Investment Articles

Are fixed rate bonds a wise option for your investment portfolio in 2012? With savings account rates scraping the bottom of the barrel, and an increasingly unpredictable stock market, fixed rate bonds can provide a happy medium for those seeking a little bit more for their money without the degree of risk associated with stock market investment – but are the fixed rates a problem?

When you purchase a fixed rate bond you receive a set rate of interest across a pre-agreed period of time in return for the loan of your capital. The fixed period is usually between 6 months and 5 years.

Your fixed interest rate is usually guaranteed unless the bond provider goes bust. The value of your capital is not normally guaranteed, so you may not get back the full amount of capital you put in.

Fixed rate bonds will often provide very competitive rates when compared to traditional savings accounts, so if you were to base your decision on current interest rates investing in fixed rate bonds can look like a very good option indeed.

What worries many is that when you take out a fixed rate bond you will usually have to make a commitment for a certain period of time. If interest rates begin to rise again before the bond term is over the investor could end up losing out on better rates until the bond term has expired.

The big question for those looking to find a good deal for their cash then, is when will rates start to rise again? Many economists predict that the Bank of England base rate, which has been stuck at 0.5% for some time now and plays a large role in determining interest rates across the market, will not shift until 2016. On the other hand some are predicting that the base rate will start to move again as early as 2013. The simple answer is that no-one can tell for sure.

At current rates fixed bonds offer a competitive option in comparison with many savings accounts, so holding a portion of your portfolio in such investment could prove to be a profitable choice.

The guaranteed income that fixed bonds can generate could be very valuable in times of few guarantees. However, in view of the fact that interest rates may begin to rise again in the near future you may want to consider spreading your savings across different savings and investment options which can include fixed rate bonds.

It’s always a good idea to shop around and compare bonds and other options to secure the right deal for your needs.

If you do decide that investing in fixed rate bonds could be a suitable option for you, you may wish to speak to an independent investment advisor who can help you ensure that your portfolio is tailored to your attitude to risk and personal financial circumstances.

Searching for the best fixed bond rates can be a headache. A bond comparison website is one way to search for the best fixed rate bonds and may help you to secure a competitive interest rate for your savings.

Private investing is another option for people who want their money to grow over a period of time. A lot of the investment opportunities available in this area involve ideas for start-up companies that financial institutions are not willing to give a chance to. This is why private investors are also called Angel Investors because they help those budding entrepreneurs to realize their business goals. It’s quite risky considering that you are investing in a start-up company and that you would have to help develop it and sometimes take an active management role to ensure a good return on investment. Surely, this type of investment is not for the faint of heart, but it can really give you good returns if you choose the right company to help and invest in.

Advantages and Disadvantages of Private Investing

Private investing has its own pros and cons. The obvious disadvantage is the risk you should be willing to take when investing in a start-up company. Unlike investing in stocks of an established company or corporation, you will have to deal with the growing pains of building the business up from scratch and this may mean losing money in the process. This type of investment also requires you to play an active role in the business, so if you’re looking to sit back and wait for your money to grow like stock market investments, this may not be a good option for you. The advantage to private investing can outweigh the negative aspects if it’s done properly. As a private or angel investor, you are helping people who need someone to believe in their business plan and give them the financial support they need. As mentioned earlier, this is a hands-on investment option, which can be a good thing if you have business experience and you want more control of what the company does with your money. Since it’s your money that the company is using for its operations, your input is valuable during the decision making process and you can even take a more active management role if necessary.

As a private investor, the return on investment you get will depend on the decisions you make and how you handle your share of the business responsibilities. Investments like these can work for or against you depending on the choices that you make from selecting the right company to invest in to making sound business and financial decisions for the good of the company. Private investing may be a big risk, but it can be very rewarding if you know what you’re doing.

When we are talking about investment, this word has been heard often enough. A lot of people or friends do not really understand what investment is and desperate to start investing without knowing the contents of their investments. Be careful. You may experience losses instead of profits.

Investment is a concept commonly done in the financial world in order to develop the value of money. Development is represented in the form of return or interest.

A good investment product is a product that suits to your needs and your character. It is not all of investment products are suitable and necessary need at once. You have to understand of how the product will deliver the maximum benefit and risks that may arise.

Deposit Account.

This product is commonly used by those who has a risk-tend of more conservative or safe (with fixed interest and protect the initial), as compared with other investment products. The period is very diverse, typically 3, 6, or 12 months. If you try to withdraw before its due date, you will be penalized.

Although this type of investment is less able to compensate for the inflation rate, the deposit is still required and can be utilized in the process of financial planning. This product is suitable for storing the funds that will be required within one year.

Gold – Precious Metals

There are gold bullion and jewelry. The difference is, when you are buying gold jewelry; you are buying a gram of gold plus the difficulty of manufacture. When you are willing to sell it back, the ‘difficulty value’ is not counted. Thus, for investment purpose, certified gold bullion is much better.

Property

Property investment has been recognized for long. Currently, the attraction of property is not only land, but also houses, townhouses, apartments, villas, and other residential properties. The most crucial thing when investing in property is location.

Stock

When deciding to begin to invest in stocks, you must commit to have it in the long term, 5 years-10 years. If you only intend to purchase in the short term and make a profit on the price difference, then you are not investors, but your are a trader or broker.

Stock investment is more suitable for those in young age. Why? It is because the stock is an investment product for the long term. Stocks often need more time to develop.

This investment has the principle of high risk, high return. Perform an analysis of companies with the potential to grow continuously in the future.

Mutual Funds

There are four conventional mutual fund products: money market funds, fixed income funds, mixed funds, and stock or equity funds.

Mutual funds help the investors, especially beginners, who have limited funds, time, and knowledge to investing directly into stock. The important thing is the suitability of types of mutual funds with a risk profile and your financial planning goals.

Have a successful investing in 2012! Have fun with your money!

* Analyze your Personal Financial Planning before choosing an investment type.

In the current investing climate many investors are seeking out alternatives to traditional investment assets in an effort to boost poor returns and bolster the limp performance of their pension portfolios. While stocks and shares continue to display the kind of up-and-down volatility that would make a rollercoaster jealous, real-assets including fine wine, stamps, land and forestry have all continued to grow in values as rising global incomes combine with a growing global population to boost demand against a backdrop of limited supply.

Whenever supplies of an asset are limited and demand increases, we see the value increase as buyers compete for the best assets, so those investors in control of finite resources are likely to continue to capture capital growth regardless of the performance of the wider economy.

Whilst in is certainly true that some alternative investment assets rely on the existence of wealth for their end-use market; for example stamps and fine wine rely on the existence of wealthy buyers, it is also true that certain essential assets will enjoy a demand even if the global economy were to collapse tomorrow. These safe haven alternative investments include agricultural land, energy-generating assets, infrastructure and commodity driven properties such as forestry investments.

There is a limited global stock of land suitable for agricultural production and demand for food commodities and feedstock for animal feed and biofuels in growing exponentially as developing nations expend their populace and rising incomes lead to greater consumption of commodities. Indeed the giant populations of India and China are entering their most resource-intensive phase of growth, just like the west during the industrial revolution. The difference here is that the populations and resource requirements of these countries is much larger. This makes agricultural land a precious resource that is likely to become one of the most valuable assets on earth. Not only that, but goof quality farmland produces annual income from the production and sale of food commodities, so income streams also rise as food prices increase. It is worth noting that the amount of arable land per person on the plant has halved since only the 1960’s, going some way to explaining why so many institutional investors are holding more and more agriculture investments.

Renewable energy investments that produce income from solar, wind or agricultural crops are also seen as a potentially great alternative investment opportunity as they continue to generate revenue regardless of dividend performance in traditional investment markets. As long as the wind keeps blowing and the sun keeps shining, those in control of renewable energy investment assets will continue to earn up to 20 per cent per annul income yields based on current project establishment costs.

For the long-term investor, forestry investments continue to grow in any economic weather, because the majority of financial returns is actually driven by the biological growth of trees, not the performance of the economy. Whilst a relatively buoyant economy is essential in order for there to be demand for timber products, it is growth in emerging market economies what will drive future demand, and so investors who own a stake in a commercial forestry investment property close to emerging markets are likely to capture non-correlated growth and be able to create substantial revenues from the sale of essential commodities as trees turn into valuable timber stands.

In summary, alternative investments are popular because they generate returns not dependent on traditional markets, but investors should always be careful as these kinds of real-asset alternative investment all carry asset, location, sector and counterparty specific risks that many investor may not recognise or be able to screen for, so the use of an experienced consultant with a good track record of identifying successful alternative investment assets is essential in order to avoid undue risk and maximise upside potential.

David Garner is Partner at DGC Asset Management, an alternative investments boutique specialising in property transactions in the agriculture and renewable energy sectors.

People are worried, concerned and yes, even scared. How do you invest in these volatile and uncertain times? The memories of the Global Financial Crisis (GFC) of 2008-2009 are still fresh. They themselves may have “lost” money during this period as have many of their friends. They know people or have heard stories of people who “went into cash” at the right time.

The global economies and investment markets are again facing new uncertainly and volatility. People are asking themselves and their advisers questions such as:

• Will I lose my money?

• Is any place safe?

• Should I go into cash?

• Am I wasting my money by salary sacrificing into superannuation?

Let’s look at the recent past and where we are now.

In the beginning

The Australian share market peaked at around 6800 in November 2007. Concerns over the American subprime market and the creditworthiness of the debt products arising from these mortgages, Collateralised Debt Obligations (CDO’s), began to appear however the crisis did not reach a climax until September 2008 when the Americans permitted the large investment bank Lehman Brothers to fail. Up to that point the debt crisis and resulting failures of financial institutions in American were contained.

Once Lehman Brothers failed, there was a massive global loss of confidence and lending between even large financial institutions froze as there was a fear that they could not repay their borrowings. Investment uncertainty and volatility increased. Interest rates in Australia and overseas fell rapidly, governments propped up financial institutions, and there were massive government stimulus packages as well as government guarantees over depositor’s funds. The Australian share market hit a low of around 3100 in April 2009.

Some Hope

Gradually the measures in Australia and overseas took effect. Confidence rebounded to some degree and the Australia share market was soon back to 5000. The Reserve Bank began to raise interest rates from the low of 3% to 4.75% by November 2010. Talk was of how soon the federal budget would be back in surplus and how to contain the inflationary effects of the resource boom. Investment uncertainty and volatility decreased and money came back into the market.

The picture overseas was mixed. The BRIC countries of Brazil, Russia, India and China continued to grow at a fast pace as did other emerging and secondary economies such as Vietnam, South Korea, Malaysia, Turkey and Argentina to name a few. Commodity prices rose which has helped Australia as well as the oil rich countries.

Too soon to celebrate

Against this good news the effects of the GFC have had a lasting impact on other countries which have struggled with debt and economies which have not fully lifted out of recession. In Europe the debt crisis spread from Ireland to Greece and then to Portugal and more recently doubts over whether Spain and Italy can manage their debt. Countries such as Germany, which have bounced back strongly from the GFC, are reluctant to fund the mismanagement of the PIIGS (Portugal, Ireland, Italy, Greece and Spain).

The big concern however is the effect that a default of even a country such as Greece would have on the countries of the Euro. As 2011 progressed and into 2012, this concern has had a major impact on the share markets.

The other focus of bad news is the debt problems of America and its continuing lack of growth. America has taken on huge debt funding wars in Iraq and Afghanistan, the bailout of financial institutions, a loss of revenue because of tax cuts to the rich and unfunded social security entitlement programs authorised by the Bush administration.

Market panic occurred in July and August 2011 when the debt problems in Europe became more serious and the political brinkmanship in America over lifting the federal government’s debt ceiling brought about a lack of confidence which was brought to a climax when Standard and Poor lowered their rating of American debt. The Australian market had one of its largest falls on 9th August, although it rebounded the same day. Once again investment uncertainty and volatility increased.

Going Forward

Major concerns on people’s minds are as follows:

1. We have a situation where Greece will almost certainly default on its debt, which could spread to other European countries.

2. Economic growth is poor in much of Europe and America however the means to stimulate growth through deficit financing and the lowering of interest rates is not available.

3. America has unique and persistent problems such as falling house prices, a reluctant to raise taxes and the ongoing drain of overseas military commitments.

4. There is friction between China and its trading partners, especially America, over the value of the yuan and persistent trade imbalances.

5. There are special concerns over China such as its continued desire to hold low yielding American debt and the sustainability of its economic model which has been reliant on exports and investments.

These concerns are summarised in a fear that we are on the verge of a second GFC. Hence the questions presented at the start of this article.

This is a reprinted summary from an article in http://www.barrylizmore.com.au

Barry Lizmore is a financial planner in Melbourne Australia and is a lecturer in financial planning at Deakin University. I have recently written a book, “Take Control of Your Money” which explains the financial planning process and answers questions such as:

My educational web site which includes information on my book is http://www.barrylizmore.com.au

Fine wine investment market has changed dramatically in the last twenty years and is booming, even more so since Hong Kong removed a duty they had on wine, and demand has risen dramatically.

Investors look to alternatives ways to invest their money in trying times and with Asia’s rapid wealth, which looks only to increase, more and more money will be invested in fine wine. Investing in wine is thriving amongst the Asian markets, especially with the increasing demand from China.

Wine is generally more stable than stock-market linked indices allowing investors to securely own a tangible asset. Wine has always held its value and the reason why Bordeaux is a worthy asset is simply down to the laws of supply and demand. Investors want high returns from wine and fine wines can be a good, low-risk long term investment and less likely to follow the same paths as equity markets. There is no doubt that over the last 25 years wine has been a sound investment. Even in a bad harvest with a low quota, wines still get consumed and demand still remains stable and even grows with prices increasing up to 20% a year. Some wine investments have already outperformed gold and crude oil investments.

Fine wine is the only asset that operates with a perfect supply curve. It is the uniqueness in demand in wines that create a consistent growth curve which is why wine has little in common to other asset classes in terms of volatility. Wine investment is tax free as it does not attract Capital Gains Tax. VAT and Duty may also be avoided if your wine investment is kept in bonds.

Fine wine as an investment should be bought from a reputable source and storing the wine correctly is vital to ensuring its investment potential. There is a huge choice of fine wine investment companies to help people get into the market, and investors need not know anything about vintage wine.

Case prices vary but some top performers can command £5000 for each case and it is not uncommon for prices to be double that. Investors should benefit from a full market cycle between three and five years with maximum returns on an eight to ten year period. It has always been said that wine matures with age and so does the investment. As wines mature and become consumed, they becomes rarer which adds value to investments.

Wine investment is not a new trend, and is no longer the domain of the knowledgeable few as more and more investors are benefiting greatly and joining this exciting and vibrant market.

Written by Vin-X wine investment brokers, http://www.vin-x.co.uk.

Online share dealing accounts can offer a quick and easy way of starting out in stock market investment if you’re looking for a more hands on approach investing and are prepared to put up with a degree of risk.

How do I trade online?

Online share dealing for the individual involves setting up an account and buying and selling shares through it. When you set up an online share dealing account you will usually be required to pay a flat rate of between £6.00 and £20.00 per trade. Some accounts will also charge a quarterly membership fee too. You should make sure that you are aware of all the costs involved before committing to one particular account.

There are many online share dealing accounts available from a range of providers and you can often open an account simply by registering a debit card and providing a few personal banking details.

What do I do next?

1) Decide your limits. Before you begin you should decide on a maximum amount you would like to invest with. Trading can be exciting and fast paced, but you should be completely clear about your limits and the risk involved to your capital before you begin.

2) Do your research. It’s always best to invest in a company you already know something about, and research can help you to gauge risk involved in a particular company. Many share dealing account providers will offer a short trading history on individual companies, use this to your advantage

3) Diversify. Rather than buying many shares in a single company try to spread your investments across several companies. That way if one company goes down it will have less damage on your overall share portfolio.

Your shares will be held in an online portfolio which will also hold information about current share prices and any profit or loss you may have incurred. It’s best not to trade your shares too often as you will probably be charged per trade and these charges can add up and eat into any profit margins.

Is it right for me?

Share dealing online is most suitable for those will small sums to invest and feel comfortable with the processes and risks of investing in shares. It’s certainly not everyone’s cup of tea and you may want to speak to an investment advisor if you have a large sum of money to invest or if you are unsure about any aspect of investing in shares.

John T Hughes writes for Share Dealing Account, a leading online source of information on share dealing accounts in the UK.

In the current global climate, defined by low interest rates; high inflation; volatile investment markets; and poor short term visibility, investors are seeking out alternative investments that generate growth and income that does not depend on traditional market performance.

As such, much attention has been focussed on timber investments as a tool to preserve capital, hedge inflation and generate superior income in a low-risk environment.

Institutional Investors such as pension funds, university endowments and hedge funds have long known the benefits of investing in timber assets, with many such as the Yale University Endowment Fund holding 28 per cent of their investment portfolio in real-asset alternative investments including tropical forestry investments and farmland.

Timber investments are seen as generating non-correlative investment returns due to the fact that the majority of revenues is sourced from the biological growth of the tree, with only a small percentage of return attributed to timber price growth or land value appreciation. One credible university study found that over 60 per cent of returns from forestry investments can be attributed to the ‘biological hedge’.

Demand for timber products remains strong, and rises roughly in line with population expansion, a factor compounded by economic expansion in developing nations leading to a n increase in consumption of timber products per capita as new homes and other infrastructure in developed.

Currently, around 30 per cent of global timber supplies are sourced from illegal logging, and a further 40 per cent form unsustainable sources. The future demand dynamics then indicates that timber investments are likely to continue to outperform other assets such as equities, as they have for the past 30 years.

Taking a very broad view, forestry investment returns can be enhanced and potential downside risk substantially reduced through the application of strategic species and location selection, combined with experienced forestry management to create a sustainable and profitable investment model.

Broadly speaking, the faster a tree grows into commercially viable timber, the greater the return on investment, so selecting fast-growing tropical timber species is the first step in consolidating profitable forestry investments. Bamboo is one example of a timber species with great potential as a subject of sustainable forestry investments due to the fact that the rate of biological growth is so rapid as to ensure a commercially viable, harvestable timber stand within 4 years of planting.

Other features to take into account to maximise forestry investment returns are sustainable plantations managements, suitable site selection and investing in upstream products developments, allowing timber growers to process their raw materials and sell value-added timber products such as boards and other processed wood products.

Investors interesting in harnessing the characteristics of forestry investments for their own portfolio should be encouraged to seek advice from an independent third party with experience in identifying and delivering successful forestry investment projects.

DGC Asset Management provide independent advice for Investors interested in direct forestry investments.

TEAK – the truly ‘Hard Asset’

Plantation Asset Management Limited now offers one of the best opportunities for private investors to add long-term value accreditation to their portfolios by owning their own teak plantation on specially selected land in Brazil. Projected returns – based on historic price data and industry production averages – show that £10,000 invested now will produce a total return of £140,000 over 25 years. These returns reflect only 5% annual price inflation for teak wood, which has in fact seen average annual price rises of 5.2% over the past 30 years.

And all this comes with the major advantage that Capital Gains Tax and Inheritance Tax breaks exist for all forestry investments, so that you can lock away assets for your retirement, or your children and grandchildren without worrying about the long-term tax implications. The tax advantages will also boost overall returns even further. So, whether you are planning for retirement or long-term savings goals, such as university and college fees, planting teak now will ensure you meet your targets. In this offer from Plantation Asset Management you will also have the protection of full insurance of your trees against any fire or storm damage. This insurance is built into the capital cost of your investment, and comes with a warranty that ensures the nursery company responsible for initial planting will compensate you if more than 20% of the teak saplings die within the first year. Your land will be purchased on a 30-year lease, and individual investors will own their leased land and trees enabling investors to choose their own exit timing. Management of individual plantations will be at the choice of the investor, from a choice of three local forestry management companies – all well qualified, experienced and known to Plantation Asset Management.

Because of its strength, durability and weather-resistant properties, teak wood has been highly-prized and valued for centuries and remains a key component of modern construction and design. The wood is used in the making of floors, outdoor decking, outdoor furniture, solid doors and expensive decks for boats, as well as high-grade indoor furniture and fittings. Currently, there is strong demand for teak across China, Europe, India, Japan and the USA, and world consumption of industrial wood is expected to grow by 60% in the next five years, so that demand will overtake current potential supply in 2015 (source: United Nations). Thus, investment in teak wood now is a priority for forward-thinking investors.

Hard Wood = Hard Asset = Hard Cash

Teak is relatively fast growing, maturing in 10-15 years, and most furniture makers suggest teak wood aged between 12-15 years is ideal for their business – at this age teak has all the durability and weather resistance but is more easily workable than fully matured wood. Younger wood still has its uses, particularly at the cheaper end of the furniture spectrum and for fencing and light construction, whilst fully mature wood is the most valuable. Peak returns for teak are usually projected at 20-25 years, which is why Plantation Asset Management Limited has structured its offering on a 25-year plan, in which investors can exit after just 5, 10, 15 or 20 years. We will buy back your land and trees at cost + 5% per annum or you have the option to sell via our website trading platform or to a third party at any time. The offer comes with a low minimum investment of just £3,450 – including the plantation management fee. Investment is based on plots of 1/10th of a hectare (roughly a quarter of an acre), and investors can buy multiple plots subject to availability. Unlike many other forestry products there are no other further or on going costs/fees. This is a unique proposition. Management costs, including insurance, of the plantations are built into your investment, and you will receive regular information on the progress of planting and growth to be provided by the project managers. You are also free to visit your plantation and meet the farm managers and inspect your trees.

Select-Global is one of the most influential and innovative companies in the Alternative Investment and SIPP Investment arena.  We are dedicated to guiding our investors through the sometimes complex world of investment opportunities that the global Alternative Investment markets offer.

There has been a surprising, although not fully unanticipated, rise in the amount of alternative investors over recent years and various specialist investment companies now exist to cater for this demand by offering investments that are not only lucrative, but are also environmentally friendly.

Investing in our own planet is becoming big business these days and now there are a number of ways solo investors and larger companies and organisations can make money whilst concentrating on reducing their own carbon emissions.

Carbon Trading

Carbon trading is basically an economical approach to reducing pollution and the resultant build up of green house gasses in the earth’s atmosphere which in turn leads to climate change and global warming, and so far it has been very effective. Industries that emit pollutants into the atmosphere are now required to purchase permits to do so. The total amount they are permitted to pollute comes under strict controls. All industries must have these permits, and these permits are effectively carbon credits. Each carbon credit is worth 1 tonne of Co2 or the equivalent amount of emitted polutants.

This credit system encourages those who pollute to reduce their emissions, and when they do so they will have spare credit that they can trade to industries and businesses that need more credit to increase their own levels. This way the polluting business that buys the excess credit isn’t really adding any more Co2 to the atmosphere because they have purchased the credit from a business that has reduced their pollution level.

This trading provides avenues for investment by identifying those companies who are attempting to gain carbon credit by reducing emissions.

Pensions

Carbon credits are also a very popular choice for SIPPs (self invested personal pensions). Because only a few, very select investments are made each year, and the tax office allows for extra revenue to be made from SIPPs, there is a very good chance of excellent returns. If you’re going to put money away for your future retirement and you want an alternative investment, then you may as well invest it in something that will give you a good return and also protect rare Earth commodities for future generations too.

This is further enabled through investment specialists being able to offer short, medium and long term investments, with exit strategies in place to allow investors to get out when they want; very unlike collective investment schemes that don’t allow this type of management and manoeuvrability.

Select-Global is one of the most influential and innovative companies in the Alternative Investment and SIPP Investment arena.  We are dedicated to guiding our investors through the sometimes complex world of investment opportunities that the global Alternative Investment markets offer. Our mission is to provide the most up-to-date information and investment advice in the world’s most favourable Alternative Investment and SIPP Investment markets. We pride ourselves on the unparalleled levels of professionalism and the ethical services we offer our clients. http://www.select-global.com