Categories
Investors‎

The Importance Of Long Term Thinking In Property Investment

The recession, market inexperience and the urge to protect what is yours can make knowing how to make the best investments- be it in investment property or the stock market- seem impossible. It’s tempting to take the short-term view, and it’s natural to panic when you see your hard-won investment on a downhill. But property, like many other investment classes, needs a long-term strategy to allow compounding of your asset value to take place.

Compound interest can’t be all that, surely?

Oh yes, it can. Compounding is the process where the interest your money earns this year is added back to your principal, and then earns more interest next year…and so on. It sounds really simple, but spend three minutes with Google for a few examples if you’re still skeptical about how impressive the results of compounding are. It’s a powerful growth force, and one present in any investment that grows faster than inflation- so it’s very relevant to your investment property’s value- but it only works if given the time to do so. You’re more likely to lose money over the short-term then gain it, but more likely to gain then lose over the long term.

That can’t work like that?

There is one problem with the many examples websites give of compounding- it presents it as a straight line of growth. Anyone who’s spent any time around investment knows that doesn’t happen like that. There’s peaks and dips in any asset class, be it investment property or the stock market. The thing is, these classes still make great returns on average- so while there may be a loss one year, a few years of fabulous gains make it all average out to a nice overall growth rate. So you arrive at a situation where if you sell in 3 years you could make a catastrophic loss, but in 20 the property would make a massive gain.

Why is a short-term strategy a bad idea?

The longer you retain your investment property, the more that power of averages is going to work for you. Think of the example above. 1 bad year in 20 is nothing- 1 bad year in 3 is a third of your investment term! The economic market, as we’ve said, is not stable. Think of just a few things that have happened recently- most Australians will remember unforeseen menace that was the Global Financial Crisis with heavy hearts. For those who sold at that time, it was a disaster as all their gains were wiped out- but those who were able to hang on to their investment property over that time will now see a recovery and ultimately those properties will prove sound investments as good years and the occasional incredible year buoy up the damage of the bad ones.

Sudden unforeseen crisis isn’t the only pitfall of short term investment, of course. The market is always ebbing and flowing, and other facets such as changing governmental policies and the discovery or new resources in areas can all influence whether the market will peak or flop in any individual year. So, when you’re considering your investment property, keep these things in mind:
* The power of compounding
* The power of averages
* The natural fluctuations year-to-year [and that they aren’t impossible to outlast]

Overall, it’s not half as important to make a profit this year as it is to make a profit over many years- thereby leads the path to a sound, profitable investment. When choosing your investment property, it’s absolutely vital to consider it a long term investment, not a short one.

Categories
Investors‎

Short Course on Investments – Getting to Square 1

Things You Should Know About Day Trading More and more people these days are into day trading and if you want to know the reasons, just keep on reading this article for more information. There are different ways to buy and sell day trading, you can do it using currencies, commodities and stocks. Through this, you can easily get your money just by selling and buying. The truth is that the day trading is not the same with the general kind of trading when it comes to time. In this article, you can learn more information about day trading, so read on until the end. The other important thing you need to know about day trading is that the time range for trading is not the same the entire day in terms of minutes, seconds and more. Aside from that, it also depends on the status of the trade. If you start playing the day trading, you can do once or more trades in a single say. Before you start playing with day trading, it is important that you also know the different kinds of day trading there is. When it comes to day trading, you can encounter the ranging trades, counter-trend trades and trend trades as different kinds of day trading. With the trend trades, the main focus is on the movement of the current price in the market. With this, as a trader, you need to buy the price it is high and sell it if it is down. With the counter trade day trading, you need to trade without following the stream buying. If the market has a sideways movement, that is when the ranging trade becomes significant. The truth is that most people these days would prefer the single trade kind of day trading. By saying day trading, the best option for you to choose is the one that fits you the most. Aside from that, it is also best if you depend the day trading type you choose on the current movement on the market.

What Research About Investments Can Teach You

When it comes to day trading, it is also important for a trader to know the different services offered and equipment needed. The truth is that there are now lots of traders these days who do their day trading online because of modern technology. The good thing with this is that you can now trade no matter where you are in the world. Of course, this can be done using some charting software, telephone and trading software. The other good thing about the day trading is that it has market data and brokerage as some of it services. The other good thing about the services offered by the day trading is that they are also available online. Before you start doing the day trading, you first have to make sure that you are familiar with the different risks involved.What Do You Know About Trades

Categories
Investors‎

How to opt for the right investment plan

Everyone aspires for happy and lavish lifestyle. We constantly strive to make some kind of investment to yield some good returns from the market. This investment can range from equities to debt and stocks to mutual funds etc. However, with the modern day efforts and market analysis, financial experts say one of the best ways to enhance your funds in systematic pattern is through the Investment Insurance Plans. These plans give policyholder the benefits of both the worlds, saving as well as methodical increase in the assets. Whether you want to fulfill your long-term goals or take care of your short- term responsibilities, investment insurances are suitable for both kinds of requirements. Thus, a policyholder is not only getting guaranteed returns but he or she is also suitably covered with insurance while running his or her race to earn sufficient money.

Types of Investment insurance Plans:

Unit Linked Investment Plans (ULIP):

ULIPs are a common type of investment plan where part of investment goes for insurance cover while the remaining portion is invested in various equity and debt schemes. These plans are suitable in fast building a large corpus. These investments are directly related to the performance of markets, because of which they offer comparatively higher but volatile returns. Considered to be flexible and transparent, these plans offer investors with capital guarantees.

Endowment Plan:

Endowment plans are generally for people who donot wish to take financial risks. It presents investor with a life cover but with comparatively lower returns. These plans guarantee returns to the investors, mostly at the time of maturity.

Systematic Investment Plan (SIP):

A popular form of investment, in SIP a person invests in mutual fund schemes. Here the investor can withstand the volatility of an unpredictable market with the help of Net Asset Value (NAV) that defines the units one might own. Try giving post-dated cheques which will easily transfer money from savings account to mutual funds.

‘With Profit’ Plans:

In “With profit” plans the investments are done on a range of assets which in turn provide investors with good returns on their policies; usually in the form of bonuses. These guaranteed bonuses are declared on per annum basis.

Why Investment Insurance Plans?

Investment insurance plans help investors to build a large corpus over the long-term time frame. On maturity, bonuses are offered along with a guaranteed sum. The flexibility of the plans allows choosing a suitable policy period. These plans offer an opportunity to do goal-based savings. Besides, they can be utilized to tax benefits for investors under section 80C and 10(10D) of Income Tax Act. Consumers can also get a loan against such policies. This investment insurance serves as protection for investors and his/her family.

How to choose an Investment plan:

*First review your financial needs, risks taking capacities and the period till which you would like to invest. Decide a final goal and then choose a suitable investment plan
*Try to begin with small amount, which can be increased gradually.
*Go for both liquidity and fixed investments. This will allow you to use your investment in emergency as well as curb over-expenditure of the same.
*Ensure that your plan allows switching
*After investing, keep an annual reviewing portfolio
*Based on your suitability select a premium payment option
While choosing investment insurance plans one must not get into over-exposure of a single market instrument. It is advisable to evaluate all market options and invest accordingly. Always compare various investment plans because not every plan fulfils every investment goal you have. Evaluate every aspect of a plan and then make a purchase.