Investing in Real Estate Securities for High Yield

November 1st, 2008
Charles and Kim Petty asked:


Investing in real estate requires investment of not only money but also time and efforts. If you do not want to buy a property, rehab, maintain or even rent it out but yet want to enjoy the fruits of investing in real estate, then real estate securities is the right way forward for you. If you have another business but yet wish to dip your fingers in real estate without investing your precious time, then you can choose from any of the following real estate securities.

? Real Estate Limited Partnership. One of the ways to enter into the real estate market without any day-to-day hassles is to become a limited partner in a firm that actively deals in real estate. There can even be additional limited partners in one firm. A general partner will be assigned the task of managing the daily affairs of the company including buying and selling of properties, renting it out, collection of rent, managing expenses, etc. Limited partners can act only in case of any gross mismanagement by the general partner that would necessitate his or her removal from the firm. As a limited partner, you will be able to receive a portion of the profits that your firm generates. The returns in this mode are quite high but so are the risks since there might be many partners involved in a single company. 

? Real Estate Investment Trusts [REITs]. These are companies that must shell out at least 90% of their net income to its shareholders. These companies purchase and oversee various real estate projects and the income generated from such ventures is subject to single taxation at the investor level. Thus, the returns to investment in such an instrument is quite high. There are various REITs that specialize in acquiring, managing and disposing several property sectors such as residential homes, apartments, commercial offices, hotels, warehouses, etc, and even by different regions. This method offers modest capital appreciation in the long run.  

? Real Estate Mutual Funds. Real estate mutual funds invest their money in select REITs and even in other publicly traded companies that are active in the real estate market. These mutual funds thus offer a high yield in the form of dividends. The only problem is that due to the dual fee structure, you will need to pay management fees and expenses to the management of REIT as well as an additional1 to 2% fee to the manager of the real estate mutual funds.  

? High Yield Private Mortgage Notes. Professional real estate investors normally use these notes in the form of loans. They use them to buy, rehab or even equity cash out of various properties that generate income. These notes are also completely guaranteed by matching collateral in the form of productive real estate. These loans are normally for a duration of one year and never exceed 65% of the currently appraised value of property and the income generated is in the form of interest payments. These loans also take less time to get processed as compared to traditional loans that are advanced by lending institutions. Since these loan are backed by real estate, the borrowers credit is not a major problem while securing them. Investors have an opportunity to earn around 12 to 18 percent by investing in these instruments.  

If you are new to such investments, then hire the right professionals to guide you on the best securities that can provide you with the highest returns with the lowest risk. Investing in real estate securities is thus a profitable alternative to directly dealing in real estate.  

Written by: SP

Date Written: 03-07-08

Reviewer Assigned by: David

Reviewed by: AL 

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10 Tips on Planning for Long Term Care

October 27th, 2008
investing for the long term
MatthewPawlina asked:


Long term care is required by the young and old due to a terminal illness, injury or old age.

The period long term care is required can vary from a few days or weeks to many years. According to studies conducted by insurance professionals: around 3% of long term care patients are under 18 years of age; around 40% are between 18 and 64 years of age; and 57% are above 65. And government programs can only pay for around 16% of long term care needs. The rest has to be borne by the people themselves.

Costs of health care are steep and just nursing could cost over USD 40000 a year. Home care too costs over USD 200 a day. Since costs are rising everyday it is best for individuals and families to plan for contingencies like long term care needs by taking insurance policies early.

It is important to create a long term care plan:

1. It is important to prepare for the future from a young age. Invest wisely in insurance plan that will take care of long term needs. Create a folder with instructions detailing care preferences, medical treatments, and the documents that will provide for extended treatments.

2. Choose a care advocate who will ensure that your wishes regarding long term care are carried out. The advocate will take the responsibility of arranging the funding and the care giving services.

3. Invest in a reliable long term care insurance sold by leading insurance companies that will take care of medical as well as non medical needs.

4. Make a thorough research on long term care insurance policies and choose a company that is established and reliable.

5. Plan the premium payments. Ask how much the premiums will cost with increasing age. And make provisions so that you will be in position to pay the premiums when it will really matter and not have to abandon the long term care insurance policy.

6. Ensure that the policy you are selecting covers cost of day-in, day out care and home help, medicines, and doctor’s visits. Take the help of a knowledgeable insurance advisor in case there are any problems.

7. Ask for a policy that includes inflation protection. This is critical in the case of long term care insurance. The options vary from company to company; some offer the right to buy additional coverage in the future while others offer inflation protection within the premiums paid.

8. When filling in forms fill in the answers honestly. Check and recheck the form. Also make sure you understand the fine print in the policy and all the terminology.

9. Ask for outlines of coverage from several companies and compare the coverage before investing in a long term care insurance policy. If you have any doubts get a clarification from the agent or insurance company.

10. Maintain accurate medical records in an accessible file. And keep an update of changes in insurance laws and coverage as time passes by.

Learn how to protect your long term interests.

Social Benefits of Home Ownership

October 24th, 2008
John Harris asked:


People who own their own homes experience many benefits that renters don’t. Numerous studies have shown that homeowners are more likely to be involved in their communities, build wealth, and increase their educational level. Owners of homes are also less likely to be involved in crime or to depend on public assistance. Simply the stability offered by living in one place, and taking pride in the ownership of one’s home, can boost the standard of living. The problem has always been how to make homes affordable to those in greatest need of those benefits.

The wealthy know that a homes’ value will increase over time, and can reduce their taxable income. But there is a huge racial and socioeconomic gap that has been slow to change. The number of minorities who own homes has increased slowly over the past few years. Yet 76% of whites owned homes in 2006, compared with 48.2% of African Americans, and 49.5% of Hispanics. Homes are simply not in reach of a large part of this population. In California in 2007, the average monthly payment of new homes sold to first time buyers was over $3,000.

What’s the Goal?

These numbers are what prompted President Bush to proclaim this past June National Homeownership Month. He announced a goal of increasing the number of minority owners of homes to 5.5 million by 2010. This will be challenging. Despite the current buyer’s market, the cost of starter homes is continuing to rise at a time when lending standards have tightened significantly.

The tighter standards are a result of both the US Congress and the National Association of Realtors pushing for stricter regulations on the lending industry. An increase in foreclosed homes in both 2006 and 2007 is attributed to lenders approving loans to applicants who clearly did not have the means to support them. In addition, the Mortgage Bankers Association reports that up to $1.5 trillion in adjustable rate mortgages will experience increases in their rates this year. While many borrowers will simply refinance on their homes, the tighter regulations mean that many of those who want to refinance won’t be able to. Some will face foreclosure of their homes.

What’s the Plan?

In addition to tighter lending guidelines to protect consumers from losing their homes, other measures are needed. Freddie Mac and Fannie Mae, both government sponsored mortgage groups, will purchase some outstanding sub-prime loans in order to help homeowners refinance and keep their homes. The Federal Reserve is currently holding interest rates steady. This makes conventional mortgages more appealing. Finally, there are many government-sponsored programs to help minority groups buy their first homes. Ultimately, the ability of the lower economic sector of Americans to buy their first homes will impact the rest of the real estate market.

how can I invest in long term stock?

October 22nd, 2008
long term stock investing
manfreeme asked:


I am not interested in day to day trading. What are good companies to invest it in if you are a poor man like me but would like to invest something.
How can I read the investment portfolio?
Someone help so I can save a buck or two..
manfreeme

If the stock market is supposed to be a good long-term investment, why isn’t it more stable?

October 22nd, 2008
long term stock investing
karl_popper_fan asked:


I know over the long run, the stock market is a good investment if a portfolio is diversified, so why is there so much volitility in the short run?

I can see some specific companies or even sectors having huge sell offs, but why would the entire stock market have huge sell offs if people are supposed to weather the bad times and think long term?

Yes, I don’t know much about investing!

TRADING VS. INVESTING - What is more profitable on long term, trading or investing?

October 22nd, 2008
investing for the long term
looser asked:


In theory trading is more profitable because more potential profits can be made but on the other hand it allows to make many mistakes compounding to a poor return. What is your opintion is trading or investing on long term more profitable?

in his speech what u think he is trying to say Robert F. Kennedy?

October 21st, 2008
Confident asked:


Mr. Chancellor, Mr. Vice Chancellor, Professor Robertson, Mr. Diamond, Mr. Daniel, Ladies and Gentlemen:

I come here this evening because of my deep interest and affection for a land settled by the Dutch in the mid-seventeenth century, then taken over by the British, and at last independent; a land in which the native inhabitants were at first subdued, but relations with whom remain a problem to this day; a land which defined itself on a hostile frontier; a land which has tamed rich natural resources through the energetic application of modern technology; a land which was once the importer of slaves, and now must struggle to wipe out the last traces of that former *******. I refer, of course, to the United States of America.

But I am glad to come here, and my wife and I and all of our party are glad to come here to South Africa, and we are glad to come here to Capetown. I am already greatly enjoying my visit here. I am making an effort to meet and exchange views with people of all walks of life, and all segments of South African opinion — including those who represent the views of the government. Today I am glad to meet with the National Union of South African Students. For a decade, NUSAS has stood and worked for the principles of the Universal Declaration of Human Rights — principles which embody the collective hopes of men of good will around the globe.

Your work, at home and in international student affairs, has brought great credit to yourselves and your country. I know the National Student Association in the United States feels a particularly close relationship with this organization. And I wish to thank especially Mr. Ian Robertson, who first extended this invitation on behalf of NUSAS, I wish to thank him for his kindness to me in inviting me. I am very sorry that he can not be with us here this evening. I was happy to have had the opportunity to meet and speak with him earlier this evening, and I presented him with a copy of Profiles in Courage, which was a book written by President John Kennedy and was signed to him by President Kennedy’s widow, Mrs. John Kennedy.

This is a Day of Affirmation — a celebration of liberty. We stand here in the name of freedom.

At the heart of that western freedom and democracy is the belief that the individual man, the child of God, is the touchstone of value, and all society, all groups, and states, exist for that person’s benefit. Therefore the enlargement of liberty for individual human beings must be the supreme goal and the abiding practice of any western society.

The first element of this individual liberty is the freedom of speech; the right to express and communicate ideas, to set oneself apart from the dumb beasts of field and forest; the right to recall governments to their duties and obligations; above all, the right to affirm one’s membership and allegiance to the body politic — to society — to the men with whom we share our land, our heritage and our children’s future.

Hand in hand with freedom of speech goes the power to be heard — to share in the decisions of government which shape men’s lives. Everything that makes man’s lives worthwhile — family, work, education, a place to rear one’s children and a place to rest one’s head — all this depends on the decisions of government; all can be swept away by a government which does not heed the demands of its people, and I mean all of its people. Therefore, the essential humanity of man can be protected and preserved only where the government must answer — not just to the wealthy; not just to those of a particular religion, not just to those of a particular race; but to all of the people.

And even government by the consent of the governed, as in our own Constitution, must be limited in its power to act against its people: so that there may be no interference with the right to worship, but also no interference with the security of the home; no arbitrary imposition of pains or penalties on an ordinary citizen by officials high or low; no restriction on the freedom of men to seek education or to seek work or opportunity of any kind, so that each man may become all that he is capable of becoming.

These are the sacred rights of western society. These were the essential differences between us and **** Germany as they were between Athens and Persia.

They are the essences of our differences with communism today. I am unalterably opposed to communism because it exalts the state over the individual and over the family, and because its system contains a lack of freedom of speech, of protest, of religion, and of the press, which is characteristic of a totalitarian regime. The way of opposition to communism, however, is not to imitate its dictatorship, but to enlarge individual human freedom. There are those in every land who would label as communist every threat to their privilege. But may I say to you , as I have seen on my travels in all sections of the world, reform is not communism. And the denial of freedom, in whatever name, only strengthens the very communism it claims to oppose.

Many nations have set forth their own definitions and declarations of these principles. And there have often been wide and tragic gaps between promise and performance, ideal and reality. Yet the great ideals have constantly recalled us to our own duties. And — with painful slowness — we in the United States have extended and enlarged the meaning and the practice of freedom to all of our people.

For two centuries, my own country has struggled to overcome the self-imposed handicap of prejudice and discrimination based on nationality, on social class or race — discrimination profoundly repugnant to the theory and to the command of our Constitution. Even as my father grew up in Boston, Massachusetts, signs told him that No Irish Need Apply. Two generations later, President Kennedy became the first Irish Catholic, and the first Catholic, to head the nation; but how many men of ability had, before 1961, been denied the opportunity to contribute to the nation’s progress because they were Catholic, or because they were of Irish extraction? How many sons of Italian or Jewish or Polish parents slumbered in the slums — untaught, unlearned, their potential lost forever to our nation and to the human race? Even today, what price will we pay before we have assured full opportunity to millions of Negro Americans?

In the last five years we have done more to assure equality to our Negro citizens and to help the deprived, both white and black, than in the hundred years before that time. But much, much more remains to be done.

For there are millions of Negroes untrained for the simplest of jobs, and thousands every day denied their full and equal rights under the law; and the violence of the disinherited, the insulted and the injured, looms over the streets of Harlem and of Watts and Southside Chicago.

But a Negro American trains as an astronaut, one of mankind’s first explorers into outer space; another is the chief barrister of the United States government, and dozens sit on the benches of our court; and another, Dr. Martin Luther King, is the second man of African descent to win the Nobel Peace Prize for his non-violent efforts for social justice between all of the races.

We have passed laws prohibiting discrimination in education, in employment, in housing; but these laws alone cannot overcome the heritage of centuries — of broken families and stunted children, and poverty and degradation and pain.

So the road toward equality of freedom is not easy, and great cost and danger march alongside all of us. We are committed to peaceful and non-violent change and that is important for all to understand — though change is unsettling. Still, even in the turbulence of protest and struggle is greater hope for the future, as men learn to claim and achieve for themselves the rights formerly petitioned from others.

And most important of all, all the panoply of government power has been committed to the goal of equality before the law — as we are now committing ourselves to achievement of equal opportunity in fact.

We must recognize the full human equality of all of our people — before God, before the law, and in the councils of government. We must do this, not because it is economically advantageous — although it is; not because the laws of God command it — although they do; not because people in other lands wish it so. We must do it for the single and fundamental reason that it is the right thing to do.

We recognize that there are problems and obstacles before the fulfillment of these ideals in the United States as we recognize that other nations, in Latin America and in Asia and in Africa have their own political, economic, and social problems, their unique barriers to the elimination of injustices.

In some, there is concern that change will submerge the rights of a minority, particularly where that minority is of a different race than that of the majority. We in the United States believe in the protection of minorities; we recognize the contributions that they can make and the leadership they can provide; and we do not believe that any people — whether majority or minority, or individual human beings — are expendable in the cause of theory or policy. We recognize also that justice between men and nations is imperfect, and that humanity sometimes progresses very slowly indeed.

All do not develop in the same manner and at the same pace. Nations, like men, often march to the beat of different drummers, and the precise solutions of the United States can neither be dictated nor transplanted to others, and that is not our intention. What is important however is that all nations must march toward increasing freedom; toward justice for all; toward a society strong and flexible enough to meet the demands of all of its people, whatever their race, and the demands of a world of immense and dizzying change that face us all.

In a few hours, the plane that brought me to this country crossed over oceans and countries which have been a crucible of human history. In minutes we traced migrations of men over thousands of years; seconds, the briefest glimpse, and we passed battlefields on which millions of men once struggled and died. We could see no national boundaries, no vast gulfs or high walls dividing people from people; only nature and the works of man — homes and factories and farms — everywhere reflecting man’s common effort to enrich his life. Everywhere new technology and communications brings men and nations closer together, the concerns of one inevitably become the concerns of all. And our new closeness is stripping away the false masks, the illusion of differences which is at the root of injustice and **** and war. Only earthbound man still clings to the dark and poisoning superstition that his world is bounded by the nearest hill, his universe ends at river’s shore, his common humanity is enclosed in the tight circle of those who share his town or his views and the color of his skin.

It is your job, the task of the young people in this world to strip the last remnants of that ancient, cruel belief from the civilization of man.

Each nation has different obstacles and different goals, shaped by the vagaries of history and of experience. Yet as I talk to young people around the world I am impressed not by the diversity but by the closeness of their goals, their desires, and their concerns and their hope for the future. There is discrimination in New York, the racial inequality of apartheid in South Africa, and serfdom in the mountains of Peru. People starve to death in the streets of India; a former Prime Minister is summarily executed in the Congo; intellectuals go to jail in Russia; and thousands are slaughtered in Indonesia; wealth is lavished on armaments everywhere in the world. These are different evils; but they are the common works of man. They reflect the imperfections of human justice, the inadequacy of human compassion, the defectiveness of our sensibility toward the sufferings of our fellows; they mark the limit of our ability to use knowledge for the well-being of our fellow human beings throughout the world. And therefore they call upon common qualities of conscience and indignation, a shared determination to wipe away the unnecessary sufferings of our fellow human beings at home and around the world.

It is these qualities which make of our youth today the only true international community. More than this I think that we could agree on what kind of a world we want to build. It would be a world of independent nations, moving toward international community, each of which protected and respected the basic human freedoms. It would be a world which demanded of each government that it accept its responsibility to insure social justice. It would be a world of constantly accelerating economic progress — not material welfare as an end in of itself, but as a means to liberate the capacity of every human being to pursue his talents and to pursue his hopes. It would, in short, be a world that we would all be proud to have built.

Just to the North of here are lands of challenge and of opportunity — rich in natural resources, land and minerals and people. Yet they are also lands confronted by the greatest odds — overwhelming ignorance, internal tensions and strife, and great obstacles of climate and geography. Many of these nations, as colonies, were oppressed and were exploited. Yet they have not estranged themselves from the broad traditions of the West; they are hoping and they are gambling their progress and their stability on the chance that we will meet our responsibilities to them, to help them overcome their poverty.

In the world we would like to build, South Africa could play an outstanding role, and a role of leadership in that effort. This country is without question a preeminent repository of the wealth and the knowledge and the skill of the continent. Here are the greater part of Africa’s research scientists and steel production, most of it reservoirs of coal and of electric power. Many South Africans have made major contributions to African technical development and world science; the names of some are known wherever men seek to eliminate the ravages of tropical disease and of pestilence. In your faculties and councils, here in this very audience, are hundreds and thousands of men and women who could transform the lives of millions for all time to come.

But the help and leadership of South Africa or of the United States cannot be accepted if we — within our own countries or in our relationships with others — deny individual integrity, human dignity, and the common humanity of man. If we would lead outside our own borders; if we would help those who need our assistance; if we would meet our responsibilities to mankind; we must first, all of us, demolish the borders which history has erected between men within our own nations — barriers of race and religion, social class and ignorance.

Our answer is the world’s hope; it is to rely on youth. The cruelties and the obstacles of this swiftly changing planet will not yield to obsolete dogmas and outworn slogans. It cannot be moved by those who cling to a present which is already dying, who prefer the illusion of security to the excitement and danger which comes with even the most peaceful progress. This world demands the qualities of youth: not a time of life but a state of mind, a temper of the will, a quality of imagination, a predominance of courage over timidity, of the appetite for adventure over the life of ease — a man like the Chancellor of this University. It is a revolutionary world that we all live in; and thus, as I have said in Latin America and Asia and in Europe and in my own country, the United States, it is the young people who must take the lead. Thus you, and your young compatriots everywhere have had thrust upon you a greater burden of responsibility than any generation that has ever lived.

There is, said an Italian philosopher, nothing more difficult to take in hand, more perilous to conduct, or more uncertain in its success than to take the lead in the introduction of a new order of things. Yet this is the measure of the task of your generation and the road is strewn with many dangers.

First is the danger of futility; the belief there is nothing one man or one woman cando against the enormous array of the world’s ills — against misery, against ignorance, or injustice and violence. Yet many of the world’s great movements, of thought and action, have flowed from the work of a single man. A young monk began the Protestant reformation, a young general extended an empire from Macedonia to the borders of the earth, and a young woman reclaimed the territory of France. It was a young Italian explorer who discovered the New /world, and 32 year old Thomas Jefferson who proclaimed that all men are created equal. Give me a place to stand, said Archimedes, and I will move the world. These men moved the world, and so can we all. Few will have the greatness to bend history; but each of us can work to change a small portion of the events, and in the total of all these acts will be written the history of this generation. Thousands of Peace Corps volunteers are making a difference in the isolated villages and the city slums of dozens of countries. Thousands of unknown men and women in Europe resisted the occupation of the ***** and many died, but all added to the ultimate strength and freedom of their countries. It is from numberless diverse acts of courage such as these that the belief that human history is thus shaped. Each time a man stands up for an ideal, or acts to improve the lot of others, or strikes out against injustice, he sends forth a tiny ripple of hope, and crossing each other from a million different centers of energy and daring those ripples build a current which can sweep down the mightiest walls of oppression and resistance.

If Athens shall appear great to you, said Pericles, consider then that her glories were purchased by valiant men, and by men who learned their duty. That is the source of all greatness in all societies, and it is the key to progress in our own time.

The second danger is that of expediency; of those who say that hopes and beliefs must bend before immediate necessities. Of course if we must act effectively we must deal with the world as it is. We must get things done. But if there was one thing that President Kennedy stood for that touched the most profound feeling of young people across the world, it was the belief that idealism, high aspiration and deep convictions are not incompatible with the most practical and efficient of programs — that there is no basic inconsistency between ideals and realistic possibilities — no separation between the deepest desires of heart and of mind and the rational application of human effort to human problems. It is not realistic or hard-headed to solve problems and take action unguided by ultimate moral aims and values, although we all know some who claim that it is so. In my judgement, it is thoughtless folly. For it ignores the realities of human faith and of passion and of belief; forces ultimately more powerful than all the calculations of our economists or of our generals. Of course to adhere to standards, to idealism, to vision in the face of immediate dangers takes great courage and takes self-confidence. But we also know that only those who dare to fail greatly, can ever achieve greatly.

It is this new idealism which is also, I believe, the common heritage of a generation which has learned that while efficiency can lead to the camps at Auschwitz, or the streets of Budapest, only the ideals of humanity and love can climb the hills of the Acropolis.

A third danger is timidity. Few men are willing to brave the disapproval of their fellows, the censure of their colleagues, the wrath of their society. Moral courage is a rarer commodity than bravery in battle or great intelligence. Yet it is the one essential, vital quality for those who seek to change the world which yields most painfully to change. Aristotle tells us At the Olympic games it is not the finest or the strongest men who are crowned, but those who enter the lists. . .so too in the life of the honorable and the good it is they who act rightly who win the prize. I believe that in this generation those with the courage to enter the conflict will find themselves with companions in every corner of the world.

For the fortunate amongst us, the fourth danger is comfort; the temptation to follow the easy and familiar path of personal ambition and financial success so grandly spread before those who have the privelege of an education. But that is not the road history has marked out for us. There is a Chinese curse which says May he live in interesting times. Like it or not, we live in interesting times. They are times of danger and uncertainty; but they are also the most creative of any time in the history of mankind. And everyone here will ultimately be judged — will ultimately judge himself — on the effort he has contributed to building a new world society and the extent to which his ideals and goals have shaped that effort.

So we part, I to my country and you to remain. We are — if a man of forty can claim the privelege — fellow members of the world’s largest younger generation. Each of us have our own work to do. I know at times you must feel very alone with your problems and with your difficulties. But I want to say how impressed I am with what you stand for and for the effort you are making; and I say this not just for myself, but men and women all over the world. And I hope you will often take heart from the knowledge that you are joined with your fellow young people in every land, they struggling with their problems and you with yours, but all joined in a common purpose; that, like the young people of my own country and of every country that I have visited, you are all in many ways more closely united to the brothers of your time than to the older generation in any of these nations; you are determined to build a better future. President Kennedy was speaking to the young people of America, but beyond them to young people everywhere, when he said The energy, the faith, the devotion which we bring to this endeavor will light our country and all who serve it — and the glow from that fire can truly light the world.

And, he added, With a good conscience our only sure reward, with history the final judge of our deeds, let us go forth and lead the land we love, asking His blessing and His help, but knowing that here on earth God’s work must truly be our own.

I thank you.

Long term investing for a future child?

October 21st, 2008
investing for the long term
theyoungone2005 asked:


I am a 21 yr old male and I want to start some really long term investing for my future kids…. yeah it may seem kinda weird or stupid right now…. but hey… I am more mature than a majority of the boys my age.

What kinds of options should I look at? I will be putting in a very small amount each month to whatever it will be because I am starting some other investment ventures as well for myself.

Thank you!

High Risk, Moderate Risk And Low Risk Investments

October 20th, 2008
limit risk in investments
Connie Barker asked:


For those looking to invest, you should know that many investments can be categorized as being high risk, moderate risk and low risk. Investing is not difficult, but you should always put lots of thought and planning into it. It is also extremely important to educate yourself about the many different investments available to you so you can find those that fit best with your specific situation and lifestyle. Here are some tips regarding the three categories of investing.

Low Risk Investments

While low risk investments are usually very low key and rarely are extremely glitzy or publicized, they do offer conservative investors a way to save money for the short or long term without the risk involved that you find in other forms of investing. Low risk investments usually pay the lowest yields, but are far less volatile than many other types of investments. Low risk investments include money market funds, certificate of deposits and some types of bonds. Low risk investments are perfect for those that want to make sure there money remains safe and secure. While low risk investments don’t offer high returns, they do offer stability and security for those that can’t afford to lose money or would just like to avoid as much risk as possible. Expect low risk investments to pay out yields of 1% to 5% annually.

Moderate Risk Investments

Moderate risk investments are perfect for those that are interested in investing for the long term and would like to earn moderate yields. Moderate risk investments are usually certain kinds of stocks, bonds and mutual funds that pay handsomely over the long term. While generally riskier than saving money in a bank, for those that are looking to invest for the long term, historically speaking you will grow your money quite nicely. Moderate risk investments usually use the power of compound interest and time to create a nest egg from 10 to 40 years with regular savings. For instance, saving 1K per year at an interest rate of 10% for 30 years can return close to 200K. Moderate risk investments usually return yields of 5% to 12%.

High Risk Investments

High risk investments are those investments that if you are lucky can return huge yields, however the downturn is that they can be extremely volatile and in many cases instead of getting rich off your investment, you find yourself losing some or all of it. High risk investments include penny stocks, international stocks, some types of Forex trades, etc. The sky is the limit for returns, but many high risk investments- if considered a winner should return yields that range from 10% to 30%++.

Managing Risk & Shares

October 20th, 2008
Phil Wengier asked:


Managing Risk

Every deal, trade, investment or business must be undertaken on the basis of a strictly applied limited risk approach. That is, you should only be prepared to lose a fixed andlimited amount of money on the investment.

You have no control over what the market will do; you have no control over the share price. Strangely, however, one of the few factors completely in your control is how much you are prepared to lose.

Each time money is invested in a share, the risk being assumed by that investment action must be identified before the investment is made. Once the risk amount has been identified,the next decision is to decide on the method of risk control which will be employed as part of the investment plan. Saratoga’s Safe Investing Method™ uses three alternative risk control methods.

Each investment must also have the potential for profit of several times the risk.By strictly applying this rule for every investment, the overall profits will end up greater than losses incurred.

You never know whether a share investment (or other investment) will profit when you enterinto it. Every investment you undertake must therefore have a risk-to-reward ratio of better

than 1 to 2. Then, even if only half of your investments are winners, you must make money.

It is good practice to target a minimum of 1 to 3 risk-to-reward ratio.

Managing Money Through Diversification

There needs to be a spread of investments (or trades or deals), in order to ensure an overall profit. If you knew which particular investment or share would provide the best return in the future then you could put all of your money into just that one investment and wait for the return. Unfortunately, no one knows the future, so putting all your eggs in one basket is a very high risk strategy.

Any deal, trade, or investment can completely fail. Occasionally one will. Rarely, a bluechip company will go into bankruptcy. These factors are not known up-front at the time of making the investment. If they were, you would not make that investment.

The safeguard for this contingency is to invest only a small percentage of your wealth in any

single investment. This is called diversification. For example, assume you had ten different investments each of equal value, and one of them failed completely, then at worst you have only lost 10% of your wealth. It is probable that you will still make an overall positive return for the year despite this major failure as the other 90% of your wealth continues to work for you.