Author: Joseph Kenny
The main objective of any investment is to make money and gain from a profit. Experienced investors usually study market trends before investing. However, inexperienced investors depend on the advice from financial advisors and brokers to guide their investments. Money always grows with time in the stock markets. A successful and profitable investment involves a lot of patience and constant monitoring of market fluctuations. In order for an investment to be profitable, it is important to adopt flexibility and diversification of funds. Listed below are some important points-to-remember:
Flexibility: Investors need to be flexible with their investments. Investment strategies involve regular analysis and reviews of the financial market. Amateur investors should seek help from financial advisors on their investment portfolio. Long-term planning and asset allocation are very important to an investment portfolio. Mutual funds, variable annuities and variable universal life insurance or VUL products provide good ground for investment flexibility. Another type of investment is Survivorship Variable Universal Life Insurance or SVUL. SVUL covers two people in one life insurance policy.
The benefit is payable after the death of the last surviving insured person. The investment portfolio should be designed to help diversify the investments. Diversification: Diversification involves making different investments to gain from higher returns. This risk-management technique of investing helps to diversify the investments in stocks, bonds and cash. It does not waive off the risk of loss totally, but it definitely creates more avenues for profit. The investor can invest in a number of different companies, foreign securities and mutual funds. Even if one company declares a loss, the investor still has the other investments to fall back on.
Diversification is a good method to counter the risk involved in the total loss of an investment.
Simple Approach: It is safe for amateur investors to follow simple guidelines for investing money. Immature investors should not invest in companies that they are not very sure about and haven’t researched. A simple approach to investment is to stake money in recognized companies that offer high returns and show a consistent growth pattern. It pays to conduct a research on the company before making an investment. Be Disciplined: Market trends fluctuate due to several reasons. An investor’s judgment should not be based on momentary instability. It is not advisable to make a change in the adopted strategy mid way. However, regular analysis and timely reviews help to keep abreast with important information of the stock market.
Invest Smartly: Investors need to be well informed and alert all the time. Cautious long-term planning is as important as being patient. Investors ought to be methodical when following an investment strategy. It is equally important to understand and monitor the economics and trend of a company. The investor should be updated regularly on business, political and stock related news to learn the political implications that may affect the company in future. Investments carry the element of risk and therefore investors are advised to investigate before investing. It helps to follow the general guidelines of investment and invest smartly.
Author: Rhiannon Williamson
Just because real estate prices seem to have hit a temporary ceiling in many countries around the world, that doesn’t mean that profits from property investments are hard to come by.
Even during a real estate market slowdown, stagnation or depression profits can be made locally and overseas. This article shows you the top ten tips that real estate investors apply to their property portfolio building strategy to ensure success from their investments.
1) Research the curve - the concept of a property market cycle existing is not myth it’s a fact and is generally accepted to be based on a price-income relationship. Check the recent historical price data for properties in the area of the country you’re considering purchasing in and try to determine the overall feel in the market for prices currently. Are prices rising, are prices falling or have they reached a peak. You need to know where the curve of the property market cycle is at in your preferred investment area.
2) Get ahead of the curve – as a basic rule of thumb, professional real estate property investors seek to buy ahead of the curve. If a market is rising they will try and target up and coming areas, areas that are close to locations that have peaked, areas close to locations experiencing redevelopment or investment. These areas will most likely become ‘the next big thing’ and those who by in before the trend will stand to make the most gains. As a market is stagnating or falling many successful investors target areas that enjoyed the best levels of growth, yields and profits very early on in the previous cycle because these areas will most likely be the first areas to become profitable as the cycle begins turning towards positive once more.
3) Know your market – who are you buying property for? Are you buying to let to young executives, purchasing for renovation to resell to a family market or purchasing jet to let real estate for short term rental to holiday makers? Think about your market before you make a purchase. Know what they look for in a property and ensure that is what you are going to be offering them
4) Think further afield – there are emerging real estate property markets around the world where countries’ economies are going from strength to strength, where a growing tourism sector is pushing up demand or where constitutional legislation has been or is about to be changed to allow for foreign freehold ownership of property for example. Look further afield than your own back yard for your next property investment and diversify that real estate portfolio for maximum success.
5) Purchase price – set yourself a budget that will realistically allow you to purchase what you’re looking for and profit from that purchase either through capital gains or rental yield.
6) Entry costs – research fees, charges and all expenses you will incur when you buy your property – they differ from country to country and sometimes even from state to state. In Turkey for example you should add on an additional 5% of the purchase price for all fees, in Spain you will need to factor in an average of 10% and in Germany fees and charges can be in excess of 20%. Know how much you will have to incur and factor this amount into your budget to avoid any nasty surprises and to ensure your investment can become profitable.
7) Capital growth potential – what factors point to the potential profitability of your real estate property investment? If you’re looking overseas at an emerging market, which economic or social indicators exist to suggest that property prices will increase? If you’re buying to let out are there any indications to suggest that demand for rental accommodation will remain strong, increase or even decline? Think about what you want to achieve from your investment and then research and find out whether your expectations are realistic.
Exit costs – if you will incur substantial capital gains taxation liability if you sell your property investment for profit, will that render the investment profitless? In Spain a foreign buyer can incur up to 35% capital gains tax, in Turkey on the other hand property sales are capital gains tax free if the underlying real estate has been owned for four or more years.
9) Profit margins – what levels of capital growth can you realistically gain on your property investment or how much rental income can you generate? Work out these facts and then work backwards towards your initial budget to work out your potential profit margins. At all times you have to keep the bigger picture in mind to ensure that your real estate investment has good potential for profit.
10) Think long term – unless you’re buying property off plan and intending to flip it for resale and profit before completion you should view real estate investment as a long term investment.
Real estate is a slow to liquidate asset, cash tied up in property is not simple to free up. Take a long term approach to your property portfolio and give your assets time to increase in value before cashing them in for profit.