You've without doubt seen them or read them. Glossy ads or four-color advances in publications and newspapers promising to teach you all the juicy details about successful real-estate investing. And all you need to do to learn each one of these real estate investing surface encounters chuck russo secrets is to pay a rather high sum for a one-or two-day seminar.
Often these kinds of slick property investing seminars claim that you can make intelligent, profitable real estate investments with zero money lower (other than, of program, the hefty fee you purchase the workshop). Now, how appealing is that? Make a benefit from real est investments you created using no funds. Possible? Not likely.
Successful owning a home requires cash flow. That's the character of any kind of business or investment, especially real estate investing. You put your hard earned money into something which you hope and plan will make you more money.
Unfortunately not enough newbies towards the world of property investing believe that it's a magical type of business exactly where standard business rules do not apply. Simply set, if you would like to stay in property investing for a lot more than, say, a day or two, then you're going to have to generate money to use and invest.
While it could be true which buying property with simply no money down is straightforward, anyone who's even made a simple real estate investment (such as buying their particular home) knows there's much more involved in property investing that will set you back money. For illustration, what regarding any required repairs?
So, the number 1 rule people not used to real estate investing ought to remember is to have available cash reserves. Before you decide to actually perform any property investing, save some money. Having just a little money within the bank when you begin real estate investing surface encounters chuck russo can help you make more profitable real estate investments in rental properties, for example.
When real estate investing in rental attributes, you'll want in order to select just qualified tenants. If you have no cashflow when property investing within rental properties, you may be pressured to take a much less qualified tenant as you need somebody to pay you money so that you can take attention of repairs or lawyer fees.
For almost any real estate investing, meaning rental properties or even properties you purchase to sell, having cash reserved can permit you to ask for a higher price. You can ask for a increased price from the real estate investment because an individual surface encounters chuck russo won't feel financially strapped as you wait for an offer. You won't be backed into a corner and forced to accept just any offer because you desperately need the money.
Another downfall of many new to real estate investing is, well, greed. Make any profit, yes, but don't become so greedy that you simply ask with regard to ridiculous rental or second-hand rates on all of your real est investments.
Those not used to real property investing have to see real estate investing as a business, NOT a spare time activity. Don't think that real property investing is going to make you rich overnight. What business does?
It takes about half a year to decide if property investing in for you. If you might have decided in which, hey I love this, then offer yourself many years to truly start making money. It typically takes at least five years being truly successful in real estate investing.
Persistence may be the key to success in real-estate investing. If you might have decided that real-estate investing is perfect for you, surface encounters chuck russo keep plugging away at it and the rewards will be greater than you imagined.
You wouldn't think Apple and Indonesia have much in common. On the surface, they don't, but they can still teach you a lot about investing. Let's start with Apple.
Apple made the news recently with two major events. It is locked in a battle with Exxon over which is the most valuable company by market capitalization -- a remarkable turnaround. Apple has a market value of over $344 billion. Then Steve Jobs announced his resignation at Chief Operating Officer for health related reasons.
According to a thoughtful blog by Weston Wellington of Dimensional Fund Advisors (not available online), it was not so long ago that the financial media was trashing Apple. In February 14, 2005, Robert Barker, in an article in BusinessWeek stated "...Apple doesn't tempt me..." I wonder what did. Maybe Lehman or Bear Stearns!
Steven Gandel weighed in with an article in Money on March 24, 2004. He quoted Transamerica portfolio manager Chris Bonavico who opined that Apple stock is "...crap from an investor standpoint."
Many analysts credit the remarkable sales of its Apples Stores as the key to Apple's success. In a quote attributed to David Goldstein, Channel Marketing Corp, which appeared in an article in BusinessWeek on May 21, 2001, Mr. Goldstein gave Apple "two years before they're turning out the lights on a very painful and expensive mistake."
What can you learn from these comments about Apple stock? Read the financial media if you find it entertaining. It's useless (and potentially harmful) as a source of reliable financial advice.
What about Indonesia?
The financial media was preoccupied with the downgrade by Standard & Poor's of the credit rating of the U.S, which lowered its rating from AAA status to AA plus. The new rating places the U.S. below the United Kingdom, Canada and even the Isle of Man.
Many investors viewed the lower rating with alarm and considered it a precursor of low stock returns for decades to come. The data tells a much different story, and may indicate there is no better time to invest in U.S. stocks and bonds.
In another blog, Wellington notes that Standard & Poor's rated the credit of Indonesia a "B" in July, 2001, which placed it in the "junk" category. Over the past decade, its credit rating has never risen to investment grade.
Investors in the Jakarta Composite have earned a total return of a whopping 29% per year over the last decade, ending June 30, 2011. According to Wellington, "If the Dow Jones Average had kept pace with Indonesian stocks over the past decade, it would be over 104,000 today."
Here's the lesson to be learned from Indonesia: A low (or reduced) credit rating on sovereign debt does not necessarily correlate to lower stock market returns. This is the opposite of what many investors and financial talking heads believe.
Most investors get their financial information from the financial media or brokers. As Dr. Phil would say: How is that working for you?
Dan Solin is a Senior Vice President of Index Funds Advisors (ifa.com). He is the author of the New York Times best sellers The Smartest Investment Book You'll Ever Read, The Smartest 401(k) Book You'll Ever Read, and The Smartest Retirement Book You'll Ever Read. His new book, The Smartest Portfolio You'll Ever Own, will be released in September, 2011. The views set forth in this blog are the opinions of the author alone and may not represent the views of any firm or entity with whom he is affiliated. The data, information, and content on this blog are for information, education, and non-commercial purposes only. Returns from index funds do not represent the performance of any investment advisory firm. The information on this blog does not involve the rendering of personalized investment advice and is limited to the dissemination of opinions on investing. No reader should construe these opinions as an offer of advisory services. Readers who require investment advice should retain the services of a competent investment professional. The information on this blog is not an offer to buy or sell, or a solicitation of any offer to buy or sell any securities or class of securities mentioned herein. Furthermore, the information on this blog should not be construed as an offer of advisory services. Please note that the author does not recommend specific securities nor is he responsible for comments made by persons posting on this blog.
Socially responsible investments might be emotionally compelling investments, but do they necessarily have compelling financial returns?
The term "Impact Investing" has taken on many meanings in the past few years. I want to end the confusion and underscore that impact investing must by definition deliver impactful and compelling financial returns.
Impact investing has been labeled as a subset of socially responsible investing (SRI). But, it is not a subset of SRI.
The basic premise of socially responsible investing is to avoid investing in businesses that cause harm to the environment or society. Since SRI's approach to investing is narrow and passive, it is by definition often a niche investing strategy, which in many cases has delivered lukewarm returns.
SRIs don't necessarily impact an industry, impact investments necessarily do. Yet, many organizations still treat SRI and impact investing like synonyms - causing confusion.
For example, here is the definition of SRI from ecolife, a website that is an online guide to green living:
"Socially responsible investing is an investment strategy employed by individuals, corporations, and governments looking for ways to ensure their funds go to support socially responsible firms. The concept goes by names like sustainable investing, impact investing, community investing, ethical investing, and socially-conscious investing; it is a non-financial gauge that is used when selecting various investment options that takes into account factors such as environmental, social, and ethical values."
The reality is that some socially responsible investments can be impact investments, but not all impact investments are socially responsible investments. So, SRIs are really a subset of impact investing. According to the Monitor Institute's new report "impact investors want to move beyond 'socially responsible investment'."
All impact investments have the potential to move towards a new economy - an impact economy, not all SRIs will. In fact, most SRIs won't.
Why? Impact investing is socially responsible and must have compelling returns. Returns that make the professional investor consider it seriously as a critical piece in the portfolio. According to Dr. Arjuna Sittampalam, research associate with EDHEC-Risk Institute, "in other words, the investor makes an active decision to seek a social or developmental return alongside their financial return."
Since impact investments create compelling returns, they have a greater chance of attracting more serious professional investors than SRIs -- a necessity for creating worldwide social change and impact.
The Global Impact Investing Network (GIIN) defines impact investments as those that: "aim to solve social or environmental challenges while generating financial profit. Impact investing includes investments that range from producing a return of principal capital (capital preservation) to offering market-rate or even market-beating financial returns. Although impact investing could be categorized as a type of 'socially responsible investing,' it contrasts with negative screening, which focuses primarily on avoiding investments in 'bad' or 'harmful' companies - impact investors actively seek to place capital in businesses and funds that can harness the positive power of enterprise."
This definition is more on target with the real definition of impact investing, but to revise part of GIIN's definition: Impact investments only include investments that can offer market-rate or even market-beating financial returns.
So, my definition -- impact investing must achieve four significant goals:
1. Make an impact in solving a pressing problem of our time,
2. Generate compelling returns for investors,
3. Generate growth for economies, and
4. Generate prosperity for developed and developing nations.
An example is my own case-in-point. I founded SunEdison that created the power purchase agreement (PPA) model for the solar industry. This business model used net metering, streamlined interconnection standards, ways to connect to the grid, and actually provided a new solar power service to customers.
Investments in PPAs are delivering 7-12% unleveraged after tax returns. In today's financial environment; these are compelling returns given the low risks.
Plus, PPAs have lowered the use of fossil fuels to deliver electric energy; created thousands of jobs worldwide and are growing. They have impactful financial returns and impact a big problem.
According to the Monitor Institute's new report Investing for social and environmental impact: a design for catalyzing an emerging industry "it is certainly plausible that in the next five to 10 years investing for impact could grow to represent about 1 percent of estimated professionally managed global assets in 2008. That would create a market of approximately $500 billion. A market that size would create an important supplement to philanthropy, nearly doubling the amount given away in the U.S. alone today."
But that is only a start, a start to an "Impact Economy." To really make a difference - to leverage impact investing to create an impact economy, it must be larger. Some estimate that we need to invest over $1 trillion to combat issues like climate change, poverty, and lacking global health, to put the world back onto a stable more equitable footing.
So, let's put our money where the impact is. Stop selling impact investors short.
Jigar Shah is CEO of the Carbon War Room, a nonprofit that harnesses the power of entrepreneurs to implement market-driven solutions to climate change and create a post-carbon economy.
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