Investment Advice You Need to Know

Investments can be helpful in achieving financial stability. They should be explored by people who are planning ahead. Good advice in this area can assist in choosing the best investment tool to use. There are a number of investment instruments available for people to take advantage of; however, prudence must be exercised when choosing. This article will act as a guide in assisting individuals to make the right choice, and also, to provide information you need to know.

An investment can be defined as the commitment of money or capital to purchase financial instruments or other assets to gain profitable returns in the form of interest, income or increase of the value of the instrument. Investments includes, using the good produced or its money equivalent, to create a durable consumer or producer good or the investor may choose to lend the original good to another in exchange for either interest or a share of the profit.

How can we be successful at investing? Well, we must first have the desire to invest. After acquiring the desire, we need to be motivated to save, no matter how small the amount. The fact is that emphasis should not be placed on the amount being saved, but rather; how often it is being done. After we have mastered the art of saving, the next step is investing. It is incumbent on persons to educate themselves on the subject so that they will be able to make an informed decision.

Financial investments can be extremely beneficial to individuals who seek good advice on identifying a good investment product. With this in mind investors can apply certain principles in order to benefit from their work. First of all, investors need to invest with a margin of safety. This principle is particularly useful when seeking to identify safe investments, and involves the purchase of securities at significant discount to its intrinsic or true value. Applying this principle can benefit the investor in two ways, for one, it may provide high return investment opportunities; it may also minimize the downside risk of an investment.

High return investment products are usually sought after by investors, however, individuals need to be aware that there are certain strategies that when applied, can increase the rate of return on their investment, these includes; increasing savings; investing in a manner that will result in a reduction in the amount of tax paid; invest in a variety of safe investment products; getting involved in international investments, and doing a revision of your portfolio’s performance each year.

Investment options will always be available for investors to take advantage of. These options, when carefully selected, can provide a steady source of income. It is the responsibility of each investor to do the necessary research and seek the necessary professional advice to land a good investment.

Dollar Cost Averaging for the Fully Invested

Adding to our previous discussion around the benefits that volatility generates for dollar cost averaging strategies, we now consider whether those benefits can be exploited by the fully invested. Again, the excess returns come from the fact that DCA exploits the “buy more low” and “buy less high” aspect of fixed-dollar investments, and are enhanced by additional volatility.

So, are the benefits derived from DCA exclusively available to those making bi-weekly allocations? Good news, the answer is no. In fact, every investor who is already fully invested can structure their portfolio approach so as to gain additional benefits from volatility over time – just like DCA. This is achieved by executing a strategy of “intra-portfolio dollar cost averaging”.

Traditional DCA takes new cash flows and buys more of relatively cheap assets and less of relatively expensive assets. For investors who are not adding meaningful additional cash flows to their portfolio (those with the most significant account sizes), a comparable strategy can add additional returns in excess of what the underlying investments in their portfolios will generate.

By systematically buying relatively cheap assets with proceeds derived from selling relatively expensive assets, a fully invested portfolio can generate additional gains over time. The same concept as dollar cost averaging applies, as investors will improve the average price of their investments over time, and ultimately earn more than the sum of the portfolio’s parts. It is also true that increased volatility can enhance those excess returns. This argument applies even a step further, in that intra-portfolio dollar cost averaging is the only way a fully invested portfolio can earn more than the sum of its parts.

Another less technical term for intra-portfolio dollar cost averaging is ‘rebalancing’. Unfortunately, rather than being exploited, rebalancing is typically an afterthought, and is rarely considered a domain to which you can apply a systematic process and generate additional returns. When executed with a system that goes beyond the basic “time” and “over/underweight” parameters to one that exploits volatility like its DCA brethren, rebalancing can be an extremely powerful portfolio tool.

Considering all of the effort that goes into generating investment selection alpha (or ‘fee reduction alpha’ for the passive strategists among us), it seems worthwhile to consider other areas of potential gain that have gone unexploited for so long. Adding a process to rebalancing can help improve outcomes for clients, without sacrificing the work done in investment selection.

Why Investing in Long-Term Wood Plantations Is a Good Idea

Did you know the best ships and boats in the world use a type of wood called “Teca” for the floor construction? Did you know millionaires buy “Teca” to make their home furniture and their house floors?

“Teca” is a type of wood that is planted in tropical weather. The approximate cycle time is of 20 years from planting to harvesting. Even though this is a large time period, it is considered one of the most profitable businesses in the agricultural industry. In fact, the demand of this product is so high, that traders from Eastern countries like India go to South America to buy this wood and ship it to their nations.

People who tend to invest in this business are usually individuals that are looking to have a family business and pass it from generation to generation. However, this is a business with one and only one purpose: Investing in order to have long-term income and profits. Therefore, “Teca” growers do not have plantations looking for a short-term monthly income. Usually, people in this industry have an additional job or business for their living, and think of the “Teca” plantation as their savings for retirement or to pass the business to their next generations.

In terms of maintenance and daily work, this plant does not require much of it. The key time are the first years after the first planting cycle in which care and fertilization must be provided. After that, the tree grows by itself without much job to be done. Another important detail is that after the first harvest, a new plant is naturally regenerated, with better quality and less care needed.

When talking about selling and distribution, there is nothing to worry about. Buyers will come by themselves looking to buy, so this is not a business that requires having a lot of contacts and networking.

The main reason of why this business is so profitable is that there is too much demand and very few supply because most people do not have the necessary amount to invest. The ideal project would be to have your own land and plantation. However, there are many traders and companies looking to sell shares of an existing plantation. Nowadays, this last method is being very common because people do not have enough money but they know and belief in the business wellness and prosperity. In fact, in the last decade, South American farmers and executives with savings have been looking for land and plantations of “Teca” more than ever before in order to invest their money.

Additionally, due to the prosperity and growth of the business, people are looking to become expert forest engineers. Even though this plant does not require of much attention, it is fundamental to have an established project with statistics, measurements and details. This work is done by such forest engineers and hence the reason of people wanting to become one.

Again, this is a long-term business that will not provide any gain or income in the present. However, think about it. If you want to invest your savings and earn more money from it in the future, “Teca” is a great option that should be considered.