Investment Articles

So you took advice off the nice friendly Financial Adviser, and three years on you now have less money than you started with. Where did it go wrong? To be truthful it all went wrong about 2001. I had been a financial adviser for about ten years. Up until 2001 you could invest in just about any equity base investment and turn a sizable profit within five years. Since 2010 that has not been the case. In the long term equity investment will still knock the socks off deposit, and is far less fraught than property investment, however to get the best from your investment it needs to be managed.

Maybe you thought it was. I do not mean a managed fund, as this is just normally management within a sector or group. And I do not mean by a Bank. I wish I could comment on this one further but legal action prevents me from doing so. And I do not mean managed by your friendly adviser, as he will only look at your investments now and again. And I do not mean the company your investment vehicle is with. I know that it says that they manage your Investment Bond, yes they do. But not the choice of the individual investments within it. So it is actually up to you to manage the individual investments. So now you have your answer to the question. Your investments are performing poorly because you are managing them, or not as the case turns out.

Most investment vehicles allow for changes of funds free of charge. Some vehicles are open to any investment choice, so a great deal can be done to ensure that your investments perform well. However in reality once a fund choice has been made that is the way it will stay for many years. Quite often right up to encashment, then returning a very poor rate.

However there is a solution. Most Investors do not realise that their investments can be managed on a daily basis. A very select few Financial Brokers are able to offer In House Portfolio Management. This ensures that your individual investments are being monitored. And if need be, changes can be made. The volatility that we have seen over the last few years can then be used to your advantage, rather than your loss. Portfolio Management costs, but it is an added value service so it pays for itself, normally many times over.

If you have an offshore investment that lacks performance. Inquire about Personal Portfolio Management. It may be the difference between a comfortable retirement or having less money than you started with. Which would you rather?

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Maybe some of us want to believe that it does not take money to make money. I would like to believe it too but so far, I found that it is more real when I use money to make money, and it is much easier too. Right now, if you are investing and you have all the intention to let your money make money, then I will share two simple tips with you.

But I do not make any guarantee on the end results here. It may vary according to how well you apply them.

The First Tip: Create More Winners.

‘Winners’ refer to your investment that gives you positive returns. Now, the only concern here is return on investment (ROI). You may use a high risk portfolio, slow but safe return investment vehicles, and other kind of investing but the bottom line is; it gives positive return.

Once you have identified a winner, you can duplicate the process and acquire more winners. It may take a while for you to select one successfully but in the end, it will pay you in spades.

Along the way, you probably going to make mistakes and wrong decisions, but you need to take it as a lesson. The faster you learn, the faster you can reap the reward from your investing effort.

Perhaps, you can skip the learning curve faster by having experts to guide you or get yourself educated. There are resources you can tap into with some research. An expert used to advice other investors, “Train your brain to see what your eyes could not.”

The Second Tip: Cut Your Loses

This tip is so obvious but in reality, people like to keep a losing portfolio, hoping that a miracle will happen and turn things around to their favor.

But the wise knows that, “Chances favor the prepared mind.”

The prepared minds are willing to let go of the losing portfolio when the situation calls for. They rely on hope after they have made enough ‘calculated-risk’. In fact, they would not jump into an investment if they did not devise the way out first.

Find winners and kick losers; this is probably the smartest investment tips to have your money make more money.

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Sometimes I hate being right. I am often asked for a forecast of bank cd rates and last week I made a doozy. Unfortunately, it seems to be coming true.

I predicted that 1-year CD rates would be heading towards 0.50% and 5-year CDs down to 1.50%. When you remove the top players, we are quickly approaching those numbers. Which also means that the top players are likely to begin going down. (And we saw some of that this week)

Institutional jumbo CD investors are especially hard hit. The top player such as Alliant Federal Credit Union still had a 1.75% APY for 1-year, however it dropped to 1.60% this week. Sadly it is still one of the top 1-year rates. Unfortunately it isn’t available for institutional CD buyers. And once you have $250,000 of personal funds with them you have to move on down the list. The average for the top 10 and top 20 certificate of deposit rates is quickly decreasing.

As with any investment vehicle, those who try to time the market generally don’t fare so well. That is why I believe long-term CDs with low penalties are a good option. You get some better yield now and have a fixed cost to close if rates go up anytime soon. Of course, rates rising anytime soon doesn’t seem likely.

Here is an example of a 5-year CD with a 90-Day penalty and how it performs when compared to straight term CDs. The rate is a 3.00% APY and if you invest $100,000 you will earn $3000 every year for the next five years. The penalty to close is a fixed cost of $739.73. If you decided to close your CD after one year, your net earnings would be $2,260.27 and that would the same as investing in a 1-year CD at 2.26%. I haven’t seen too many of those lately. After 2-years it would be the same as a 2.63%. So you can outperform the current CD market by adding some long-term CDs with penalties that aren’t too high.

If you need help with your Jumbo CDs, give us a shout or check out Compare CD Rates

Chris Duncan is a FINRA Registered Representative. He works for Jumbo CD Investments, Inc., a leading CD research and placement firm. He specializes in helping clients find the highest CD rates nationwide. His clients include individuals, financial institutions, corporations, and public agencies. Visit us at Best CD Rates

The road leading to the financial success and real wealth almost always involves some form of investing. While a job is an absolute necessity for paying your bills and living an easy life with amenities, the people who amass the real wealth are usually always some sort of investors. Investing has a capability to give you the leverage. It empowers you to do a lot by using small amount of resources. Even if you are earning a standard salary for yourself, you can always make investment for generating wealth to secure your financial future.

Investing is not a simple thing. An average person possesses normal, or poor skills of money management because this was not something which was taught to him in his school. Their parents probably possessed the same kind of poor skills and then passed those to us.

I can assure you that investing is not rocket science. The great way to start right away is by first locating the opportunities and then moving slowly with the flow to reap the benefits.

So, how can you start your investing career? We have 3 good suggestions for you:

1. Stock Market

Historically it has been seen that stock market is one of the best place to start investing your money. In the past 10 years or so, despite of all those great market crashes, it was able to produce the highest possible yields. To this day, it is an investment vehicle of choice for many and has a great potential to generate massive wealth.

Stocks afford you an opportunity to make investments in the genius of the great businessmen like Steve Jobs, Bill Gates, and Warren Buffet. It’s like piggybacking on their successes.

2. Real Estate

Real estate investing is just not for all the people. Though quite slower than the stock markets, it has a great advantage in the fact that you can use the money from the banks for the investment purpose. There is no denying that risk is involved, but a simple fact that you can easily get a mortgage and purchase a $200,000 investment by just putting $20,000 of your investment definitely gives you lot of leverage.

3. Businesses

Truthfully, we all don’t possess that determination or skills which are required to first start and then build a good business, but we can always invest in businesses.

This is surely a little known opportunity in investment which is secure and has a great potential for good returns. There are many big franchises that are regularly on the lookout for investors who are ready to invest as silent partners in the franchisees which do not need any start up capital as with other businesses.

A famous and good franchise can turn out to be a great investment. The simple fact that somebody else will build your business and then run it simply means that you can easily earn profits without much effort.

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Investment tips are very important to consider especially for beginners. This is a way of guiding what to do or what kind of investment to choose. With the right basic foundation of knowledge, a beginner can build from there towards a deeper understanding of how to invest and what types of investments they might be interested in, and most importantly how to make the most out of their money.

Most forms of investing involve some form of monetary risk. That being said, it’s important that you invest only the amount that will not hurt you too much if you end up loosing it. It is necessary that you think positively but not to the extent that you assume that after your first investment, you’ll be rich in an instant. That is one of the many mentalities that people have when it comes to investing. Investments can either be risky or risk-free. Greater risk of losses tends to mean greater possibilities of greater gains. The risks and possibilities go hand in hand in risky investments like stock investment. People prefer to invest on stocks because it can give much higher returns compared to other investments. However, if you can’t handle losses, it is best to go with a less risky form of investment, or a risk-free investment vehicle.

Stock investment is just one of so many kinds of investments that you can choose from. You can also invest in businesses outside of the stock market, foreign currencies on the Forex, real estate, annuity payments, and many other things. Whatever investment you prefer, conducting research and gathering information from reliable sources would be of great help; this is called due diligence. It is a must to remember that you have to experience the ups and downs of investing for you to completely understand how it works and learn the perfect strategies so you can advance in your investing abilities, and reduce future losses.

Please read my Hub for more investment tips.

In this new financial era inflation will reward borrowers who acquire appreciating assets using depreciating dollars, but disadvantage savers as the value of their money goes down over time. This will set the stage for another significant property boom as more investors will turn back to assets that store value, like residential property, which increases in value during inflationary times.

If the global financial crisis has taught us anything, it’s that we need to start taking a different approach to money and how we value it, procure it and use it.

So back to the original question – what’s going to be the best investment in the years ahead?

One thing is certain: there is no such thing as a perfect investment. If somebody tells you they have found “the perfect investment” be very sceptical and ask lots of question, because chances are they’re trying to sell you something you just shouldn’t buy.

The things I look for are:

· liquidity (the ability to take your money out by either selling or borrowing against your investment);
· easy management;
· strong, stable rates of capital appreciation;
· steady cashflow;
· a hedge against inflation; and
· good tax benefits.

When you look at the major categories of investments, you will recognise that not many fit the bill when it comes to all five of these criteria.

The recent world financial crisis and the new era of money we have entered means that you’re going to have to invest in assets that are both powerful and stable.

By powerful, I mean that to act as a hedge against inflation they must have the ability to grow at high, wealth producing rates of growth. In other words, you’re going to have to be able to leverage or borrow against them.

By stability, I mean your investment should grow in value steadily and surely without major fluctuations in value.

Many investments are powerful and many are stable, but only a few are both. Prime residential real estate is one of the investment vehicles that has both power and stability in spades.

Now that doesn’t mean it’s perfect, because property is not as liquid as many other investments. It can take months to get cash out of your property portfolio, if you sell your properties. Or you may be able to get cash out quicker by borrowing against the increasing value of your property, but even this can take a month or so to organise.

While some might see this as an issue, I would argue that a relative lack of liquidity is one of the virtues of property as an investment vehicle. Why? Because the only way for an investment to achieve liquidity is to relinquish some of its stability – if it is liquid (easily sold like shares) it is more likely to have wide, more volatile fluctuations in value.

Let’s examine this concept a little more closely by looking at the stock market. The stock market is another potentially powerful investment vehicle because you can borrow against your purchase of shares (buying on margin). But in order to achieve the liquidity the stock market provides you give up some stability. Share prices are volatile and fluctuate up and down and then down and up again. Sure you can get your money out quickly, but you also run a bigger risk of making a loss.

What about putting money into a savings account? This type of investment is both very liquid and pretty stable, but it won’t give you a wealth producing rate of return.

If I had the choice (and I do), I’ll take stability (lack of big swings in price) over liquidity every time. Over the last two turbulent years of the world economic crisis, my real estate portfolio has grown in value but has been relatively illiquid – it would have taken time to sell up. However over the same period, shares that were very liquid decreased in value by 30, 40 and even up to 50%. I will stick with property any day.

Many financial planners recommend ‘when-to’ investments, which means you have to know when to buy and when to sell. Timing is crucial with these investments: if you buy low and sell high, you do well. If you get your timing wrong though, your money can be wiped out. Shares, commodities and futures tend to be ‘when-to’ investments.

I would rather put my money into a ‘how-to’ investment such as real estate, which increases steadily in value and doesn’t have the wild variations in price, yet is still powerful enough to generate wealth producing rates of return through the benefits of leverage.

While timing is still important in ‘how-to’ investments, it’s nowhere near as important as how you buy them and how you add value. ‘How-to’ investments are rarely liquid, but produce real wealth. Most ‘when-to’ investment vehicles (like the stock market) produce only a handful of large winners but there tends to be millions of losers. On the other hand, real estate produces millions of wealthy people and only a handful of losers.

Michael Yardney is a best selling author and one of Australia’s leading experts in the psychology of success and wealth creation through property. He is a regular keynote speaker at seminars throughout Australia and South East Asia and his opinions are frequently quoted in the media.

Subscribe to his free e-magazine at http://www.PropertyUpdate.com.au Find out more about Metropole Property Investment Strategists http://www.metropole.com.au

Ask those who are rich, and they will probably say they got rich from real estate or stocks. These are only two ways. There are actually various ways to get rich by investing. You can purchase bonds, mutual funds, and many other investment tools.

People who invest in real estate will normally buy property and flip it for a profit. If they do not sell it, they may place someone in the building and collect rent. There are many ways real estate investors can make money investing.

Then there are people who buy and sell stocks. They will buy the hottest selling stocks and hold on to them until they peak. Then when the stock prices start to drop, they will sell off. If this investor buys many stocks from various companies, he can develop a huge portfolio.

Other ways to invest include mutual funds, bonds, savings account, and CD’s. Each type of investment vehicle has a procedure to follow if you are going to be successful getting involved with it. The first thing you need to do is understand the tool or vehicle and learn how it works. This way you will understand how to invest it each one. By doing so, you will get a lot out of it. The key to investing is to know how to invest without losing your shirt. Otherwise, you could end up going in the wrong direction and lose everything.

Investing can be confusing to anyone who does not understand it and how it works. This is why you need to pay attention to the investment. Only then will you be able to invest properly. Just don’t be afraid about investing and many people are who do not understand investing and what it is.

By educating yourself, you will remove that fear and be able to take part in investing to some degree.

FAIL to plan, then you plan to FAIL!
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The Challenge

What would you do if one million dollars suddenly landed on your lap tax free? I can list down all the things I can buy and spend it on but here’s another question you might not have thought of: How would you make One Million Dollars Grow?

I’ve read so many stories about successful people starting out with little more than a few dollars and had turned it into fortunes. What if you could start with a million? Would you have it easier? Could you turn it into five million, maybe ten or even a hundred? How would you do it?

I have been reading about Chinese culture lately and their method for investing struck me. The Chinese have a simple rule of what to do with a sudden windfall of cash that somewhat makes sense. If I had a million dollars today (tax free), I would follow these steps:

10% = Fun Money

Fun Money is simply spent on anything you want! $100,000 sounds like a lot of fun! I would buy the Mercedes Benz that my wife and I have always wanted. It’s an E Coupe. That would probably knock off half of my fun money right there. (sniff.sniff) The rest I would spend on paying debt (credit cards, car payments etc.), also making the necessary repairs, modifications and upgrades on my home and travel time with my family.

20% = Low Risk-Low (to medium) Return Investment

A low risk- low (to medium) return investment is an investment wherein there is a high capital needed but the ROI (Return of Investment) will be on a ’slowly but surely’ pace. Within these lines I may venture into a string of franchises (food with good brands) or buy some real estate (land, apartments, etc.) which provide monthly checks and keep the investment at an appreciating rate. The goal here is to make a safe investment. There are no guarantees on anything but these investments are considered less risky.

10% = High Risk to High Return Investment.

This investment is simply a high risk endeavor with a potentially high return. They can be joint ventures with partners to form a company that pushes a new and exciting high potential product into the market, put up a new restaurant, etc. This can also be used as funds for being a venture capitalist for entrepreneurs with great ideas but are low on capital. On the other hand, if a good opportunity has yet to come along, the money can be used to invest in the stock market, mutual funds or bonds but the case should be that it can be liquidated in a short period of time when the right opportunity presents itself.

60% = Savings / Sleeper

Finally, $600,000 would be put to work through bank time deposits, CD’s etc. The interest earned would be a nice pay off. It can be appropriated to more savings or to finish up mortgage payments. The important thing is to let this huge chunk of money work for you. Can you imagine having $600,000 working for you while you relax? =) I would hire a financial planner that can present to me a host of safe investment vehicles with good interest rates.

So out of a million dollars, 60% is intact and growing, while the other 30% is invested and already working for you. There are checks coming in month on month without you having to really work hard for it. This is called passive to semi passive income. For me it is the right way to not just live life but to actually enjoy it.

So what would you do with One Million Dollars?

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There are different securities in the market today that we can choose from. They are all forms of investments or different ways to keep you money somewhere besides a bank. They can offer great returns if you know what you are doing. If you don’t, I suggest you seek the help of a professional before you start investing blindly.

Let’s start with Mutual Funds. This is one of the most common investment vehicles that people use in today’s world. Most employees who invest in a 401k have mutual funds in their portfolios. They are pooled investment accounts that allow the employee to invest if different things with little money. You can invest in a wide range of things when it comes to mutual funds. They are generally stocks and bonds for most people. Most of them are managed by professional money managers that you hire. They are paid from the investments that they make for you. Check with a professional to learn more before you get started.

Stocks are also an option that you can use to invest. Stocks are where you buy shares of ownership of a specific company. The value of the shares will move up and down with the market and with the company’s overall performance. Once again, check with a professional before getting started.

Exchange Traded Funds are another form of investment. They are generally called ETF’s and are pooled investments that mirror a market or index. They are traded by individuals mostly. They offer the investor a way of investing without the cost associated with professional management. You still need to seek professional education before investing. They have become very popular over the past 15 years. Lots of people use them.

Unit investment trusts are fixed groups of different investments whose shares are sold to individual investors. Many ETF’s are sold and organized into these trusts.

Closed end mutual funds are another type of investment trust. They are trust that is fixed groups of securities that are traded by individual investors and are professionally managed.

Investing takes education just like everything else. Please seek to have a good education before you think about investing. This will save you from loosing lots of money in your life if you just spend a little time learning from someone who has been there already.

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I am assuming that you finally made the decision to sign up with an investment brokerage account so you can invest in the stock market and start to make money or save for retirement. Maybe you are already a more experienced trader or investor but is looking for other brokerage options out there. There are a lot of options these days and is can be confusing to find the right online discount broker. You can choose from full service premium brokers to online discount brokers. A good way to pick a broker is a combination of a popular one that has been around for some year as well as a broker that has consistently appeared in the top rankings of reviews.

Other factors to consider before choosing an online discount broker is to look at the type of investment vehicles you would like to start trading: stocks, bonds, forex or foreign exchange, index, options, mutual funds. Other factors include the amount of your investment, the extend and type of research you are looking for, customer service and trading reliability. It is also good to know what kind of investor you are: an active trader with a large number of transactions each week or a more passive trader who follows the index or has a more buy and hold strategy. Brokerage charge fees and commission between the different brokers are therefore important to review.

I have opened an account with TDAmeritrade based on their service, research, excellent on-line tools including the Think-or-Swim platform which I use to keep track of my option trading.

For more information and a list of the 10 most used brokers, go to http://www.hoppietrading.com/onlinediscountbroker.htm