The investment can be a little scary for most people - especially if your income is limited durable. As you know, all investments have an element of risk, but it is prudent to seek opportunities to minimize a risk while obtaining a reasonable return.
The real key to making a safe investment is by investing in a time of a testing " top dog" , where the ROI is moderate to high.
Consider these types of investments for your portfolio:
1.Bonds. Bonds are a safer investment than stocks. This is because a stock is an investment without a guaranteed return while a bond is similar to a loan and has a promised return, plus interest.
- There is a difference between promised and guaranteed. No investment can be guaranteed but with bonds, you know what to expect. Look for investments with a low probability of default (the chance that the company would close its doors or file bankruptcy).
- Bonds are generally paid back to you by the end of the year. However, the terms can be different for each agreement.
- The larger the bond, the larger the profit. But remember, you're always going to make more money on a higher interest bond. So, you may be better off investing your funds in one high-interest bond rather than two lower interest bonds.
2.Stocks. As mentioned, stocks can be risky but, in order to earn a high return, some level of risk must be involved. You can minimize your risks by choosing one of the safer stocks (such as constantly thriving defensive stocks) to invest in.
· Companies, such as Pepsi (PEP), McDonalds (MCD), The Procter & Gamble Company (PG), Johnson & Johnson (JNJ) and Wal-Mart Stores Inc. (WMT) are some of the safer choices in the stock market. These companies also place a high value on shareholder satisfaction.
- Investing in defensive stocks, which are reliable and have proven their longevity and profitability, allows you a small blanket of security that you wouldn't get investing in the newest, hottest companies, which can tank at any moment.
- Keep in mind, when investing in stocks, there are no 100% safe choices, but you can minimize your risk by buying stocks of a time-tested and profitable company. Or spread out your risk by investing in profitable, long-standing mutual funds where your return is based on a portion of a whole portfolio of stocks.
- Stocks are a better choice for your long-term financial planning goals. If you're a cautious investor, look for a long-standing solid company to invest in.
3. Multi-family real estate. Now is a great time to invest in a multi-family dwelling. Due to the housing meltdown, there are many multi-family units priced to move quickly.
- A multi-family dwelling is a safer investment than a single-family home because you're able to retain more tenants. Therefore, if one tenant decides to leave at the end of their lease, you still have other tenants set up in other units that are still generating income.
- Multi-family dwellings are more profitable than single-family homes. For example, if you have three 2-bedroom units renting for $700 each per month, you're bringing in $2,100 per month. As opposed to the one, smaller income from just one tenant.
Develop an investment strategy requires patience and a honest assessment of your risk appetite. Real Estate Investing has always been a popular investment. Owning a multi-unit occupancy rental property guarantees a monthly return, as long as you budget for maintenance and other incidental expenses.
The bonds are safe but have the lowest performance. However, some hidden gems on the market offer above the high-interest rate. Stocks offer higher performance, but performance is not guaranteed and faces a higher risk.
A smart strategy is to diversify your risk and return through a diversified portfolio of investments, some with less risk and others with moderate risk. Only go after high-risk investments if you have money to burn! This strategy allows you to enjoy consistently positive returns over the years.
Many people dream of investing in the large apartment, buildings. Shopping centers, office and commercial - yet few have the necessary resources and expertise for such investments. Real Estate Investment Trusts (REIT), one of the ways that ordinary people can invest in the large and expensive real estate.
The REIT invests in income producing properties. These properties can be condominiums, commercial properties. Strip shopping centers, hospitals, housing, and so on. In practical terms, the REIT is similar to unit trust investments are pooled, and the REIT buys and manages income-generating properties.
How Do You Make Money From REITs?
REITs are essentially landlords. The revenue consists of all the rents collected from the tenants. The expenses include property management, property tax, utilities, mortgage payments, and more. The profit is what's left over after all the bills are paid.
This profit is given back to investors in the form of dividends.
The great news is that REITs have a powerful incentive to distribute a minimum of 90% of the taxable income to investors; REITs do not have to pay corporate income tax if they meet the 90% minimum payout.
There are 3 main types of REITs:
1. Equity REIT.
The most common type is an equity REIT. These companies invest in income producing property that the REIT will also manage. When REIT's are considered as investments, this is the type that is typically being referred to.
2. Mortgage REIT.
These REITs invest in outstanding mortgages and also make loans backed by real estate. While the underlying property values are important for both equity and mortgage REITs, mortgage REITs values are also very dependent on interest rates. This type of REIT accounts for less than 10% of all REITs operating in the United States.
3. Hybrid REIT.
The hybrid REIT is a combination of an equity REIT and mortgage REIT. So this type invests in both mortgages and actual real estate assets. The hybrid REIT potentially has the greatest diversification.
Some equity and hybrid REITs will invest in numerous properties of varying size and function. This diversification should provide some stability relative to the change in value of the individual properties. What can affect values? Vacancies, non-payment of rent, a general downturn of the local market, and interest rates are a few of the things that can affect the values.
How Do You Evaluate an REIT as an Investment?
As an investor, you can buy and sell your shares in an REIT just as you could with any other stock. Be sure you educate yourself in the proper way to evaluate an REIT. It is not in the business of manufacturing anything and it is not providing a service. The common methods of evaluating stocks may not apply in the same way.
Most REITs specialize in a single type of property, like apartments, retail space, or commercial office space. Many REITs limit themselves to a geographical area as well; this can be an important consideration when attempting to determine which REIT is best for you.
A great REIT will manage its properties to get the best possible income growth and then reinvest that money in properties that generate an even greater return than the existing properties. Those are the two things an equity REIT must do to excel.
A good measure for evaluating REITs is "funds from operations" (FFO).
This discounts gains and losses from the sale of assets and adds back depreciation. A long-term FFO growth is generally a good indicator of the financial health of an REIT.
While FFO gives an indication of the strength of an REIT, it is not the only predictor of an REIT's value. REITs own a lot of assets, and the value of those assets has the largest impact on the current asking price of an REIT's shares.
The REIT may be the investment vehicle, which was looking to expand your portfolio. As always, be sure to educate yourself, or seek advice from a financial expert before investing your hard-earned no money for new investment.
When most people think of investing in real estate, homes, mini-malls or apartment buildings come to mind first. However, this is just the tip of the iceberg for real estate investment. Offbeat consider the following real estate investment opportunities. These investments can have a significant impact over the long term, and very well change your financial future.
1. Recreational Vehicles (RV).
Believe it or not, RV rentals and sales are a very big market. With baby boomers leaning into retirement and young families seeking a way to lessen their vacation costs, many people are willing to buy or rent an RV.
If you're hoping to purchase an RV to save money on your family vacations, keep the RV until it makes sense to sell it. Make routine cosmetic updates to the RV throughout the years to match the expectations of buyers.
Consider renting out the RV for a profit. The RV rental market is hungry with renters but is much underserved. You can easily rent out class C motor home for 7-nights for a minimum of $125 per night! If you're fully booked every week out of the year, you can earn $46,000 in just one year!
For class A RV you can charge in upwards of $200 per night, or $1,400 for a 7-day week - which equates to $73,000 over the course of a fully booked year. Pop-up campers can be rented for as much as $75 per night - or just over $27,000 for a fully booked year.
Even if you're only able to rent out your RV for two weeks out of the month for $125 per night, you're able to earn $23,000 per year!
2. Self-Storage.
Self-storage is a big industry. The shaky state of the economy may be partially to blame as the number of multi-generation homes and families downsizing their living quarters are increasing.
The Self Storage Association reports that one in ten families rent out-of-home storage space. Typically, units rent between $50 per month for a small unit to over $200 for a sizeable storage unit.
The cost of purchasing a self-storage facility varies widely. It can cost as little as $200,000 or as much as $3,000,000 depending on the size, location and demand for the service in the area.
Keep in mind, aside from the mortgage, there is still overhead. Utilities must be operating in order to keep the storage facility at an acceptable temperature; this is to avoid ruined personal property. Also, employees might be necessary, as well as a security system. But as a whole, the investment generates fairly passive income.
3. Online real estate.
Online real estate, otherwise known as websites, requires very little investment and can typically generate a good ROI over time. Traditionally real estate is thought of as tangible, but don't disregard the earning power of online property. When you consider that Candy.com sold for over 5 million dollars, online real estate has the potential for astronomical returns.
Approximate startup costs are as follows: $10 for a domain name, $0-75 for a standard website template to over $750 for a unique website design, and content creation starting at around $15 for a quality article.
The key to making money online is having high quality and a high quantity of content in addition to money making streams like marketing other company's products, on-site advertising, or product sales.
There you have it - three markets where competition isn't very fierce, and the bar to entry is relatively low. Investing in any of the three offbeat investments is mentioned, you have the opportunity to maximize their investment dollars. And over time, you may be able to invest in a full-fledged business.
