Exciting Trends for Investing

Every year different investment trends are noted but since the most recent financial crisis, things have really changed. Because of the consequences of the crisis, investors, as well as financial advisors have had to look at the world of investing in a much different way. In fact, in looking at financial portfolios from 10 years ago to today it is easy to see they are being created differently. We wanted to offer information about some of the unique opportunities that investing offers today.

However, before making the decision to invest, an individual needs to learn the best approach. More and more investors are now taking a tactical approach to processes such as asset allocation and fund selection. In addition to this, many of the older metrics and tools used have now been replaced with modern solutions. Again, someone who wants to become a successful trader needs to have insight into the types of strategies currently used.

Remember, the key to success in today’s investing market is to understand changes that have occurred over the years and the different opportunities available. For this reason, anyone interested in investing needs to make every effort to learn as much as possible. This is a very serious career but with the right knowledge and skill, it is an exciting and lucrative choice. However, all investments come with risk but there are ways to reduce them, which is part of the learning process.

Tips for Good Investing

It is imperative for investors to have some level of protection from adverse movements associated with different markets. While there are different options, one of the most One of the best ways to accomplish this goal is by creating an investment portfolio, one that is both strong and diverse. However, the portfolio must also be based on some of the new trends seen with investments. Any of the following are good options:

  • ETFs
  • Funds
  • Managed Accounts

Keep in mind that for each of the items listed above, individual products would be chosen. Depending on the type of investment chosen, someone new to investing might do quite well but for more complex investments or even if someone needs assistance, a professional advisor or broker could assist.

Generational Investing

Different generations should also be considered when an individual chooses a type of investment but also as the portfolio building process. Over the past 10 years, the stock market has experienced major changes. For instance, this market has attracted an entirely new kind of investor, primarily people from Generation Y, which consists of people born during the 1970s. Interestingly, people in this generation are more cautious about investing options than earlier generations were.

Another comparison of other generations to Generation Y is that most people are actually more financially stable. As a result, they are in a better position to invest even though more cautious. Additionally, people from Generation Y have different types of financial obligations. For instance, many people are still paying off college loans. The point is that investing has changed significantly from one generation to another.

While people from Generation Y are in good financial standing overall, the group most interested in building a strong investment portfolio includes people from the Baby Boomer generation. People within this age group recognize the benefits of being prepared for retirement, which is why the good investing has become so critical. This group consists of people who are divorced, currently have children in college, have not made appropriate plans for retirement, and those far in debt. For these people, a strong investment portfolio is invaluable.

There is a third generation of people that need to be mentioned. Individuals who lived during the Great Depression have personally experienced major economic changes but when compared to the other two generations, savings is vital. Many of these people lived on little food during a very dark period of history so putting money aside, whether in a standard savings account or through investments is a top priority. The biggest challenge is that these people do not usually like change but as mentioned, with so many trends in the world of investing, there has to be some degree of flexibility.

Conclusion

These are just a few examples of things that have prompted investors and investment advisors to approach the market with a unique strategy and different attitude. For the person interested in investing, it is more important than ever to understand all the different investment opportunities and to make sound decisions.

Benefit With Systematic Investment Plan Advantage

Systematic investment Plan advantage can be taken by any investor who can spare at least 500 rupees per month. Some funds offer SIP Plans with an investment as low as 100 rupees. But for most of the funds minimum investment per month is 500 rupees. Most people have misconception that to invest large sums of money is required. But starting with an amount as low as 500 rupees per month can accumulate huge wealth in long term. It is a fact that people have many dreams or goals like better education for children, foreign vacation, dream home or happy retirement. But with limited income most people do not understand how to reach those goals.

Systematic investment Plan advantages are not limited only to low amount of investment. We know that it is almost impossible to time the market highs and lows. Most people lose money investing in shares due to timing the market rather than being a long term investor. Even the best of the investors or traders often miss market direction. For a layman or investor with little time and resources to research market moves, Systematic investment Plan advantage is unparalleled. With rupee cost averaging one can invest regularly in equities without worrying about timing the markets highs and lows. In long term, rupee cost averaging helps to accumulate wealth which is an advantage of Systematic investment Planning.

Usually investors keep averaging same number of shares/unit whenever there is a decline in the price and never while the price is rising. In the long bull run this may be an opportunity loss as no further investments are made. Rupee cost average through SIP works irrespective of market highs and lows. When the market keeps decreasing, more number of units are accumulated and less number of units are accumulated when market is increasing.

To take Systematic investment Planning advantage you must keep invested for long term. Historically it is seen that SIP works best when invested for long term. Earlier, advisers used to suggest 3 to 4 years as long term. But after 2008 market collapse, investors could not recover their losses even after investing for almost 5 more years. It is better to consider long term as a full market cycle rather than in years.

SIP investing allows investors to be balanced in their investment decisions. Disciplined and Balanced investment is another advantage of Systematic investment Plan. Investors with long term goal oriented investments often do not take investment decisions in haste and avoid panic selling or greedy buying. It is noticed many times that investors who associate their investments with goals are more balanced in their decisions.

One can choose different intervals like daily, weekly, monthly or quarterly averaging while investing through SIP which is another Systematic investment Plan advantage. Investors have the option to choose fixed dates on which their accounts are debited for the fixed amount they wish to invest. If the day chosen happens to holiday, amount gets debited on next working day.

Another Systematic investment Plan advantage is the flexibility in payment options like ECS (Electronic Clearance Scheme), Auto debit and post dated cheques. Out of the options, ECS is most convenient option for most of the investors.

For small investors who wish to invest less than 50000 per year in a mutual fund, PAN card is not mandatory. KYC can be completed with submitting voter identity card or driving license.

Benefits of Borrowing for SMSF Property Investment

Self managed super funds (SMSFs) are becoming increasingly popular in Australia. This trend is making it possible for individuals to use their retirement savings to invest in residential property. Typically, an SMSF would contribute a deposit and then borrow the remaining required funds to purchase an SMSF property. This article explains some of the benefits of borrowing for the purpose of SMSF property investment.

1. Greater investment choice
Without borrowing most SMSFs simply aren’t large enough to afford property at all. Others may be large enough but would need to use a high proportion of their funds leaving them in a position where their investments are not sufficiently diversified.

By borrowing, more SMSFS can now afford to include property in their assets. This gives the SMSF more choice of assets and aids diversification.

2. Leveraged Investment
Borrowing to purchase property can allow SMSFs to leverage their assets for greater growth.

3. Negative gearing to reduce tax
In many cases property investment will be negatively geared. That is, after allowing for interest on borrowings, holding costs and depreciation the property makes a tax loss. This tax loss can be off-set against other taxable income of the SMSF (e.g. member contributions, interest on cash assets) to reduce the tax payable by the SMSF.

4. Capital gains tax reduction
Taxing of capital gains incurred by SMSFs is different than the rules for “outside super”. A SMSF would pay 15% on capital gains for property sold within 12 months, and effectively 10% where the property is held for over 12 months (the SMSF only needs to declare 2/3 of the capital gain which is taxed at 15%). But most importantly no capital gains tax would be payable if the property is sold when the SMSF is in pension phase.

5. Direct Control and member preference
Often, people choose to establish an SMSF because they want more direct control over their superannuation investment strategy and asset choice. Property is an asset which gives the SMSF member more direct control and is therefore a natural fit with SMSFs. Many people have a preference for “bricks and mortar” assets which until recently have been out of reach for most SMSFs

6. Member investment skill
In some cases the SMSF trustee may already have significant skill in property investing which can be utilised by the SMSF. In some cases people may have invested in property “outside super” but exhausted their capacity to continue to invest and an SMSF will allow them to utilise their property investment skills to invest for their retirement “inside super”.

7. Volatility
While each individual investment needs to be assessed on its own merits however median Australian property prices when compared with say Australian share market indexes such as the all ordinaries have been less volatile. This may suit some SMSF investment strategies.

SMSF property investment can be a great investment technique that considerably adds to an individual’s retirement savings. By combining this with the added advantages of borrowing for investment purposes, it’s possible to dramatically improve the SMSF’s returns on investment.

Key Benefits Of Investing In Mutual Funds

All types of investments come with some sort of risk and normally has its ups and downs. The same can be said for mutual fund investments although the level of risk is much lower then investing in directly into stocks since a mutual fund is a collective investment that uses money from the investor to purchase a group of stocks/investments as the value of those investments increase and decrease so to does the value of the fund. There are both pros and cons with mutual fund investing but for today we are just going to focus on the benefits listed below.

Typically the most reassuring part of investing in a mutual fund is the knowledge that your fund is being managed and taken care of by a professional. When you buy and sell stocks and bonds, your best weapon beside due diligence is your gut instinct and a dogeared copy of the Wall Street Journal. With mutual funds, you’re trusting your investment to an expert or experts people whom probably have the Journal memorized and also has an entire corporation’s brain trust at their disposal. Its always a good idea to look into the mutual fund your thinking of buying previous history, success and do at least a quick Google search try to see what others maybe saying about the fund in question.

For investors working on a tight budget that do not have much wiggle room, mutual funds are a great choice because they have maximum liquidity. Liquidity refers to how easy it is to get your cash back should you ever need it or simply want out of the investment. With some investments (especially low risk investments), your money can be tied up for extended periods of time with no way for you to access it without huge penalties or complete forfeit of any profits earned so far. You can hold onto a fund as long or you wish or you can sell at the end of every trading day so you can have instant almost instant access to your investment money anytime.

A popular phrase associated with investing and used by many investors is diversification. Being a diverse investor means you don’t want all of your investments in the same thing. Since a fund will invest in stocks, commodities, bonds and other things, you can start to diversity your current investment portfolio instantly by investing in mutual funds.

Another attractive benefit for those that are new to investing is how easy mutual fund investing is. Most investors don’t even have to worry about paying the proper tax and keeping the right records because the companies provide this service for you as part of managing your money. They are a fantastic way for first time investors to experiment with the market and investing as a whole.

Finally, you will have a wide variety of choice of what type of fund you are going to invest into. No matter how much or how little you want to invest, how much risk your willing to take or what your short and long term goals are, there is a fund that will suit your needs.

Again its important to state no form of investing is completely risk free, mutual funds provide a wide range of options that are perfect for first time investors and seasoned pros, alike. For a growing number of investors, mutual funds are the best investment vehicle available.