Investors are always on the lookout for good investment ideas, although it can be difficult for small investors to determine where they should invest their money. The best investments are those that have the lowest risk and that offer some sort of guarantee on return. Nearly all investments carry some sort of risk with them, and when investing money, there is no real way to be sure that you will get the return that you are looking for. You can even lose money. Nonetheless, there are some good investment ideas that small investors should consider.
Real Estate
The real estate market right now is still in a slump, but most experts agree - now is the time to buy. This is true for those who are looking to make the move into home ownership and also true for folks who want to invest in real estate. With a large inventory of homes on the market, there is no shortage of investment opportunities. Look for short sales, foreclosures and other so-called "distressed" properties to maximize your opportunity for a return. Keep in mind that real estate investments may take awhile to become profitable, but once the market is on the move again, you stand to make some good money.
Stocks
Any list of good investment ideas would be remiss if it failed to mention stocks as a viable option for investors of all sizes. The stock market is nothing if not volatile, but stocks are still a good way to invest your money. Buying into particular stocks is affordable for everyone, and stocks allow you to diversify your investments. What's more, you can also buy and trade stocks online easily, thanks to services like ETrade.Com.
T-Bonds
Government bonds or U.S Treasury bonds are usually thought to be one of the best and safest investments, since they are backed by the full faith and credit of the United States government. Keep in mind that t-bonds have maturity rates of seven years or longer and usually offer a return of at least five percent. Treasury bonds are basically the government's way of borrowing money from consumers and paying them interest for doing so.
Gold
There is some controversy about whether or not a list of good investment ideas should include gold. Historically, gold has always held its value, although the price of gold has started to slow down recently. As a rule of thumb, gold sells for more when the U.S. dollar is weak, which is why gold saw such a comeback during the worst part of the recession. Nonetheless, exchange traded funds and gold certificates can be quite lucrative to own as an investment. Most people do not physically buy gold bars and keep them in a safe anymore. The best strategy for gold investing is to buy gold at rock bottom and sell it during periods when the dollar is weak.
Deposit Accounts
Good investment ideas do not have to be risky. For the small investor who does not want to risk his investment dollars on any investment that may not pay off, there is always the bank deposit account. Savings accounts and certificates of deposit can be great for those who just want a safe place to invest their money while collecting a token amount of interest income. Bank deposit accounts are insured up to $250K by the government's Federal Deposit Insurance Corporation or FDIC, which means if the bank holding your money goes belly-up, you won't lose a dime.
Showing posts with label Investment. Show all posts
Showing posts with label Investment. Show all posts
Wednesday, 31 October 2012
Best Stock Fund and Bond Fund Investment Strategy for 2013
The best investment strategy for 2013 will differ from conventional investment strategy for both stock funds and bond funds. Many investors have fallen in love with their bond fund because it has been their best investment, in terms of performance, for years. It's time to look beyond 2013 in putting together your best investment portfolio to balance risk vs. return to limit the possibility of significant losses going forward.
Hindsight is of no value in the investment world, and even the best stock fund or bond fund will lose money if the investment environment goes against one or the other asset class. As an investor you need balance, and for the average investor this means you need both kinds of mutual funds in your investment portfolio. Now, you also need to re-think your investment strategy in both cases, because interest rates have been falling for 30 years and have recently hit EXTREME all-time lows.
What this means is that even though bond funds have performed well vs. safe investments and even stock funds - the best investment strategy now is to start limiting your exposure to risk in this asset class. The reason: these funds perform well when rates are falling, and lose money when rates rise. Even the highest quality or best bond funds are subject to this phenomenon called "interest rate risk". The signature of long term bond funds is interest rate risk.
So, what's your best investment strategy to get both income and growth in 2013 and beyond and what are the best funds to own? Look for intermediate-term bond funds with investment portfolios where the average maturity is 5 to 7 years vs. 10 to 20 years or longer, to increase you safety factor. You will sacrifice some dividend income, but will greatly reduce interest rate risk. Then, look for the best stock fund investment that will both lower your risk of owning a stock fund while making up for the dividend income you have given up.
What you need to understand is that your bond fund has likely been your best investment in recent times not because it has paid such high dividends - but because it has been going up in value due to falling interest rates in the economy. There are stock funds out there right now that pay higher dividends, and do not have interest rate risk. Your best investment strategy would be to emphasize these funds, since some of the best stock funds pay higher dividends than the average bond fund.
The best investment strategy for 2013 will be to lower your allocation to bonds and funds that invest in them, while also lowering your risk in stocks (growth funds) that pay little if anything in dividends. At the same time, it is always wise to lower your cost of investing in mutual funds of both varieties in order to increase your net return. Now, let's get more specific in terms of the best bond funds and best stock funds to invest in so we can put our investment strategy in action.
The best investment strategy for bond funds: go with intermediate-term INDEX FUNDS with NO sales charges and low yearly expenses. This can save you 3% or more upfront and about 1% a year for expenses. This is significant when you consider that you can't earn 1% a year on most safe investments, and most bond funds won't be paying dividends of even 3% in 2013. Plus, longer term funds have significant downside risk called interest rate risk.
The best investment strategy for stock funds: Go with stock INDEX funds that invest in large companies that pay higher than average dividends. Consider real estate equity funds as well for even higher dividend yields. If you include both in your investment portfolio, and go with no-load funds to avoid sales charges and lower your yearly expenses, you could net an average of 3% or more in dividends. Plus, these funds have less downside risk than growth funds that don't pay significant dividends.
The best investment strategy for 2013 will provide you with a relatively attractive dividend income - while lowering your risk in both your stock fund and bond fund investments.
Hindsight is of no value in the investment world, and even the best stock fund or bond fund will lose money if the investment environment goes against one or the other asset class. As an investor you need balance, and for the average investor this means you need both kinds of mutual funds in your investment portfolio. Now, you also need to re-think your investment strategy in both cases, because interest rates have been falling for 30 years and have recently hit EXTREME all-time lows.
What this means is that even though bond funds have performed well vs. safe investments and even stock funds - the best investment strategy now is to start limiting your exposure to risk in this asset class. The reason: these funds perform well when rates are falling, and lose money when rates rise. Even the highest quality or best bond funds are subject to this phenomenon called "interest rate risk". The signature of long term bond funds is interest rate risk.
So, what's your best investment strategy to get both income and growth in 2013 and beyond and what are the best funds to own? Look for intermediate-term bond funds with investment portfolios where the average maturity is 5 to 7 years vs. 10 to 20 years or longer, to increase you safety factor. You will sacrifice some dividend income, but will greatly reduce interest rate risk. Then, look for the best stock fund investment that will both lower your risk of owning a stock fund while making up for the dividend income you have given up.
What you need to understand is that your bond fund has likely been your best investment in recent times not because it has paid such high dividends - but because it has been going up in value due to falling interest rates in the economy. There are stock funds out there right now that pay higher dividends, and do not have interest rate risk. Your best investment strategy would be to emphasize these funds, since some of the best stock funds pay higher dividends than the average bond fund.
The best investment strategy for 2013 will be to lower your allocation to bonds and funds that invest in them, while also lowering your risk in stocks (growth funds) that pay little if anything in dividends. At the same time, it is always wise to lower your cost of investing in mutual funds of both varieties in order to increase your net return. Now, let's get more specific in terms of the best bond funds and best stock funds to invest in so we can put our investment strategy in action.
The best investment strategy for bond funds: go with intermediate-term INDEX FUNDS with NO sales charges and low yearly expenses. This can save you 3% or more upfront and about 1% a year for expenses. This is significant when you consider that you can't earn 1% a year on most safe investments, and most bond funds won't be paying dividends of even 3% in 2013. Plus, longer term funds have significant downside risk called interest rate risk.
The best investment strategy for stock funds: Go with stock INDEX funds that invest in large companies that pay higher than average dividends. Consider real estate equity funds as well for even higher dividend yields. If you include both in your investment portfolio, and go with no-load funds to avoid sales charges and lower your yearly expenses, you could net an average of 3% or more in dividends. Plus, these funds have less downside risk than growth funds that don't pay significant dividends.
The best investment strategy for 2013 will provide you with a relatively attractive dividend income - while lowering your risk in both your stock fund and bond fund investments.
Tuesday, 30 October 2012
Good Investment Ideas That Small and Big Business Executives Should Consider
Even though having a good education and a well-paying job guarantees a comfortable life, people who want financial security even during economic downtimes should invest their wealth. As a result, they will still have a source of income, even if they lose or retire from their professional jobs. However, although there are many businesses that people can go for, they should meticulously choose a venture that has minimal risks. They can consider the following good investment ideas:
The Stock Market
One promising investment idea that people should consider is trading in the exchange market. Though there is a common misconception that the stock market is a reserve for big-business executives, it requires low starting capital and is among the most profitable ventures to date. For instance, people can easily find reputable trading platforms on the internet, buy cheap penny stocks, and then double their investments as they begin to register good profits.
Moreover, small investors who do not have the financial muscle can buy shares of starting companies. These are usually cheap and can increase in value over a short duration. However, even though the Forex market is a promising business idea that people should consider, they should remember that nothing comes easy. They should research, do the mandatory legwork, and coin efficient strategies that enhance their chances of success in this global marketplace.
E-commerce Websites
The web is an exquisite platform where people can market their products and or services to a global audience. They only need to create simple and navigable websites or blogs and make money by selling their personal goods. Furthermore, people can use several promotional tools to make money. For instance, they can subscribe to various Pay Per Click (PPC) campaigns, display contextual advertisements on the websites, and earn money when readers click ads.
Small investors can also contact manufacturers and or big marketing agencies and subscribe to their affiliate programs. They can then create promotional pages that market their affiliate products and earn a commission when people buy the product from their websites. Although this investment idea is among the cheapest, and easiest to start, people must have loyal readers who will promote their sales initiatives. Therefore, it is imperative that they develop quality content, monetize their websites, and develop effective marketing campaigns.
Securities and Bonds
Securities and bonds are good investment ideas, especially to people who want to supplement other forms of investments. For instance, depending on their areas of residence, they can buy government bonds at a moderate price, and earn interests. Moreover, they can diversify their options by buying mutual funds. Because of their safety and high maturity or current interest rates that they attract, people can easily raise money to fund their development projects.
Real Estate
With the heightened need for cheaper, but better accommodation options, investing in real estate an exquisite idea that people who have the financial muscle should consider. Although the starting is discouraging, those who have gained a foothold in this industry smile all the way to the bank. By building unique and high-quality properties, they can entice their customers to buy subjectively rather than objectively.
People who consider the foregoing investment ideas will enhance their financial security and have a stress-free future even after retirement.
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The Stock Market
One promising investment idea that people should consider is trading in the exchange market. Though there is a common misconception that the stock market is a reserve for big-business executives, it requires low starting capital and is among the most profitable ventures to date. For instance, people can easily find reputable trading platforms on the internet, buy cheap penny stocks, and then double their investments as they begin to register good profits.
Moreover, small investors who do not have the financial muscle can buy shares of starting companies. These are usually cheap and can increase in value over a short duration. However, even though the Forex market is a promising business idea that people should consider, they should remember that nothing comes easy. They should research, do the mandatory legwork, and coin efficient strategies that enhance their chances of success in this global marketplace.
E-commerce Websites
The web is an exquisite platform where people can market their products and or services to a global audience. They only need to create simple and navigable websites or blogs and make money by selling their personal goods. Furthermore, people can use several promotional tools to make money. For instance, they can subscribe to various Pay Per Click (PPC) campaigns, display contextual advertisements on the websites, and earn money when readers click ads.
Small investors can also contact manufacturers and or big marketing agencies and subscribe to their affiliate programs. They can then create promotional pages that market their affiliate products and earn a commission when people buy the product from their websites. Although this investment idea is among the cheapest, and easiest to start, people must have loyal readers who will promote their sales initiatives. Therefore, it is imperative that they develop quality content, monetize their websites, and develop effective marketing campaigns.
Securities and Bonds
Securities and bonds are good investment ideas, especially to people who want to supplement other forms of investments. For instance, depending on their areas of residence, they can buy government bonds at a moderate price, and earn interests. Moreover, they can diversify their options by buying mutual funds. Because of their safety and high maturity or current interest rates that they attract, people can easily raise money to fund their development projects.
Real Estate
With the heightened need for cheaper, but better accommodation options, investing in real estate an exquisite idea that people who have the financial muscle should consider. Although the starting is discouraging, those who have gained a foothold in this industry smile all the way to the bank. By building unique and high-quality properties, they can entice their customers to buy subjectively rather than objectively.
People who consider the foregoing investment ideas will enhance their financial security and have a stress-free future even after retirement.
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Wednesday, 12 September 2012
Mortgage Investment Corporations - MIC Funds
What is a Mortgage Investment Corporation? (MIC)
In a nut shell, a Mortgage Investment Corporation or MIC for short is an investment vehicle (corporation) that enables investors to invest in a diversified pool of real estate mortgages.
Investing in a MIC is similar to investing in a mutual fund in that the investor is investing in a series of mortgages as opposed to investing into a single mortgage. The advantage of this model is that it removes the impact of a single mortgage going bad by spreading the risk over the entire pool.
Investor returns are typically between 8% and 11% and the minimum investment ranges from $5,000 to $10,000.
MICs may be considered more stable than various other money market funds in that it invests in real property (tangible assets) versus other forms of securities which may invest solely on personal or corporate guarantees.
One of the reasons to invest in a MIC is that it is suitable for investors who do not have the time or interest in assuming the administrative responsibilities attached to running a mortgage portfolio. Essentially, the MIC allows investors to share in the benefits of the lucrative and relatively secure mortgage business back by the added security of real estate. Depending on individual circumstances, MIC's can be an appealing investment to all types of investors. In other words you don't need to have a high net worth to invest in a MIC.
A MIC is given special designation by Revenue Canada, highlighted in Section 130.1 of the Income Tax Act. To qualify as a Mortgage Investment Corporation for Canadian income tax purposes, the Fund must comply with the following:
At least 50% of the Fund's assets must consist of residentially orientated mortgages and/or cash;The Fund's only business activity is investing funds of the corporation and not managing or developing any real property;The Fund must not hold any investments secured by real property situated outside Canada or have debts owing to it by non-resident individuals, other than debts secured by real property situated in Canada; andNo shareholder may own more than 25% of the issued shares of any class.
MIC investments are able to be held in registered accounts including RRSPs, RRIFs, RDSPs, RESPs, and/or TFSAs.
MIC's are a slow process of creating wealth. Stocks markets are exciting but many times there is little reason for a stock going up or down. This volatility makes it difficult to plan for the future. Mortgages on the other hand have a fixed rate of interest which is due and payable in a set pattern so you know what's happening from day to day. MIC's offer stable and predictable returns in what one might call a "boring" investment. "Boring" but very successful!
In a nut shell, a Mortgage Investment Corporation or MIC for short is an investment vehicle (corporation) that enables investors to invest in a diversified pool of real estate mortgages.
Investing in a MIC is similar to investing in a mutual fund in that the investor is investing in a series of mortgages as opposed to investing into a single mortgage. The advantage of this model is that it removes the impact of a single mortgage going bad by spreading the risk over the entire pool.
Investor returns are typically between 8% and 11% and the minimum investment ranges from $5,000 to $10,000.
MICs may be considered more stable than various other money market funds in that it invests in real property (tangible assets) versus other forms of securities which may invest solely on personal or corporate guarantees.
One of the reasons to invest in a MIC is that it is suitable for investors who do not have the time or interest in assuming the administrative responsibilities attached to running a mortgage portfolio. Essentially, the MIC allows investors to share in the benefits of the lucrative and relatively secure mortgage business back by the added security of real estate. Depending on individual circumstances, MIC's can be an appealing investment to all types of investors. In other words you don't need to have a high net worth to invest in a MIC.
A MIC is given special designation by Revenue Canada, highlighted in Section 130.1 of the Income Tax Act. To qualify as a Mortgage Investment Corporation for Canadian income tax purposes, the Fund must comply with the following:
At least 50% of the Fund's assets must consist of residentially orientated mortgages and/or cash;The Fund's only business activity is investing funds of the corporation and not managing or developing any real property;The Fund must not hold any investments secured by real property situated outside Canada or have debts owing to it by non-resident individuals, other than debts secured by real property situated in Canada; andNo shareholder may own more than 25% of the issued shares of any class.
MIC investments are able to be held in registered accounts including RRSPs, RRIFs, RDSPs, RESPs, and/or TFSAs.
MIC's are a slow process of creating wealth. Stocks markets are exciting but many times there is little reason for a stock going up or down. This volatility makes it difficult to plan for the future. Mortgages on the other hand have a fixed rate of interest which is due and payable in a set pattern so you know what's happening from day to day. MIC's offer stable and predictable returns in what one might call a "boring" investment. "Boring" but very successful!
Tuesday, 11 September 2012
My Boring Trip to an Investment Show
I admit, I'm not the sharpest knife in the drawer. Sure, I got a degree in Business Administration many years ago but that and $1.50 will buy me a medium coffee at Dunkin' Donuts.
So I thought I'd follow the smart folks in this investing business: check out the local money show. They come to town once or twice a year so they must be good, right?
I paid my entrance fee... first mistake in money management. Had I been on the ball, I should have been able to enter the show for free, just like the other 98% of attendees who bore coupons.
However, I'm in. This should be good. Through the gate, I picked up my bag of goodies. This is the material provided by exhibitors too cheap to buy a booth. That's ok, I'll peruse it at home, if it gets that far. A quick glance and I see that I don't understand most of it anyways. But it might be a good cure for insomnia.
I visited some booths, brokers boasting the merits of their software, mostly. Interesting until I enquired about their commissions while still maintaining a high level of service with a platform that's easy to use, flexible and provides the features I need. In addition, I need the trades to be sent directly to the floor, can you handle that? We parted as friends.
I love walking by the investment booths that provide the little mints... kept me fed most of the day. Do they really thing a Hershey Kiss will commit me to listen to their spiel? Or that another mouse pad would interest me in investing in their mutual funds that paid 2% last year? Isn't this so 1980's?
Various enterprises were represented, the most interesting being the newspaper that gave away a tool kit if I subscribed to their daily. The tools were a bit toyish but my daughter can play with them. Of course, I was now committed to $149 for a year's worth of newsprint to be disposed every week.
Booth after booth, some of the most irrelevant displays were rightfully ignored by the masses. I soon realized these small players were there only to appease their shareholders, not necessarily to provide any real opportunities for visitors. "No thanks, I'm not interested in your 'rising star' penny stock company. I already got burned once... now defunct New Era Gold it was called. All lies, sorry, no thanks."
Then, the piece de resistance... the speaker on stage. This stuffed shirt blabbered on about global markets, IRA's and 401(k)'s, investments that return 4%, countries poised for growth, new investment ideas, blah, blah, blah. I turned to the guy next to me "Hey, you know what he's talking about?" "Not a clue, but he does sound important, doesn't he?"
Think I'll just stay with my morning easy trade that earns me 5% a day... so much easier for a simple guy like me. Thanks for the lesson.
So I thought I'd follow the smart folks in this investing business: check out the local money show. They come to town once or twice a year so they must be good, right?
I paid my entrance fee... first mistake in money management. Had I been on the ball, I should have been able to enter the show for free, just like the other 98% of attendees who bore coupons.
However, I'm in. This should be good. Through the gate, I picked up my bag of goodies. This is the material provided by exhibitors too cheap to buy a booth. That's ok, I'll peruse it at home, if it gets that far. A quick glance and I see that I don't understand most of it anyways. But it might be a good cure for insomnia.
I visited some booths, brokers boasting the merits of their software, mostly. Interesting until I enquired about their commissions while still maintaining a high level of service with a platform that's easy to use, flexible and provides the features I need. In addition, I need the trades to be sent directly to the floor, can you handle that? We parted as friends.
I love walking by the investment booths that provide the little mints... kept me fed most of the day. Do they really thing a Hershey Kiss will commit me to listen to their spiel? Or that another mouse pad would interest me in investing in their mutual funds that paid 2% last year? Isn't this so 1980's?
Various enterprises were represented, the most interesting being the newspaper that gave away a tool kit if I subscribed to their daily. The tools were a bit toyish but my daughter can play with them. Of course, I was now committed to $149 for a year's worth of newsprint to be disposed every week.
Booth after booth, some of the most irrelevant displays were rightfully ignored by the masses. I soon realized these small players were there only to appease their shareholders, not necessarily to provide any real opportunities for visitors. "No thanks, I'm not interested in your 'rising star' penny stock company. I already got burned once... now defunct New Era Gold it was called. All lies, sorry, no thanks."
Then, the piece de resistance... the speaker on stage. This stuffed shirt blabbered on about global markets, IRA's and 401(k)'s, investments that return 4%, countries poised for growth, new investment ideas, blah, blah, blah. I turned to the guy next to me "Hey, you know what he's talking about?" "Not a clue, but he does sound important, doesn't he?"
Think I'll just stay with my morning easy trade that earns me 5% a day... so much easier for a simple guy like me. Thanks for the lesson.
Tuesday, 28 August 2012
Short Term Investment Options
Investing is not hinged on the premise of putting your money somewhere for long time so that you can gain huge benefits. There are many short term investment options available that can guarantee you good returns. The challenge lies in the identification of a suitable option that has minimum risks and maximum benefits. The choice of an investment option is normally determined by liquidity situation, liquidity and the willingness of an individual to take risks. The following are some of the short term investments that are worth considering when investing in the short term.
Money Market Accounts
These refer to a type of savings account that is offered by credit unions and banks. The characteristic features of these accounts is that they pay a higher rate of interest based on the current market interest rates and also require higher minimum balance, mostly above $ 1,000. Failure to maintain the minimum required balance in the account may attract some charges. These accounts can allow one to write up to three checks in a month. Withdrawal to third parties are limited at six transactions, with various restrictions mostly high charges if an individual makes more withdrawals than its required.
Microloans
Microloan programs facilitate the provision of small loans to individuals who do not have the financial backing or collateral to acquire loans from banks and other lending institutions that require collateral. Investors usually give their funds to special lenders who are experienced in management and lending. These lenders also offer technical assistance to borrowers. The investors receive interests that would have been enjoyed by banks and other lending institutions. Microloans have a maximum term of 6 years and attract an interest rate of about 8 to 13 percent. Microloans can be a great short term investment idea.
Investing in Options
Options are investments or derivatives. Their total value is determined by the value of the underlying investment. Most options are secured by stocks. However, indexes and commodities may also be used as underlying securities. Stock options give the investor the right to buy or sell shares of stock at a certain price. They normally have a set expiration date. Investing in options requires one to have adequate knowledge in financial markets so as to be able to predict movement of stock, moreover the right time to buy or sell.
Exchange Traded Funds (ETF)
These are shares that trade on the stock exchanges all day long in form of funds. These funds may hold assets such as bonds, stocks and commodities. ETFs yield a return on their index. They are considered as low cost and hence it is cheaper to invest in. ETFs can be bought and sold on the same day, hence convenient as a short term investment strategy.
Fixed Maturity Plans (FMPs) and Monthly Income Plans (MIPs)
These are instruments that invest in fixed deposits and bonds that bear similar maturity period. FMPs contain a fixed maturity period. On the other hand, MIPs are flexible in that they do not have a fixed maturity period. An investor is free to withdraw the investment any time after paying an exit load, charged at 0.5 to 1 percent. Those are some of the effective short term investment options.
Money Market Accounts
These refer to a type of savings account that is offered by credit unions and banks. The characteristic features of these accounts is that they pay a higher rate of interest based on the current market interest rates and also require higher minimum balance, mostly above $ 1,000. Failure to maintain the minimum required balance in the account may attract some charges. These accounts can allow one to write up to three checks in a month. Withdrawal to third parties are limited at six transactions, with various restrictions mostly high charges if an individual makes more withdrawals than its required.
Microloans
Microloan programs facilitate the provision of small loans to individuals who do not have the financial backing or collateral to acquire loans from banks and other lending institutions that require collateral. Investors usually give their funds to special lenders who are experienced in management and lending. These lenders also offer technical assistance to borrowers. The investors receive interests that would have been enjoyed by banks and other lending institutions. Microloans have a maximum term of 6 years and attract an interest rate of about 8 to 13 percent. Microloans can be a great short term investment idea.
Investing in Options
Options are investments or derivatives. Their total value is determined by the value of the underlying investment. Most options are secured by stocks. However, indexes and commodities may also be used as underlying securities. Stock options give the investor the right to buy or sell shares of stock at a certain price. They normally have a set expiration date. Investing in options requires one to have adequate knowledge in financial markets so as to be able to predict movement of stock, moreover the right time to buy or sell.
Exchange Traded Funds (ETF)
These are shares that trade on the stock exchanges all day long in form of funds. These funds may hold assets such as bonds, stocks and commodities. ETFs yield a return on their index. They are considered as low cost and hence it is cheaper to invest in. ETFs can be bought and sold on the same day, hence convenient as a short term investment strategy.
Fixed Maturity Plans (FMPs) and Monthly Income Plans (MIPs)
These are instruments that invest in fixed deposits and bonds that bear similar maturity period. FMPs contain a fixed maturity period. On the other hand, MIPs are flexible in that they do not have a fixed maturity period. An investor is free to withdraw the investment any time after paying an exit load, charged at 0.5 to 1 percent. Those are some of the effective short term investment options.
Monday, 27 August 2012
The Investment ISA Explained
What Is An Investment ISA?
The ISA (Individual Savings Account) was created by the Government in 1999 as a way of encouraging UK tax payers to start saving for the future. Divided into a cash or equity investment forms, the investment ISA enables you to put money into a range of stocks and shares as well as unit trusts, investments trusts and government and corporate bonds all under the ISA umbrella.
In tax year 2012/13 each qualifying UK tax payers is able to place up to £11,280 into stocks and shares ISA or split their investment between this and a cash ISA investment. This allowance is now expected to rise in line with the Retail Price Index year on year and has risen by £600 since 2011/2012.
Unlike a Cash ISA, the value of your investment within a stocks and shares ISA will fluctuate with changes in the stock market which means that though you have more potential to gain than you do with a standard savings account, you are also at risk of the value of your capital going down.
The Tax Benefits of an Investment ISA
As with the standard cash ISA, any gains you make within your fund are completely free of income and capital gains tax which makes them one of the most tax efficient forms of investment for most UK residents.
However when buying certain share-based investments within the ISA account there maybe some liability for standard rate tax payers, but this would be equal to the same charges made outside the ISA status and can be completely avoided by investing only in interest bearing products within your portfolio.
The Cost of an Investment ISA
As all stocks and shares within the ISA must be purchased by a fund manager, you will be liable for both the administration charges to cover your investment. When choosing the ISA to suit you make sure that you select a product that charges fees at a level that is acceptable to you and the investment you intend to make.
Transferring Into An Investment ISA
Although the limit for investment for any one year is set by the annual allowance, it is possible to transfer funds into an Investment ISA from previous years cash ISAs. This will enable you to take your funds out of potentially lower rate accounts and transfer them into a facility that could offer much greater rewards, but this must also be balanced with the extra level of risk that is then incurred.
It is also possible to transfer any cash ISA for the existing financial year into an investment ISA but this must be done in one lump sum and cannot repeated again in the year.
If you are considering placing your funds in an Investment ISA then take a look at the comparison sites that are available giving you details of the best deals that are available to ensure that even if you have no prior knowledge of the stock market or equity investments as a whole that you have the best opportunity to make your money work for you.
The ISA (Individual Savings Account) was created by the Government in 1999 as a way of encouraging UK tax payers to start saving for the future. Divided into a cash or equity investment forms, the investment ISA enables you to put money into a range of stocks and shares as well as unit trusts, investments trusts and government and corporate bonds all under the ISA umbrella.
In tax year 2012/13 each qualifying UK tax payers is able to place up to £11,280 into stocks and shares ISA or split their investment between this and a cash ISA investment. This allowance is now expected to rise in line with the Retail Price Index year on year and has risen by £600 since 2011/2012.
Unlike a Cash ISA, the value of your investment within a stocks and shares ISA will fluctuate with changes in the stock market which means that though you have more potential to gain than you do with a standard savings account, you are also at risk of the value of your capital going down.
The Tax Benefits of an Investment ISA
As with the standard cash ISA, any gains you make within your fund are completely free of income and capital gains tax which makes them one of the most tax efficient forms of investment for most UK residents.
However when buying certain share-based investments within the ISA account there maybe some liability for standard rate tax payers, but this would be equal to the same charges made outside the ISA status and can be completely avoided by investing only in interest bearing products within your portfolio.
The Cost of an Investment ISA
As all stocks and shares within the ISA must be purchased by a fund manager, you will be liable for both the administration charges to cover your investment. When choosing the ISA to suit you make sure that you select a product that charges fees at a level that is acceptable to you and the investment you intend to make.
Transferring Into An Investment ISA
Although the limit for investment for any one year is set by the annual allowance, it is possible to transfer funds into an Investment ISA from previous years cash ISAs. This will enable you to take your funds out of potentially lower rate accounts and transfer them into a facility that could offer much greater rewards, but this must also be balanced with the extra level of risk that is then incurred.
It is also possible to transfer any cash ISA for the existing financial year into an investment ISA but this must be done in one lump sum and cannot repeated again in the year.
If you are considering placing your funds in an Investment ISA then take a look at the comparison sites that are available giving you details of the best deals that are available to ensure that even if you have no prior knowledge of the stock market or equity investments as a whole that you have the best opportunity to make your money work for you.
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