Any investor who sincerely works towards making the most of the current market trend will never underestimate the importance of having an investment strategy predefined before he starts investing. Investment environment is increasingly becoming complex and encompass various kinds of marketable securities. Nevertheless, importance of a well-defined and suitable investment strategy cannot be underestimated.
An investment strategy defines how an investor should go about choosing securities to invest in. It is a basic guide for where to invest, when to invest and how much to invest. There are five important steps in an investment process which should not be neglected. They are:
1. Defining an Investment strategy/policy
2. Analyzing securities
3. Constructing a portfolio to minimize risk
4. Evaluating the performance of the portfolio, and
5. Revising the portfolio
An investor cannot define his investment strategy unless he defines his investment objective and investment surplus to his disposal. Objective of ‘making more money’ is very vague. Of course everyone wants to make more money! Objectives have to be clearly defined in terms of risk and return. Understanding the relationship between risk and return will go a long way while building a portfolio that can provide optimum returns for the amount of risk an investor can take.
A commonly neglected aspect while choosing a venue of investment is the individual tax status. It does not make sense for a tax-exempt investor to invest in government securities or other tax-exempt investment options.
The second step of analyzing securities enables the investor to distinguish between underpriced and overpriced stock. Return can be maximized by investing in stocks which are currently underpriced but have the potential to increase (remember buy low sell high). There are two approaches used for analyzing securities; Technical analysis and Fundamental analysis.
Technical analysis involves studying the trends of stock prices movements. Technical analysts claim that by studying recurring trends and patterns in price movements it is possible to predict near term price movements. This is based on the assumption that price trends and pattern repeat themselves.
On the other hand, fundamental analysts believe that intrinsic value is equal to the present value of all the cash flows that a firm expects to gain in the future. Present value is therefore computed by forecasting the timing and amount of future cash flows and discounting these by applying an appropriate discount rate. A stock is considered undervalued and worth investing in only if this intrinsic value is reasonably less than the stock’s current market price. This is based on the belief that mispriced stocks will be corrected by the market at some point of time in the future, and that underpriced stocks will appreciate and overpriced stocks will depreciate.
By: Geetika Sharma
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Filed under Investing by on Sep 14th, 2010. 
By: serge.coudert
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Filed under Renting & Real Estate by on Sep 14th, 2010.
I would like to hold an online survey to gauge which methods most Y!Answers users come across and their views on each method or which method their prefer most.
Thanks for taking the time to answer my question.
By: j_m_camilleri
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Filed under Investing by on Sep 14th, 2010.
By: itguru5354
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Filed under Other - Business & Finance by on Sep 14th, 2010.
Are you seeking a new career in investment opportunities? Or, perhaps you wish to supplement your income, but have no idea where to begin? The answer may be in real estate. Wait! Before you dismiss this idea, consider joining a real estate club. If you are already involved in this successful area, you are already one step ahead. But, if you are tinkering with the idea of how to start a real estate investment club, read on.
While you may have expertise in one particular area of real estate, you may need to branch out and find others of a similar ilk who you can hook up with to broaden every aspect of real estate investment. Whether you are a part-time or full-time investor, you can incorporate people into your club from such diverse backgrounds as: real estate brokers, agents, attorneys, accountants, appraisers, bankers, contractors, and others who may be interested in this joint venture. Imagine the plethora of expertise and information everyone can provide!
* Set up a website encompassing a business directory which lists everyone’s name and area of expertise.
* Prepare a monthly newsletter to send out to your group, while offering a free subscription to newcomers.
* Feature articles on various real estate investing subjects; invite real estate companies to advertise.
* Create a calendar of events you can all contribute to and participate in.
* Add property listings to your website, as well as an affiliate program structured to market, sell, automate and promote your products and services to clients and other partnership affiliations.
* Incorporate monthly meetings; inviting current members and guests. This is critical in the networking process, as well as engaging business contacts at the same time.
* Prepare an e-book or handbook to be given out to all of your members. Ensure there is advertising space available for new business partners.
* Be sure to conduct workshops and seminars on real estate investing.
* Offer discounts to members with real estate magazine subscriptions, merchant gift cards, or other similar discounts.
* Create a forum on your website where members and other visitors can discuss current real estate offerings or other important news items.
* Offer free real estate investment books and audio tapes on your website.
* Add a list of investment resources your members and clients can utilize, such as: business tools, real estate forms, state property codes, real estate classifieds, and property value reports.
* Another vital feature is testimonials; they carry an enormous amount of influence among your readers and potential clients.
These are just a few ideas to assist you in starting a real estate investment club. Surely, there are more ideas not related here which you may be able to utilize. It all begins with an idea; the idea takes root, and before you know it, people are calling asking to become a part of this great new endeavor. The service you are providing by initiating a real estate club is immeasurable. For those who are unwilling or unable to take the leap into real estate investment, your club will give them the confidence and know-how to realize their goals.
By: Ethan Allen
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Filed under Investing by on Sep 14th, 2010.
Investing in real estate can be very profitable if done correctly. However, it can be daunting for someone who knows little about real estate investment or has little capital to invest. Just as there are investment clubs for stocks there are also investment clubs for those who want to invest in real estate. The purpose of a real estate investment club is to get a group together who can pool their resources and knowledge to invest in real estate.
The internet is a good place to research and learn about real estate investment clubs. Most clubs online ultimately want you to join and may not provide enough information until after a commitment is made. While most of these are legitimate you should research them before you make any type of commitment. You can attend meetings for other clubs to get a feel on how they operate. It’s helpful to have some first hand knowledge about real estate investment clubs before opting to start your own.
Be familiar with the relevant laws of your state before starting a real estate investment club. You and your group will need to know how real estate transactions are handled so you won’t lose money on your deals. It’s always helpful to find at least one member who understands these laws. In fact, members who have specialized knowledge such as accounting, law, finance and real estate can be beneficial for the group.
Many real estate investment clubs hold regular meetings, at least once a month. These meetings are used to make key decisions for the group. The group can elect officers such as president, vice president, treasurer and secretary to preside over meetings and manage the club. Additionally, you can form committees that perform special tasks such as scouting out potential property investments. Meetings can be held in person or as teleconference over the internet if many members are not local.
Monthly correspondence in the form of a newsletter can be sent out to members to keep them up to date on current events as well as when the next meeting will take place. It’s good to invite professionals such as real estate planners, realtors and brokers, financial planners and tax specialists to speak at meetings to share their experiences and educate the group members.
Deciding how much money to invest can be tricky. It is often best to start out small and work your way up to larger investments. The more members you have the less money each will need to invest. On the other hand, the more members you have the harder it would be to come to unanimous decisions. When starting a real estate investment club, write up bylaws that everyone agrees to. Be sure to include how decisions will be made and what power the president has, if any, to resolve disputes or override decisions.
By: Alvin Toh
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Filed under Investing by on Sep 14th, 2010.
What are investment courses? Do they actually work?
Well, let’s start off first by answering the first question.
Investment courses are offered in order to teach both new and more experienced investors to become successful in the financial market. These courses are actually created to provide you with enough knowledge on how to deal and work with stockbrokers and mediators.
Investment courses keep traders and investors updated and give them a better understanding on what goes on in the foreign exchange market.
Now, to answer the second question: Do they actually work?
This actually depends on how you take and use the information you learn on your investment course. If you take what you have learned seriously and apply it, there is more possibility that the investment course that you took will work.
But, if you take the information for granted or do nothing with it, then of course it will not be effective, and you may just be wasting your money.
If you gain the knowledge and do the work, these investment courses will be able to help you to gain the skills that will help you become a successful investor in the future.
Courses about investment should ideally cover all the essential things that a person needs to know about trading and investing.
A reputable course should cover the basics and foundation of financial planning, and how to set your financial goals. This is important as it will lessen the risk of actually losing money that you will be investing in the future.
Another topic that an effective investment course should tackle is getting to know the roles that bankers and brokers play in the market, and how they can affect your investment strategy.
You should also be taught how to calculate the returns that you are expecting, which will give you the ability to analyse an investment to know if it is likely to be profitable.
An investment course should also teach you how to balance the flow of money, in other words the amount of money that you actually invest, versus the amount of money you risk with each investment or trade, and how to qualify those risks.
How to create and develop strategies in the market is another skill commonly taught in an investment course. These courses should also cover the foundation of technical analysis and fundamental analysis, which gives you the basis of how to choose the stocks you are going to invest in.
Investing courses are offered in a range of venues, such as schools, universities, and sometimes even privately operated institutes or training systems.
When choosing which investment course you would want to attend to, it is recommended that you think first on what you would like to learn about and the strategy you are most interested in and would want to focus on before choosing a course.
Most courses are not free, and come with a price tag, so it is best to check the cost first to prepare your wallet or credit card!
Make sure that if you do take an investing course, that it is with a reputable investor or a reputable company that is offering training by someone with first-hand trading experience.
By doing your due diligence on your investing course, you are already practicing being a successful investor.
After all, once you place your money on something, it is an investment, which automatically makes you an investor.
It is then up to you whether attending investment courses will become a good investment or not.
It is great to start off your investing career with some proper training; however whether you end up becoming a successful investor is ultimately going to be up to you.
By: Andrew M Robinson
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Filed under Investing by on Sep 14th, 2010.
By: confusedperson
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Filed under Investing by on Sep 14th, 2010.
Real estate has traditionally been an avenue for considerable investment per se and investment opportunity for High Net-worth Individuals, Financial institutions as well as individuals looking at viable alternatives for investing money among stocks, bullion, property and other avenues.
Money invested in property for its income and capital growth provides stable and predictable income returns, similar to that of bonds offering both a regular return on investment, if property is rented as well as possibility of capital appreciation. Like all other investment options, real estate investment also has certain risks attached to it, which is quite different from other investments. The available investment opportunities can broadly be categorized into residential, commercial office space and retail sectors.
Investment scenario in real estate
Any investor before considering real estate investments should consider the risk involved in it. This investment option demands a high entry price, suffers from lack of liquidity and an uncertain gestation period. To being illiquid, one cannot sell some units of his property (as one could have done by selling some units of equities, debts or even mutual funds) in case of urgent need of funds.
The maturity period of property investment is uncertain. Investor also has to check the clear property title, especially for the investments in India. The industry experts in this regard claim that property investment should be done by persons who have deeper pockets and longer-term view of their investments. From a long-term financial returns perspective, it is advisable to invest in higher-grade commercial properties.
The returns from property market are comparable to that of certain equities and index funds in longer term. Any investor looking for balancing his portfolio can now look at the real estate sector as a secure means of investment with a certain degree of volatility and risk. A right tenant, location, segmental categories of the Indian property market and individual risk preferences will hence forth prove to be key indicators in achieving the target yields from investments.
The proposed introduction of REMF (Real Estate Mutual Funds) and REIT (Real Estate Investment Trust) will boost these real estate investments from the small investors’ point of view. This will also allow small investors to enter the real estate market with contribution as less as INR 10,000.
There is also a demand and need from different market players of the property segment to gradually relax certain norms for FDI in this sector. These foreign investments would then mean higher standards of quality infrastructure and hence would change the entire market scenario in terms of competition and professionalism of market players.
Overall, real estate is expected to offer a good investment alternative to stocks and bonds over the coming years. This attractiveness of real estate investment would be further enhanced on account of favourable inflation and low interest rate regime.
Looking forward, it is possible that with the progress towards the possible opening up of the real estate mutual funds industry and the participation of financial institutions into property investment business, it will pave the way for more organized investment real estate in India, which would be an apt way for investors to get an alternative to invest in property portfolios at marginal level.
Investor’s Profile
The two most active investor segments are High Net Worth Individuals (HNIs) and Financial Institutions. While the institutions traditionally show a preference to commercial investment, the high net worth individuals show interest in investing in residential as well as commercial properties.
Apart from these, is the third category of Non-Resident Indians (NRIs). There is a clear bias towards investing in residential properties than commercial properties by the NRIs, the fact could be reasoned as emotional attachment and future security sought by the NRIs. As the necessary formalities and documentation for purchasing immovable properties other than agricultural and plantation properties are quite simple and the rental income is freely repatriable outside India, NRIs have increased their role as investors in real estate
Foreign direct investments (FDIs) in real estate form a small portion of the total investments as there are restrictions such as a minimum lock in period of three years, a minimum size of property to be developed and conditional exit. Besides the conditions, the foreign investor will have to deal with a number of government departments and interpret many complex laws/bylaws.
The concept of Real Estate Investment Trust (REIT) is on the verge of introduction in India. But like most other novel financial instruments, there are going to be problems for this new concept to be accepted.
Real Estate Investment Trust (REIT) would be structured as a company dedicated to owning and, in most cases, operating income-producing real estate, such as apartments, shopping centres, offices and warehouses. A REIT is a company that buys, develops, manages and sells real estate assets and allows participants to invest in a professionally managed portfolio of properties.
Some REITs also are engaged in financing real estate. REITs are pass-through entities or companies that are able to distribute the majority of income cash flows to investors, without taxation, at the corporate level. The main purpose of REITs is to pass the profits to the investors in as intact manner as possible. Hence initially, the REIT’s business activities would generally be restricted to generation of property rental income.
The role of the investor is instrumental in scenarios where the interest of the seller and the buyer do not match. For example, if the seller is keen to sell the property and the identified occupier intends to lease the property, between them, the deal will never be fructified; however, an investor can have competitive yields by buying the property and leasing it out to the occupier.
Rationale for real estate investment schemes
The activity of real estate includes a wide range of activities such as development and construction of townships, housing and commercial properties, maintenance of existing properties etc.
The construction sector is one the highest employment sector of the economy and directly or indirectly affects the fortunes of many other sectors. It provides employment to a large work force including a substantial proportion of unskilled labor. However for many reasons this sector does not have smooth access to institutional finance. This is perceived as one of the reasons for the sector not performing to its potential.
By channeling small savings into property, investments would greatly increase access to organized institutional finance. Improved activity in the property sector also improves the revenue flows to the State exchequer through-increased sales-tax, octroi and other collections.
Real estate is an important asset class, which is under conventional circumstances not a viable route for investors in India at present, except by means of direct ownership of properties. For many investors the time is ripe for introducing product to enable diversification by allocating some part of their investment portfolio to real estate investment products. This can be effectively achieved through real estate funds.
Property investment products provide opportunity for capital gains as well as regular periodic incomes. The capital gains may arise from properties developed for sale to actual users or direct investors and the income stream arises out of rentals, income from deposits and service charges for property maintenance.
Advantages of investment in real estate
The following are the advantages for investing in Real Estate Investment Schemes
• As an asset class, property is distinct from the other investment avenues available to a small as well as large investor. Investment in property has its own methodology, advantages, and risk factors that are unlike those for conventional investments. A completely different set of factors, including capital formation, economic performance and supply considerations, influence the realty market, leading to a low correlation in price behaviour vis-
Filed under Real Estate by on Sep 14th, 2010.
By: Caveman Lawyer
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Filed under Renting & Real Estate by on Sep 14th, 2010.