Which are the options for good investments? In general, one can
consider those options that provide the maximum benefits along with no
risk factors as ideal. However, it is important to note that it is
simply impossible to generalize the whole process. What works for one
may be very wrong for another. There are certain factors that one needs
to keep in mind when choosing the different investment scenarios
available. Some of these include income, age, individual goals and
targets, as well as current financial situation. Instead of going by the
book or following any hard and fast rule, it is necessary to get
financial investment help based on individual situations.
Have you
heard of the proverb, 'do not keep all your eggs in one basket'? This
holds completely true in case of good investments. Building of a diverse
financial portfolio is something wise investors always do. This should
ideally contain different classes of assets, which facilitate long-term
financial benefits and allow money to grow for an extended period.
Setting up a financial target
Everybody
invests money for long-term financial benefits. Whichever may be the
case, it is necessary to set up individual momentary investment targets
and then act in accordance. Those who are unable to set up goals on
their own can take help from financial advisors especially when one is
looking for varied investment options for getting maximum future gains.
Some of the reasons why people consider various investment opportunities
include, building of retirement funds, college fund for children or
personal qualification, or keeping out money for the rainy day.
Whichever goal one is after, it is possible to find good investments
that are appropriate and worthy.
Mutual fund investment
When
it comes to good investments, there is nothing like the mutual fund.
This is ideal for people who are looking for diverse opportunities and
want to see their money grow on a long-term basis. This function with
diverse investors money pooling coupled with diverse investment as
opportunities present themselves. Stock funds involve active seeking of
best stocks and ideal time for buying securities for maximum profits.
Bonds
Bonds
are an ideal choice in cases where a current income is the main
requirement. This offers an ideal choice for retirees who can invest in
stock and then use the money in interests for supplementing either the
pension or social security. It is even possible to go for additional
portfolio diversification using bond funds for overall financial risk
reductions.
International investments
Sometimes investing
away from home can lead to increased financial opportunities and finding
of highly profitable ventures that provide big returns. While there are
big benefits one needs to remain on the lookout for big risks as well.
This is because of the volatile financial situations overseas. Some of
the points to remember is to make good investments in stock funds
internationally and do so only when one does not require that money in
the coming 5 years at least.
Thursday 16 May 2013
Investing Abroad: Understanding Emerging Markets
For those interested in getting involved in investing, the stock
market is a logical place to start. However, the earning potential of
domestic companies isn't quite what it used to be.
As many U.S. stock prices continue yo-yoing from the recession and interest rates at an all-time low, many investors are looking to invest their money abroad in hopes of earning bigger returns. If domestic stocks aren't your cup of tea, you are looking to gain exposure in a developing region, or you are simply interested in diversifying your portfolio, then the emerging markets may be your ticket to investing success.
Many parts of the world are starting to catch up to some of the more economically developed areas, such as the United States and Europe. These countries and areas are considered markets that are emerging or on the verge of emerging (if that;s even a category) because they are poised to grow in many different sectors, including energy production, infrastructure, utilities, medical care, education, industry, finance, etc. This immense potential for growth makes emerging markets a great investment option for those investors who are willing to take a greater risk for the chance of a bigger reward by putting money behind a company in a less established country.
Stocks with Potential
If the prospect of investing in emerging markets sounds intriguing, there are a number of different investment vehicles to consider. One of the most popular is to buy stock in companies in developing areas. This option provides direct exposure to the returns and has a high potential for long-term growth if the company is successful. Companies such as Alibaba.com, Foxconn and PetroChina are some current popular picks in the emerging markets. However, investing in one of these companies -- or others -- comes with some extra risk since there is no guarantee that a company will grow and flourish in the emerging market. If you choose to take this investment route, look for companies that stand to provide a valuable resource, product, or service to a developing nation.
Diving Into Emerging Markets ETF
Another investing option in emerging markets comes in the form of an exchange traded fund (ETF). These funds are similar to mutual funds in that they are professionally managed and hold a large number of shares in several different companies, however, unlike mutual funds, they can be traded like stocks on a security exchange. An emerging market ETF is often run by a financial institution, such as Vanguard or iShare, that does a large amount of research and picks the companies with the most potential for growth. Some examples of these ETFs include: First Trust BICK Index Fund (BICK), Global X Russell Emerging Mrkts Growth ETF (EMGX), Market Vectors India Small-Cap ETF (SCIF), and Vanguard Emerging Mrkts ETF (VWO). Again, the drawback of investing in these funds is that they can be more volatile than some of their domestic counterparts.
Mutual Funds
In some cases, investors can also get involved with mutual funds that engage in emerging market investment activity. Mutual funds are slightly different from ETF's because they are only traded once a day - typically at the end of the trading day. There aren't as many mutual funds available in these markets are there are ETFs or individual stocks, but there are still some very viable and potentially profitable choices if you are interested in pursuing an emerging market mutual fund. Some of the top performers in the past year include, ING Emerging Countries Q (NACQX), Nicholas-Applegate Emerging Markets II (NAGDX), Wasatch Emerging Market Small Cap (WAEMX), and Aberdeen Emerging Markets B (GEGBX).
Investing in the BRIC
One of the most well-known and popular emerging markets for investors is the BRIC, an acronym that refers to Brazil, Russia, India, and China. These four countries make up more than 25 percent of the world's land and 40 percent of the world's population. The BRIC is a powerhouse of these markets that is expected to experience a significant amount of economic growth in the coming years, making investment opportunities in these countries plentiful, and likely well participated in, and potentially lucrative.
Whether you choose to invest in the BRIC or put your money into another growing country, such as Mexico or South Korea, there are plenty of investment opportunities in emerging markets. Just make sure that before choosing any investment, you thoroughly research the companies, options, and markets that you are considering. And remember, investing in an one of these can be risky, but sometimes big risks come with big rewards.
As many U.S. stock prices continue yo-yoing from the recession and interest rates at an all-time low, many investors are looking to invest their money abroad in hopes of earning bigger returns. If domestic stocks aren't your cup of tea, you are looking to gain exposure in a developing region, or you are simply interested in diversifying your portfolio, then the emerging markets may be your ticket to investing success.
Many parts of the world are starting to catch up to some of the more economically developed areas, such as the United States and Europe. These countries and areas are considered markets that are emerging or on the verge of emerging (if that;s even a category) because they are poised to grow in many different sectors, including energy production, infrastructure, utilities, medical care, education, industry, finance, etc. This immense potential for growth makes emerging markets a great investment option for those investors who are willing to take a greater risk for the chance of a bigger reward by putting money behind a company in a less established country.
Stocks with Potential
If the prospect of investing in emerging markets sounds intriguing, there are a number of different investment vehicles to consider. One of the most popular is to buy stock in companies in developing areas. This option provides direct exposure to the returns and has a high potential for long-term growth if the company is successful. Companies such as Alibaba.com, Foxconn and PetroChina are some current popular picks in the emerging markets. However, investing in one of these companies -- or others -- comes with some extra risk since there is no guarantee that a company will grow and flourish in the emerging market. If you choose to take this investment route, look for companies that stand to provide a valuable resource, product, or service to a developing nation.
Diving Into Emerging Markets ETF
Another investing option in emerging markets comes in the form of an exchange traded fund (ETF). These funds are similar to mutual funds in that they are professionally managed and hold a large number of shares in several different companies, however, unlike mutual funds, they can be traded like stocks on a security exchange. An emerging market ETF is often run by a financial institution, such as Vanguard or iShare, that does a large amount of research and picks the companies with the most potential for growth. Some examples of these ETFs include: First Trust BICK Index Fund (BICK), Global X Russell Emerging Mrkts Growth ETF (EMGX), Market Vectors India Small-Cap ETF (SCIF), and Vanguard Emerging Mrkts ETF (VWO). Again, the drawback of investing in these funds is that they can be more volatile than some of their domestic counterparts.
Mutual Funds
In some cases, investors can also get involved with mutual funds that engage in emerging market investment activity. Mutual funds are slightly different from ETF's because they are only traded once a day - typically at the end of the trading day. There aren't as many mutual funds available in these markets are there are ETFs or individual stocks, but there are still some very viable and potentially profitable choices if you are interested in pursuing an emerging market mutual fund. Some of the top performers in the past year include, ING Emerging Countries Q (NACQX), Nicholas-Applegate Emerging Markets II (NAGDX), Wasatch Emerging Market Small Cap (WAEMX), and Aberdeen Emerging Markets B (GEGBX).
Investing in the BRIC
One of the most well-known and popular emerging markets for investors is the BRIC, an acronym that refers to Brazil, Russia, India, and China. These four countries make up more than 25 percent of the world's land and 40 percent of the world's population. The BRIC is a powerhouse of these markets that is expected to experience a significant amount of economic growth in the coming years, making investment opportunities in these countries plentiful, and likely well participated in, and potentially lucrative.
Whether you choose to invest in the BRIC or put your money into another growing country, such as Mexico or South Korea, there are plenty of investment opportunities in emerging markets. Just make sure that before choosing any investment, you thoroughly research the companies, options, and markets that you are considering. And remember, investing in an one of these can be risky, but sometimes big risks come with big rewards.
Mutual Funds Made Simple
Mutual funds are the average or inexperienced investor's best
friend. They are designed for every-day people who want help from
professionals in managing their investments. To get technical, they are
"open-end investment companies" that pool investors' money and manage it
for them.
Investing in mutual funds is quite simple. Tens of millions of Americans trust their money to these investor-friendly investments. Let's take a look at how investing in mutual funds works.
Jack has a $10,000 CD maturing at the bank in a joint account with his spouse. He also wants to start investing about $5000 a year in a Roth IRA. He is looking to earn more interest on his CD, and wants more investment options for his IRA than his bank offers.
Jack does not really know how to invest his money, so he asks his old friend Jim for advice because he knows that Jim is an experienced investor. Plus, Jack is thrifty and does not trust salesmen, and that includes those who charge you to invest with them.
Jim suggests mutual funds with a major no-load fund family that he does business with. Jim knows how to invest, and helps Jack with the mutual fund applications. This required two different applications. The first was to open a joint account with the $10,000 CD money. The second was to open a Roth IRA.
The $10,000 was spit evenly with half going to a high-quality bond fund, and half to a money market fund. They did this because Jack wanted safety, but also wanted to earn higher interest than he could get at the bank. Jack would not receive the interest income the funds paid in dividends, but decided to have it automatically reinvested to buy more shares, so his investment would grow.
They opened a Roth IRA and set things up so that $400 a month would automatically flow from Jack's checking account to the IRA with the mutual fund company. Half would go to a balanced fund that invested in both stocks and bonds, and half to a money market fund. Once again, all dividends (and capital gains) would automatically be reinvested to buy more shares.
Jack wanted growth, but Jim knew him very well. Jack did not know how to invest, he was cost conscious, and he avoided risk whenever possible. That's why Jim had half of Jack's money going into money market funds. These funds pay competitive interest rates in the form of dividends. If interest rates in the economy change, the rate paid by money market funds change in step. Plus, they have a great record for low risk and high safety.
For now, Jack is happy, especially since all of this cost him nothing in sales charges or fees. For example, he sent the fund company $10,000. All of his money was invested to buy shares, with no sales charges. Plus, he has $400 a month going into funds in his Roth IRA. Once again, all of the $400 is going to work to buy shares, with no sales charges or fees.
The only cost to Jack is yearly expenses. Every mutual fund takes these costs directly from fund assets. Jack wouldn't even know this if Jim hadn't told him. On the other hand, Jack's expenses were very low compared to most funds.
Investing in mutual funds is quite simple. Tens of millions of Americans trust their money to these investor-friendly investments. Let's take a look at how investing in mutual funds works.
Jack has a $10,000 CD maturing at the bank in a joint account with his spouse. He also wants to start investing about $5000 a year in a Roth IRA. He is looking to earn more interest on his CD, and wants more investment options for his IRA than his bank offers.
Jack does not really know how to invest his money, so he asks his old friend Jim for advice because he knows that Jim is an experienced investor. Plus, Jack is thrifty and does not trust salesmen, and that includes those who charge you to invest with them.
Jim suggests mutual funds with a major no-load fund family that he does business with. Jim knows how to invest, and helps Jack with the mutual fund applications. This required two different applications. The first was to open a joint account with the $10,000 CD money. The second was to open a Roth IRA.
The $10,000 was spit evenly with half going to a high-quality bond fund, and half to a money market fund. They did this because Jack wanted safety, but also wanted to earn higher interest than he could get at the bank. Jack would not receive the interest income the funds paid in dividends, but decided to have it automatically reinvested to buy more shares, so his investment would grow.
They opened a Roth IRA and set things up so that $400 a month would automatically flow from Jack's checking account to the IRA with the mutual fund company. Half would go to a balanced fund that invested in both stocks and bonds, and half to a money market fund. Once again, all dividends (and capital gains) would automatically be reinvested to buy more shares.
Jack wanted growth, but Jim knew him very well. Jack did not know how to invest, he was cost conscious, and he avoided risk whenever possible. That's why Jim had half of Jack's money going into money market funds. These funds pay competitive interest rates in the form of dividends. If interest rates in the economy change, the rate paid by money market funds change in step. Plus, they have a great record for low risk and high safety.
For now, Jack is happy, especially since all of this cost him nothing in sales charges or fees. For example, he sent the fund company $10,000. All of his money was invested to buy shares, with no sales charges. Plus, he has $400 a month going into funds in his Roth IRA. Once again, all of the $400 is going to work to buy shares, with no sales charges or fees.
The only cost to Jack is yearly expenses. Every mutual fund takes these costs directly from fund assets. Jack wouldn't even know this if Jim hadn't told him. On the other hand, Jack's expenses were very low compared to most funds.
Real Estate Investing: Notes And Trust Deeds
People in need of cash borrow from lenders signing a promissory
note and secure the loan with a deed of trust against the title of the
borrower's property. People get hold of promissory notes when they lend
money or when they buy notes.
The note is a written, signed agreement between the lender and the borrower, where in the borrower promises to repay the loan. The promissory note includes details such as the name and address of the lender and the borrower, the loan amount, the interest rates, the frequency of the repayment as well as the amount to be repaid in each installment, the tenure of the loan, prepayment penalties if any.
The borrower usually transfers his property {held in trust} to an independent third party. The third party holds the conditional title
For the lenders sake and has the power to re-convey the deed once the loan has been repaid in full as per the agreement as well as having the power to dispose the property should the borrower default on his payments. This process is termed as foreclosure; it can be judicial or non-judicial as per the desire of the lender.
Real Estate Investing In Notes and Trust Deeds;
It is rather a risky investment; therefore, investors need to find a reputable, experienced mortgage loan broker. They have to check the market value as well as the equity of the property to be used as collateral making sure the loan-to-value ratio is favorable; check the borrowers' credit records and profile to ascertain they are low risk investments. Escrowing the processes involved in granting of the loan or the procurement of the note is another important detail to be noted. Checking with the insurance company to what extent the lender is covered will be prudent. A detailed description of the property, its location, market value, pending lawsuits against the property if any, if any other lien exist against the property etc. has to be carefully researched and analyzed. Hiring good escrow agents who are licensed by the department of corporations is crucial.
Investors have to take necessary action incase the borrower defaults and foreclosure of the property is the only option left. It could be a problem if there is a senior lien on the property. Make sure that the property does not have senior lien when you procure the trust deed. If there is a senior lien, make sure your foreclosure date precedes it. Foreclosure if done judicially may take 3 to 4 months where as if done privately may be accomplished within 30 days. Many people have profited in real estate by investing in notes and trust deeds.
There are firms that sell services as well as products to help you with investing in real estates through notes and bond deeds.
The note is a written, signed agreement between the lender and the borrower, where in the borrower promises to repay the loan. The promissory note includes details such as the name and address of the lender and the borrower, the loan amount, the interest rates, the frequency of the repayment as well as the amount to be repaid in each installment, the tenure of the loan, prepayment penalties if any.
The borrower usually transfers his property {held in trust} to an independent third party. The third party holds the conditional title
For the lenders sake and has the power to re-convey the deed once the loan has been repaid in full as per the agreement as well as having the power to dispose the property should the borrower default on his payments. This process is termed as foreclosure; it can be judicial or non-judicial as per the desire of the lender.
Real Estate Investing In Notes and Trust Deeds;
It is rather a risky investment; therefore, investors need to find a reputable, experienced mortgage loan broker. They have to check the market value as well as the equity of the property to be used as collateral making sure the loan-to-value ratio is favorable; check the borrowers' credit records and profile to ascertain they are low risk investments. Escrowing the processes involved in granting of the loan or the procurement of the note is another important detail to be noted. Checking with the insurance company to what extent the lender is covered will be prudent. A detailed description of the property, its location, market value, pending lawsuits against the property if any, if any other lien exist against the property etc. has to be carefully researched and analyzed. Hiring good escrow agents who are licensed by the department of corporations is crucial.
Investors have to take necessary action incase the borrower defaults and foreclosure of the property is the only option left. It could be a problem if there is a senior lien on the property. Make sure that the property does not have senior lien when you procure the trust deed. If there is a senior lien, make sure your foreclosure date precedes it. Foreclosure if done judicially may take 3 to 4 months where as if done privately may be accomplished within 30 days. Many people have profited in real estate by investing in notes and trust deeds.
There are firms that sell services as well as products to help you with investing in real estates through notes and bond deeds.
How to Structure, Appraise and Value a Real Estate Mortgage Note
Five Key Factors that Impact Risk, Value and Income
What is a real estate mortgage note?
Legally speaking, a mortgage note is two legal documents: 1) A promissory note, and 2) An encumbrance or lien recorded against real estate. But, based on every day conversational usage, most people, lawyers excepted, think of it a one document. To be technically correct in this discussion we will deal with the two separate documents-the promissory note and the mortgage or deed of trust.
To determine the best way to structure a real estate mortgage note we must first consider our goal or our purpose. Remember, we are discussing a "financial instrument" an "investment instrument". The function of a financial investment is to generate income/cash-flow at the highest rate possible rate commensurate with the risks involved. We will assume the investing goal provides at least a market rate of income, recognizing the risks involved.
5 Key Factors Impacting the Fair Market Value of a Real Estate Mortgage Note
1. Borrower/Debtor
2. Interest Rate
3. Payments & Terms
4. Collateral Security
5. Document Language
Borrower/Debtor
Always deal with a borrower that has good credit. A person's FICO (credit score) shows how reliable they are in paying off debts-keeping their promises. Avoid buyers who object to having their credit history pulled; there is a reason they want it kept confidential. Don't take their word for their past paying history, do a credit check.
Interest Rate
The interest rate should be reasonable and fair to both parties; it should reflect the market rate for the mortgage loan with an appropriate adjustment for risk factors. Over charging can lead to hard feelings, inability to make the payments and possibly violating the usury laws of the state. Undercharging devalues the loan and renders it a poor investment.
Payments & Term
The periodic payment should be within the budget of the borrower; the payments should be monthly; the term of the loan should be less than five years, three years is better; avoid making long-term loans. A note with a 3-year term is more valuable than one with a 15-year term. The longer-term notes are discounted much more to account for the longer waiting period.
Collateral Security
Obtain a substantial down payment; keep the loan balance at or below 75% of the value of the collateral real estate. The down payment amount reflects on a borrower's financial stability. The higher the loan-to-value (LTV), the more risk there is to the investor. Use real estate as the collateral security backing-up the bower's promise to repay. Be certain to evaluate the condition and location of the property used as security. The mortgage or deed of trust documents collateralizing the promissory note should be recorded in first position; it should be a first position mortgage loan.
If you are structuring a business promissory note, its value will be much greater and it will have less risk if the real estate of the business is part of the note's collateral security. This means that companies that lease property face bigger financing discounts, unless other real estate is used as security.
Documents and Language
Preparing the mortgage loan documents yourself is high risk folly; it may seem simple and easy to do, but it is not either if it is done correctly; you may save some money on the front end, but you will give the savings back plus way more on the back end. On the internet you will find hundreds of ads and offers proclaiming "free promissory note forms", "free tips", and the answers to legal questions "free". Don't take the bait! Only an experienced promissory note specialist who really understands the legal and practical meaning of the terms and conditions can keep you safe; each state has different laws and customs. There are state laws and federal laws to be considered.
Use a recognized, experienced, trained expert to maximize your income and minimize your risks.
What is a real estate mortgage note?
Legally speaking, a mortgage note is two legal documents: 1) A promissory note, and 2) An encumbrance or lien recorded against real estate. But, based on every day conversational usage, most people, lawyers excepted, think of it a one document. To be technically correct in this discussion we will deal with the two separate documents-the promissory note and the mortgage or deed of trust.
To determine the best way to structure a real estate mortgage note we must first consider our goal or our purpose. Remember, we are discussing a "financial instrument" an "investment instrument". The function of a financial investment is to generate income/cash-flow at the highest rate possible rate commensurate with the risks involved. We will assume the investing goal provides at least a market rate of income, recognizing the risks involved.
5 Key Factors Impacting the Fair Market Value of a Real Estate Mortgage Note
1. Borrower/Debtor
2. Interest Rate
3. Payments & Terms
4. Collateral Security
5. Document Language
Borrower/Debtor
Always deal with a borrower that has good credit. A person's FICO (credit score) shows how reliable they are in paying off debts-keeping their promises. Avoid buyers who object to having their credit history pulled; there is a reason they want it kept confidential. Don't take their word for their past paying history, do a credit check.
Interest Rate
The interest rate should be reasonable and fair to both parties; it should reflect the market rate for the mortgage loan with an appropriate adjustment for risk factors. Over charging can lead to hard feelings, inability to make the payments and possibly violating the usury laws of the state. Undercharging devalues the loan and renders it a poor investment.
Payments & Term
The periodic payment should be within the budget of the borrower; the payments should be monthly; the term of the loan should be less than five years, three years is better; avoid making long-term loans. A note with a 3-year term is more valuable than one with a 15-year term. The longer-term notes are discounted much more to account for the longer waiting period.
Collateral Security
Obtain a substantial down payment; keep the loan balance at or below 75% of the value of the collateral real estate. The down payment amount reflects on a borrower's financial stability. The higher the loan-to-value (LTV), the more risk there is to the investor. Use real estate as the collateral security backing-up the bower's promise to repay. Be certain to evaluate the condition and location of the property used as security. The mortgage or deed of trust documents collateralizing the promissory note should be recorded in first position; it should be a first position mortgage loan.
If you are structuring a business promissory note, its value will be much greater and it will have less risk if the real estate of the business is part of the note's collateral security. This means that companies that lease property face bigger financing discounts, unless other real estate is used as security.
Documents and Language
Preparing the mortgage loan documents yourself is high risk folly; it may seem simple and easy to do, but it is not either if it is done correctly; you may save some money on the front end, but you will give the savings back plus way more on the back end. On the internet you will find hundreds of ads and offers proclaiming "free promissory note forms", "free tips", and the answers to legal questions "free". Don't take the bait! Only an experienced promissory note specialist who really understands the legal and practical meaning of the terms and conditions can keep you safe; each state has different laws and customs. There are state laws and federal laws to be considered.
Use a recognized, experienced, trained expert to maximize your income and minimize your risks.
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