RP Wang Investment

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.

By: Alvin Toh

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Condominiums have become popular in recent years both as residences and investment opportunities. Are Condos a good investment?

There have been several reasons for the popularity of condominiums. The first is the changing dynamics of social life in the modern era. The time consuming need to maintain a detached home and its surrounding property is removed from the condo experience. Homeowners Associations, known as HOAs, generally take care of all the interior and exterior upkeep. Although they charge dues to fund these services, the dues are factored into the rental or purchase cost. The big thing seems to be the accommodation of today’s fast paced and busy lifestyle.

The increase in popularity is also a fueled a bit by the aging of the baby boomers and the overall increase in the aged population. An increase in the general population and the overcrowding this has caused in many urban areas has led to condominium construction as a viable alternative to suburban developments in many places. So, there are a lot of factors that are making condos popular. When something is getting popular, it stands to reason that it is also a very good investment vehicle.

Are condos a good investment? The answer is a resounding yes. There are some general guidelines and a few pitfalls, but this is true of any investment. What makes the condos a good choice, especially for the beginner in Real Estate Investment is their popularity and those HOA’s. The Homeowner Associations usually maintain a fairly strict standard within the condominium. While this may annoy some residents, it certainly aids the owners. One of the biggest problems facing the investor in rental property is insuring that the property is properly maintained to protect the investment. This is usually not a serious problem in condos.

Appreciation in value is the prime driving force behind a wise Real Estate investment. It does not matter if the condo is going to be used as a vacation time share property, a straight rental property, or even your private residence, the idea is that you should be able to sell it for more than you paid for it. The value of condominiums contains to rise as their popularity continues to grow. The very same factors that are pushing the popularity are not likely to change or ease off in the foreseeable future. The population continues to age and the life style continues to grow more active and more time pressured. Also, space is not going to get any less limited.

Condos are an easier deal and ideal for first time investors in Real Estate. However, the idea of even a good investment does not include anything like an iron clad guarantee of success. If you are going to be a successful Real Estate investor, you need to be an educated Real Estate investor.

By: Raynor James

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Kansieo.com

Financial urgency can hit anyone, especially taking into consideration the present financial scenario in the US and rest of the world. That is why you should be prepared to handle such exigencies with a sound financial plan.

With the global financial meltdown, you definitely need a plan of action to help counter any economic adversities that may come your way. An important aspect of financial security is debt management. If you are able to debt your debts down, you will not lose face or credibility.

A good debt management program will not only help to get rid of existing debts, it will also show you ways to prevent debt and all associated stressor that come with it. Basically a debt management organization works with you and counsels you on how to identify your income and spending pattern that actually led to the adverse situation. This, in turn, allows you to adopt a more practical approach to your spending and money saving habits.

Remember, debt can stay with you for a very long time if you make no efforts to clear it. In addition, you will be burdened with heavy interest and penalty charges. However, if you opt for the correct debt management plan, you can reduce the interest rate substantially.

If you are struggling with debt, it makes sense to contact the lenders and request for a better payment plan. The lenders rather get part of the money than none at all and that is why they will be willing to work with you. With regard to credit card debt, you should make an effort to keep up with the minimum payments and refrain from using the credit card any further until all the debt has been cleared. Make a monthly budget and stick to it no matter what temptation comes you way. This way you will not add new debts and still work towards eliminating the existing debts.

By: Pauline Go

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This article provides some straightforward answers to some of the most often asked questions from people who are new to investment.

What is fixed interest?
Fixed interest describes fixed term deposits like bank deposits, cash management accounts, debentures as well as bonds like government stock and company bonds. Fixed interest investments pay interest, usually every six months or quarterly. On maturity the investor is paid back what they invested. Fixed interest is a very good investment, especially for people looking for a low risk investment and a reliable source of income. The major disadvantage with fixed interest is that the returns from it are relatively low and therefore it provides little protection against inflation.

What are equities?
Equities is another name for shares. The word equity is derived from the latin word aequitas, meaning equal ownership. This aptly describes shares, which are essentially part ownership of a company. For instance, if a company has 100 shares in total and you own 10 shares, you own 10% of that company.

Why does everyone worry about inflation?
The goal of investment is to ensure you can maintain your standard of living in 20 or 40 years time. To do this, the value of your savings must rise at least in line with inflation, which really is just a measure of how much prices are rising.

What is a balanced portfolio?
We often advise people that if they do nothing else, at least diversify. A balanced portfolio is nothing more than a spread of investments. List all your investments under four headings: fixed interest, local shares, overseas shares and property. You should have some money invested in each. How you split your funds between each sector depends on your appetite for risk, how long you are investing for and your investment goals. Your investment adviser can help you make these decisions.

How do I avoid fraudulent or dubious investments?
The old adage that “if it sounds too good to be true, it usually is” is a very, very useful rule when it comes to investing. Over the long term,equities provide a return of around 8% per annum, fixed interest around 6% and property around 9%. Be very wary of investments that advertise far higher returns than this. The biggest mistake new investors often make is to be lured to fast returns. Be very honest with yourself when considering investments; ie. recognise when greed is taking over your decision making! It is a good idea to seek professional advice before jumping into an investment. Remember, it’s your money and there is no need to rush into any investment.

Why do some people invest outside New Zealand?
Not only is New Zealand the very best country in the world, it is also one of the smallest. Our economy and share market are relatively vulnerable, as is our currency. It is sensible to therefore have some funds invested outside New Zealand, especially as most of the goods we buy every day are either imported or priced by forces outside New Zealand, therefore a lower New Zealand dollar makes overseas goods more expensive.Investing funds offshore helps to smooth out the impact of movements in the currency.

Everyone talks about the long term – what is the long term?
When investing in growth investments like equities you need to give them time to work for you. Shares go up and down in the short term but over the long term this volatility smoothes out. The long term should be at least 20 years. This may sound awfully long, but consider if you are 40 years old and are investing for your retirement, you could easily be a holder of your shares for 40 years or more.

By: Cam Watson

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One of the biggest benefits of mutual funds is that they provide the means for individual investors to achieve broad diversification in their investment portfolios. Although many wealthy individuals and institutions use mutual funds as at least the core of their portfolios, having considerable wealth is not necessary to construct a well-diversified portfolio with mutual funds. Indeed, it’s possible to assemble a well-diversified portfolio of mutual funds with as little as $100,000, a fairly well diversified portfolio with $50,000 and an adequately-diversified portfolio of index funds with much less.

Having a well-diversified portfolio is important for three reasons. First, diversification can best be described as not putting all of your eggs in one basket. Mutual funds are large diversified portfolios and thus provide automatic diversification within their respective asset classes. Investing in a number of mutual funds to spread your investable funds across a variety of asset classes increases your level of diversification and decreases your aggregate exposure to risk. As investment risk is measured in terms of volatility, decreasing aggregate risk decreases the volatility of the value of your portfolio, thus sparing you the roller coaster ride that you would experience if you held only a single asset class in your portfolio, such as large-cap domestic stocks.

Second, although expected return diminishes with risk, the relationship is disproportionate and favors return. Well-conceived diversification has the potential to considerably reduce the aggregate risk of your portfolio at the cost of a relatively small reduction in your expected return. So you get a much smoother ride for a minimal cost.

Third, over the past 25 years or so, there have been a number of studies conducted that have concluded that asset allocation accounts for between 90% and 96% of your success as an investor, where success is defined as maximizing return at a level of risk that is consistent with your level of risk tolerance. Individual security selection accounts for the rest of investors’ long-term success. Now, just being broadly diversified won’t get you into that 90% to 96% range, but it’s a big step in the right direction. A viable model that defines the composition of an efficient portfolio is required to allocate your capital across the various asset classes in a manner that will reap the full benefits of diversification.

Diversification and asset allocation are not synonyms, as diversification is just a part of asset allocation. Diversification is a matter of degree; it describes the degree to which you have diversified away company-specific risk. Full diversification within a market, in theory, eliminates all company-specific risk, leaving your portfolio exposed only to systematic risk, which is the risk inherent in the market as a whole. So, that brings up the obvious question: What is The Market?

The S&P 500, Russell 1000 and Wilshire 5000 are often used as proxies for “The Market.” But they’re only proxies for the U.S. stock market. To be fully diversified, you would have to be invested in all of the publicly traded securities (stocks, bonds, real estate and commodities) worldwide and your investments would have to be broadly diversified within all asset classes in that aggregation. This can actually be achieved by holding a collection of index funds.

Asset allocation describes how your capital is distributed to the diversity of asset classes you have chosen to hold in your portfolio, i.e., your investment universe. If you had chosen full worldwide diversification, your next step would be to determine how to allocate your capital across that aggregation of asset classes. One possibility would be to hold what’s known as the Market Portfolio. To do this you would have to invest in all those asset classes on a market capitalization-weighted basis. That would by definition be an efficient portfolio and constructing such a portfolio is possible with index funds. It’s also possible with regular mutual funds, but getting and maintaining the appropriate weightings would be pretty tricky and require a lot of time and effort.

Beyond the Market Portfolio, there are just about as many ways to select asset classes and allocate capital as there are portfolio managers, investment advisors and newsletter editors. Although they’re mostly based on the same financial theories, everyone has their own model and their own forecasts to fuel their models. But going any deeper into asset allocation would diverge too far from the topic of this article…diversification.

In real estate it’s location, location, location. In investing it’s diversification, diversification, diversification. You must be adequately diversified, otherwise you will be exposed to too much risk with respect to your expected return. And no asset allocation model can compensate for under-diversification, as your chosen degree of diversification defines the investment universe across which asset allocation must take place. With thousands of mutual funds to choose from, there’s no good reason for anyone to be under-diversified.

By: Mike Kennedy

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They say that real estate can be the best investment that one person could have. Real estate has the capability to appreciate over time and at the same time people who are into real estate can have monthly income of their own. But no matter how good the feedbacks and the reputation of real estate in the market, only the select few are involved in this kind of business. Not because this investment property getting started is too hard, but because a lot of persons who wants to invest in real estate find investing in this sector a bit complex and confusing as well.

Let not this confusion get the best out of you. It’s time to fully understand what investment really means and one can person can get into property investment with the least hassles. And here are some tips that can help the newbie in you in order to make that first move in the right direction towards investment property getting started. First thing first, learn more about the business. If you want to go to real estate then you have to know the basics in the business. It is also imperative to know the risks involved with this kind of investment. In real estate investments are large and the losses that a person can have can be high as well. It is suggested as well that you know the types of properties. Knowing what properties come cheapest can get you started in the business. This means that you can first invest on foreclosures or the pre-foreclosures property. You can buy them at less cost yet you can do some upgrades on these properties so that you can sell them at a higher price. Other properties that you can look into include residential and commercial buildings, large or small.

With your investment property getting started, the next thing that you should consider is- are you willing to sell the property or you want to rent it out. Renting the property will ensure that you will have an income over for some time, but it should be expected as well that a certain part of the income will be used to maintain the property. Another thinking to live by is to go small first. The moment you have mastered the art of maintaining small properties, then it’s the time that you can go big time. Think location. Investors will always say location, location and location. This is true since the location of one property is one factor in shaping the price of that property.

Always avoid properties that may seem to look perfect. With investment property getting started, chances are these properties aren’t good investments. It is recommended as well that you do your own cash flow homework. Personally prepare the income and the expense list. The investments that you take should be near your place so that you can check it from time to time. A number of tips are available out there and at times these are just modified versions of what you know.

By: Ian Pennington

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Investment

When may people look to invest, they simply look at the annual rate of return, however performance also needs to be seen in terms of risk – reward and comparisons need to be made in terms of how the investment is doing against others in its sector and how it compares to investments in other sectors.

This requires a bit of time, but is time well spent in terms of getting the best investments for you and how to combine them for optimum risk to reward.

Below you will find some ways of assessing the performance of an investment.

Use the tools below and you will be able to choose your investments better and maximize rates of return.
Draw downs and Peak to Valley Draw Downs

This is one of the most important areas for investors to look at. Although past performance is not a guide to future results it gives an indication of losing periods, their size and recovery.

A drawdown is simply a fall in value for an investment and gives an indication of downside losses that investors should be comfortable with. A peak to valley shows the worst period of return of an investment and is the one investors, should be prepared to expect.

Drawdowns, every investor hates them but all investments have them, so pick investments with drawdowns your comfortable with and always assume your worst drawdown is ahead of you.

Standard Deviation

The volatility of an investment is denoted by a statistical measure known as the standard deviation of the return rate.

Without going into complex mathematics, Just think of standard deviation as being synonymous with volatility. standard deviation therefore is applied to the annual rate of return of an investment to measure the investment’s volatility (risk).

The higher the standard deviation the more volatile the investment. Low standard deviation would be present in such areas as bank deposit accounts and bonds and high standard deviation in higher risk products such as leveraged futures and FOREX accounts.

Sharp Ratio

This risk-adjusted measure was developed by William F. Sharpe, by calculating standard deviation and excess return to determine reward per unit of risk.

The higher the Sharpe ratio, the better the fund’s historical risk-adjusted performance.

Sortino Ratio

Similar to the Sharpe ratio and looks to differentiate between harmful volatility from volatility in general by replacing standard deviation with downside deviation in the calculation.

The Sortino Ratio is calculated by subtracting the risk free rate from the return of the portfolio and then dividing by the downside deviation. The Sortino ratio measures the return to “bad” volatility.

This ratio allows investors to assess risk in a better way than simply looking at excess returns to total volatility; it considers how often the price of the investment rises as opposed to how often it falls.

The bigger the Sortino Ratio is the lower the chances of large losses occurring.

Benchmarks

Benchmarks are a way of comparing investments so you can make meaningful comparisons within sectors and across sectors.
Two benchmarks are normally used:

1. Benchmark for Correlation Values: The benchmark that the fund has chosen to run correlation values such as alpha, beta, R and R squared.

2. Benchmark for Graphing: The benchmark that the investment has chosen to graph itself against as a comparison.

Beta

Beta is the measure of a fund’s volatility relative to the market. (most fund managers correlate themselves to the S&P 500). A beta of greater than 1.0 indicates that the fund is more volatile than the market, and less than 1.0 is less volatile than the market.

For example, if the market rises 1% and a fund has a beta greater than 3.8, the fund will rise, on average, 3.8%. For a fund with a beta of 0.5, if the market rises 1%, the fund will rise on average, 0.5%.

The relationship is exactly the same in a falling market. (Note that investments can have a negative beta, as well meaning that on average they rise when the market falls and vice versa.

A little research can pay big dividends

A little research using the above on your investments can pay big dividends in getting an investment portfolio that’s right for you and could give you better growth to drawdown.

By: Kelly Price

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You don’t have to be made of money to be an investor. There are many investments ideas for small investors that you probably aren’t aware of. And these investments can be a lot closer and simpler than you think.

One investment idea for small investors is stocks. Now this may come as a surprise since most people think you need to have scads of money to get involved with the stock market.

Many stocks, however, do not cost an arm and leg to buy. They can be quite affordable and you can start with a few shares and work up to larger investments.

Shares in start up companies in a hot industry are one example of a good investment idea for small investors. A few shares of a blue chip stock is another.

Just be sure to do some research first and be willing to hang on to your stock through ups and downs, as stocks tend to be more profitable in the long term and will definitely see some ups and downs.

Government bonds and securities are other investment options for small investors.

Many government bonds can be bought at a low to moderate price, and they will give an investor the advantage of interest payments.

These interest payments can be used for another investment idea. In fact, the interest payments on government bonds and shares can make it possible to diversify investments for small investors.

Investment ideas for small investors can be in more tangible types of items as well. Items such as coins, cars and collectibles are often a good place for small investors to begin.

These types of investments often make an investor feel more secure than when they’re dealing with what is often referred to as “paper “ money. They like being able to keep their investments close to them.

The advantage this can have is that if a coin or collectible has a sudden spike in value it can be easily gotten to and sold for a profit. And, after all, the best investment idea for small investors is the one they feel the most secure and comfortable making.

By: Mika Hamilton

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