Personal Development Academy: Investment

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Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts

Thursday, 1 February 2018

February 01, 2018 0

Top 5 Benefits of Investments

From our childhood days, we are taught to save money from our pocket to buy the belongings we wanted the most. This casing of mind carries to the age of maturity and we try to save money for the thing we want the most. But here we commit a drastic mistake of life that makes a difference of becoming successful or reduced in terms of financial amplification.
To understand the investments; we must define the investment first.

What is Investment?

According to Investopedia, An investment is an asset or item that is purchased with the hope that it will generate income or will appreciate in the future. In an economic sense, an investment is the purchase of goods that are not consumed today but are used in the future to create wealth. In finance, an investment is a monetary asset purchased with the idea that the asset will provide income in the future or will be sold at a higher price for a profit.
What are its top 5 benefits?

1) Financial Independence

Financial independence means you have enough wealth to live off of without working. Financially independent people have enough assets that generate income without any physical work as their money is doing work for them.
How to achieve Financial Independence?
Here are the best tips to become financially independent:
· Try to increase your income.
· Plan your savings every year.
· Select profitable investment options.
· Decide your financial goals.
· Try to stay away from loans and debts.

2) Safeguard against the Inflation

Inflation is a sustained increase in the general price level of goods and services in an economy over a period of time. It can be considered as the ageing of the value of money over a time.
In Economics, Inflation reflects a reduction in the purchasing power per unit of money - a loss of real value in the medium of exchange and unit of account within the economy
The value of assets keeps on increasing due to inflation. As a result, the investments are not only safe but also increased by the time. Hence, It acts as an uphold against the Inflation

3) Achieve Financial Goals

When we invest, we put our money aside for long-term goals such as retirement, International holiday trip, Luxury home with a car or a child's education.
The Investments ensure us to achieve all our long term and short term goals at a precise time.

4) Increase Wealth

Investing isn't a mode to get rich quickly. It takes time, patience, and awareness. It requires analytical studies of opportunities available and makes well-versed choices of where to place your investment so it provides huge returns. If the things are performed in a spot in order the results are almost guaranteed.

5) Provide a source of Income

Some funds specifically set out to provide investors with a monthly income while others such as many property funds pay out dividends monthly, as well.
Most of the monthly income funds attempt to offer 11 monthly payments of a similar amount and a 12th that varies. The exact level of income will depend on the fund's performance.
What are the ways of Investments?
Suitable Investment Options are stated as follows:
· Real Estate.
· Individual Stock.
· Mutual Funds.
· Corporate Debt.
· Government Bonds.
· Commodities (Gold, Silver etc).
· Liquid Funds.
· Fixed Deposits.

Article Source: http://EzineArticles.com/expert/Faiz_Akhtar/2480892
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Wednesday, 13 December 2017

Risk Attitude

December 13, 2017 0

To Risk or Not to Risk

This is a BIG question.

Should I enter this relationship? Should I marry this man? Should I take a new job? Should I move to a different city?

What if I fail? What if I look stupid? What if I loose money? What if I can't survive? (If you're asking this question, it's probably best NOT to take the risk!)

One of the biggest risks I ever took was marrying Lorenzo. I'd already had ONE failed marriage. What if I had another one? What if he were using me as an entrance fee into the US of A?

All these doubts. All these questions.

So was getting married worth the risk?

Yes.

So far.

Being in a romantic relationship with Lorenzo has taken me to much deeper levels of myself. To my greatest joys and my deepest fears.

And it's definitely been worth it.

So how do you determine whether to risk or not to risk?


1. To "Ben Franklin"? Or "Dip-Stick"?


My father always said, "If you have a decision to make, do like Ben Franklin...draw a line down the center of the page. On one side list all the advantages. On the other side list the disadvantages. Then see what you've got.

"Ben Franklin" is a Masculine approach to decision making. The Masculine thinks about the risk and the consequences of the choice then makes a logical, intelligent decision.

The Feminine approach is to "Dip-Stick".

When I was deciding whether or not to marry Lorenzo, Dr. Pat Allen suggested I "dip-stick" my feelings.

If I felt like being married to Lorenzo, I'd put a mark under "Yes". If I didn't, I'd mark "No".

After a week (or two) the "Yes" side won. So we got married. (I bet you thought there was more to it?)

So ladies, draw a line down the page and instead of "advantages" and "disadvantages", write YES or NO. Then check in with your feelings several times a day for a week or so.

Even if both sides start out equally, one side will eventually win over the other.

And the "crazy making" rumination between your head and heart (think, feel, think, feel, think, feel...) will stop.

2. Can You Afford the Price Tag?


If taking the risk didn't work out, would you survive it?

If you lost your investment, your partner or the job, would the experience be worth it? (I'm not talking about just dollars and cents.)

Would the actual experience be worth it? Would you become a "better" person? Could you learn something valuable? Can you afford the loss of NOT doing it?

When you look back on your life, is this a worthy investment of your money, time, energy or life experience?

If the answer is "Yes", do it.

I thought DUTY DATING would lead me to my next film project. It didn't.

But DUTY DATING did lead me to my husband.

And being the "Dating Director". And meeting many of you. And the opportunity of creating another career outside the (brutal) film industry.

I learned A LOT writing, directing and producing a feature film. The experience was invaluable. I would never trade it.

And DUTY DATING was completed and distributed internationally. (Even my in-laws saw it on Italian TV:))

3. What's Your Plan B?


I understand many "risk takers" have no Plan B. They say it's because there is simply NO alternative. Fine. If you gotta have it, you gotta have it, so by all means, go for it. Godspeed.

But for some of us, when unexpectedly Life Happens, it's nice to have Plan B. If something doesn't work out the way you want, there's something to fall back on. Even if the "fall back" isn't exactly your dream.

When I made the decision to move to LA, I wasn't sure if I could handle it. After all, I was raised in a small Tennessee town. (A BIG city for me was Knoxville.)

But I knew if I fell flat on my butt...if I lost everything I had...and ended up broke on the street, I could ALWAYS go home. Back to Kingsport, Tennessee. My parents would take me in. It wasn't my ideal choice (not theirs either). But at least I had a safety net.

And that's a big comfort. It gives me freedom to take risks.

So I advise having Plan B. Not that you'd ever use it. But knowing it's there can offer you alternatives. And peace of mind.

Here's to the Risk Taker in You!
Cherry Norris is a renowned celebrity dating coach, workshop director and popular speaker. Based in Los Angeles, California, Cherry is an official dating coach for Cupid's Coach matchmaking service and the relationship expert on Catherine Oxenberg's TV pilot, Practical Princess. Cherry has lead workshops around the US and on cruises to Mexico and Alaska. She has been featured in The LA Times, The Hollywood Reporter, Divine Caroline, and Women's World.

 Cherry's passion is helping people build healthy, intimate romantic relationships. Under her direction, you will learn the skills and techniques for dating that will have you starring in the role of a lifetime opposite the co-star you've been waiting for!


Article Source: http://EzineArticles.com/expert/Cherry_Norris/173358




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Monday, 11 December 2017

What is Wealth?

December 11, 2017 0

What constitutes wealth?





The dictionary meaning of wealth is abundance. When spoken in the context of money, it would obviously mean an abundance of money. Well, this may seem a strange explanation because money is a limited resource for all of us after all. In fact, since most of us face the issue of having limited wealth, we need to prioritize our needs in order to ensure that we use this resource in the most optimal manner to fulfill the most important needs or goals.

Typically, all the money that is surplus to you at the present moment could make up your wealth. It may of course be needed in future to meet your financial commitment. Your wealth could be in the form of property, deposits, gold, shares and other such assets.

The important determinants of wealth


 The amount of gross wealth that you can potentially build up in your lifetime (ignoring the utilization on financial goals for the sake of simplicity) typically depends on three main factors namely:

  • Return that your savings earn and finally
  •  The length of time that you allow your savings to grow.

 Here is a detailed look on how each of these factors affect your wealth.

Importance of saving and investing towards wealth creation: It takes money to make money; just as it takes wheat to grow wheat. A healthy savings rate is the basis for creating wealth. This could of course raise the question as to what a healthy savings rate actually is. it simply is the rate that enables you to achieve your financial goals, given your investment temperament and preferences. Remember, it is your savings and not gross income that makes you wealthy.

Importance of returns in wealth creation: It is quite obvious that higher the return that your investment earns more is the wealth that you are going to create for yourself. But how high a return is good enough? Well, this again is a question that your financial plan alone can answer. Your investments have to earn a return which is enough to meet your financial commitments.



But at a very basic level, your post tax investment return should at least match the inflation levels just to stay afloat. If the return falls below the prevailing inflation level, your wealth would be eroded or destroyed. The purchasing power of your wealth weakens gradually over time if it underperforms the inflation level. So, inflation would be the floor level that your wealth would have to earn post-tax over time, just to stay where it is in terms of relative value.

 And what is the highest level of return that you can or should aspire for? This will in practice be determined by two factors:

Your risk profile


 What is the level of risk that your financial position forces you to take? If the gap between your present and future is large, you may need to take on quite a bit of risk with your investments in the hope that the potentially higher returns would help you bridge the gap. But even if this gap is large, what if your financial situation is such that you cannot afford to take risk?

 For example, you may have a large amount of loan to repay or your primary, earned income itself is too unstable or uncertain. In this case you may not be able to expose your investments to a high degree of risk. And finally, are you comfortable with the gyrations of the equity market? If your investments are going to keep you awake all night, your wealth would mean little to you. 

Financial prudence


Your risk profile is only one part of your investment puzzle. The other part is about financial prudence. Even if you have the requisite risk profile, is it wise to put all your money in one risky asset? What if the asset underperforms for an extended period of time? What if you need some money at short notice? It is always prudent to spread your investment among multiple asset classes because:

Different asset classes perform differently across time periods.

 Your portfolio downside would be limited as a chance of all assets declining simultaneously is remote.

 Return should always be measured through the prism of risk taken.

A prudent asset allocation pattern that takes care of your risk profile and return requirements could be the secret of your success. You need to allocate your investments among the various assets according to this pattern and more importantly rebalance back to the original allocation periodically. As different assets perform differently during any given time period, your allocation is likely to get skewed towards the strong performer which increases the risk of your portfolio.

Finally, building wealth takes time.

 Just as it takes years or even decades for a seed to grow into a tree, your wealth too needs to be given sufficient time to grow. With adequate time, the magical power of compounding ensures that your wealth is multiplied multifold. As the graph below depicts, this growth is not uniform over the time period but is more back loaded. That is maximum growth happens towards the latter half of the investment period.



Illustration disclaimer: The above example is only for illustration purposes & shall not be construed as indicative yields/returns of any of the Schemes of Canara Robeco Mutual Fund.

 You would notice that nearly two-thirds of the growth in the investment value is in the last ten years of the thirty year investment. It therefore becomes crucial that you start your investment at the earliest and allow compounding to magnify your results over time.

In a nutshell: High earnings alone cannot make one wealthy. It is the discipline and financial prudence in utilizing those earnings which are the true determinants of wealth.
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Sunday, 26 November 2017

Inflation and Interest Rate

November 26, 2017 0

On 2 November 2017, the Bank of England announced the first increase in interest rates since July 2007 on the back of inflation reaching 3% in September.

What’s been happening? What’s the longer term outlook for UK interest rates and inflation? And, most importantly, what does it mean for your investments?

First things first – what are interest rates?


Interest rates are how much a lender will charge a borrower when they take out a loan. It’s usually shown as a percentage of the total amount loaned and there are hundreds of different interest rates between lenders and borrowers.

The Bank of England uses the base rate as a tool to control inflation

In this article we’re specifically talking about the interest rate set by the Bank of England – commonly known as the base rate. In the US, the base rate is set by the Federal Reserve and in the Eurozone by the European Central Bank.

How does the base rate affect you?


The rate that a central bank, such as the Bank of England in the UK, charges to commercial banks has an impact on what they charge you for loans and mortgages, and also what interest rate you get for saving with them.

So the cost of borrowing and the returns on your savings depend to a large extent on the interest rate set by the Bank of England.

If the base rate falls, banks can get money at a cheaper rate, meaning the cost of mortgages and other loans usually falls too – which is good news.

The not-so-good news is that you won’t be earning as much interest on your savings.

The base rate plays a crucial role in economic policy too

The Bank of England uses the base rate as a tool to control inflation. This is because the higher the base rate, the more incentive individuals and businesses have to save rather than borrow money: they’ll be getting higher returns from their savings but have to pay more for any loans.

So if inflation gets too high, the Bank of England may increase the base rate to encourage us all to spend less and to save more. In turn, this can help to bring price rises – inflation – back under control.

And that’s just what’s happened – inflation has been rising


The Bank of England currently has an inflation target of 2%. But inflation has exceeded that for most of 2017, and it reached a five-year high of 3% in September (source: Office for National Statistics Consumer Prices Index).

Despite the base rate rise, interest rates continue to be at historically low levels

It isn’t only the UK which has experienced rising inflation – the rising price of commodities, including oil, has led to upward inflationary pressures globally. Another factor is bad weather, which has affected the production of some crops – you may remember the lettuce shortage hitting the headlines in February.

However, one factor which is more specific to the UK is the weakening of sterling since the Brexit vote.

Although this has been a positive factor for UK companies exporting goods, it’s meant increases in the costs of imported goods.

The impact of this can’t be underestimated – we still import a considerable amount of the food we consume and the energy we use. Many consumer electronics, such as TVs, laptops, tablets and mobile phones, are also produced overseas.

So the Bank of England has acted, and raised the base rate by 0.25% to 0.5%.

What’s next for the base rate and inflation?


The Bank of England has repeated that “any future increases in Bank Rate would be expected to be at a gradual pace and to a limited extent”. It also believes that inflation is likely to have peaked above 3.0% in October.

Andrew Milligan, Head of Global Strategy at Standard Life Investments, expects another increase next year, and perhaps again in 2019, but believes it’s very data dependent.

He also thinks the Bank of England will want to move slowly given the large debt burden facing some parts of the country.

What does this mean for savings and investments?


Despite the base rate rise, interest rates continue to be at historically low levels, and there’s no indication that the Bank of England will now embark on a series of large hikes. So, although the situation for savers has improved, the interest available on most savings accounts is still lower than the rate of inflation.

Rising inflation means that the income you get from bonds won’t be worth as much. Investing gives you the opportunity for returns above inflation over the longer term.

But of course it carries more risk and investments can still be affected by interest rates and inflation, both positively and negatively.

You could get back less than you paid in and of course you can’t rely on past performance.

As a result, bond prices tend to fall as they’re less attractive to investors. However, rising, but still fairly low inflation and low interest rates are generally seen as positive for equities. Commodities (things like oil, gas, metals, wheat and coffee) also tend to do well when inflation is rising.

The important thing to remember is that investing is for the long term and no single type of investment will provide strong returns in all economic conditions.

Having a well-diversified portfolio, where your money is spread across a variety of investments from different parts of the world can help you achieve the right balance between risk and return, whatever’s happening in the economy and markets.

If you don’t have the time or inclination to build and manage a portfolio like this yourself, there are investment options that can do this for you.

The information in this blog or any response to comments should not be regarded as financial advice and is based on our understanding in November 2017.
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