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Tag: Investment

  • A Complete Guide on REIT

    A Complete Guide on REIT

    Every individual looks for expanding his/her investment portfolio. With a variety of investment options available in the market, it often becomes difficult to choose which investment one should opt for.

    There are a lot of financial characteristics to consider before building your investment portfolio. These things include tax rates, liquidity, gains, etc.

    Real estate investing can be a major impetus to your financial portfolio. It can quite literally accelerate your journey to riches if done correctly.

    Most of the time, real estate investing is often associated with owning properties and leasing them out. However, there is more to real estate investing than just this. Real Estate Investment Trusts (REIT) are an important component of real estate investing.

    What is a REIT?

    The full form of REIT is Real Estate Investment Trust.

    It is just like a mutual fund. So this brings us to our question, what is a mutual fund?

    Mutual funds essentially make use of pooled money from a variety of investors to buy financial assets like stocks, bonds, etc. Then, the gains from these financial assets are divided proportionately among the mutual fund investors.

    Similarly, REIT pools money from a variety of investors to buy real estate and then generate income. It allows individual investors to earn a portion of that income-producing real estate.

    These real estate portfolios are made with multiple property types. REIT indulges in buying properties and leasing the real estate to other companies/individuals. The income which is generated as a result of leasing out or selling is then distributed proportionately among shareholders.

    Also, REIT is specific to one particular locality of the town/city. Therefore, you must choose the specific location you prefer to invest in.

    Also, REIT is of different types, categorized into many sections including medical REIT, office REIT, residential REIT, retail REIT, etc.

    Healthcare REIT includes nursing homes, medical offices, hospitals, and clinics. Office REIT includes business offices, business districts, etc. Hence, there are a lot of varieties of which REIT available in the market.

    Advantages of REIT

    Everything in life has advantages and disadvantages just like it is said there are two sides to everything: a bright and a dark side.

    Any and every financial decision requires careful analysis before investing. Gauging the pros and cons before going for REIT is very fundamental.

    These are some of the advantages of REITs:

    Diversification

    Diversification is the key mantra underlying investing.

    One of the first things to keep in mind while building an investment portfolio is to diversify it. The old saying, “Don’t put all your eggs in one basket” holds true here.

    Putting all your money into a single investment is never a good idea.

    Rather than investing in one stock or one mutual fund, investing in various assets is a better way to guard against market fluctuations. REITs are very similar to mutual funds in their approach and thus are a good option to add to your investment portfolio.

    Time

    REITs can prove to be very good investment options when invested in for a long period of time. Also, REITs come with a lot of time flexibility.

    Investing for long-term should be your priority if you wish to earn some major gains.

    Liquidity

    While it is easy to believe that selling houses is difficult, it is not entirely true.

    When you invest in a REIT, selling houses and getting back your money is way easier. It is a relatively liquid way of investing in real estate.

    Simple Tax Calculation

    The gains on REIT are charged for taxes just like other incomes. There is no complexity in the calculation of taxes and the whole procedure is really simple.

    Disadvantages of REIT

    While there are a lot of convincing arguments in favor of REIT, there are certain downsides to it as well. Before investing, one should think about the downside as well. Here are some disadvantages or drawbacks:

    Property Taxes

    While property taxes would not affect you directly as an investor in REIT, they would however have an indirect bearing on your gains.

    How?

    Because property taxes can decrease the earnings you get from the REIT.

    Also, property taxes vary from place to place. So you must keep a check on the property rates in the locality you are willing to invest.

    Interest Rates

    Whenever interest rates go up, REIT prices dip. While some people may consider this as an opportunity to sell and earn good money, it is important to keep in mind your long-term investment goals.

    The decision to sell or hold your REIT should be based on your financial goals rather than the market situation.

    Tax

    The gain from REITs is often considered as an ordinary income instead of as a capital gain. Hence, the gains from your REIT are charged at a higher tax rate than capital gains.

    How to proceed with REIT?

    Now that you’ve gauged the advantages and disadvantages of REITs, you can choose whether it’s a good option for you to invest in.

    But how would you approach REIT?

    Research

    Similar to any financial investment, you must do an ample amount of research. Read about which companies are better, which REITs give better returns, and which localities are better to invest in.

    REITs or Mutual Funds that invest in REITs

    You can either invest directly in REITs or choose to invest in mutual funds which then invest in REITs further. The second approach is better for those looking for little effort and greater gains.

    Conclusion

    On the off chance, you are looking to increase your income level and up your investment game, Real Estate Investment Trust is made for you.

    Turbocharge your investments with this simple technique. If you have big-time aspirations for your financial situation, it is time to diversify your portfolio with real estate.

    If you are willing to invest in real estate but wish to avoid its high risk, lack of liquidity, etc., then you must opt for REIT after carefully analyzing its pros and cons.

    I hope this helped!


    By HomeLight Homes

  • What are the best mutual funds

    What are the best mutual funds

    For the smart options for mutual fund investment now the steps are essential. You need to be specific on this part. For that you need the best deal.

    The ranking with the best funds you find on other sites is a misleading exercise because it doesn’t help you understand how to invest your money but it is a pure vanity metric that often hides many problems. If you are looking for a ranking because you are an advanced investor and you feel you do not need advice, you will hardly find it here.

    Is it worthwhile or not relying on this strategy to invest your money?

    If, on the other hand, you are interested in understanding if it is worthwhile to invest in funds, keep reading because there is so much information useful for you.

    Investing in funds often is not worthwhile

    The mutual fund investment are most of the times a bloodbath to the detriment of the customer organized by the bank and management company, with the aim of putting your hands in your pockets even when the instrument does not makes them incapacitated.

    It will seem a harsh opinion, which among other things contrasts with what your financial promoter will have told you, very interested; thanks to the generous commissions he will put in his pocket, to direct you towards this peculiar investment tool.

    Unlisted actively managed funds : they are the worst because they are not traded on the stock exchange (consequently, they are less liquid for you) and have higher commissions without offering better returns than the market;

    Actively managed listed funds: more transparent and liquid than the former, they often have entry and exit costs and management costs that are too high to justify returns in line with the markets;

    Passive-managed funds or ETFs: these are the ones I prefer because there is no management company that tries to beat the market but the fund simply replicates the reference benchmark. You can learn more about this in the article where I explain how I invest .

    After that, let’s go ahead: below I offer you 5 tips for investing in mutual funds , giving you some tips also and not only to recognize those who, in a frankly bleak landscape, could actually improve the composition of the portfolio.

    Funds almost never perform better than market benchmarks

    When you are buying shares in a mutual fund, you are trying to beat the market, otherwise you would rely on particularly differentiated indices or ETFs to bring an aligned return on this or that market.

    Things unfortunately are not always the case, in the sense that in 90% of the cases the mutual funds perform worse than the benchmarks of the reference market. Yes, although there is a management company of sapientini and pundits, ready, they say, to intercept trends first and foremost.

    The chatter, however, as is often repeated, is zero, and it is to the rates of return on investment that we must look: the returns are, and it is precisely the paper that sings, lower than the market averages, even before inserting into the equation the substantial management commissions that this type of tools incorporate.

    Differentiates, but only on solid markets

    The differentiation is a concept as basic as often misunderstood accomplices’ also conflicting information that comes to those who are not exactly in the industry.

    To differentiate means to have a portfolio made up of different securities by geographical origin, risk profile and sector. It is of little use to differentiate on different energy raw materials, on shares of the same sector (banking, tech, etc.), or between bonds of countries that have broadly the same trend. The differentiation must first of all be true, and protect us from the collapses of the sector. Secondly it must be solid, because in the name of differentiation we cannot include rubbish in our portfolio. The funds in this sense can certainly help us, provided we know what and why to choose.

    Often the differentiation offered by mutual funds is only apparent, in the sense that portfolios of securities from the same sector are offered, which never protect us from the risks that an unsorted portfolio has inherent in its construction. Before choosing a good mutual fund, check the composition and the rules that the management company has given itself in order to change the portfolio itself.

    ETFs differentiate and cost less

    ETFs can be a good compromise because they offer you:

    The replication of indices that by their nature are already differentiated: think of an ETF that has a predominant component of the US stock market – it will have in the reference basket tech, heavy industrial, energy, financial and banking stocks;

    Extremely low commissions, which in some cases are even 90%, lower than those that are practiced by mutual funds;

    The possibility of selling the shares through regulated markets, or through markets those are identical to the stock exchange, for greater liquidity and greater ease of management.

    By choosing ETF vouchers, you can have all the positive sides of mutual funds, without exposing yourself to the most common problems that concern the management of actively managed funds.

  • Smart Decisions for equity investment As Required

    Smart Decisions for equity investment As Required

    The equity investment or portfolio investment is an investment of cash in shares of companies that are registered as open or closed joint stock companies.

    Equity investments allow you to receive a part of the joint-stock company’s profit equal to the proportion of the shares held by the investor, as well as to receive part of the property that remains after the liquidation of the joint-stock company in case of bankruptcy or for other reasons.

    Ways to invest in equity

    To date, there are several ways to invest in equity, the most common are two: buying shares in an enterprise on an exchange or from a third-party investor. Shares of a company can be sold on the stock exchange only if the company is registered as an open joint stock company (OAO). Buying shares from shareholders is possible only when shareholders wish to sell their securities. Usually, the maximum offers for the purchase of shares are observed in periods of economic restructuring and crises.

    The third method involves the acquisition of shares at the time of the additional issue of securities by the joint-stock company. In this case, the shares will be offered for sale at higher prices compared to stock values, but this will allow investors to immediately invest a large amount of capital.

    Equity investment objectives

    Equity investment can be aimed at receiving passive income or one-time large profits. Having bought out the share, the shareholder has the right to receive dividends on shares annually or more often (part of the profit, which is equal to the share of the purchased shares). Receiving dividends is one of the most common forms of passive income, when an investor receives money without personal participation in paperwork.

    Getting a large amount of profit at the same time most often occurs through speculation. Buying shares of companies that recently entered the market; the investor reserves the right to resell the shares. If the security rises in price, the shareholder can sell it, the difference between the sale price and the purchase price will be a profit. Sometimes profits from speculation can be impressive.

    In addition, the purpose of investing in equity capital may be the desire to repurchase the whole joint stock company. Considered investments allow for the redemption not immediately, but gradually, without risking all the capital.

    Equity is the tool of choice for investment in startups for professional investors. Both business angels and venture capitalists rely on this form of participation in financing, as an investment has benefits for both investors and startups. Therefore, all stakeholders in the industry – startups, crowd investing platforms, business experts and consumer advocates – agree and plead for investments in real GmbH shares. It comes at no surprise that companies alike to SoFi offer advice on how to invest in different avenues, including fractional shares.

    The equity financing is a form of corporate financing, in which the money comes from the owners of the company. As the name suggests, the company is financed by its own funds.

    Financing gives a company the opportunity to start or make larger purchases within the company without having to resort to lending.This type of financing reduces direct assets but at the same time increases the company’s equity and its corresponding value. Here, a distinction is made between the internal and external capital, which is spent on the investment.

    Equity in the company

    While in the private sector most of the expenditures are financed by own financial resources at best and only in rare cases larger loans are taken up, in the enterprise also the leverage pays off.

    The debt, which comes from loans for larger companies, measures itself quickly with success and can be procured just as quickly, so that in a short time can be invested.

    Equity, on the other hand, is generated by the entrepreneurs themselves and, in the event of any loss, is coupled with a risk to the company.

    On the other hand, increasing self-financing always results in an increase in equity.Only companies that seek equity security are successful in the long term and accordingly receive debt as needed.

    Surpluses are usually funds that can be used for equity financing. The surpluses are those that are retained and transferred to the business assets. Whereas, however, the dissolution of hidden reserves to increase equity is possible.

    Advantages and disadvantages of self-financing

    The advantages of self-financing are the reduced risk of over-indebtedness, the reduced risk of bankruptcy and the greater independence of the company.

    However, one of the disadvantages of equity financing is that equity capital is very expensive in the longer term and cannot be deducted for tax purposes.

    The investors, who participate with an equity capital, usually demand risk premiums. In a sense, they protect themselves against a total loss, such as in the insolvency of the company.

    When will equity finance be used?

    Generally, the rule is that companies should buy long-term value through equity or long-term debt. Accordingly, buildings, company properties or large machinery should be added to equity or financed very cheaply in order to make a profit.

    In contrast, part of the current assets is covered by borrowed funds, so it does not have such a severe impact on business assets.

  • Why Investing in Mutual Fund is a Smart Move

    Why Investing in Mutual Fund is a Smart Move

    Mutual funds are one of the popular options when it comes to investing your money wisely. People who are looking for ways to increase their investment for securing their financial future can trust the mutual fund investments schemes.

    Mutual fund is a type of investment where investors can choose a scheme based on their financial requirements, especially for those who don’t know much about investments. Mutual funds are created using the money from different investors and used in securities such as stocks, bonds, and other money market instruments and other assets. These funds are professionally managed and offer the investors capital gains against a small fee.

    If you are looking for easy ways to invest your money that will provide you with handsome returns then you should invest in mutual funds.

    Here are some of the best benefits of mutual fund investments:

    1. It is Easier than you think

    To begin with, mutual funds do not require any experience, knowledge of economics, or financial markets. Your portfolio will be managed by professionals and all you need to do is choose a program that matches your budget. One of the best things about the mutual funds is that it can be personalized for your use. You can choose from many types of investments types and reap the benefits.

    1. Its Highly Affordable

    Mutual fund investment is for everyone. No matter how much money you have you can always find the comfortable amount to invest in. You can choose to invest in as low as $1000 mutual fund purchase. There are different types of mutual funds and depending on their nature their prices can be very low. For example, if you choose a systematic investment program with a fixed dollar amount or fixed number of shares, your investment can be less than $3000.

    If you compare the cost of maintenance of the portfolio like the transaction cost, costs to the brokerage firms and so on, you will find that they are less expensive than the other type of portfolios.

    1. You can Easily Buy them

    One of the key benefits of the mutual funds investments is that you can easily buy them. You can purchase from different sources like brokerage firms, mutual fund companies, insurance companies, online brokers and more. It only takes few minutes to open your account, for example in a mutual company fund like Vanguard Investments. This no-hassle feature of the mutual funds makes it one of the best ways people can invest. For people who would like something simple and less complicated ways to smartly invest their money, mutual funds are the bet options.

    1. Diverse options

    The mutual funds allow you to diversify your portfolio to maximize your returns. You can choose from various categories and types of mutual funds. Apart from investing in stocks, bonds and cash, you can also invest in some of the sub-categories like the sector funds. You learn as you grow your portfolio. It is one of the main benefits of the mutual funds that they are easy to understand. You can also fully manage your own portfolio and maximize your investment for a better financial future.

    1. You can Rely on the Team

    Usually the mutual fund investment portfolio is professionally managed by a team of experts. They do the research and analysis to find the best investments for you.  You don’t have to do all the complicated things. You will saving hours of your time and leave the tasks to the team. This is why mutual funds are so great. Even with minimum knowledge, you can rest assured that your money is going in the right places.

    1. So many Ways to Integrate Mutual funds

    Mutual funds are flexible, diverse and versatile.  Many people happily investment in the mutual funds and reap the benefits. You get to choose from all kinds of investments types, right from the automatic deposit, 401(k) plans, dividends, short-term savings, long-term savings, systematic withdrawal, annuity sub-accounts, and more. You will be happy to know that mutual funds are the most common types of securities investments in 401(k) plans and IRAs.

    1. Its Transparent and Trustworthy

    Mutual funds are and transparent, which is why so many people are willing to invest in it. You can easily avail the information you need for investment on the mutual fund company’s website or prospectus. You get what you pay for. If you have doubts about the efficiency and transparency of the mutual fund investment, then stop worrying. You can know everything you need to know or don’t need to know. You can easily make an informed investment decision with mutual funds.

    Conclusion

    A mutual fund investment is ideal for all type of investors whether new or old. It comes with many benefits and it is also secure so you can easily invest your money and enjoy all the perks.

  • 10 Common Mistakes Property Investment Beginners Make

    10 Common Mistakes Property Investment Beginners Make

    Property investment is not easy. It involves risks, but it can also be very rewarding. However, as great as property investment is, beginners often enter the hype with much excitement only to end up not really thriving. You don’t want to be one of those, do you? Here are 10 of the most common mistakes beginners make in property investment.

    • Excitement over making the First Purchase

    Most first-time property investors often get excited about making their first investment. And without further ado, they buy the first thing that catches their attention. We can’t help but be excited over the prospects of long-term investments. However, we need to be very cautious and careful about what we should invest in.

    How To Avoid: In real property investment, you speculate first before making any decisions. Never jump on the first opportunity you get. Instead, you look around, weigh your options and see what works best for you.

    1. Lack of Research and Information

    One of the primary mistakes beginners make is simply doing things spontaneously, without actually doing any, or not much research. Beginners often think that it is all about the action. It’s simply looking for properties to buy and sell. But in truth, property investment is a science of its own.

    When you buy a property, you should choose not with your own preferences and taste in mind but what would appeal to most people.  Just because we like a property doesn’t mean that it would be a good investment. Buying without checking the potential for resale or the type of renters you want is a common mistake most beginners must avoid.

    How To Avoid: It needs a lot of analysis. It’s a business after all. You are buying land to make a profit out of renters and not for yourself. No matter how appealing a property is, it’s not meant for you to live in but for you to gain maximum profits. So always check the property and do your research. There is more to property investment than just buying land and having a house built on it.

    1. Failure to Create an Exit Strategy

    Every business has its risks. Property investment is not an exception. It requires a lot of attention and care and devotion just as much as other forms of investment do.

    How To Avoid: Every time you acquire a property make sure that you can do multiple things with it. You can flip it, improve to sell or rent it out. An exit strategy means that you should always have a plan B, C, and D in case plan A doesn’t work out.

    1. Not Planning a Strict Budget

    Properties are necessary commodities. You’re bound to find an available property you can make a profit from. But buying properties or acquiring properties come at a price. Real property mistakes beginners make often start with going beyond budget or buying a property that fits your budget exactly. You have to remember that you need to allow for repairs and regular maintenance on your property.

    How To Avoid: Set a strict budget. Set aside money to acquire one and fix a budget as well as emergency funds for every property. Never go beyond budget but instead always aim to go lower than the budget that you have, so you can use it again for another investment, or to maintain the one you have.

    1. Being Overly Cautious

    Some beginners have the tendency to overthink. They think that maybe there is a better property out there until they finally have gone through every available one in the market.

    How To Avoid: We become over cautious when we don’t know what we are doing and when we literally don’t have any confidence in ourselves. Be brave and choose a property that you think you can make money from. Even if it’s a humble start, you still win even if you just earn a little bit from it.

    1. Relying on a Partner

    Beginners are often insecure and often fear failure. Hence, they become dependent on a partner. This is a good start but not a good learning curve. You may rely on your partner to make decisions and this can lead to conflict and losses. Choose partners, especially if they are family members carefully as tough decisions often have to be made.

    How To Avoid: Learn from your partner and make decisions together. If it is a family member then discuss everything before changes or decisions are made.

    1. Stingy Micromanagement

    As starting property investors you want to make all things work out the way you hope it will so you become hands-on on every single thing. You want all the details to happen under your supervision. This over-tightening becomes stressful.

    How To Avoid: Hire professionals to do the legal stuff for you. Your task is to delegate and supervise. Don’t do it all yourself or you are bound to become weary and careless.

    1. Thinking You Know It All

    We think we can do it all by ourselves based on business studies and research. Well, that’s not the case. We’re always faced with business issues and dramas as well as scenarios that no business school ever teaches.

    How To Avoid: Stick to a veteran and learn the trade well before doing it by yourself.

    1. Forgetting Government Liabilities

    You get overly excited in making sure your project goes as planned but have you thought about the permits, inspections, and other legal processes?

    How To Avoid: Every property you deal with requires proper documentation and legal processes. You need to find out what must be done and how much it would cost you to buy a property. Due diligence is very important.

    1. Not Learning from Your Mistakes

    This is a mistake not just beginners do but everyone. We often end up doing the same mistakes over and over again.

    How to Avoid: Accept the fact that you made a mistake and don’t blame it on others. Accepting your mistake is one way for you to understand the fact that you really have done something wrong that cost you. In business, it is vital to learn from your mistakes or else you will be stuck in a circle of costly faults that will never end. Understand your failure and the rest will go on from there.

  • 5 Effective Ways To Get A Fair Price on Home

    5 Effective Ways To Get A Fair Price on Home

    There is always one thing in common when it comes to real estate investment – the PRICE. A good and fair price has a direct impact on the buyer’s and seller’s side, considering nobody wants to be at the disadvantage. Who would, right? Yet as we all know, pricing decision can result in an important consequence. It can make or break a good deal. That means, setting the right price level matters the most.

    However, just because you can afford the price, that doesn’t mean you’re getting a good offer. Investing in a property such as Alveo condominium Tayagay is not just about the purchase. There must be a smart judgment to get a fair price.  But how do you really know if you are getting a fair deal on the price? Here’s how:

    1. Research recently sold, comparable properties

    Comparing properties is not just about how similar or different they are in terms of their sizes, condition, neighborhood and their amenities. When you compare, you basically include all the aspects of the property – not just the features but also the prices. Generally, most home investors gain their interest in the comparison of prices in different properties. Is the property less expensive than larger or nicer properties? Or is the property more expensive when it’s smaller? This will give you an idea on which of the properties has a better offer than the other.

    1. Check out comparable properties that are currently on the market

    Aside from the properties that are recently sold, you can also try visiting other homes on the market. Perhaps, there are home features that you can find on a certain property that you want to have. Also, checking such will give you a big difference when it comes to comparison in many aspects of the property. With that, you can then start comparing prices and see if that particular feature is worth the offer.

    1. Look at comparables that were on the market recently but didn’t sell

    Just because the property didn’t sell, that doesn’t mean it is no good at all. In fact, you can have a better option when it comes to their prices.  There are even properties that are on sale with an affordable price without compromising its quality. If you are interested, then you can check out the unsold inventory index for the information about the current supply and demand in the housing market.

    1. Consider market condition and appreciation rates in the area

    Whether you realize it or not, there are sellers who tend to overprice the property. There are also for sale properties especially when it’s urgent, sellers go for an underpriced rate.  If you are not keen when it comes to its price, you may not get a desirable offer. That is why it is important for you to consider the impact of interest rate. Of course, this all depends on where the market is currently situated in the real estate curve.

    1. Are you buying a for-sale-by-owner property?

    There are actually different ways of purchasing a property. One is through the for-sale-by-owner property (FSBO). It is when selling a property without the use of real estate agents. Investing in this kind of property should be discounted since there is no seller’s agent commission. However, this is one of the things many sellers don’t take into consideration when setting their prices. There are also possibilities that sellers may not have an agent’s guidance in setting a reasonable price, which may result in a bad deal. As a home investor, you have to be keen when it comes to its price.

    The price is a big factor in the investment. If you want to have a smooth sailing process, then start your search with a good deal. Check if the property is worth the investment. Moreover, never forget to be keen when it comes to having a fair price.