Investment Articles

Socially Responsible Investing – more than a fad?

Fads come and go. SRI might have looked like “flavor of the month” at the first “SRI in the Rockies” conference of 1990, but instead of disappearing, its popularity has increased year-on-year. For last year, the Eurosif (European Sustainable Investment Forum) Report put total SRI assets under management at around € 5 trillion (currently some US $ 7.11 trillion). This includes Core SRI with its positive selection of suitable investments, and Broad SRI with the opportunities that are left after negative screening of unsuitable ones. Any popular investment strategy merits investigation by hedge funds, whose operations are based on reallocating their AUM as returns from different investments vary over time. However, with divergences in investment approaches between hedge funds and SRI, the question so far has been whether they are compatible enough to work together.

It’s not just about money

The dual goals of SRI are to maximize returns while contributing to social well-being by factoring in non-financial criteria. Also described as sustainable or ethical investing, SRI typically champions human rights, social justice, ecological responsibility and corporate correctness. Different forms of SRI have existed for a long time. Refusals to invest in tobacco, arms and alcohol are just some of the historical examples. More recently, corporate greening and respect for the environment are issues that have gained attention. The growing realization by investors of the influence that they can wield on different organizations has led them to scrutinize both investment policies and investment vehicles, and to use that influence to change or boycott accordingly.

Where is SRI headed?

In a word – upwards. The figure for AUM for SRI continues to rise. With strong growth in European and American markets and a sizeable market potential in Asia, projections from organizations like Robeco and Booz & Company are for 25% annual growth and a 15% share of all Assets Under Management worldwide within the next 4 – 5 years. Whether or not the market segmentation remains the same however may be another matter. Today Core SRI is one-third of Broad SRI, the whole market being driven for the most part by institutional investors who hold 92% of the AUM for SRI. Bonds comprise 53% of total SRI assets, and equity just 33% (Eurosif figures for 2010).

SRI returns and performance

How does SRI compare with other investments? There is a temptation to consider SRI as an exercise in investor altruism, where performance is a secondary consideration and restriction in the investment universe leads to mediocre returns. Yet a 2007 study (by Leuven University) on the risk-return of Belgian SRI funds and a 2011 study on French SRI funds (by Capelle-Blancard and Monjon) showed neither underperformance nor over performance when compared to their non-SRI counterparts. Another study by Weber, Mansfeld and Schirrmann showed that a selection of 151 SRI funds performed better than the MSCI World Index between 2002 and 2009. Their conclusion suggests however that in-depth analysis and manager skill is still the most important determinant of performance. If there is any issue, it is that there is no standard approach to integrating SRI into portfolio management. Meanwhile SRI continues to demonstrate respectable returns and more.

A Hedge Fund/SRI stand-off

Pension funds, insurance companies and high net worth individuals are all contributing to the increasing demand for SRI. Hedge funds by comparison seem reticent. In Europe for example (Eurosif 2010), alternatives and hedge fund assets account for a modest 5.6% of total SRI assets. Hedge fund managers have perhaps viewed SRI so far as an eccentric offshoot of alternative investments, while investors have not yet found the alignment they want between hedge funds and SRI. Their problem is not only with the nature of the sectors in which hedge funds invest. It is also with some hedge fund strategy practices like selling short, which restricts possibilities to engage management in the corporations or sectors concerned. Less engagement means less influence and in turn less chance for SRI to achieve its parallel objectives of returns and social justice.

Opening the flood gates

SRI represents an increasingly important potential source of fresh capital for hedge funds. Conversely, if investors want to maximize their influence, hedge funds are a significant lever they cannot ignore. Trading sectors and trading practices may both need adjustment for the two to work together well. The argument for instance that short sales help SRI by reducing the stock price of companies that do not comply with social or environmental standards is short-sighted at best. SRI seeks to encourage compliant organizations, but not to deliberately damage the non-compliant. For instance, when the California Pension Fund withdrew from the Thai stock market in 2002, the Thai Stock Exchange created a SRI fund to protect the better employers from any negative impact.

SRI has also shown itself to be buoyant in the recent global financial woes, growing by 13% in the US between 2007 and 2010 compared to just 1% for other professionally managed assets. SRI has the potential to provide hedge funds a useful diversification of their portfolios and their investor base. In the same way that industrial corporations have often found that going green turns out to be advantageous not only environmentally but also economically, hedge funds may well find that going “SRI” not only satisfies investor demand for social justice, but brings direct financial benefits as well.

Read more about SRI investing and the latest developments in using investments as a catalyst for social change on the blog, The Geneva Globe.

References:

Responsible Investing: A Paradigm Shift Robeco and Booz & Company

European SRI Study 2010 Eurosif (the European Sustainable Investment Forum)

Risk-Return of Belgian SRI Funds Luc Van Liedekerke, Lieven De Moor and Dieter Vanwalleghem

The Financial Performance of SRI Funds between 2002 and 2009 Olaf Weber, Marco Mansfeld, and Eric Schirrmann

The Performance Of Socially Responsible Funds: Does The Screening Process Matter? Gunther Capelle-Blancard, Stephanie Monjon

Geneva Capital S.A. is an independent advisory boutique for alternative investments based in the heart of the Swiss asset management sector. The firm advises investors on a range of responsible investment opportunities including thematic and ESG (Environmental, Social, and Corporate Governance) related funds, and private equity in emerging and frontier markets. Contact Geneva Capital at http://www.genevacapitalsa.com.

Commodities, safe Haven Investments for 2011-2012, have still a long way to go. Despite the financial crisis recently, investors are doubtful about investing in stock markets. Everyone has the question about where the strength lies during 2011 and 2012. They are unaware of the fact that commodities are becoming a safe haven for the coming years.

The reason behind this investment vehicle gaining speed and poise is because of the rising inflation and food cost. In a better economy, many people will gain a lot of fortune through commodities’ sectors. Take for example the commodity- oil; there has been a steep increase in oil prices since many months. The oil reserve is running out and so the prices will stay high for quite some time.

No commodity or market rises in straight line, as a matter of fact, it can be considered as hedge against inflation. Therefore, it can be said commodities are safe haven Investments for 2011-2012. So, at present owning bonds and stocks are a risky affair but owning real assets and commodities can be said as a smart move

Across the continents, food commodities have been traded and distributed to international markets. Therefore, you can gain a lot of profit through them. However, you need to do your home work and research to invest in the best deals. In the historical period, when there was a financial crisis, the countries turned to US. Now, when United States itself is going through a crisis, whom will they turn to?

Some analysts were of the opinion that it is the end of US and the world. However, the return of the investors to capital markets has helped to send the US Dollar and equities to a new height. A self-fulfilling cycle has been created which has assisted in driving the Dollar ahead and has made the commodity prices lower. This benefits the US economy and in turn drives the Dollar rate higher.

It is a known fact by now that these commodities are safe Haven Investments for 2011-2012. Therefore, investors have adopted many ways to own gold and in its many forms. This helps to increase their chances as well as status to have greater power. Gold market has always been popular since the ancient times. However, it is not a clever idea to put “all eggs in one basket”. You should also opt for stocks, real estate and other kinds of investments. This will help you from going bankrupt if one of the markets falls.

The market rate value of gold is based just as the stock markets. Therefore, it is difficult to know the specific factors which influence the market rate of gold. But while investing on gold, you should always choose the gold bullion instead of various other types of gold. Experts can provide gold market analysis that will assist the individual to decide the gold purchase budget. There have been fewer fluctuations in gold prices for quite some time now. Therefore, gold can be said as one of the commodities that is safe haven investments for 2011-2012.

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While binary options trading can be a very potentially lucrative investment opportunity, as with all all forms of investment they do carry risk that you need to be aware of.

1. The first and probably the single most important one for you to be aware of is one you probably already know. And that is the stock market is very volatile. If your retirement account has taken any hits lately you probably notices this.

Anything can affect the direction that it goes. With the recent downgrade of the credit rating of the USA, to whatever military conflict erupts the interconnected global village can bring havoc into any trading portfolio. Remember Murphy’s Law that whatever can go wrong will go wrong. You can name any type of negative event that can happen and the market can go haywire.

2. Binary options can not be exercised until expiry. In other words you’re getting into a trade you can’t get out of. On the other hand though with binary options your losses are limited to the investment and there are no margin calls. And some brokers will give a 15% refund on a losing trade.

3. Another risk in binary options trading is the number of decimal points involved. A vanilla option has two decimal points where a binary option can have to four. So if your trade ends up with 0.0001 away from being a winning trade you lose.

4. A fixed rate of profit. While 71% profit is a few light years better than what you’ll get with bonds these days vanilla options have the potential for triple digit profits. This does have an advantage over taking a second job though. Because if you invest $100 in a trade and you win you get $71. What part time job pays you $71 an hour.

Not trying to scare you away from getting involved with binary options trading as there is real potential for profits. It’s simply that with the right knowledge and an awareness of the risk involved you can make better informed decisions as to what you are getting involved in.

While there is clear and obvious risk in binary options trading if you choose this as an investment vehicle you are well aware of the risk that you are getting into. Other forms of investment often try to downplay the risk which can leave you in shock should something not go the way you anticipated.

For more information on binary options trading Click Here

Individually Managed Accounts (IMAs) and Separately Managed Accounts (SMAs) both offer investors a highly transparent managed share portfolio while avoiding the tax distortions that come with pooled investment vehicles such as managed funds.

However, there are some important differences between individually and separately managed accounts and while they may sound very similar, these differences can have a significant impact on investment performance, suitability, and tax effectiveness.

In General, Separately Managed Accounts are a good alternative to managed funds for many investors, while investors with $1 million or more, are likely to find the features of an IMA more compelling.

Key differences between the two types of managed accounts rests in their approach to building an investment portfolio.

SMAs are constructed with a ‘model portfolio’ where each investor receives precisely the same portfolio, based on a template created by the fund manager. IMAs however, are constructed individually for each investor, although each account will share some common holdings. These two approaches have some important differences:

* Investors in a SMA may buy stocks that have already enjoyed most of their returns, but remain in the model portfolio to avoid realising capital gains tax. IMA investors however will receive a portfolio that is assembled incrementally, as attractive opportunities arise.

* For the same reason, new investors in Separately Managed Accounts will receive a larger position in stocks that have already performed well, while IMA investors are likely to receive larger holdings in stocks the investment manager believes will perform well in future.

* IMAs also provide the ability to tailor the portfolio to the investor’s circumstances. For instance, an IMA manager may place more weight on generating franked dividends for a SMSF, while long term capital appreciation could be more valuable for an investor with a high tax rate. These differences in investment management help produce good after tax results for each investor. Since every investor in a SMA receives the same portfolio, the Separately Managed Account manager cannot factor individual considerations into their management.

* Both structures will allow the transfer an existing portfolio, with the IMA providing some additional flexibility and tax advantages. When importing an existing portfolio into a SMA, only those shares contained in the model portfolio will be retained and only to the proportion held in the model portfolio. Therefore, investors may still realise capital gains when entering an SMA. Conversely, a diligent IMA manager will adapt the existing portfolio over time and with consideration to tax events.

* For investors wishing to exclude individual stocks or sectors, an Individually Managed Account manager will hold alternative positions, while the SMA will generally hold cash in lieu of the excluded positions. This can have a significant impact on the portfolio’s overall returns.

In executing trades, SMA investors will generally receive ‘at market’ prices on their transactions, while an IMA manager may attempt to get best execution and/or exercise discretion over the timing of buys and sells.

Service levels are also different, with Separately Managed Account investors receiving a service akin to a managed fund. while Individually Managed Account investors have ongoing access to the fund manager responsible for their portfolio and will likely receive personalised reporting.

PPM

The job of the investor is to get the highest possible return on their investments. The highest money market accounts are just one type among many that offer investors an option that has both flexibility and a decent possible return. Money market accounts (MMAs) are not among the highest paying accounts available at most banks, but because of the added flexibility and lessened restrictions on the use of the funds in the accounts, they can be a great option

Is a money market account really what I want

Usually, when an investor puts money in the bank to get a high rate of return, they will consider getting a Certificate of Deposit (CD). MMAs will typically return more than a savings account, but they usually return much less than a CD.

CD accounts have many restrictions placed upon them. Usually withdrawals are prevented. If a withdrawal from a CD account is made, the penalties can sometimes be so high that any returns that would have been made on the investment investment will be lost.

Why money market accounts?

That is why many investors choose to open a MMA rather than a CD. Money market accounts at most financial institutions will allow several withdrawals to be made each month.

Investors want the flexibility that come an MMa can offer, especially with the volatility of the present economy. Being able to easily, and without penalty, make withdrawals from savings investment vehicles has a certain level of freedom for which many investors are looking.

Options and features

Be aware, though, that not all MMAs have the same features and options. An investor would be very wise to shop around at different banks to find the parameters that best suit their portfolio..

Rates of returns, even in the highest money market accounts, typically change every day. It is important to consider all of the the terms and conditions that might apply to the account. Limitations on withdrawals, minimum balances, the solvency of the bank and fees are amongst the things to consider.

MMAs are considered a low risk investment, yet they have enough flexibility to be included in the portfolio of most experienced investors. If you are looking to diversify your accounts and include something with great flexibility, but a good solid track record, the highest money market accounts will most likely fit your needs.

Ask your financial planner or licensed professional in your area about an MMA and find out how they will fit into your existing investment needs.

Ed Akehurst is a full time Internet marketer who writes about a wide variety of topics, including real estate and investing. He discusses the highest money market accounts in his blog. If you are looking for investment resources and information, please visit http://highestmoneymarketaccounts.com today.

Now that you are ready to start investing, there are several points you have to consider. The first and most important thing is to define your objectives. In other words, what are you trying to achieve? Many people start investing without first defining their objectives. This is not the right way to start.

The next thing you have to consider is your risk tolerance. Risk tolerance is how you feel personally about taking risks financially and losing money. Your financial advisor should take this into consideration when they advice you. In fact, your investment advisor should ask you a lot of questions.

Your risk tolerance can vary, depending on factors such as age, financial goals, family situation, and income needs. Generally the older you are, the more you want to avoid risky investments. This is because your older years are really meant for consolidating your investments. When you are younger, you have more time for your investments to recover from market volatility, so you can afford to take more risks.

The rate of return on your investment is another point to consider. There are investments which offer guaranteed rate of returns. The downside of this is that the returns may be on the low side, and you may not be able to take advantage of high returns in the market.

Before you start investing, you may want to make a decision whether to use a broker or invest directly yourself. Of course the choice you make will be dependent on your knowledge of investments and investment vehicles.

Many investors work with brokerage companies, mutual fund companies, financial advisors in banks, insurance companies, and independent financial advisors. It is important to note that most of these people work for a commission.

The industry is regulated so that the investor is protected to an extent. As an investor, you of course have to do your due diligence and be knowledgeable about investing.

Many investors choose to open an account with a broker. This can be done online or by physically going to a broker’s office. There is a document called the new account agreement which you have to sign. Again, it is important to do your due diligence and read and thoroughly understand any document you are asked to sign. Responsibilities of all parties should be clearly defined. Ask questions if you need to. Your financial advisor should be willing to answer all your questions.

Are there people out there who will try to take advantage of you? Absolutely! That is why you must ask as many questions as possible, and not take anything for granted. Ask about the fees, liquidity of your investments, penalties for early withdrawal, tax liabilities, etc. You can also ask the financial advisor for references. After all, this is your money!

Another question you need to find out is, “will you be required to put a specific amount of money in your account at predetermined intervals?” This is called dollar cost averaging. Dollar cost averaging is a practice which helps to reduce the impact of market risk.

Get more free information at http://www.smartinvestorsguide.com

If you have ever thought about investing, the biggest question you would probably ask yourself or other people is, “how do I start?” Depending on who you ask, you probably will get some pretty interesting answers. Life consists of people who wish they had, and people who do. Which category do you belong to? One reason some people do not invest is because of fear. They are fearful they will lose their money. They are fearful they don’t know enough about investing to make informed decisions.

In today’s economy, there are so many investment vehicles available for those who are prepared to educate themselves. With the right information, you will not have to be fearful or confused about which investment vehicle to use to build your wealth.

Although there are several investment vehicles available, the important thing for you as a new investor, is not to overstretch yourself. This means that you do not have to invest in every single vehicle at the beginning. You can start to build your portfolio gradually by having just one investment type. You then increase to two, and then three, and so on. You also have to define what investment vehicle you will use for short term, mid term, and long term strategy.

The fact is if you do not save money, you may never become wealthy. Many people have a lottery mentality. To become wealthy, it is not how much you make, but how much you save. Your saving also has to be consistent and habitual.

Now you may say, “but I can barely make ends meet”. The hard truth is that if you never pay yourself (that is save money), then you may never be able to make ends meet.

Creating wealth involves discipline, and may require you to cut down on certain things. If you don’t do this, the sad fact is that you may never become debt free.

Yes we all have to pay bills, but this can never be an excuse not to strive to live a debt free life.

Have a plan to pay off your bills on a regular basis. You will be amazed how much money you will be able to save if you cut out the non essentials. Keep the bills to an absolute minimum. Remember incurring bills keep you in debt, while saving money will make you debt free.

To begin your investment, you can decide that a certain percentage will come out of your pay check on a regular basis.

In order not to be tempted to spend the money, you can arrange to have the money taken directly from your paycheck. If this is not possible, then you will have to set up some form of direct payment from your bank account. Remember, you are paying yourself! You have worked hard, and you deserve it.

Finally you may want to know how much money to start your investments with. This will depend on the type of investment you choose, and how fast you want to build your portfolio.

Get more free information at http://www.smartinvestorsguide.com

Have you ever asked yourself how the rich became wealthy? The next time you ask those who are rich how they became wealthy, they will probably tell you that they became wealthy from buying and selling real estate or by trading in stocks. These are only some of the ways to become wealthy. There are several other ways to get rich by investing. You can invest in real estate, buy bonds, mutual funds etc.

People who invest in real estate will normally buy property, fix it up, and then sell it for a profit. A lot of people have built a tremendous amount of wealth this way. If they do not sell the property, they may place someone in the building and collect rent on a regular basis. This method is called “buy and hold strategy”. There are many other ways real estate investors can make money investing.

Other types of investors are people who buy and sell stocks. They usually will buy stocks at a relatively low price, and then hold on to the stocks until the price of the stock rises significantly in value. When the stock prices start to drop, the stocks will then be sold at a significant profit. Investors who buy many stocks like these from several companies can quickly develop a massive portfolio.

Many investors spread their money over a range of investments. This is called diversification. To put it another way, you do not want to put all your eggs in one basket. Many will put some of their money into higher risk investments with a hope of getting higher returns. It also makes sense to invest in “safer” investments. The returns on “safer” investments will not be as high as the returns on higher risk investments of course.

Other ways to invest include bonds, saving accounts, mutual funds, and CDs. Mutual funds are professionally managed by investment companies. Investors buy units in the fund, and the investment company uses the money to buy stocks, bonds, commodities, futures, etc.

If you are going to be a successful investor, you have to follow certain procedures. The first thing you need to do is understand the investment vehicle and learn how it works. If you don’t understand how to invest, you could end up making a lot of mistakes which can turn out to be expensive.

Investing can be confusing to anyone who does not understand it and how it works. This is why you need to learn as much as you can about investing. Learning and understanding investing will enable you to invest properly and wisely. By educating yourself, you will remove a lot of risk and be able to make informed and wise decisions concerning your investments. This in turn will enable you to build wealth for you and for your family. It is important to realize however that investing is not a get-rich-quick scheme. If you must take control of your personal finances, it will require work and you will have to learn. The rewards though will far out-weigh the amount of work involved. Start taking control of your personal finances today.

Get more free information at http://www.smartinvestorsguide.com

Get more free information at http://www.smartinvestorsguide.com

Do you think a person earning $20,000 per year can become a millionaire? Absolutely! Anyone can do anything they set their mind to it and if they develop a realistic plan and stick to it. Let’s take a look how.

John is a hard working man earning $20,000 per year in his job. He has learned to reduce the money he is spending on taxes, life and health insurance, health care, food, and cars. He has also learned the importance of planning for retirement and purchasing his own home. He is 35 years old, and has set a goal of having $1,000,000 when he retires at 65. What must he do?

First, by reducing many of his living costs, John has worked into his budget a 10% savings plan. This means he will be able to invest $2000 per year into a tax sheltered Retirement Account (which by the way, further reduces his taxes). He might even use a self-directed account, therefore even further controlling the investment vehicle. John knows he MUST earn a minimum of 15% a year on his investments. So, he may select tax liens in Florida (18% a year), stock investing (Dogs of the Dow-17% since 1973), or real estate investments, with rates of return (cash on cash) of 15%.

There are several ways to get 15% or greater on investments, as well as cash flow strategies. Bottom line he is going to get at least 15%! His investments gains an average of just 15% per year over the course of 30 years. How much do you think this has earned him?

$2,000/year x 15% return on investment (compounded) x 30 years = $739,066.

Well, John has not quite reached his goal yet. But remember, he is also investing in a new home. He knows that real estate will appreciate on average at 5% per year (national average). John finds a nice home that suits his taste at 10% below fair market value using the rules of this course for $80,000. The house is actually worth $88,000.

Starting value of $88,000 x 5% annual appreciation x 30 years = $393,161.

So, at age 65, John has $393,161 in equity + $739,066 in his mutual fund, which equals $1,132,227. You see, John has surpassed his goal.

A simple plan can work. The key is being disciplined and saving for your future. Your objective is to make available for savings, 10% of your income. If you cannot achieve this simply by reducing your expenses, you must increase your income.

SUPER CHARGE THE PLAN

Now if we want to supercharge this plan, we have to increase the amount of starting money, or more importantly, get a better rate of return.

For example, if we start with a small amount of money, granted “small” may differ for everyone, so I did a table with various amounts. Added 30 years, at some aggressive rates of return, and you have some unbelievable future wealth. Even Trillions!

30 Years of Investing at different ROI

Amount – 15 percent – 25 percent – 50 percent

$1,000 – $66,212 – $807,794 – $191,751,059

$5,000 – $331,059 – $4,038,968 – $958,755,296

$10,000 – $662,118 – $8,077,936 – $1,917,519,592

$25,000` – $1,655,294 – $20,194,839 – $4,793,776,480

Now the reality, is that we are not going to hit a TRILLION dollars, but it does illustrate the point. Strong rates of return over time, give you outstanding results over time.

My magic number is 15%! In fact one of my favorite trading systems is credit spreads. A high probability system, with outstanding returns. Often, you can earn 5-10 percent per month. No guarantees, investing has risk, but highly probable. You should check it out.

Hi. My name is Jim Francis. I would like to create a financial miracle in your life. I have had the good fortune to spend time with 50 plus millionaires and 2 billionaires. Each of these MENTORS, gave 2 wonderful gifts. Number 1: Philosophy. Number 2: Strategy. Each are equally important. After studying with them for over 2 decades, I created the Millionaire Matrix. A vehicle for financial freedom. Specific strategies, in business, real estate, investing and wealth protection that can make a major difference in your life.

http://www.jimfrancis.com http://www.creditspreadsystem.com

To be really basic there are pretty much just a few different types of mainstream investments. They are stocks or shares, property, bonds and cash. Now if you haven’t done any investing before I may have just terrified you. Just try to remember that most things in life sound complicated or confusing when you first start learning about them.

OK, so when we look a bit deeper into it, there are quite a few sub-categories for each kind of investment. And each area of investing comes with its own challenges, positives, negatives and quite a steep learning curve as well.

The good news is, that when you are a new investor you will probably start out slowly and so you’ll learn about each type of investment as you’re ready to “play” with them.

The next question to ask yourself is “What type of investor am I?” Most people will fit into one of these categories and either be a conservative, middle of the range or an aggressive investor. And you may find that once you have some experience in investing, your style of investing may change also. Particular types of investments also usually fit into one of two categories – high risk or low risk.

The share market can be very intimidating for those new to investing and I recommend getting some other investing experience before tackling this type of investing.

Many people start their investment journey as conservative investors and will most often invest in cash-type investments. What I mean by this is that they invest their money in very conservative financial vehicles, such as interest bearing accounts at a bank, mutual funds, retirement funds, Government-backed bonds, and Certificates of Deposit. These are very safe investments that grow over a long period of time. These are also low risk investments in a way, but often don’t even keep up with inflation. It also means you are relying on other people to invest your money wisely and that you have absolutely no control over it.

Modest investors are still fairly conservative and will often invest a good part of their portfolio in cash investment products, while at the same time some may try their hand in the stock market, others may purchase property and most moderate risk investors will be looking at low to moderate risk investments.

The more aggressive investors generally do a lot of their investing in the stock market, which can be quite a volatile market. If you plan to get into share trading I strongly suggest doing at least one course that has been recommended to you by someone you trust and then to paper-trade (practice trading – real trades, but without actually buying them) for at least six months. Aggressive investors will look at business ventures along with higher risk property deals and are often will to put the larger part of their portfolio in higher risk opportunities.

So let’s say you’re an aggressive investor and you find an older apartment building. You would plan to invest even more money renovating the property, which can be risky if you have not calculated all the outcomes correctly. You would invest this way because you anticipate being able to increase the rental fees for each apartment or perhaps you were looking to flip the property for a net profit. This can be very lucrative and it can also cause bankruptcy. Usually it comes down to how well you do your homework and how much experience you have.

Property in any given area tends to go through cycles, so again you need to be educated before you jump into any “deals of a lifetime”, especially if everyone is jumping in at the same time. Usually by that time all the real deals have been snapped up by the savvy investors and you are looking at the peak of the cycle, just before it starts to decline. I will go into cycle details in much more depth in future posts. Oh, and it’s not just property that has cycles – just something that you should be aware of.

If you’re seriously considering investing you first need to decide what risk level you are comfortable with and how much money you have to start out with. Seriously, there are very few people who get rich working for someone else, so you’re on the right track, because you’re going to look after your own money way better than anyone else in the long run. Just remember – especially when you’re starting out – that any money you plan to invest, you must be comfortable with the idea of losing it. You mustn’t invest with money you can’t afford to lose.

Julie started investing from an early age, owning her own 7 days a week business at 18 years old, and has continued throughout her life to educate herself on multiple investment strategies. Her main focus has been residential property investing. She has owned multiple rental properties, renovated 11 homes, performed sub-divisions, bought off the plan, been successful with property options and now lives on over 110 acres in rural South Australia. While she leans toward property investments, she has also educated herself with many other investment vehicles and encourages others to do the same. Looking into a variety of investments can help you decide what investing strategies are a good fit for you.