which have grown 355% since 2004.

Investment in Brazilian equity capital has continued to be strong during 2011. Intra-company loans have also attracted high levels of FDI along with Greenfield projects. UNCTAD expects FDI to remain buoyant during the rest of this year.

Investment by Brazilian companies abroad was also strong in 2010 when outflows reached US$11.5 billion. Acquisitions in developed countries by household names such as Vale, Gerdau and Petrobras made up the core of Brazilian investment overseas.

Emerging Markets New Powerhouses

UNCTAD highlights the growing importance of emerging markets for both inflows and outflows of FDI. The report finds that these new markets are increasingly dominating levels of FDI globally. This tendency mirrors the world economy where emerging markets gradually account for higher percentages of economic growth.

The report states that in 2010, “developing and transition economies together attracted more than half of global FDI flows”. The rise in FDI leads UNCTAD to call emerging markets “new FDI powerhouses”, an opinion shared by many analysts given the economic strength and booming consumer markets in countries like Brazil, India and China. Brazil is expected to continue to feature among the world’s top five nations for investment over the next few years.

About Obelisk International: Obelisk International offers select investment opportunities in Brazil in a range of sectors such as residential real estate, construction and social housing. Obelisk gives investors security, profitability and diversity thanks to a combination of close attention to our clients’ investment requirements and high quality in-house research and analysis.

For more information on Brazilian investments and to find out about Obelisk International’s latest opportunities for investment in Brazil, contact us on 0034 952 820 319. Via email: info@obeliskinternational.com or visit our website: http://www.obeliskinternational.com. Follow us on Twitter – Obelisk International and Facebook.

Two primary reasons a business may want to locate equity partners for business funding are: 1) to pay for the start and completion of a business project, or 2) to pay operational expenses that will be incurred in pursuit of strategic goals that enhance business success. It is important that you carefully pinpoint your reasons for seeking new funding dollars to make sure that you look for those investors who will be most interested in satisfying your financial needs.

Investors fund a variety of projects because the term “project” can mean a lot of different things. For example, a project may be concerned with the creation and production of a new product line. A project may be the purchase of a company that sells products that complement the existing product line. Investors also look at projects that involve expanding business overseas or expanding a production line. It may be the project is simply the purchase of large expensive equipment that will make a business more profitable.

Of course, these partners are also willing to consider funding strategic business operations as opposed to projects. Instead of funding a project, the investors might fund new business startup funding similar to venture capital or a long-term business plan that expands market reach. What makes equity partners different from business loans as funding sources is the fact that they will take part ownership of the business and will also participate in management decisions.

A Matter of Ownership

Equity partners are quite different from other investors because they will actually take a minority or majority interest in a business. Angel investors or venture capital investments usually don’t lead to business ownership. When the equity partners decide to put money into a project, the ownership endures until the return on investment is realized. In the case of project investments, a minority share of the business is usually the requirement of the equity partners.

On the other hand, when they fund strategic operations, the business funding often leads to a majority ownership interest in the business. Since the investors are putting cash into the business with the expectation that the business operations made possible by the investment will create new profits, it really makes sense that the investors would take majority shares. The long term nature of strategic operations funding would naturally lead to investors wanting a long term say in the decision making process.

Equity partners will consider most financial needs and that includes startup funding. When preparing the business plan, it’s important to review all of the investor options. These include business loans and angel investors in addition to equity partners. Whether you are funding a project or strategic operations, a quality business plan is needed that targets the type of investor most likely to approve funding.

Get more info about communicating with equity partners for your business venture at the Funded website or visit the Funded blog at http://www.funded.com/blog.

CALCULATE YOUR RISK REWARD RATIO

Investment is a risk, yet it is more risky not to take risk especially in Investment. Because of the risk attached to Investment, the successful ones learns the implication of the risk to be taken, then they play around the dread of incurring losses and that is why they become rich in the long run.

What do the Successful Investors Do?

Foremost successful Investor look for the risk region before looking for reward/profit but those who make losses look first to reward and are blinded to risk. Where there is profit, there must be risk beside it. Without knowledge of inherent risk, profit-making becomes a gambling or illusive venture.

The role of experience and adequate education all help to reduce risk but they do not eliminate risk – and without the understanding of the risk/reward level of a given Investment, you may be in for trouble.

Some of the questions to ask include

• What is the nature of the risk involved?
• How volatile is the market?
• Who controls the force of the market?
• Do I have what it takes to manage the risk?

In this section we are more particular about quantifying your risk/reward ratio before stepping into Investment – that is taking calculated risk. In all Investments the input/output ratio should be less than one, this means that input should be less than output: in other words there should be profit after all expenses – i.e. the risk should be less in quantity or probability than the profit at the end of the day.

• Risk Gauged on Probability: If you have a risk of say $500 but with probability of loss at say 1 out of ten. Then you have a good chance if the profitable trades could average a return of $100 and above.
• Risk Gauged on Quantity: If you have a risk of say $100 and reward on every trade as averaged $150, if you can make one trade for one loss trade i.e. 1:1 then you stand a chance to make profit overtime.

If the chances of a profit is slim do not venture, leave such enterprise to the average Investors if you don’t want to be the average investor out there on the street. Think of it the average investors are wiped.

Types of Risk

Risk Reward ratio differs from Investment to Investment.

• But the general implication is that high yielding Investments are usually more risky than the low risky Investments.
• Another area of risk/reward implication is to learn about the asset/liability factor of a given venture – ability to differentiate between an asset and a liability. For instance, in real estate, investing in apartment could be a liability on the long run if it keep taking money from you as maintenance or tax charges; while investment in a rental outfit like office apartment has an asset that bring in money.
• Another factor to consider in understanding the risk level of a venture is to find out how early someone joins a trend. In the financial world, the time you join the trend makes a difference on your risk/reward calculation – joining a trend earlier signifies potential profit for you.

The rule of thumb when drawing a logical risk/reward ratio is as follows:

For extremely risky Investment though profitable e.g. foreign exchange market, the savvy investor do employ a minimum of 1:4 risk/reward ratio coupled to their experience of the market. This means that a risk (stop-loss) of $30, you should stand a chance of earning in return $120. But for the extremely low risk and stable Investments where capital investment is in its most stable e.g government bond, the risk/reward ratio is reverse i.e. 1:4 meaning that for a risk of invested $80, you stand to earn say $20. In this case you hardly lose, therefore your $80 is highly favored to earn another $20.

You might have learn something here – thanks for your time.

My organization: FIREWORD RESOURCES is a business-investment system developer – due to the hype and deception that is common in the Forex market brought about the need to develop fxtrendsystem which can be seen on the following sites http://www.fxtrendsystem.com, my other site coming up and dedicated for mentoring and developing forex traders is http://www.fxcapitalinvestors.com My verified trades is found on collective2.com with name: Fx Trend System

There’s plenty of information available on the internet about investing in hard money loans, so it’s generally safe to assume that most investors have heard of this popular strategy. It goes by a lot of different names, including: Trust Deed Investing, Being the Bank, Private Lending, Secured Lending and many others. Unfortunately, a lot of the details and even some of the basic philosophies that make this investing strategy so powerful in today’s marketplace tend to get lost behind the message that these investments generally feature high yields (8 – 15% depending on the circumstances). Nobody’s going to complain about the possibility of earning these types of returns, but is that really why investing in hard money loans is a good decision? After all, junk bonds and penny stocks promote the potential for high yields too, but smart investors aren’t scrambling to scoop those up. So, it must be something else that makes investing in hard money loans attractive. Let’s examine a few of the reasons why investors are loving this popular investment vehicle:

Wise investors always have a Plan B

1. Security
The security that hard money loan investments offer is by far their most important feature. Security means that your investment is backed by, supported by, linked to or kept safe by a piece of valuable collateral. It’s often helpful to think of investing in a secured loan as “having a Plan B.” When you make a loan to a borrower, your investment is really a bet that your borrower is going to make monthly payments and then eventually return your principal. You’re investing in a contract – an agreement to receive a specified return for the right to use your money for a period of time. The real estate that the loan is secured by is your Plan B. Should your borrower not abide by the contract that you’ve invested in, you have another means of recovering your investment. Namely, you have the right to liquidate their asset(s) to pay yourself back. There are very few investments available of any kind that offer this type of investment structure. The ability to protect yourself is by far the most important aspect of any hard money loan investment.

2. Control
When you buy a share of stock you don’t get control of a company. You bought the right to stand back and watch someone else make or lose you money. When you buy a corporate bond you buy the right to collect cash flows based on terms that someone else has set. When you invest in hard money loans you call the shots and make the rules. If borrowers don’t want to play by your rules then you don’t have to lend them any money – plain and simple. You have the opportunity to assess the situation, create loan terms that mitigate your risk, and obligate your borrower to meet certain requirements that you dictate. If they don’t, you generally have the right to seek recourse.

3. Income
Investing in hard money loans produces regular income. In a time when cash flow is tight and many investors are looking for a regular paycheck to supplement other lost income, secured lending provides an excellent solution. If hard money loans are structured properly, they can provide a safe, consistent, monthly income to their investors for years.

4. Attainability
For most investors, shelling out large chunks of cash to buy foreclosure properties or to invest in real estate just isn’t a good fit. It requires larger amounts of cash and carries considerably more risk and responsibility. Investing in hard money loans is an attainable solution for almost everyone that has a little bit of cash to invest. There is a multitude of borrowers in the marketplace looking for capital and absolutely no shortage of demand for loans.

These are really just some of the reasons why investing in hard money loans is beneficial for investors today, but they’re also some of the most important. Safety, security and consistent income are all rolled into this single investment vehicle, and investors have definitely taken notice.

Chris Gleason is the Managing Director of MMG Capital, a nationwide hard money lender and provider of Secured Investment Opportunities. MMG Capital and its partners have over 50 years of combined real estate, finance, and lending experience and handle all of their transactions with utmost integrity and complete transparency. More information about MMG Capital Investments can be found on our website: http://www.mmginvestors.com. Investors can request a free copy of our Guide to Trust Deed Investing, as well as an Investor Kit that includes information on our company and what we do for our clients.
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The Bubbling Ocean

The bubbling ocean tide gives us another idea to changes: when it recedes, it continues until a mark is made where it does not go further down the ocean bed and when it begins to extend outward it will continue to cover the shore submerging available lands. It is one of the best typology for describing investment.

When an investment instrument begins to gain value, it will continue non-stopping until it hits a mark where the value cannot grow further, and then it will begin to come down to another mark. How you get to know this is when a new high mark of the instrument does not measure up to a former high in recent time. If you have observed the ocean movement, it is sometime difficult to know when the ocean begins to enlarge or shrink its coverage except you have a mark of the previous high or low point.

Another example to understanding the master key for your unlocking of investment riddles is to know the characteristics of the masses. A people and group of people will continue to do one thing which becomes a vogue – everybody subscribe to it as the in thing, and it will be like an everlasting idea, but along the line a new deviation will gradually create a new but reversed trait.

The idea is that everything changes in life but through considerable order – not in a state of random confusion.

The immediate above idea leads to another deeper concept: the fewer the people involved in a change process the easier it is to counter their effect, but the larger the number of people involved the more difficult it is to create a reverse change. And this infers that any change that takes effect on a very large group will continue for a very long time, and if this change is countered, the new deviation will be very strong that it will be difficult to return the society or people to her former state.

The economy is central to the existence of the people, organizations, states, nations and the world. And capital investment is the stake of any economy. By implication when we talk about investment, we are talking about the entire configuration of man – because man’s total behaviour affects the outlook of the economy.

This basically infers that the people create what we call trend, and the trend though so commonly talked about has not been given considerable thought by people who really want to make money as investors: it is the magic key to unlocking investment bullion if rightly applied.

Every activity of man whether locally or internationally all help to create the trends of diverse form which altogether comes to affect investment volume for every instrument.

We can view trend as it relates to why certain currency, companies and stocks are more traded than the other, and why certain apartments in certain quarters of the city sell higher; it is all about trend created by man. Trend could also be seen at what trading time of the days, weeks, months that we do have significant market volume, and each with various characteristics. Certain government’s activities, labour actions, and many other factors come together to give us what we call trend. The bottom line is that people makes the trend.

We are in a world of change as reflected through various activities of man. As long as we are active beings of choice, there will always be changes, it is this changes that makes for various trends in the diverse sectors of the human society. For the investor, this helps you to know that there is no trend that is permanent; the trend will always change.

There will always be changes, and when it comes you need to find out the strength. Change is like the ocean, when you move against it current it may sweep you away. The bottom line is learning to follow, and using an advance investor’s language – learn to manage the trend; because you may not have to follow every trend, but you must learn to manage every trend in the market so as to sail profitably just as the swimmer may have to do with the flow of the current. But when it is turbulent run for your dear life!

Like the ocean, if you are keen enough, trend does not change by surprise, it always comes with clue for the very observant person.

The importance of understanding the trend of the market is the pivot to profitable investment. For emphasis sake, I will repeat it over and over: the trend is the fulcrum – the basis for any meaningful investment. Trend is also associated with the formation of supports and resistance regions of investment. If you do not gain anything from this discussion remember this.

The deeper truth about the trend is here: larger number of people create longer term trend in the market. The longer the time frame the more people are involved in sustaining the trend and the more difficult it will take to reverse the trend. Fewer people create shorter term trend in the market. The shorter the time frame, the fewer the people that sustains the trend and it is much easier to reverse the shorter time trend.

The great idea is to learn to identify the different trends in every market place. This means that both the short and long term frame are important to an experience investor. A long term trader without a cue of the shorter time frame is inviting trouble. Worst is a short term trader that losses focus of the longer time frame – because it is confirmed observation that the shorter trend often bowed down to the longer trend. Larger group of people often influence the direction of action of fewer people – the trend is a game of people.

Trends in a shorter time frame will often give way to trends on the higher time frame. Failure to understand this is one of the reasons why many traders believe investment to be a gambling game. Investment is beyond speculation; it is a science with predictable outcome.

Another view I want you to take is to understand the relationship between time and trend. The longer the time frame the more perfect (certain) a trend tend to be and the shorter the time frame, the less perfect (uncertain) is its trend when it formed. The reason for the information is to help you be on the lookout for longer term trend and join it early through the help of a shorter time frame.

Trading shorter or longer term exclusive of one another is the path to investment mediocrity. The magic to investment miracle is learning how to combine the longer and shorter time frame for your trading decision, and when the trend has changed, you have no business being in the market; even if you are addicted to trading on long term. Investment is a game of trend.

If you will become a great investor, you primary responsibility is to be a detector of new trend whether in business purchase, stock, foreign exchange or real estate – you must have your indicators right that helps you do exactly this – finding a new trend because this is where the unmistaken profit lies. The reason for this is that new trends are more reliable to follow -the older a trend is the more careful one need to be in joining. It is becoming no use joining an investment trend which every Dick and Harry knows about – every Dick and Harry are the bandwagon who always join an investment instrument like a herd of cow; and no sooner they join that depreciation sets in and leading to another crash of investment value. What they do is to push the market value of an investment far above its true value, and no sooner they find out this that they will all begin to jump out of the trend; and this causes devaluation of an investment. This is the need for the experience investor to always seek for new trends and have the courage to join early.

Smart, this is the end of my class with you – as this is the sum of the principle needed. What you might have need of is getting the right indicators and components that will help you identify the exhaustion of one trend and changing to a new trend, thereby helping you to gain early entry into the market. This should not be a problem to you, but if you still have problem in this respect, call on me – the sage is always available for all true investors; the teacher will always be available for the ready student.

Finally, with all I have taught you, I want you to build a profitable system suitable for you – have your personality right, understand the five basic rules to starting out as an investor, then build a profitable system with your understanding of what a trend is. It may take time but learn all it takes by yourself, and in time to come when the chips are down and the majority of investors are lost as to what to do your personal experience will count.

I hope to see you as one of the rare investors of all time. And when you need me always call. Bye.

My organization: FIREWORD RESOURCES is a business-investment system developer – due to the hype and deception that is common in the Forex market brought about the need to develop fxtrendsystem which can be seen on the following sites

My verified trades is found on collective2.com with name: Fx Trend System