Apr
30
Investing Now to Live the Life You Dream of
Filed Under investing | Comments Off
Howard Platt asked:
Have you ever wondered why you haven’t achieved the financial success you so desire? Do you understand what it takes to reach that elusive destination, financial freedom? Anyone can have the success they desire. I dare you to become financially free.
A good definition of financial independence, by the way, is the control of an income stream sufficient to support your current standard of living.
You do not just fall into financial independence. More than anything else, the secret to real wealth is the mindset of wealth.
So you see, my dare is not really as outrageous as it might sound at first. By accepting the challenge, you are taking the first step to acquiring the mindset of wealth. You must be resolved to the fact that with wealth building, there must be dedication. And I guarantee that the opportunity to become financially independent is waiting for you, but you have to make the decision to go for it.
It’s up to you to take that step across the threshold of opportunity facing you now. It’s a decision you should have no hesitancy for. And when you do, you’re on your way to financial independence.
There are four major hurdles you must jump to become financially independent. I could go into a deep explanation of each step but I will save that for another time, I really want to discuss a powerful investment strategy. But I will briefly outline the four steps to financial independence.
So to get started, lets begin with the first of our skills of wealth building and that is earning. You must understand the two basic components controlling your earning power.
The first of these is our ability to perform our chosen line of work, that is, how well do we do what we do. The second and probably the most important factor controlling our earning power, is the demand in the marketplace for whatever it is we’ve chosen to do.
Second, you must build a financial protection account to cover all your expenses in case of an emergency, such as the loss of your income source. Saving is really the second important skill for acquiring wealth. You must have the discipline to build a protection account that will cover all your living expenses for your family, for a period of a year or two.
The third step in becoming financially independent is to begin an investment program. You want to achieve the highest returns on the money that you have designated for your investment program. Your objective now is to accumulate a mass of capital that will generate sufficient income to support your lifestyle without your having to work.
The fourth step to financial independence is too develop enough investment prowess to earn the extra income that allows you to fill your wants and desires. You have your needs met, but now you want to create the extra income that allows you to become financially free, this is where you can basically satisfy most of all your wants.
There, now that we have the four basic steps to financial freedom. I would like to carry on with the main focus of this article.
But I must make it clear that I had set up multiple Avenues of Income first, to put me in the financial situation that affords me the ability to test the waters of many different financial opportunities.
So, now I would like to discuss a powerful investment strategy. This is an investment strategy that has worked well for me in all types of market conditions. And by no means is this a strategy that I designed. In fact, it’s one that has been used successfully from a time long before the modern market and the stock exchange even existed. It’s called value investing.
Value investing is the best long term strategy for creating wealth that’s ever been devised. The theory behind it all is remarkably simple. You can become a value investor by investing your money only in under-valued assets. You can find under-valued assets in stocks and bonds, real estate or a wide variety of other investment opportunities. But whatever the investment asset may be, value investing boils down to the equivalent of buying dollar bills for pennies.
Now, I am sure you are saying “If it’s really that easy, everyone would be doing it.” I want to assure you easy as it actually is, everyone is not doing it. As with all great ideas in the world, only a few recognize them for what they are, and fewer still then decide to act on them.
Under-valued assets exist for reasons that range from fluctuations in the economy to fluctuations in human emotions.
It’s important to understand, however, that you can always find undervalued assets if you are willing to look for them. And, you don’t have to do this all by yourself. Look for investment professionals who operate investment funds and companies using this strategy. Through study and practice you will learn to accurately assess values as a basis for profitable investment.
Another key mindset of wealth is thinking and acting like a business person as well as an investor. Remember the better business person you are, the better investor you’ll be. And the better investor you become, the better business person you’ll be.
Please also keep in mind that value investing may offer important opportunities to take an active role in creating value in your investments. For example, you might turn an unwanted piece of real estate into an income producing asset, or turn a failing business into a thriving business, or create a new product or service based on a need or want you see in the marketplace.
Another form of value investing is investing in yourself and your abilities. There are many ways of increasing the cash flow into your families finances.
Setting up avenues of income that could hold the possibility of creating a passive and/or residual stream of income. If you take the opportunity to set up another stream of income, you would really be increasing your ability to grow anyone of your other investments. And, there are many ways of creating an extra souse of income that doesn’t consume every spare minute that you have. To the contrary, making such a move in your life would possibly result in you’re having even more free time to do the things you love.
The options are endless. The possibilities of a whole knew future are there for the taking.
Brittany
Have you ever wondered why you haven’t achieved the financial success you so desire? Do you understand what it takes to reach that elusive destination, financial freedom? Anyone can have the success they desire. I dare you to become financially free.
A good definition of financial independence, by the way, is the control of an income stream sufficient to support your current standard of living.
You do not just fall into financial independence. More than anything else, the secret to real wealth is the mindset of wealth.
So you see, my dare is not really as outrageous as it might sound at first. By accepting the challenge, you are taking the first step to acquiring the mindset of wealth. You must be resolved to the fact that with wealth building, there must be dedication. And I guarantee that the opportunity to become financially independent is waiting for you, but you have to make the decision to go for it.
It’s up to you to take that step across the threshold of opportunity facing you now. It’s a decision you should have no hesitancy for. And when you do, you’re on your way to financial independence.
There are four major hurdles you must jump to become financially independent. I could go into a deep explanation of each step but I will save that for another time, I really want to discuss a powerful investment strategy. But I will briefly outline the four steps to financial independence.
So to get started, lets begin with the first of our skills of wealth building and that is earning. You must understand the two basic components controlling your earning power.
The first of these is our ability to perform our chosen line of work, that is, how well do we do what we do. The second and probably the most important factor controlling our earning power, is the demand in the marketplace for whatever it is we’ve chosen to do.
Second, you must build a financial protection account to cover all your expenses in case of an emergency, such as the loss of your income source. Saving is really the second important skill for acquiring wealth. You must have the discipline to build a protection account that will cover all your living expenses for your family, for a period of a year or two.
The third step in becoming financially independent is to begin an investment program. You want to achieve the highest returns on the money that you have designated for your investment program. Your objective now is to accumulate a mass of capital that will generate sufficient income to support your lifestyle without your having to work.
The fourth step to financial independence is too develop enough investment prowess to earn the extra income that allows you to fill your wants and desires. You have your needs met, but now you want to create the extra income that allows you to become financially free, this is where you can basically satisfy most of all your wants.
There, now that we have the four basic steps to financial freedom. I would like to carry on with the main focus of this article.
But I must make it clear that I had set up multiple Avenues of Income first, to put me in the financial situation that affords me the ability to test the waters of many different financial opportunities.
So, now I would like to discuss a powerful investment strategy. This is an investment strategy that has worked well for me in all types of market conditions. And by no means is this a strategy that I designed. In fact, it’s one that has been used successfully from a time long before the modern market and the stock exchange even existed. It’s called value investing.
Value investing is the best long term strategy for creating wealth that’s ever been devised. The theory behind it all is remarkably simple. You can become a value investor by investing your money only in under-valued assets. You can find under-valued assets in stocks and bonds, real estate or a wide variety of other investment opportunities. But whatever the investment asset may be, value investing boils down to the equivalent of buying dollar bills for pennies.
Now, I am sure you are saying “If it’s really that easy, everyone would be doing it.” I want to assure you easy as it actually is, everyone is not doing it. As with all great ideas in the world, only a few recognize them for what they are, and fewer still then decide to act on them.
Under-valued assets exist for reasons that range from fluctuations in the economy to fluctuations in human emotions.
It’s important to understand, however, that you can always find undervalued assets if you are willing to look for them. And, you don’t have to do this all by yourself. Look for investment professionals who operate investment funds and companies using this strategy. Through study and practice you will learn to accurately assess values as a basis for profitable investment.
Another key mindset of wealth is thinking and acting like a business person as well as an investor. Remember the better business person you are, the better investor you’ll be. And the better investor you become, the better business person you’ll be.
Please also keep in mind that value investing may offer important opportunities to take an active role in creating value in your investments. For example, you might turn an unwanted piece of real estate into an income producing asset, or turn a failing business into a thriving business, or create a new product or service based on a need or want you see in the marketplace.
Another form of value investing is investing in yourself and your abilities. There are many ways of increasing the cash flow into your families finances.
Setting up avenues of income that could hold the possibility of creating a passive and/or residual stream of income. If you take the opportunity to set up another stream of income, you would really be increasing your ability to grow anyone of your other investments. And, there are many ways of creating an extra souse of income that doesn’t consume every spare minute that you have. To the contrary, making such a move in your life would possibly result in you’re having even more free time to do the things you love.
The options are endless. The possibilities of a whole knew future are there for the taking.
Brittany
Apr
29
Socially Responsible Investing for Idiots
Filed Under investing | Comments Off
Michael Grodsky, AIF® asked:
Socially Responsible Investing for Idiots
Sí, Money! (http://simoney.us)
By Michael Grodsky
If I have to be an idiot, at the least I’m a green idiot. I believe in clean air, corporate responsibility, community activism, licorice, pizza and Thai food. And healthy living, freedom, and of course freedom raisins.
Shiny happy raisins
I love trees, sky, and ah, the OXYGEN! But I’m worried about the dismal state of health care, education funding, the ozone hole, the Medicare donut hole, and your little dog too! Did you know the North Pole is melting? That really scares me. Plus I need to cut down on my Chunky Monkey intake.
In everything I do, in every move I make, it seems that I’m part of the worldwide web of production and consumption. So I pertly place my recyclables in the blue bin, our family uses reusable grocery bags, and I vote. What more can a light-switch thumping, gasoline-pumping 21st century fox do?
C’mon, baby, light my SRI fire…
It was only a couple of years ago a friend remarked to me that real estate was the only investment that made any sense, as if his seat on the Ferris Wheel of investments, propelled by an invincible source, would forever be going up, up, UP! Instead, what happened was “up, up and away.”
The first Ferris wheel, from 1893 World Columbian Exposition in Chicago
The desire for a sure thing is hard to resist. Albert Einstein, succumbing to pressure to support the idea of a static universe, in his 1917 paper added an adjustment number called the “cosmological constant” to his equation for general relativity. In 1931 he publicly renounced this static cosmology and endorsed the Big Bang expanding universe model, ditching the cosmological constant and returning to his original equation. He later called his bowing to peer pressure the greatest blunder of his entire life. You can read about the adventure in author Simon Singh’s “Big Bang - The Origin of the Universe.”
Many philanthropic foundations have long drawn a wall between their socially conscious mission statements that drive grant making, and the investment holdings of their endowment. There is a truism that investing for social benefit results in lower returns. But just as scientific peer consensus eventually embraced the Big Bang theory, so has the thinking of philanthropic foundations changed. The reasons are twofold: A recognition that corporate responsibility and societal concerns are valid parts of investment decisions, (1) and a growing number of academic studies have demonstrated that socially responsible investment (SRI) mutual funds perform competitively with non-SRI funds over time. (2)
For example, according to University of Maastricht and Erasmus University Rotterdam economists in their prize-winning paper, “we find little evidence of significant differences in risk-adjusted returns between ethical and conventional funds for the 1990-2001 period.” (3)
Foundation investment choices seem to be increasingly guided by effect upon society as a whole, not just financial gain, according to a recent Los Angeles Times article. (4) Fresh thinking in the nation’s largest foundations may be driving the impetus ever faster: The $8.5-billion William and Flora Hewlett Foundation (Menlo Park), the $6.1-billion John D. and Catherine T. MacArthur Foundation (Chicago), the $7.8-billion W.K. Kellogg Foundation (Battle Creek, Michigan) all have made recent changes to improve the social effect of their investments. (5)
SRI assets are also growing faster than assets as a whole: according to the non-profit Social Investment Forum’s 2005 biennial report, SRI assets rose more than 258 percent from $639 billion in 1995 to $2.29 trillion in 2005. Over those ten years, SRI assets grew four percent faster than the entire universe of managed assets in the United States. (6)
Some have already been on the SRI track: the nation’s second largest foundation, the Ford Foundation, along with others such as the F.B. Herron Foundation, the Jessie Smith Noyes Foundation and the Nathan Cumings Foundation, have for a long time aligned their charitable and investment practices.
What is Socially Responsible Investing?
Socially Responsible Investing (SRI) is a broad-based approach to investing that now encompasses an estimated $2.3 trillion out of $24 trillion in the U.S. investment marketplace today. (7) The release of the United Nations Principles for Responsible Investment–subscribed to by some of the world’s largest institutional investors, asset managers, and related organizations representing over $9 trillion in assets as of mid- 2007–underscores the widespread acceptance of the principle that investors cannot, in the long run, achieve their goals by investing in corporations that externalize their costs onto society. (8)
How do I research SRI funds?
A good place to start is the Social Investment Forum (http://www.socialinvest.org). Look at the resource list at the end of this article too.
How do I start investing?
If you participate in an employer-sponsored retirement plan, there may be SRI funds already available to you. If you manage your own IRA or other plan, look into what’s available. But don’t just go adding a fund without considering the entire makeup of your portfolio.
The key to earning decent long-term returns and limiting overall risk is to have a proper asset allocation, meaning you don’t have all your eggs in one basket. For do-it-yourself-ers, check out the government’s website about asset allocation (http://tinyurl.com/2825hw), or purchase “All About Asset Allocation” by Richard A. Ferri ($13.57 at Amazon), a great introduction to the topic. Your personal financial advisor or company where you have your investment or retirement accounts can help.
How do I know which funds will produce the highest returns?
You don’t, you can’t, and you won’t, so just forget about it because past performance doesn’t predict future results. The day-to-day ups and downs of the market receive the media attention, but the daily, quarterly, or even yearly returns are largely irrelevant in constructing an individual’s portfolio whose objectives are long-range. What you want to look for are funds that perform well over the long run within their particular sector, as compared to the appropriate benchmark indices. Various areas of the economy are always moving up and down and sideways, and so far no one has ever been able to know ahead of time what the pattern will be. Asset allocation, I’ll say again, may be the key to long-term success in building a financially secure future. Not panicking helps too!
What makes an SRI fund different?
If a prospective company is a fit according to a fund’s stated objectives, research is performed to determine whether or not it’s a good idea to buy stock at the current offering price. It boils down to the question “Within the guidelines of the stated objectives of the fund, will this purchase help to achieve the highest possible return for the fund’s shareholders?”
The three core socially responsible investing strategies are screening, shareholder advocacy, and community investing. Screening means a fund will include or exclude companies based upon criteria such as alcohol, tobacco, animal testing, and human rights, among others. These screens can be positive (e.g., including companies that treat employees well) or negative (e.g., excluding companies who do business with disturbed musicians).
Keep in mind that, as with all mutual funds, SRI funds have no guarantees of future return.
In any case, you’d better take this lad’s offering of raisins!
If you use electricity, drive a car, and participate in many other activities of daily living, in a very true sense you are already investing in the companies that allow and encourage your consumption. In other words, you are part of the “market” whether or not you actually own stocks or mutual funds. Socially responsible investing can be a way to make your dollars work toward something in which you believe, and support those companies you believe have a vision in line with your own.
Resources and suggested reading
1. “The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments and Enhance Philanthropic Missions.” Social Investment Forum Foundation’s resource guide for foundations to manage risk and leverage their investment assets more fully with their core philanthropic purpose, while creating lasting value. http://tinyurl.com/35t49h
2. “10 best” list of companies. Corporate Responsibility Officer magazine rates the citizenship disclosures, policies and performance of large-cap, public companies in the following industries: Auto & Vehicles, Paper, Technology Hardware, Technology Software, Transport, and Travel & Lodging industries, Chemical, Energy, Financial, Media and Utilities industries. http://www.thecro.com/node/580
3. Social Science Research Network. http://www.ssrn.com/
4. United Nations’ “The Principles for Responsible Investment.” An investor initiative in partnership with UNEP Finance Initiative and the UN Global Compact. http://www.unpri.org/
5. The Social Investment Forum; national membership association dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing. http://www.socialinvest.org/
6. Social Investment Forum’s 2005 biennial report. http://tinyurl.com/258794
7. Sristudies.org, a resource for quantitative aspects of socially responsible investing. Includes an annotated bibliography of studies of socially responsible investing. A project of the Moskowitz Research Program, which is affiliated with the Center for Responsible Business at the Haas School of Business, University of California, Berkeley.
8. Socially Responsible Mutual Fund Charts of Financial Performance. http://www.socialinvest.org/resources/mfpc/
9. SocialFunds.com, an advertising-driven website with information on SRI mutual funds, community investments, corporate research, shareowner actions, and daily social investment news.
10. “Handbook on Responsible Investment Across Asset Classes.” For asset allocation junkies, individuals and institutional investors the Boston College Center for Corporate Citizenship created this work. http://tinyurl.com/2ffqbu
Footnotes
1. The Maturing of Socially Responsible Investment: A Review of the Developing Link with Corporate Social Responsibility by Russell Sparkes and Christopher J. Cowton. Journal of Business Ethics, Volume 52, Number 1 / June, 2004.
2. SriStudies.org
3. International Evidence on Ethical Mutual Fund Performance and Investment Style, paper by Rob Bauer, Kees Koedijk, Rogér Otten. Limburg Institute of Financial Economics, November 2002. (socialinvest.org/resources/research)
4. Foundations align investments with their charitable goals by Charles Piller, Los Angeles Times, December 29, 2007. Section C, p 1.
5. Ibid.
6. 2005 Report on Socially Responsible Investing Trends in the United States. Social Investment Forum. (www.socialinvest.org)
7. Socially Responsible Investing Facts. Social Investment Forum. www.socialinvest.org
8. PRI Report On Progress 2007. PRI (Principles for Responsible Investment), United Nations. (www.unpri.org)
Image credits
Sun-Maid/George Bush composite image
• First Sun-Maid packaging to feature a likeness of Lorraine Collett as the “Sun-Maid Girl,” 1916. Designer unknown, incorporates painting by Fanny Scafford. Public domain in the United States.
• Photograph of Bush speaking. Brazil, November 6, 2005. Agência Brasil, a public Brazilian news agency, produced photograph. Published under the Creative Commons License Attribution 2.5 Brazil.
Fox/Morrison composite image
• Foxes by Franz Marc, 1913. The Yorck Project: 10.000 Meisterwerke der Malerei. DVD-ROM, 2002. ISBN 3936122202. Distributed by DIRECTMEDIA Publishing GmbH. Public Domain.
• Jim Morrison portrait, 2007, by Amadeu.taradell. Released by author into public domain.
Ferris Wheel/Superman composite image
• The first Ferris wheel from the 1893 World Columbian Exposition in Chicago. The New York Times photo archive. Public Domain.
• Screenshot of 1941 cartoon Superman. Fleischer Studios. This work is in the public domain because it was published in the United States between 1923 and 1963 with a copyright notice, and its copyright was not renewed.
Musician holding Valentine’s Day raisins composite image
• Photo of musician Jeff Hawley, 2007. Manager, Marketing Content Pro Audio and Combo Division, Yamaha Corporation of America. Courtesy of Mr. Hawley.
• Photo, August 3, 2005 by Mazbln. Halberstadt, Klosterkirche St. Burchardi, Ort des John-Cage-Projektes “As slow as possible.” Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.2 or any later version published by the Free Software Foundation.
• Original painting of Lorraine Collett by Fanny Scafford, 1915, later used on Sun-Maid raisin packaging. Public domain in the United States.
This column is meant to provide general information, and should not be construed as providing investment, legal, or tax advice. There is no guarantee as to the accuracy or completeness of the information in this article. There are no guarantees of future return for any fund, nor an endorsement of any investment product. Mutual funds are sold by prospectus only. For complete information on mutual funds including sales charges and expenses, call your financial professional for a prospectus. Please read the prospectus carefully before investing. Links are provided herein as a courtesy, and no guarantees are made as to the accuracy of the content on the referenced websites.
Sí, Money! - Vol. 2, No. 1 February 2008 - http://simoney.us
Zachary
Socially Responsible Investing for Idiots
Sí, Money! (http://simoney.us)
By Michael Grodsky
If I have to be an idiot, at the least I’m a green idiot. I believe in clean air, corporate responsibility, community activism, licorice, pizza and Thai food. And healthy living, freedom, and of course freedom raisins.
Shiny happy raisins
I love trees, sky, and ah, the OXYGEN! But I’m worried about the dismal state of health care, education funding, the ozone hole, the Medicare donut hole, and your little dog too! Did you know the North Pole is melting? That really scares me. Plus I need to cut down on my Chunky Monkey intake.
In everything I do, in every move I make, it seems that I’m part of the worldwide web of production and consumption. So I pertly place my recyclables in the blue bin, our family uses reusable grocery bags, and I vote. What more can a light-switch thumping, gasoline-pumping 21st century fox do?
C’mon, baby, light my SRI fire…
It was only a couple of years ago a friend remarked to me that real estate was the only investment that made any sense, as if his seat on the Ferris Wheel of investments, propelled by an invincible source, would forever be going up, up, UP! Instead, what happened was “up, up and away.”
The first Ferris wheel, from 1893 World Columbian Exposition in Chicago
The desire for a sure thing is hard to resist. Albert Einstein, succumbing to pressure to support the idea of a static universe, in his 1917 paper added an adjustment number called the “cosmological constant” to his equation for general relativity. In 1931 he publicly renounced this static cosmology and endorsed the Big Bang expanding universe model, ditching the cosmological constant and returning to his original equation. He later called his bowing to peer pressure the greatest blunder of his entire life. You can read about the adventure in author Simon Singh’s “Big Bang - The Origin of the Universe.”
Many philanthropic foundations have long drawn a wall between their socially conscious mission statements that drive grant making, and the investment holdings of their endowment. There is a truism that investing for social benefit results in lower returns. But just as scientific peer consensus eventually embraced the Big Bang theory, so has the thinking of philanthropic foundations changed. The reasons are twofold: A recognition that corporate responsibility and societal concerns are valid parts of investment decisions, (1) and a growing number of academic studies have demonstrated that socially responsible investment (SRI) mutual funds perform competitively with non-SRI funds over time. (2)
For example, according to University of Maastricht and Erasmus University Rotterdam economists in their prize-winning paper, “we find little evidence of significant differences in risk-adjusted returns between ethical and conventional funds for the 1990-2001 period.” (3)
Foundation investment choices seem to be increasingly guided by effect upon society as a whole, not just financial gain, according to a recent Los Angeles Times article. (4) Fresh thinking in the nation’s largest foundations may be driving the impetus ever faster: The $8.5-billion William and Flora Hewlett Foundation (Menlo Park), the $6.1-billion John D. and Catherine T. MacArthur Foundation (Chicago), the $7.8-billion W.K. Kellogg Foundation (Battle Creek, Michigan) all have made recent changes to improve the social effect of their investments. (5)
SRI assets are also growing faster than assets as a whole: according to the non-profit Social Investment Forum’s 2005 biennial report, SRI assets rose more than 258 percent from $639 billion in 1995 to $2.29 trillion in 2005. Over those ten years, SRI assets grew four percent faster than the entire universe of managed assets in the United States. (6)
Some have already been on the SRI track: the nation’s second largest foundation, the Ford Foundation, along with others such as the F.B. Herron Foundation, the Jessie Smith Noyes Foundation and the Nathan Cumings Foundation, have for a long time aligned their charitable and investment practices.
What is Socially Responsible Investing?
Socially Responsible Investing (SRI) is a broad-based approach to investing that now encompasses an estimated $2.3 trillion out of $24 trillion in the U.S. investment marketplace today. (7) The release of the United Nations Principles for Responsible Investment–subscribed to by some of the world’s largest institutional investors, asset managers, and related organizations representing over $9 trillion in assets as of mid- 2007–underscores the widespread acceptance of the principle that investors cannot, in the long run, achieve their goals by investing in corporations that externalize their costs onto society. (8)
How do I research SRI funds?
A good place to start is the Social Investment Forum (http://www.socialinvest.org). Look at the resource list at the end of this article too.
How do I start investing?
If you participate in an employer-sponsored retirement plan, there may be SRI funds already available to you. If you manage your own IRA or other plan, look into what’s available. But don’t just go adding a fund without considering the entire makeup of your portfolio.
The key to earning decent long-term returns and limiting overall risk is to have a proper asset allocation, meaning you don’t have all your eggs in one basket. For do-it-yourself-ers, check out the government’s website about asset allocation (http://tinyurl.com/2825hw), or purchase “All About Asset Allocation” by Richard A. Ferri ($13.57 at Amazon), a great introduction to the topic. Your personal financial advisor or company where you have your investment or retirement accounts can help.
How do I know which funds will produce the highest returns?
You don’t, you can’t, and you won’t, so just forget about it because past performance doesn’t predict future results. The day-to-day ups and downs of the market receive the media attention, but the daily, quarterly, or even yearly returns are largely irrelevant in constructing an individual’s portfolio whose objectives are long-range. What you want to look for are funds that perform well over the long run within their particular sector, as compared to the appropriate benchmark indices. Various areas of the economy are always moving up and down and sideways, and so far no one has ever been able to know ahead of time what the pattern will be. Asset allocation, I’ll say again, may be the key to long-term success in building a financially secure future. Not panicking helps too!
What makes an SRI fund different?
If a prospective company is a fit according to a fund’s stated objectives, research is performed to determine whether or not it’s a good idea to buy stock at the current offering price. It boils down to the question “Within the guidelines of the stated objectives of the fund, will this purchase help to achieve the highest possible return for the fund’s shareholders?”
The three core socially responsible investing strategies are screening, shareholder advocacy, and community investing. Screening means a fund will include or exclude companies based upon criteria such as alcohol, tobacco, animal testing, and human rights, among others. These screens can be positive (e.g., including companies that treat employees well) or negative (e.g., excluding companies who do business with disturbed musicians).
Keep in mind that, as with all mutual funds, SRI funds have no guarantees of future return.
In any case, you’d better take this lad’s offering of raisins!
If you use electricity, drive a car, and participate in many other activities of daily living, in a very true sense you are already investing in the companies that allow and encourage your consumption. In other words, you are part of the “market” whether or not you actually own stocks or mutual funds. Socially responsible investing can be a way to make your dollars work toward something in which you believe, and support those companies you believe have a vision in line with your own.
Resources and suggested reading
1. “The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments and Enhance Philanthropic Missions.” Social Investment Forum Foundation’s resource guide for foundations to manage risk and leverage their investment assets more fully with their core philanthropic purpose, while creating lasting value. http://tinyurl.com/35t49h
2. “10 best” list of companies. Corporate Responsibility Officer magazine rates the citizenship disclosures, policies and performance of large-cap, public companies in the following industries: Auto & Vehicles, Paper, Technology Hardware, Technology Software, Transport, and Travel & Lodging industries, Chemical, Energy, Financial, Media and Utilities industries. http://www.thecro.com/node/580
3. Social Science Research Network. http://www.ssrn.com/
4. United Nations’ “The Principles for Responsible Investment.” An investor initiative in partnership with UNEP Finance Initiative and the UN Global Compact. http://www.unpri.org/
5. The Social Investment Forum; national membership association dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing. http://www.socialinvest.org/
6. Social Investment Forum’s 2005 biennial report. http://tinyurl.com/258794
7. Sristudies.org, a resource for quantitative aspects of socially responsible investing. Includes an annotated bibliography of studies of socially responsible investing. A project of the Moskowitz Research Program, which is affiliated with the Center for Responsible Business at the Haas School of Business, University of California, Berkeley.
8. Socially Responsible Mutual Fund Charts of Financial Performance. http://www.socialinvest.org/resources/mfpc/
9. SocialFunds.com, an advertising-driven website with information on SRI mutual funds, community investments, corporate research, shareowner actions, and daily social investment news.
10. “Handbook on Responsible Investment Across Asset Classes.” For asset allocation junkies, individuals and institutional investors the Boston College Center for Corporate Citizenship created this work. http://tinyurl.com/2ffqbu
Footnotes
1. The Maturing of Socially Responsible Investment: A Review of the Developing Link with Corporate Social Responsibility by Russell Sparkes and Christopher J. Cowton. Journal of Business Ethics, Volume 52, Number 1 / June, 2004.
2. SriStudies.org
3. International Evidence on Ethical Mutual Fund Performance and Investment Style, paper by Rob Bauer, Kees Koedijk, Rogér Otten. Limburg Institute of Financial Economics, November 2002. (socialinvest.org/resources/research)
4. Foundations align investments with their charitable goals by Charles Piller, Los Angeles Times, December 29, 2007. Section C, p 1.
5. Ibid.
6. 2005 Report on Socially Responsible Investing Trends in the United States. Social Investment Forum. (www.socialinvest.org)
7. Socially Responsible Investing Facts. Social Investment Forum. www.socialinvest.org
8. PRI Report On Progress 2007. PRI (Principles for Responsible Investment), United Nations. (www.unpri.org)
Image credits
Sun-Maid/George Bush composite image
• First Sun-Maid packaging to feature a likeness of Lorraine Collett as the “Sun-Maid Girl,” 1916. Designer unknown, incorporates painting by Fanny Scafford. Public domain in the United States.
• Photograph of Bush speaking. Brazil, November 6, 2005. Agência Brasil, a public Brazilian news agency, produced photograph. Published under the Creative Commons License Attribution 2.5 Brazil.
Fox/Morrison composite image
• Foxes by Franz Marc, 1913. The Yorck Project: 10.000 Meisterwerke der Malerei. DVD-ROM, 2002. ISBN 3936122202. Distributed by DIRECTMEDIA Publishing GmbH. Public Domain.
• Jim Morrison portrait, 2007, by Amadeu.taradell. Released by author into public domain.
Ferris Wheel/Superman composite image
• The first Ferris wheel from the 1893 World Columbian Exposition in Chicago. The New York Times photo archive. Public Domain.
• Screenshot of 1941 cartoon Superman. Fleischer Studios. This work is in the public domain because it was published in the United States between 1923 and 1963 with a copyright notice, and its copyright was not renewed.
Musician holding Valentine’s Day raisins composite image
• Photo of musician Jeff Hawley, 2007. Manager, Marketing Content Pro Audio and Combo Division, Yamaha Corporation of America. Courtesy of Mr. Hawley.
• Photo, August 3, 2005 by Mazbln. Halberstadt, Klosterkirche St. Burchardi, Ort des John-Cage-Projektes “As slow as possible.” Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.2 or any later version published by the Free Software Foundation.
• Original painting of Lorraine Collett by Fanny Scafford, 1915, later used on Sun-Maid raisin packaging. Public domain in the United States.
This column is meant to provide general information, and should not be construed as providing investment, legal, or tax advice. There is no guarantee as to the accuracy or completeness of the information in this article. There are no guarantees of future return for any fund, nor an endorsement of any investment product. Mutual funds are sold by prospectus only. For complete information on mutual funds including sales charges and expenses, call your financial professional for a prospectus. Please read the prospectus carefully before investing. Links are provided herein as a courtesy, and no guarantees are made as to the accuracy of the content on the referenced websites.
Sí, Money! - Vol. 2, No. 1 February 2008 - http://simoney.us
Zachary
Apr
28
Is there any age too young to start investing?
Filed Under investing | Comments Off
Alex the Geek asked:
I am 16 and am investing a few thousand dollars in the stock market. I invest wisely, but in today’s market sometimes loose some money. In your opinion, should I still be letting my parents do all of the investing or should I continue doing it myself with the approval of my parents? You won’t offend me with any answer you give, so be honest. Thanks!
Claude
I am 16 and am investing a few thousand dollars in the stock market. I invest wisely, but in today’s market sometimes loose some money. In your opinion, should I still be letting my parents do all of the investing or should I continue doing it myself with the approval of my parents? You won’t offend me with any answer you give, so be honest. Thanks!
Claude
Apr
25
investing?
Filed Under investing | Comments Off
ra3000gt asked:
I just graduated from college, I have about $3,000 that I could use to invest. I’ve never done any investing. Can anybody please tell how I could invest so that I can generate a nice amount of money without taking too much risk? which company should I use? are mutual funds the best way to start? thanks
Kim
I just graduated from college, I have about $3,000 that I could use to invest. I’ve never done any investing. Can anybody please tell how I could invest so that I can generate a nice amount of money without taking too much risk? which company should I use? are mutual funds the best way to start? thanks
Kim
Apr
22
All ways heard that investing or putting in swiss bank all ways safe and give more returns.How true it is?
Filed Under investing | Comments Off
NoOffence! asked:
All ways heard that investing or putting in swiss bank all ways safe and give more returns.How true it is and why?
Joel
All ways heard that investing or putting in swiss bank all ways safe and give more returns.How true it is and why?
Joel
Apr
20
Tax-efficient Investing: a Wise Choice
Filed Under investing | Comments Off
David Chazin asked:
Tax-Efficient Investing: A Wise Choice
By David N. Chazin
In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.
Taxes can take a chunk out of your investment returns; yet, many investors don’t give much thought to taxes when they make investment decisions. While investment decisions shouldn’t be based entirely on tax considerations, tax-efficient investing may make a significant difference in your net gain. Employing some of the following strategies could help you retain more of your potential investment earnings and lessen your tax obligation.
Invest in Stocks for the Long Term
Following a buy-and-hold strategy for your stock investments may save on taxes in the long run, as well as potentially increasing your net worth. If you trade your stock holdings frequently even if it’s only once a year you may end up owing estimated taxes and a significant capital gains tax on your profits.
Capital gains are taxed at 15% on investments you hold longer than one year (5% for gains that would otherwise be taxed in the 10% or 15% marginal federal income tax bracket). Gains on investments you’ve owned one year or less are taxed at your regular federal income-tax rate, which may be as high as 35% for 2005. So, even if you reinvest your sales profits, taxes will reduce the amount you’re reinvesting, effectively diminishing the size of your portfolio and its overall potential return.
Tax-Exempt Investments
Tax-exempt investments, such as municipal bonds, produce income that is generally exempt from federal - and often state and local income tax. If you’re seeking income rather than growth, municipal bonds may be a good choice. This is especially true for investors in higher tax brackets. Income from municipal bonds may be subject to the alternative minimum tax.
To determine whether you would be better off buying a taxable or a tax-exempt investment, you need to calculate what a taxable investment would yield on an after-tax basis and compare that with the return on a tax-exempt investment. To do this, subtract your marginal tax rate from 100% and multiply this percentage by the rate of return the taxable investment is earning. That will give you your after-tax yield. Compare this with the yield on the tax-exempt investment to find out which is higher.
For example, if you are in the 30% marginal tax bracket, a taxable investment return of 6% equates to an after-tax return of 4.2% (100% – 30% = 70%; 70% × 6% = 4.2%). Thus, a tax-exempt investment yielding higher than 4.2% will give you a better yield after taxes are considered.
Sell a Loser To Offset a Capital Gain
Capital losses offset capital gains dollar for dollar and up to $3,000 of ordinary income a year. If you will have capital gains to report on your income-tax return, consider selling a losing investment and applying the loss to offset an equivalent capital gain.
Mutual Funds with Low Turnover Rates
A mutual fund’s turnover rate measures the extent to which the fund sells securities and replaces them with new ones: the higher the turnover rate, the more frequently the fund’s managers are trading the fund’s holdings. Turnover rate is important to you as an investor because, when the fund sells securities, a capital gain or loss generally occurs for tax purposes. A portion of any capital gains realized by the fund is taxable to you, even if no distribution occurs or if your distribution is reinvested in additional fund shares. A low turnover rate indicates that capital gains generated by sales of appreciated securities should be kept to a minimum, allowing you to wait until you sell fund shares to take potential profits.
Tax-Deferred Retirement Plan
Don’t neglect your retirement plan as a vehicle for tax-deferred investing. Participating in an employer’s 401(k) or 403(b) plan (or a Keogh plan, if you’re self-employed) reduces your tax obligation, since taxes on your contributions and earnings generally are deferred until you withdraw funds from the plan, typically at retirement. Distributions may be subject to income taxes and if made prior to the age of 59 ½, are subject to an additional federal 10% penalty.
Individual Retirement Accounts (IRAs) are another option to consider if you are eligible. Your contributions to a regular IRA may be tax deductible. And, although contributions to a Roth IRA are not deductible, account earnings are tax deferred and can ultimately be withdrawn from the Roth IRA income tax free, provided certain conditions are met.
Hanging onto as much of your hard-earned money as possible is the goal of tax-advantaged investing. Your financial advisor can help you invest with this goal in mind.
David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.
Mutual funds are offered by sprospectus. An investor should carefully consider the investment objectives, risks, charges and expenses of an investment company before investing. To obtain a prospectus that contains this and other information call or ask your financial representative for a free prospectus. Read it carefully before you invest or send money. The investment return and principal value of an investment will fluctuate with changes in market conditions so that an investor’s shares, when redeemed may be worth more or less than the original amount invested.
David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.
Miguel
Tax-Efficient Investing: A Wise Choice
By David N. Chazin
In conjunction with Sagemark Consulting, a division of Lincoln Financial Advisors, a registered investment advisor. Mr. Chazin is a regular contributor to PlannerConnect.
Taxes can take a chunk out of your investment returns; yet, many investors don’t give much thought to taxes when they make investment decisions. While investment decisions shouldn’t be based entirely on tax considerations, tax-efficient investing may make a significant difference in your net gain. Employing some of the following strategies could help you retain more of your potential investment earnings and lessen your tax obligation.
Invest in Stocks for the Long Term
Following a buy-and-hold strategy for your stock investments may save on taxes in the long run, as well as potentially increasing your net worth. If you trade your stock holdings frequently even if it’s only once a year you may end up owing estimated taxes and a significant capital gains tax on your profits.
Capital gains are taxed at 15% on investments you hold longer than one year (5% for gains that would otherwise be taxed in the 10% or 15% marginal federal income tax bracket). Gains on investments you’ve owned one year or less are taxed at your regular federal income-tax rate, which may be as high as 35% for 2005. So, even if you reinvest your sales profits, taxes will reduce the amount you’re reinvesting, effectively diminishing the size of your portfolio and its overall potential return.
Tax-Exempt Investments
Tax-exempt investments, such as municipal bonds, produce income that is generally exempt from federal - and often state and local income tax. If you’re seeking income rather than growth, municipal bonds may be a good choice. This is especially true for investors in higher tax brackets. Income from municipal bonds may be subject to the alternative minimum tax.
To determine whether you would be better off buying a taxable or a tax-exempt investment, you need to calculate what a taxable investment would yield on an after-tax basis and compare that with the return on a tax-exempt investment. To do this, subtract your marginal tax rate from 100% and multiply this percentage by the rate of return the taxable investment is earning. That will give you your after-tax yield. Compare this with the yield on the tax-exempt investment to find out which is higher.
For example, if you are in the 30% marginal tax bracket, a taxable investment return of 6% equates to an after-tax return of 4.2% (100% – 30% = 70%; 70% × 6% = 4.2%). Thus, a tax-exempt investment yielding higher than 4.2% will give you a better yield after taxes are considered.
Sell a Loser To Offset a Capital Gain
Capital losses offset capital gains dollar for dollar and up to $3,000 of ordinary income a year. If you will have capital gains to report on your income-tax return, consider selling a losing investment and applying the loss to offset an equivalent capital gain.
Mutual Funds with Low Turnover Rates
A mutual fund’s turnover rate measures the extent to which the fund sells securities and replaces them with new ones: the higher the turnover rate, the more frequently the fund’s managers are trading the fund’s holdings. Turnover rate is important to you as an investor because, when the fund sells securities, a capital gain or loss generally occurs for tax purposes. A portion of any capital gains realized by the fund is taxable to you, even if no distribution occurs or if your distribution is reinvested in additional fund shares. A low turnover rate indicates that capital gains generated by sales of appreciated securities should be kept to a minimum, allowing you to wait until you sell fund shares to take potential profits.
Tax-Deferred Retirement Plan
Don’t neglect your retirement plan as a vehicle for tax-deferred investing. Participating in an employer’s 401(k) or 403(b) plan (or a Keogh plan, if you’re self-employed) reduces your tax obligation, since taxes on your contributions and earnings generally are deferred until you withdraw funds from the plan, typically at retirement. Distributions may be subject to income taxes and if made prior to the age of 59 ½, are subject to an additional federal 10% penalty.
Individual Retirement Accounts (IRAs) are another option to consider if you are eligible. Your contributions to a regular IRA may be tax deductible. And, although contributions to a Roth IRA are not deductible, account earnings are tax deferred and can ultimately be withdrawn from the Roth IRA income tax free, provided certain conditions are met.
Hanging onto as much of your hard-earned money as possible is the goal of tax-advantaged investing. Your financial advisor can help you invest with this goal in mind.
David N. Chazin is part of a network of qualified financial planners affiliated with PlannerConnect. You can reach him at David.Chazin@LFG.com, or to connect with a financial planner in your area please call (800) 318-7848, or visit the PlannerConnect website.
Mutual funds are offered by sprospectus. An investor should carefully consider the investment objectives, risks, charges and expenses of an investment company before investing. To obtain a prospectus that contains this and other information call or ask your financial representative for a free prospectus. Read it carefully before you invest or send money. The investment return and principal value of an investment will fluctuate with changes in market conditions so that an investor’s shares, when redeemed may be worth more or less than the original amount invested.
David N. Chazin, is a registered representative of Lincoln Financial Advisors, a broker/dealer, and offers investment advisory service through Sagemark Consulting, a division of Lincoln Financial Advisors Corp., a registered investment advisor,3000 Executive Parkway, Suite 400, San Ramon, CA 94583, (925) 275-0300. Insurance offered through Lincoln affiliates and other fine companies. This information should not be construed as legal or tax advice. You may want to consult a tax advisor regarding this information as it relates to your personal circumstances.
Miguel
Apr
19
Where can I go to learn more about investing?
Filed Under investing | Comments Off
steph_pete1329 asked:
I am looking to either invest or open my own company.
But I would like to educate myself before I make any decision.
Where can I go to find some information or to educate myself a little more on investing before I do anything?
Herbert
I am looking to either invest or open my own company.
But I would like to educate myself before I make any decision.
Where can I go to find some information or to educate myself a little more on investing before I do anything?
Herbert
Apr
19
Investing in Property and Looking for an Investment Loan
Filed Under investing | Comments Off
avi asked:
Why invest and why take out an investment loan?
People’s needs for investment are as varied as the investment vehicles themselves. Some want to own their home outright, pay the kids’ university fees, or take world trips; while others want to start their own business or retire on a comfortable income.
The reality for most of us is that we won’t be able to afford these things on our salary alone (unless you’re fortunate enough to be the CEO of a major corporation). The key to successful investment is to leverage, that is, to use an investment loan to improve your capacity and increase your return.
Why invest in property?
Investing in property is the safest way to invest, but we also believe in a diversified portfolio to minimise risk. Similarly, Australians have trusted investment property as their favoured investment vehicle for generations – and with good reason.
We recognise the cycles, the incredible advantage that appropriate leverage (making capital gains from borrowed funds) offers, the benefits of rent return and taxation relief in servicing those borrowings, and the significant growth achievable over time. It is not unusual for ordinary investors to accumulate four or more properties over 10 years – and the financial flexibility and cash flow outcomes can be exceptional, giving you piece of mind.
Property allows you to leverage. With only $20 000 cash invested (plus around $10 000 upfront costs) it is possible to invest in a $200,000 property, making your earning potential greater.
Can you afford to invest in property?
The question should really be, “can you afford NOT to invest”, whether it be in investment property or some other form of investment? While everyone should be investing to give them more options in life, property investment may not be suited to everyone. Most people on a standard wage can service an investment loan. After all, the investment loan interest is first met by any rental income you generate. As a general rule there will only be a small shortfall on the interest on your investment loan. Traditionally the investment loan shortfall, as well as other costs relating to your investment property would be met by your personal income. Many investors however include a capitalising line of credit in their investment loan package so that they can draw on this to meet any shortfall costs as opposed to paying same from their personal income. Instead, they use as much of their personal income as possible, not to pay any shortfall interest on the investment loan but to make additional repayments to their home loan. This way their home loan is paid off much more quickly.
With your investment loan you should also remember that negative gearing does deliver some relief to servicing your investment loan on the way through. While most investors will wait until the end of the financial year to claim their tax deductible shortfall you can in effect claim the investment loan shortfall on a monthly basis. Check out the ATO website on deductibility of interest on investment loans.
What history can tell you about property
History shows us that all property whether it be investment or owner occupied doubles in value every 7 to 12 years. Each property market is cyclic, that is, it goes through times of fast growth followed by little or no growth. When one market eg Sydney is in strong growth, other markets eg Brisbane will be in a little or no growth phase. The markets are referred to as being counter cyclic – when one is doing well, another is doing not so well.
This means for example that when the Sydney’s growth slows, Melbourne’s picks up followed by Brisbane. This is the reason we emphasise the importance of investment property as a mid to long term investment. The key however is to identify the markets with the highest probability of short to medium growth and lowest probability of downside risk. This enables you to build equity faster and therefore add to your investment property portfolio.
It also means that there are always new opportunities for investment property as there are always markets somewhere which are experiencing their growth phase. Choosing investment properties in growth markets assists in developing well-balanced, diversified portfolios.
Property in the future
In the past all property was good investment property, and a lot of people did very well out of it. While those days are gone, there are still exceptional opportunities for investors who understand the current market influences such how our population is changing, how family size is changing, how types of employment are changing, and how the economy is changing and what influences it.
So why wait? Research property – buy with your head not your heart – be an informed purchaser and most importantly make sure your investment loan is also working for you.
Reginald
Why invest and why take out an investment loan?
People’s needs for investment are as varied as the investment vehicles themselves. Some want to own their home outright, pay the kids’ university fees, or take world trips; while others want to start their own business or retire on a comfortable income.
The reality for most of us is that we won’t be able to afford these things on our salary alone (unless you’re fortunate enough to be the CEO of a major corporation). The key to successful investment is to leverage, that is, to use an investment loan to improve your capacity and increase your return.
Why invest in property?
Investing in property is the safest way to invest, but we also believe in a diversified portfolio to minimise risk. Similarly, Australians have trusted investment property as their favoured investment vehicle for generations – and with good reason.
We recognise the cycles, the incredible advantage that appropriate leverage (making capital gains from borrowed funds) offers, the benefits of rent return and taxation relief in servicing those borrowings, and the significant growth achievable over time. It is not unusual for ordinary investors to accumulate four or more properties over 10 years – and the financial flexibility and cash flow outcomes can be exceptional, giving you piece of mind.
Property allows you to leverage. With only $20 000 cash invested (plus around $10 000 upfront costs) it is possible to invest in a $200,000 property, making your earning potential greater.
Can you afford to invest in property?
The question should really be, “can you afford NOT to invest”, whether it be in investment property or some other form of investment? While everyone should be investing to give them more options in life, property investment may not be suited to everyone. Most people on a standard wage can service an investment loan. After all, the investment loan interest is first met by any rental income you generate. As a general rule there will only be a small shortfall on the interest on your investment loan. Traditionally the investment loan shortfall, as well as other costs relating to your investment property would be met by your personal income. Many investors however include a capitalising line of credit in their investment loan package so that they can draw on this to meet any shortfall costs as opposed to paying same from their personal income. Instead, they use as much of their personal income as possible, not to pay any shortfall interest on the investment loan but to make additional repayments to their home loan. This way their home loan is paid off much more quickly.
With your investment loan you should also remember that negative gearing does deliver some relief to servicing your investment loan on the way through. While most investors will wait until the end of the financial year to claim their tax deductible shortfall you can in effect claim the investment loan shortfall on a monthly basis. Check out the ATO website on deductibility of interest on investment loans.
What history can tell you about property
History shows us that all property whether it be investment or owner occupied doubles in value every 7 to 12 years. Each property market is cyclic, that is, it goes through times of fast growth followed by little or no growth. When one market eg Sydney is in strong growth, other markets eg Brisbane will be in a little or no growth phase. The markets are referred to as being counter cyclic – when one is doing well, another is doing not so well.
This means for example that when the Sydney’s growth slows, Melbourne’s picks up followed by Brisbane. This is the reason we emphasise the importance of investment property as a mid to long term investment. The key however is to identify the markets with the highest probability of short to medium growth and lowest probability of downside risk. This enables you to build equity faster and therefore add to your investment property portfolio.
It also means that there are always new opportunities for investment property as there are always markets somewhere which are experiencing their growth phase. Choosing investment properties in growth markets assists in developing well-balanced, diversified portfolios.
Property in the future
In the past all property was good investment property, and a lot of people did very well out of it. While those days are gone, there are still exceptional opportunities for investors who understand the current market influences such how our population is changing, how family size is changing, how types of employment are changing, and how the economy is changing and what influences it.
So why wait? Research property – buy with your head not your heart – be an informed purchaser and most importantly make sure your investment loan is also working for you.
Reginald
Apr
17
Investment Clubs: 5 Things you Must Know Before Joining an Investment Club
Filed Under investing | Comments Off
Alvin Toh asked:
Investment clubs are a great way to learn how to invest in stock or real estate. They are becoming increasingly popular. It is wise, however, to follow some simple guidelines before joining an investment club to be sure that you know what you’re getting into.
1 Local vs. online investment clubs
If you enjoy socializing or face-to-face interactions, then joining a local investment club may be the best option for you. Members typically meet once a month. Local investment clubs often invite investing professionals or experts to speak at meetings. These talks are excellent opportunity for members to learn from others’ investing experience and to ask questions.
You can easily find local investment clubs through word of mouth. Ask colleagues, neighbors, friends and relatives for recommendation. Chances are they may belong to a local club or know of someone who is a member of a local club.
Online investment clubs offer convenience. They usually have virtual chat rooms or forums where people can post questions and answers. If you don’t have as much time to mingle with others or attend local meetings, then you may be suited to joining an online investment club.
2 Investment capital
Determine how much you can afford to invest. Some clubs have set minimums that must be met for investments. The beauty of investment clubs is that members pool their money to invest jointly. So, you don’t need to have massive capital to begin investing.
3 Investment period
Make sure that you find out how long your money will be tied up before making any investments. Some clubs have set rules on the minimum length of time for an investment. Don’t get stuck paying a penalty that will negate any potential profits from your investment.
4 Beware of scams
Get rich quick schemes are abound, especially on the Internet. If something looks too good to be true it probably is. Most legitimate clubs don’t charge joining fees. Before joining an online investment club, check out its reviews by other members. Determine how long the club has been running and its investment performance.
5 Read the fine print
Before signing anything, read everything over thoroughly. Be sure that you understand your commitment and are comfortable with the terms and conditions of the investment club. Check for any hidden fees or penalties for early withdrawals.
Investment clubs can be an interesting and fun way to learn and invest. As long as you make wise decisions and keep a diverse portfolio you will likely be able to make some decent profits through your investment club.
Evelyn
Investment clubs are a great way to learn how to invest in stock or real estate. They are becoming increasingly popular. It is wise, however, to follow some simple guidelines before joining an investment club to be sure that you know what you’re getting into.
1 Local vs. online investment clubs
If you enjoy socializing or face-to-face interactions, then joining a local investment club may be the best option for you. Members typically meet once a month. Local investment clubs often invite investing professionals or experts to speak at meetings. These talks are excellent opportunity for members to learn from others’ investing experience and to ask questions.
You can easily find local investment clubs through word of mouth. Ask colleagues, neighbors, friends and relatives for recommendation. Chances are they may belong to a local club or know of someone who is a member of a local club.
Online investment clubs offer convenience. They usually have virtual chat rooms or forums where people can post questions and answers. If you don’t have as much time to mingle with others or attend local meetings, then you may be suited to joining an online investment club.
2 Investment capital
Determine how much you can afford to invest. Some clubs have set minimums that must be met for investments. The beauty of investment clubs is that members pool their money to invest jointly. So, you don’t need to have massive capital to begin investing.
3 Investment period
Make sure that you find out how long your money will be tied up before making any investments. Some clubs have set rules on the minimum length of time for an investment. Don’t get stuck paying a penalty that will negate any potential profits from your investment.
4 Beware of scams
Get rich quick schemes are abound, especially on the Internet. If something looks too good to be true it probably is. Most legitimate clubs don’t charge joining fees. Before joining an online investment club, check out its reviews by other members. Determine how long the club has been running and its investment performance.
5 Read the fine print
Before signing anything, read everything over thoroughly. Be sure that you understand your commitment and are comfortable with the terms and conditions of the investment club. Check for any hidden fees or penalties for early withdrawals.
Investment clubs can be an interesting and fun way to learn and invest. As long as you make wise decisions and keep a diverse portfolio you will likely be able to make some decent profits through your investment club.
Evelyn
Apr
15
What is the best way to start saving/investing?
Filed Under investing | Comments Off
Willy Wonka asked:
My wife and I are about to be through with all of our credit card and similar debt. We have a new mortgage, 2 years left on a car payment and some small student loans. We currently contribute to our companies 401K so that we can get the max match out of the company.
My wife and I are about to be through with all of our credit card and similar debt. We have a new mortgage, 2 years left on a car payment and some small student loans. We currently contribute to our companies 401K so that we can get the max match out of the company.
As of right now, we want to start with about $100/week towards our fututure. What are some of the more practical ways to start investing/saving?
I don’t know if I have the risk tollerance to jump into the stock market. Should I go with a Roth IRA? If so, should I let a company manage the funds or would I be better of doing it myself?
Thanks,
Maureen
