Tuesday, June 28, 2016

Should You Invest In A Property To Rent?

If you buy an investment property, you stand to make money from any appreciation in the property value, and also from the rent you would collect from your tenant. At the same time, you take on a financial risk. You would be responsible for paying the mortgage, repairing damage and finding a suitable tenant.

Typically, investors will borrow money in order to buy an investment property, so it’s a type of investment that usually comes with a lot of leverage. This gives you higher peaks, but it also gives you lower troughs. Before the collapse in the property market around 2007, investors would buy homes on cheap credit, and amass property after property using very little of their own money. When the property market collapsed, many lost it all, and that’s because they had too much leverage.

If your rental income covers the cost of your mortgage – which is in no way guaranteed – you will own all the equity in your property by the time the mortgage is fully paid off, and you won’t have spent any of your own money. On the other hand, you risk being saddled with a tenantless property that could depreciate in value, and drag down your credit rating in the process. When things become too much, some unfortunate landlords lose their own home because they fail to make payments on a second home.

There are landlord-tenant laws in every state, and they each place different requirements on landlords. In most states, the landlord is responsible for keeping the house in a livable condition, which can quickly become very costly and bureaucratic, much more so than most people realize before they get involved.

According to guidance published by the California Department of Consumer Affairs, for example, landlords renting to Californians are responsible for seeing there are “working smoke detectors in all units of multi-unit buildings, such as duplexes and apartment complexes. Apartment complexes also must have smoke detectors in common stairwells.” Landlords are also responsible for seeing that there are “ground fault circuit interrupters for swimming pools and antisuction protections for wading pools in apartment complexes and other residential settings.”

Landlords also run the risk of having to do major repairs, such as replacing boilers and fixing structural problems in the building. These types of changes can easily wipe out profitability for many years into the future, so it’s always good to have a reasonable capital buffer before you get started. Unless you can afford to pay the mortgage for over one year without a tenant, you probably don’t have sufficient access to capital in order to be in a safe position.

Buying a home to rent can be an overwhelming decision, but it can be a very rewarding experience as well, For many Americans, becoming a landlord is a very enjoyable and rewarding experience. Make sure to do your research properly, and look for markets where you see the potential for strong growth and robust returns.”

Image source: http://smallbusiness.chron.com/DM-Resize/photos.demandstudios.com/getty/article/74/144/78328010.jpg?w=600&h=600&keep_ratio=1

Read more ...

Tuesday, June 7, 2016

4 Online Programs Ideal for Beginning Traders

The concept of investing in the stock market is one that holds appeal for many people from diverse backgrounds, and with opportunity to make unlimited money, it’s one of the main ways people can earn a reasonable return on their money.

While investing in the stock market can be alluring, and can ultimately also prove to be very valuable, it’s not necessarily something that can be done without prior knowledge or education. Investing in the stock market can be complex, and having at least a general understanding of terminology and concepts can go a long way for novices.

Below are four online trading training courses that are ideal for beginners as they begin to dabble in the stock market.

Training Traders
Training Traders is a well-known online learning center that offers programs in-house as well. Participants can enroll in classes aimed at day trading, long-term or position trading, and all education is based on the Price Behavior methodology. This particular trading method is versatile enough to be used not only for stock trading, but also currency or futures trading. Training Traders also utilizes a Trading Software System, that helps traders of all experience levels gain an advantage.

Online Trading Academy
Founded in 1997, Online Trading Academy features a patented training strategy that aims to help students identify high profitability and low-risk opportunities. As well as online courses, Online Trading Academy also operates more than 30 financial education centers around the world. All instructors are experts who have been part of the market, including brokers and business leaders, and each is not only an experienced online trader but is also actively involved in trading through their own account.

Timothy Sykes Millionaire Challenge
Timothy Sykes has become somewhat of an icon in the penny stock trading industry. His popular blog has earned him many followers, and his Millionaire Challenge provides a way for anyone to register and then learn his secrets for turning penny stock trading into wealth. The learning tools offered through the Millionaire Challenge are designed to help students learn from their own trades as well as from the experience and expertise of others. While the other names on this list are great for learning the general ins and outs of stock trading, Timothy Sykes Millionaire Challenge is really for people who want to hone in on penny stocks, specifically.

Day Trading Academy

With a collaborative approach to training and trading Day Trading Academy brings together experienced and beginning traders, with the concept of everyone helping each other succeed. There is no software that’s part of this program, and instead, the goal is always to teach students how to read the market. The curriculum is split into four sections: beginner, intermediate, advanced and pro and two classes are held each week so that students can cover relevant topics and review the market together, live. All of the live trading classes, reviews, and daily market recaps are recorded and saved into the video library so users can participate in training whenever it’s convenient for them. 
Read more ...

Saturday, April 23, 2016

The Future is Now! Start Saving For Retirement

Retirement seems far away, but it is a reality that everyone needs to face. With life expectancy increasing, individuals will have more time to spend in their golden years. However, they cannot depend on the steady income of a pension or the assistance of social security to support them. 

Therefore, it’s up to each person to plan for retirement. Meeting with a certified financial planner is a good way to map out your investment strategy. However, there are some things you can do on your own. 

Establish Your Plan 
Before you start to calculate the savings you will need, figure out what your net worth is today. Your net worth is the total value of your assets minus your liabilities, which includes expenses such as your mortgage and other debts. If your net worth is negative, don’t worry. Now you can determine what you need to do to move toward a positive number. 

Next, calculate how much savings you will need to reach your retirement goal. Plan on generating a nest egg that can generate 70 to 80 percent of your pre-tax, pre-retirement income. Once you have come up with that amount, think about what you can do to save money on a regular basis. 

Create a budget which includes your recurring expenses. As part of your monthly bills, include your savings contributions. A budget will show you where you are spending your money, and it will help you prioritize which debts should be paid off first. 

Adopt a Savings Mindset 
When you look at the amount of money you will need to save, the number can seem overwhelming. A retirement fund such as a 401(k) or a Roth IRA can significantly increase in value over time. Therefore, make regular contributions to your funds so you can maximize your account’s growth potential. 

If a significant portion of your spending is going toward credit card debt, pay it off as soon as possible. The high interest rates usually exceed any earnings you will receive on your savings. 

Utilize Workplace Retirement Plans 
Many people don’t take advantage of retirement plans at their place of work. In many cases, employers match contributions, which translates to increased savings. If you don’t contribute, you are turning down the opportunity to obtain free money that will earn compound interest! 
Individuals who are self-employed and work for small businesses have options in this area too. Check with your tax specialist to see what types of retirement funds are available. 

If you want to protect your nest egg, a financial consultant will advise you to diversify your portfolio with a combination of stocks and bonds. Your savings configuration should reflect your age and the level of risk you are able to assume during each phase of your life. For example, Fisher Investments has a number of publications that review a variety of retirement investment strategies. 

Additionally, invest in unrelated industries to minimize risk. For instance, there is little chance that the performance of stocks in pharmaceuticals will affect the high technology sector. Also, consider investing in different economies, rather than funds that are focused on a single country or region. 

Watch Your Mortgage 
If you are a homeowner, your residence is a significant asset. If you have a mortgage and interest rates fall, consider refinancing. The cost savings over time will be significant. If your monthly payment has decreased, put the extra money into your retirement savings. 

If possible, pay off your mortgage before you are ready to retire. Eliminating your monthly mortgage payment will automatically increase your income. 
Keep Working 

You don’t have to stop working when you reach retirement age. Instead, reduce your hours or find a less-demanding job. When you work over a longer time span, you will be able to increase your savings portfolio, which allows compound interest to continue to work its magic. 

Although you will be making less money, you will probably have fewer expenses during this time of your life. For instance, your mortgage will be paid off and your children will be finished with college and hopefully on their own. 

Planning for retirement doesn’t have to be an overwhelming experience. If you follow these simple steps, you will have well-defined plan that will point you in the right direction. Once you start saving, you will be able to look forward to the bright future that lies ahead of you.

Read more ...

Sunday, April 10, 2016

How to Start Investing with Only $1,000

So, you are prepared to enter the world of stock market investing and you have set aside only $1,000 for that purpose. However, before you plunge into the complex world of the stock market, there are certain things you should put into consideration. One of the many concerns for investors with limited funds isn't only what to invest in, but also the way to go about the actual investing. You’re going to discover that not long after you enter the stock investing market, you might find yourself facing a lot of considerations from minimum deposit restrictions to the importance of diversification among others.

Do you know the account minimums?
Stock investing may appear straightforward enough for the seasoned investor - All you have to do is open up an account with a brokerage firm. But, is it that simple? What you might not understand is that all financial institutions have minimal deposit conditions. What this means is that unless you deposit a specific amount of money, they will not accept your account application. With an amount as little as $1,000, some firms wouldn’t even consider you as an investor, talk less of opening an account for you.

Discount brokerages have fees that are significantly lower than their counterparts, however do not expect them to assist you with any investment decision. Their charges are low because with them, you're in charge of all investment choices - you can’t ask for investment advice from them. With only $1,000 as a start-up investing amount, you're really on a tightrope as far as minimal deposit goes. Some discount brokerages like Banc De Binary will accept you while others will not. You’re going to need to look around until you find one that will accept your minimal deposit of $1,000.

Know the Costs of Investing
Commissions: Before you set up an investment account, you also have to think about the associated costs that you’re going to attract from buying investments. Usually, it’s going to cost you some money each single time you buy an investment (through commissions). And with a small amount of funds, these broker commissions can really poke a hole on your $1,000.

Furthermore, investing in stocks can really get expensive when you trade continuously, particularly with a minimal amount of money available to invest. Each time that you perform an investment action, whether selling or purchasing a stock, you are going to pay a commission aka trading fee. Trading fees can range anywhere from as low as $10 for each trade to as high as $30 for some discount brokerages.

Use Diversification to Minimise Risk
Some investors regard diversification as the only free lunch in investing. When it comes to diversification, the largest amount of difficulty in doing this may come from investments in stocks. Moreover, with a $1,000 deposit, it's almost impossible to have a well-diversified portfolio, so be mindful that you may need to invest in one or two firms (at the most) to begin with. And this is likely to increase your risk.

A Small Step Toward a Great Future

It’s very possible to invest in stocks with a small amount of money if you’re just starting out. But know that it’s more complex than merely picking the right investment and you must understand about the limitations which you face as a ‘newbie’ investor.
Read more ...

Saturday, February 20, 2016

How automated trading affect future of trading and investing

According to recently released article from Bloomberg: ,,The Rich Are Already Using Robo-Advisers, and That Scares Banks", assets under management in automated programs gradually grow. They should also small investors seek automated solutions for their investments?

Mainstream idea of investing is in passive approach. On the stock markets you are usually trading or better investing in the long-term. It means that you buy shares of a particular company or a whole sector, and hold them. It often indicates the average return of 10% per annum. However, detailed examination shows the fact that achieved return at the investment on the local or regional level, doesn't have to reach positive numbers even in a matter of years. A typical example is Japan where stock market is experiencing bad times for 20 years. This can be good reason to leave old portfolio theory. Investors should in terms of uncorrelated returns and strong balanced portfolio think about adding active trading part. This part can use automated trading which protect investors against psychological aspects of active trading and also optimizes time dedicated to active trading.

Today's technology offers much better conditions to develop and trade automated trading strategies than a few years ago. Computational power together with the involvement of artificial intelligence, machine learning methods and data mining, allow develop and test individual trading logics in fraction of time. Thanks to this can developers of these automated trading strategies discover effective trading logics with predictive capabilities.
Still prevailing opinion that robots cannot replace human. This is the reason of skepticism about automated trading. Investors should realize that automated trading itself is only the end of the whole process. On the beginning is human who define the basics and control the whole process of developing and testing despite the fact that the process is automated. It is much more about looking for objective advantage in the market that can be traded by automated solution. From investor perspective is much easier evaluate results from automated trading than when active trading will make himself.

Automated trading gradually grows and solutions as well. Because the development of automated trading is both financially and knowledge consuming, investors should look for automated solutions, already created by developers for trading. In this point it is more about communication with developer about understanding principles of automated trading solution which he offers. Investors will know, how evaluate results from automated trading, what technological aspects does it contain and what support they receive if anything goes wrong.

Author: Daniel Stepnicka,
Director, Co-Founder of Algofxsolution.com.
Read more ...

Thursday, February 18, 2016

How to Hold Real Estate in your Roth IRA

Real estate as an investment option
After the 2008 global financial crisis, investors are increasingly looking for assets, away from stocks and bonds, that can help diversify their portfolios, act as an inflation hedge, and provide a long-term return for retirement. One such asset is real estate, and it may be best to hold it in a self-directed IRA account, which is run by a third-party administrator and allows the investor to choose what types of investments and asset classes to put in the account. A self-directed Roth IRA offers you the added advantage of compounding your income, gains, or savings tax-free and enables you to invest in real estate such as residential homes, condominiums, commercial properties, co-ops, or even land, all within your Roth IRA.

Things to consider and prepare

Investing in the real estate in a self-directed IRA does require a different mindset because there are a number of rules you must follow, or the tax benefits can be voided. First, you need to find a bank or brokerage that has a qualified trustee or custodian for self-directed IRA and knows how to handle your real estate purchases, administers the account, and files the relevant documents with the IRS. You must also have enough money in your IRA account to buy the real estate investment from your IRA account. Some custodians may allow you to borrow to purchase the property as long as the loan is non-recourse, i.e. the house alone is used as the collateral. You cannot buy a property which you reside in or is a part of your business or buy a property you or your family members own a specified percentage – the IRS bans self-dealing. With a self-directed IRA, you also are the only one responsible for your investment decision and complying with all the regulations and rules for your investments.

Operational procedures
After your IRA custodian has purchased the property for you, the title will be in the name of your IRA custodian. The IRA account pays all the management fees, taxes, insurances, and property-related expenses and so the account needs to have sufficient cash. You could lose the tax benefits or incur penalties if you fund these expenses from your own account.

To have more control over your investments, you can create an LLC that is owned by the IRA to invest for your IRA. With this checkbook control, the IRA owner can write cheques to make purchases, pay property bills and marketing expenses, and have greater control over the assets.

Some advantages and disadvantages
Real estate can provide the owner with long-term investment value with the potential for appreciation. If the property is rented, it can provide the owner with rental income. Not only is real estate a hard asset compared to stocks and bonds but also an investment the investor understands well. The other big advantage is that if you purchase the property from your self-directed Roth IRA without a mortgage, all the rental income will be compounded tax-free. However, if you finance the property purchase with a mortgage, then the rental income becomes unrelated business taxable income, which will be taxed when earned. Another disadvantage is that you cannot claim depreciation when holding the property in the IRA. You will not be able to enjoy any advantage from your property investments until you retire.

REIT can be an easier option
If holding a physical property in your IRA is too much work for you, you can also consider investing in a Real Estate Investment Trust (REIT), which is similar to a mutual fund but invests in the real estate market. REITs are required to pay out 90% of their profits through dividends. However, investors also need to understand any tax implications when holding REITS in the Roth IRA.

Real estate investment is a good investment diversifier and provides long-term value especially when held in a tax-free Roth IRA. As to which type of the IRA accounts or real estate investments suit the investors’ goals the best, the investors will be wise to consult their financial advisers, accountants, and tax professionals first.

Read more ...