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Lessons From The Intelligent Investor
If you're like a lot of people watching the recession unfold, you have likely started to look at your finances under a microscope. Perhaps you have started saving the annual savings rate by people has started to recover a bit.
Before you draw a conclusion ask yourself, can you name a more profitable alternative A portfolio of S&P 500 stocks that yield dividends at a rate of less than 2.0 percent a year U.S. Treasury bonds that pay interest of 4.0 to 4.5 percent. Corporate bonds that might give you a point or two more interest than treasuries Hedge funds Private equity Commodities Savings accounts Certificates of Deposits I challenge anyone to run the numbers that will show the superiority of any of these choices. to bonds, commodities, and hedge funds, the investment landscape is littered with the shriveled net worth of those who attempted to navigate those rocky roads to real wealth.)
Another form of risk involves spreading capital among markets with dissimilar features. Popularly called diversification or the avoidance of losing all invested capital in a single investment choice, the risk here is more accurately distinguished as asset allocation, or placing capital in entirely different markets. Diversification is best understood as placing funds in several different stocks or investing in mutual funds to spread risk asset allocation is more closely associated with disparate market selection, such as stocks, savings, and real estate. Because real estate requires a large sum of investment capital, even in the form of a leveraged down payment, it is easy to forget or ignore the importance of asset allocation. Applying the concept of asset allocation is often difficult for investors of moderate means it is difficult to diversify limited capital within the real estate asset class. The risk remains, however if most of an individual's capital is placed in real estate,...
Mortgage Pools A relatively safe method of investing in debt is through what is called the secondary market for debt. Most conventional lenders sell their loans to one of the big government-sponsored programs, which include the Federal National Mortgage Association, or FNMA (http www.fanniemae.com index.jhtml) and the Government National Mortgage Association, or GNMA (http www.ginniemae.gov). These organizations create mortgage pools of real estate loans and sell shares to investors. They are just like mutual funds, but portfolios consist of real estate loans instead of stocks and bonds. Investors can also enter into these positions indirectly by purchasing shares in mutual funds that in turn buy shares in mortgage pools. ETFs A final category is also the newest. The Exchange Traded Fund, or ETF, is a type of mutual fund that is highly liquid. Shares are bought and sold on public exchanges rather directly through fund management companies. Traditional mutual funds were set up to...
IShares Dow Jones US Real Estate IYR iShares Cohen & Steers Realty Majors ICF Vanguard REIT Index VIPERs VNQ particular country or those that specialize in a precious metal or funds with stocks in a specific industry or sector. An ETF may invest in real estate sector stocks, REITs, or both. Because the ETF portfolio is identified in advance, management fees are far lower than those for the old-style mutual fund. Finally, ETF owners often have the ability to break out segments of the fund, or to buy and sell options based on the ETF and its bundle of stocks. The ETF market is growing rapidly.
Passbook savings and time accounts at banks and thrifts are a familiar example of this type of asset. Accounts at money market mutual funds are another example. These highly liquid assets are added to those comprising M1 to make M2 and M3. These broader measures of money are used to gauge the amount of readily spendable funds at the public's disposal.
REIT is a creature of the federal tax law. It was created in 1960 with the goal of encouraging small investors to pool their resources with others in order to raise venture capital for real estate transactions. It has been called the mutual fund of the real estate business. Just as mutual funds invest in a diversified portfolio of corporate stocks and bonds, REITs invest in a diversified portfolio of real estate and mortgage investments, with a large number of investors who combine or pool their funds.
I met Scott in 1999 at the Phoenix Open golf event. I knew of his reputation as one of the biggest mortgage bankers in Arizona, but I did not know that he knew me. Smiling as he walked up, he said, I'm glad you're saying what you say about stocks and mutual funds. They're terrible investments. At the time, I was under blistering attacks from financial planners and financial magazines that were supported by mutual fund company's advertising dollars. You may recall that in 1999, the stock market was red hot and people believed they were making billions in the new economy of the dot-com world. So to have a person of Scott's reputation back up my philosophy that stocks and mutual funds were risky investments was a welcome relief and validation. His pat on my back made watching the Phoenix Open even more enjoyable.
I met Scott in an unlikely place at the Phoenix Open Golf Tournament in 1999. His reputation preceded him I knew him, but I did not think he knew me. When I discovered he agreed with my position on stocks and mutual funds, I felt relief and affirmation. Few agreed with me at the time, and I was under attack. Now people are learning otherwise, and they are seeing their stock and 401(k) portfolios slashed. The critics aren't so loud anymore.
An experimental agency to help the national housing industry through the creation of a mutual fund for insuring mortgages made by private lenders. Many of the agencies that were created during the post Depression era have disappeared-but not the FHA. It has become a self-sustaining and standard setting agency for the federal government.
Today the average person is paying more than 50 percent on income taxes and hidden taxes. One of the beauties of real estate investing, when compared with investing in stocks and mutual funds, is the ability to pay nothing in taxes, legally. As far as I know, this real estate loophole is the biggest and best legal tax loophole remaining, and that is why Gary Gorman is my friend and advisor. Gary has both saved and made Kim and me a lot of money.
As general partner, you have control of the investment funds. You can use them in any way you believe will earn a profit for the Limited Partners. And your Limited Partners are limited in their liability in the partnership to the amount of money they originally put into the partnership.
A title insurance policy, like all types of insurance policies, is only as good as the company underwriting it. So, when you buy any type of title insurance, always use the services of a board-certified real estate attorney or a title or escrow agent whose title insurance policies are underwritten by a reputable regional or national underwriter, such as First American Title Insurance Company, Chicago Title & Trust Company, Lawyers Title Insurance Corporation, Old Republic Title Insurance Company, Fidelity National Title Insurance Company, or Stewart Title Insurance Company. However, I must warn you that most title and escrow agents are totally clueless when it comes to knowing anything about straight real estate options. This is why I highly recommend that you purchase title insurance through a board-certified real estate attorney or reputable title insurance company that has a competent real estate attorney on the staff of its underwriting department. Once you have the names of local...
The tricky answer here is pyramiding. Pyramiding is using the appreciation from one investment to make more investments. Leveraging is what makes one investment more profitable, because you're using less of your own money. A Real Estate Investment Trust (REIT) is a type of stock investment (like a mutual fund) that invests in real estate. A capital gain is the profit made by buying a piece of real estate at one price and selling it at a higher price.
In the 1980s, institutions found their cost of acquiring deposits increasing dramatically. They also experienced a major outflow of deposits due to higher rates offered by competing investments, such as mutual funds and certain bonds. With less money to support the demand for loans, the institutions have increasingly turned to the secondary market for funds.
The State of California and local governments have the authority to issue bonds. Interest paid on the bonds is tax exempt to the investors. Bonds sold by state and local governments are used to finance mortgages are called mortgage revenue bonds. Because the bonds are tax exempt, the interest rate is less than on a standard bond, and as a result, mortgage loans can be made at rates that are below market rate. The government agencies do not guarantee the bonds. The bonds are backed by the mortgages created by the bond funds. The issuer of the bond merely acts as a conduit local lenders process, close, and then service the loans for the government. These
An institute of joint investment ( IJI ) represents a corporate investment fund or share investment fund, which conducts activity related to combination (attraction) of monetary funds of investors with the purpose of receiving profit from investment in securities, corporate rights and immovable property. The Law on institutes of joint investment defines a venture investment fund as non-diversified IJI of closed type conducting exclusively private placement of issued securities, which assets are more than 50 formed from corporate rights and securities not admitted to trade on stock exchange or in trade-information system.
Roughly coinciding with the rapid changes in cash management practices was a proliferation of new types of liquid financial instruments and deposits, such as money market mutual funds, NOW (Negotiable Order of Withdrawal) and Super-NOW accounts, and money market deposits accounts. These developments raised two major concerns first, that the existing definitions of money were outmoded and therefore no longer useful as guides to making policy second, that these new types of deposits
The bulk of the equity funds comes from developers themselves and from individual investors. The developers typi Most private syndications appeal to wealthy investors. Many are structured exclusively for participation by accredited investors, as specified in a 1981 law. Other syndications require minimum income or net-worth limits which must be met by prospective investors. At the same time, many investments are informally negotiated between developers or promoters and individuals and existing investor groups. These informal private investments may require little documentation. A large portion of the private equity funds are used for new development ventures, although many also are used for acquisition of existing properties and resyndication of older properties.
Most investments are passive, in the sense that once you have bought them, there is very little you can do to increase their value. Whether you are investing in stocks, bonds, treasury bills, mutual funds, unit trusts, certificates of deposit, municipal bonds, baseball cards, phone cards, antiques, gold, silver, platinum, futures, options or commodities, you put up your money (and you generally have to come up with the entire acquisition price in cash) and then hope and pray that whatever you bought does indeed go up.