Category Archives: Investing

How to Quickly Determine the Value of Commercial Property for Sale

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The value of a commercial property for sale is determined by using some simple formulas that are based upon the amount of net operating income that the property produces each year. So when you are looking at a commercial property for sale, one of the first things that you’ll want to ask the broker for is the profit and loss statement.

Some brokers who have listed a commercial property for sale may refer to this profit and loss statement as an IPOD, or income property operating data sheet. Once you get the IPOD, or profit and loss statement, you can then compare the information provided by the broker or seller to your other sources to help determine what the real numbers are. The challenge when looking at any commercial property for sale is that the broker and/or owner will often tend to exaggerate the amount of income that the commercial property for sale produces while also trying to minimize the amount of operating expenses that are reported.

How to Determine the Value of a Property for Sale

The reason for this is simple. The value of any commercial real estate is based on the amount of net operating income the property creates each year. In fact, each additional dollar of annual income increases the value of the property by roughly ten dollars, depending on where the property is located, and how old it is. Note that this extra net income can come from either getting additional revenue in rents, or from reducing expenses by managing the property more efficiently.

Once you understand that owners of commercial real estate will tend to present unrealistic numbers in an attempt to get a higher price for their property you’ll understand better why it’s necessary when looking at any commercial property for sale to get to know the market you are investing in. When you know what the rental rates in an area tend to be or what the typical expense ratios are for a twenty-five year old apartment building then it’s much harder for the broker or owner of a commercial property for sale to attempt to pull the wool over your eyes.

Verifying the Income and Expenses

The first step in verifying the income of a commercial property for sale is to ask for the rent roll. The rent roll is a list of what each apartment, self storage unit, mobile home lot, or office space rents for. Make sure that you get the actual rent roll because the owner or broker of a commercial property for sale may try to give you a Pro-forma rent roll instead of the actual rent roll. Pro-forma means that there is an expectation, realistic or not, of getting higher rents than the property is currently getting. My response to this has always been, “If you raise the rents up to match the pro-forma, then we’ll use the higher income amounts, otherwise we’re going to base our valuation on what the property is currently producing in income.

When looking at the expenses from a commercial property for sale, remember that you’re trying to come up with the actual amount that it will cost you to operate the property rather than what the seller’s expenses have been. So while it’s helpful to know exactly what the seller’s costs have been, I’ve learned NOT to rely on the information provided by the seller when looking at a commercial property for sale because this information is almost always inaccurate.

A Simple Formula to Use for Expenses

The expenses will vary depending on the type and age of the commercial property for sale. For example, if you are looking at buying a Class C apartment building which is at least twenty-five years old, then the expenses will run between 45 to 50 percent of the collected income each month. The collected income, known as the Effective Gross Income, is what’s left after the cost of vacancies are subtracted from the total amount of rents on the rent roll from the commercial property for sale.

The final step in determining the value of a commercial property for sale is to divide the net operating income by the capitalization rate, which varies from about 6 to 12 percent depending on the type of property, the age, and the location of the commercial property for sale. The fastest way to get an idea of what capitalization rate you should be using when looking at a commercial property for sale is to ask another broker who is not involved in the transaction.

Using Escape Clauses to Limit Your Risk

Another way of protecting yourself when looking at any property for sale is to make sure that your purchase contract allows you a period of time to get out of the deal if you are not comfortable with anything that you find. Done properly, you can often tie up a property for 60 to 90 days so that you have time to accurately determine the real value. This makes it easier to look at commercial real estate, because you can get out if you have the right escape clauses.

Learn how to tie up any commercial property for sale for 90 days using a simple addendum when you get your Free Multiple Streams of Income Insider’s Guide at http://RealEstateInvestments.net/free-report

Peter Conti is a Wall St. Journal bestselling author who lives in Annapolis, MD with his wife, kids, and his dog, Snickers.

Article Source: http://EzineArticles.com/?expert=Peter_E_Conti

Retiring? What to do with your 401(k)

Retiring? What to do with your 401(k)

By Walter Updegrave

From CNN Money

(Money Magazine) — Question: When I retire, should leave my money in my company’s 401(k) or roll it into an IRA? –Mark, Plymouth, Minnesota

Answer: I hate to start with that overused phrase “it depends.” But the fact is that the right answer really does hinge on your particular circumstances, not to mention the characteristics of your 401(k) plan.

For example, two factors that can definitely influence your decision to stay or go are your age and how soon you’ll dip into your 401(k) stash for living expenses or other needs.

If you’re at least 55 when you leave your company, you qualify for an exception from penalties that apply to withdrawals prior to age 59 ½. That means you can pull money from your 401(k) account and pay only income tax on the taxable portion of the withdrawal. By contrast, if you roll your money into an IRA and begin pulling it out, you’ll not only owe income tax on withdrawals prior to age 59 ½, but a 10% penalty as well.

So if you’re at least 55 but under 59 ½ and you think you’ll need access to your 401(k) money over the next few years, you’ll probably want to keep at least a portion of your dough in your company plan, at least until you hit 59 ½.

(Yes, you can avoid the penalty on early IRA withdrawals by taking “72(t)” withdrawals withdrawals — that is, substantially equal periodic payments based on your life expectancy — but that can get kind of messy.)

Generally, though, I think most people who are retiring or already retired are probably better off rolling their 401(k) balance into an IRA.

For one thing, if you stay in your 401(k), you’re limited to the investment choices within your plan. That may not be so bad if your 401(k) has a broad menu of decent investments that are reasonably priced. (To get an idea of how your plan’s investment options stack up on price, check out the 401(k) fee reports available free from 401(k) ratings firm BrightScope.) But by rolling your savings into an IRA at a mutual fund or brokerage firm, you give yourself access to thousands of different mutual funds, ETFs and other investments.

Not that you need thousands of choices. I think most people are better off keeping things simple and making a diversified portfolio with just a handful of funds. But the point is that by expanding the roster of funds available to you, you may have a better shot at finding low-cost funds. With an IRA rollover you’ll likely be able to pick and choose from more index funds and more target-date retirement funds than your 401(k) presently offers.

Another thing you want to consider is how much flexibility you would have for drawing money if you remain in your 401(k). Can you set up a systematic withdraw plan or do you have to put in a separate request each time you need cash? Can you designate which funds draws will come from, or does the plan administrator pro rate the withdrawal amount across your holdings? Does your 401(k) allow for lifetime annuity payments? If so, are the payments competitive with what you can get outside the plan?.

With an IRA rollover, you’ll probably find you’ll have more maneuvering room. You can pull money out as needed. You can ask the investment firm handing the IRA to pay you a specific amount or a specific percentage of your account value each month. You can use some of your assets to purchase an immediate annuity that will turn that portion of your savings into guaranteed lifetime income. Or you can do all three.

Until recently, there may have been another reason to go with the IRA rollover even if you were partial to sticking with your 401(k) plan: only a spouse beneficiary had the option of rolling an inherited 401(k) into an inherited IRA and then stretching out payments over his or her life expectancy. A nonspouse beneficiary was required to take the 401(k) money (and pay tax on it) within five years of the 401(k) owner’s death.

So if you were thinking of leaving your 401(k) to someone other than your spouse, you would give that beneficiary a lot more flexibility on withdrawals and taxes by rolling your money to an IRA.

But the Pension Protection Act of 2006 eliminated that discrepancy. Actually, that’s not quite right. After the act became law, initial interpretations of the legislation said that it gave 401(k) plans the option of allowing nonspouse beneficiaries to roll over the inherited 401(k)’s assets into an inherited IRA. In short, 401(k) plans didn’t have to offer that choice.

But a subsequent notice from the IRS makes it clear (well, clear to people who read IRS notices) that starting this year 401(k) plans must make the 401(k)-to-inherited IRA option available to nonspouse beneficiaries. Be aware, though, that the beneficiary has to follow some very specific rules to do this correctly, including setting up a special inherited IRA to accept the rollover and doing the transfer via a trustee-to-trustee transfer.

Bottom line: before you make a decision, take some time to think about such issues as when you’ll need access to your money, how much flexibility you’ll have getting to it in your 401(k) vs. an IRA rollover and, of course, how much you’ll pay in expenses staying in your plan vs. doing a rollover. I suspect that most people will opt for the IRA, especially if they’re 59 ½ or older. But the only way to know which is the better choice is to think it through.

How recent grads can learn the investment ropes

How recent grads can learn the investment ropes

By Walter Updegrave

From CNN Money

(Money Magazine) — Question: I’m a recent college graduate who has a decent job that pays the bills. I also have around $10,000 in a savings account and contribute $100 a month to my 401(k). How should I begin to invest my money? Should I go to a broker? Manage it on my own? Help! –Sophia, New York City

Answer: Let’s see. You’ve managed to snag a job in an employment market that’s incredibly challenging, especially for recent grads. You’ve got a tidy sum tucked away in a safe place that can help you deal with emergencies and unexpected expenses. And you’re saving on a regular basis for retirement.

Hey, maybe you should be the one counseling new graduates.

Seriously, financially speaking at least, you’re off to a great start. The trick now is to build on the foundation you’ve already laid by assuring that the money you save throughout the rest of your career is invested in a way that gives you a reasonable shot at financial security.

Given all the turmoil in the economy, I can understand that you may feel some trepidation about venturing into the investing arena all alone. But if I were you, I’d at least consider going it on my own as opposed to working with a broker or other adviser.

Why? Well, assuming you’re not going to be investing big bucks, it’s unlikely you’re going to get much quality time and attention from an adviser. You’ll probably end up with a few perfunctory fund picks from some firm’s recommended list. That’s hardly the end of the world, but it’s not a very high bar for a reasonably intelligent and motivated person to match. And you could do worse, ending up with someone who does stay in touch, but only to move you from one investment to another, generating commissions in the process.

Besides, you’ve shown some pretty good instincts about your finances so far. So why not expand your repertoire of money moves to include some basic but effective investing strategies that can serve you well throughout the rest of your life?

The best-kept secret on Wall Street is that investing doesn’t have to be complicated. You don’t have to track the Dow every 10 minutes or pore over every pronouncement from the Federal Reserve. And you certainly don’t have to sift through each of the thousands of stocks, mutual funds and ETFs available to find decent investments. If anything, I’d say you’re better off keeping it simple.

What you do have to do in order to be a successful investor, though, is have a basic understanding of how the financial markets work and learn how to put together a portfolio of investments that can grow over the long-term without getting so obliterated every time the market takes a dive that you bail out.

There are a number of ways to gain that knowledge. A great way to start is by going to our Money 101 section, where you’ll find easy-to-read pieces on all the important aspects of personal finances. You can begin with theBasics of Investing, which will give you the lay of the investment land, so to speak. From there, you can move on to the lessons on mutual funds,stocks and bonds.

After that, you’ll want to turn your attention to the granddaddy of investing topics, Asset Allocation, which is a fancy term for spreading your money around so you don’t get wiped out should any one type of investment tank.

Other places you can go for a good grounding in investment basics are theUnderstanding Investing section of Mint.com and the Start Investing area of Morningstar’s site.

If you’re more into books, you might try The Little Book of Common Sense Investing by Vanguard founder and small investor advocate John Bogle;How A Second Grader Beats Wall Street by Allan “Dare To Be Dull” Roth; and That Thing Rich People Do by Kaye Thomas, whose Fairmark.comsite is also a font of sensible info on all things Roth.

What I like about this trio of authors is that, unlike many experts who spew out ultimately useless details on specific investments or tout some arcane strategy that works in hindsight, they actually inform you about investing principles. In short, they provide the proverbial net, not just a fish.

Of course, becoming a confident investor takes time and experience. So take it slow and move methodically. I recommend you start with mutual funds, and consider index funds in particular. If you’d like a few fund suggestions to help you get started, you can check out our Money 70 list of recommended funds.

You’re going to make mistakes along the way, so don’t get rattled when that happens. The key is to avoid making extreme moves, so that you’ll be able to recover reasonably quickly from missteps.

If you decide you prefer some help to going it alone, you’ve got several choices. Most major investment firms and mutual fund firms, including biggies like FidelitySchwab and Vanguard, have investment advisory divisions that will manage your investments for a management fee (say, 0. 5% to 1% a year) in addition to the underlying annual fees of the fund itself.

Or you might try hiring a financial planner on an hourly fee basis. The planner can help you create a basic portfolio and make some good low-cost fund recommendations. You can then take over from there. If you decide you need more help later on, you can consult the planner again for an hourly fee. At this point, only a small number of planners are willing to work under this kind of arrangement, but you can find some by going to theGarrett Planning Network or to an online service likeMyFinancialAdvice.com. The hourly cost for these types of services varies from planner to planner, but $150 to $250 is typical.

And don’t forget to check out your 401(k) plan for assistance. Most plans today offer some type of guidance, ranging from online calculators that show how different mixes of stocks and bonds affect your future retirement prospects to managed accounts, where you turn over your account to an outside investment firm that will create and manage your 401(k) money on an ongoing basis (for a fee, of course).

And if nothing else, many 401(k) plans offer the option of investing in atarget-date fund, which gives you a diversified portfolio of stocks and bonds in a single fund. These funds aren’t perfect. But they’re reasonable choices for investors who would do a lot worse on their own, and they’re certainly a decent place for someone like you to stash your retirement savings while you get your investment bearings.

So why not begin steeping yourself in the ways of the financial world now by checking out some of the resources I’ve mentioned? Even if you ultimately decide you prefer working with a pro to flying solo, the more you know about investments and markets, the more informed your financial decisions will be.

How to Purchase Commercial Real Estate

How to Purchase Commercial Real Estate

If you’re thinking about purchasing office space, this guide will help you evaluate the pros and cons of leasing vs. buying, assemble a real estate search team, choose a location, and make the purchase.

By Inc. Staff

From Inc.com


Every few years, the real estate market suffers through a crash or a correction and underscores a perpetual dilemma for small and mid-sized businesses: Is it better to rent or own commercial property?

Buying commercial real estate is a complex undertaking that is difficult even for experts to time right to maximize their investment value, let alone entrepreneurs or business executives whose areas of expertise are in different industries. It’s also a venture rife with risk, as buyers, sellers, agents, and renters alike can suffer the consequences of a dip or spike in demand. At the same time, for a business, on the upside the potential rewards can be substantial.

Why should a business buy? “To get a greater control over the cost of the real estate component of overhead, as opposed to leasing, where you can be victimized by the market if the lease rolls over when the market is tight and, as a result, you have higher rental costs,” says William Martin, chair of the real estate group in the Denver office at Kutak Rock LLP, a law firm with 400 attorneys and offices around the country. “The other benefit would be investment benefits, including depreciation of the property for tax purposes and, over the longer term, asset appreciation.”

There is no one-size-fits-all strategy for purchasing commercial real estate. That decision must be weighed by each business. The following guide will help a small business assemble a real estate search team, choose a location, and purchase property.

Purchasing Commercial Real Estate: Deciding to Buy Versus Lease

When deciding whether to buy commercial real estate, it’s important to understand the potential risks. The last thing you want is to buy property and realize a year or two later that you would have been better off renting. Here are some of the potential risks a business faces when buying:

Location may backfire. Today’s “hot” neighborhood can become tomorrow’s “not” neighborhood. Locations are trendy. Gentrification may stall. The market may go bust. The area you choose one day may become undesirable the next. Of course, the reverse can be true, as well.Loss of liquidity. Businesses may tie up much of their liquidity buying real estate. It’s not always easy to sell real estate, particularly in a slump. At the same time, businesses that own real estate at least have something to sell if they need a cash influx to revive a lagging business.Tenuous cash flow. Tenants sometimes stop paying their rent. Other times, buildings are in need of unexpected — and expensive — repairs. Your cash flow can become compromised, especially if you are forced to simultaneously pay repairs and attorney fees to handle a tenant situation.

In order to be aware of risks, do your homework. Undertake extensive due diligence before signing any contract. You also need to be hands-on with your commercial property by overseeing every level of operation and making frequent on-site visits — otherwise, you may learn about problems after it’s too late to do anything to fix them.

The decision ultimately comes down to the economics. You may want to have a real estate expert help you undertake a rent versus own analysis, taking into account growth forecasts for your business and real estate market trends. “It’s really beneficial to sit down with an expert that can lay out options for you and discuss scenarios, such as in three years this is where business will be in terms of revenue, size, or people. This is how many locations we will have. This is what our space needs will be,” says Hessam Nadji, managing director ofMarcus & Millichap, a national brokerage focused on real estate investment. A real estate expert can also help you figure out the costs of renting versus buying, factoring tax benefits such as depreciation.

Dig Deeper: How to Evaluate Your Office Leasing Strategy

Purchasing Commercial Real Estate: Assembling a Team of Experts

As a small business owner, you’re most likely not a commercial real estate expert. That’s why it’s important to surround yourself with the right team of experts. They can help you determine the right time to buy or sell, the right locations to consider, and the nuts and bolts of closing the deal. Here are some of the experts you may consider contacting:

Accountant. An accountant can help you figure out what your business can afford and analyze the tax and operating budget benefits.Lawyer. A lawyer can help you complete the transaction, negotiating with the seller and lender on your behalf.Commercial broker. A real estate broker can help you identify potential properties and what you can afford.Mortgage broker. A lender or mortgage broker will help you sort through financing options, from bank loans to those guaranteed by the U.S. Small Business Administration, such as the Certified Development Company (CDC) 504 Program, used to finance primarily real estate or equipment.

Dig Deeper: Ten Rules for Buying Real Estate

Purchasing Commercial Real Estate: Identify the Right Property

There are a number of factors to consider when looking for suitable commercial real estate to purchase. The old adage “location, location, location” is true for commercial properties just as much as it is for residential. But there are other issues at play, as well. Here are some things to consider:

Location. This is still the No. 1 issue. You want to be close to your customers, your workers, and your vendors or suppliers. “You want to be convenient to customers to the extent that you have a business where the customer comes to you,” Martin says. “But depending on the type of business, access to rail and highway and shipping lanes may be important, too.”Physical condition. After identifying the general location, consider how the property was used, the wear-and-tear, whether there are any environmental issues or potential liability issues, such as asbestos or lead paint.Allowable uses. If your business is an accounting firm, you likely need commercial office space. If you are a manufacturer, you need an industrial space. Either way, you need to make sure the zoning allows you to do what you need to do on the property.Limitations on exterior and interior. Whether due to zoning laws or building codes or covenants, there may be limits to changes or alterations you can make to the property. A good example is a building that is in an historic area and subject to restrictions on changes that can be made to the façade.Adequacy of access and parking. You need to make sure your customers can park and take into consideration whether access is compliant with laws such as the Americans With Disabilities Act.Opportunity for expansion or leasing. Entrepreneurs often have a rosy outlook about growth and so the potential to expand is a consideration as is the flipside – if you don’t grow as much as planned, can you lease out extra space?

Dig Deeper: Pick a Legal Location and Avoid Zoning Problems

Purchasing Commercial Real Estate: Do Due Diligence and Evaluate the Property

After you locate the right property, you go to contract and commence a one- or two-month period during which you need to do your homework. Now is the time to revisit your objectives, and ask yourself if the property you have identified helps you meet or further your stated objectives.

Beyond that, this is where your team of trusted advisors plays an important role. A broker will often help bring in third parties — engineers, appraisers, environmental analysts — to help verify the condition of the property, its prior use, and any potential liability issues, whether structural soundness or necessary upgrades of electrical wiring. You should also be involved to make sure that there isn’t any potential for changes in adjacent properties that could negatively impact your business or property value, such as development, road or infrastructure construction, etc. A title company can also make sure there are no prior or existing litigation and/or insurance claims affecting the property.

If you find any problems, you may have the opportunity to renegotiate with the seller or sometimes to walk away from the deal.

Dig Deeper: A New Way to Search for the Right Office Location

Purchasing Commercial Real Estate: Taking the Plunge and Making the Purchase

Once you’ve found the right property and worked with the owner on the right price, the next big step is to secure financing and come up with the right mix of how much cash you’re putting down and how much you need to finance, Nadji says.

During good economic times, there are a host of attractive financing options available to small and mid-sized businesses. After the global economic meltdown, starting in 2008, banks tightened up credit and limited many of these options. In order to get a loan during a tough economy, it’s doubly important to make sure your business has sufficient cash reserves, has a good credit rating, and is profitable.

Your attorney and accountant play key roles here to ensure contracts are sufficiently detailed, and structured to your maximum advantage. You need to envision every possible contingency, and make sure it is covered — clearly and unambiguously — in the contract. Everything from air rights and other zoning laws to the nuances of existing tenant leases and tax requirements must be understood here. You also need to verify — and re-verify — the financial terms associated with this purchase, to confirm you are ready to pull the trigger.

At this step, you should also update or add to your original business plan, to cover the specifics of this acquisition; this is when your plan comes to life. Once the purchase takes place, it is imperative that you implement and execute on the plan without procrastination. The cliché “time is money” is never truer than when you are building or renovating a commercial real estate property.

Before buying commercial real estate, it’s important to make sure that buying is right for your business for the long-term. “The most important thing is to think carefully about what could happen in the first 12 to 24 months after buying a building that would make you look back and say, ‘I made a mistake,'” says Nadji. “If you’re very aggressive with revenue growth projections or overshoot how much space you need to occupy or buy and then the business doesn’t grow fast enough into that, you may have a problem.”

Investing 101: How Bonds Are Priced

Investing 101: How Bonds Are Priced

By Michael C. Thomsett

From Mint.com


Editor’s Note: Few things can kill a cocktail conversation like bond talk — and we are obviously not talking about the kind of bond preceded by “James.” Not only do most people think bonds are boring, they also find them incredibly confusing. If you want to be a smart investor, though, you should know where your money is going — and that includes understanding bonds and their most complex feature, pricing.

This week, MintLife presents the third article in our Investing 101 series, provided by Minyanville.com.

A bond is referred to as a debt instrument. The corporation or government issuing the bond promises to repay the full value of the bond, or par value, with interest and by a specific due date.

A 3% bond with a par value of $1,000 is a contract between the issuer and the bondholder, where the issuer pays annual interest of $30, or 3% of the par value. On maturity date, the par value of $1,000 is repaid.

Because bond interest rates are fixed, but market rates are constantly changing, bond values also change all the time. When interest rates are higher than that offered by a bond, that bond becomes less desirable. As a result, that bond will be worth less than its par value and sell at a discount.

If market rates fall below the bond’s fixed rate, the bond becomes more attractive and it starts selling at a premium.

For example, when a bond is at 102, it is worth $1,020, or 2% above par value. If a bond is at 97, it has been discounted to 3% below par value.

The changes also affect the yield on the bond.

No matter what its current market value, the bond always pays the same interest. A 3%, a $1,000 bond pays $30 per year:

Interest rate x par value – Interest              (3% x $1,000 = $30)

This so-called current yield is also calculated by dividing the interest paid per year by par value:

Interest ÷ Par Value = Interest rate              ($30 ÷ $1,000 = 3%)

If a bond is selling at a premium or discount, however, the nominal yield on that bond is going to be different.

For example, when that $1,000 par value is worth 102, or $1,020, the nominal yield is reduced:

$30 ÷  $1,020 = 2.9%

This is only a slight difference; but for institutional investors relying on bond yields for millions of dollars, it adds up to a lot of money.

If the bond is selling at a discount, on the other hand, the nominal interest rate is higher. For example, if a bond with par value of $1,000 is at 97, the calculation for nominal yield is:

$30 ÷  $970 = 3.1%

No matter how much a bond’s current value changes, at maturity the par value ($1,000 in these examples) is always paid. If you purchase individual bonds with the idea to hold them to maturity, in other words, you could only take into consideration the bond’s current yield.

But things get more complicated if you purchase bonds on the secondary market, at a premium or a discount.  In those cases, a more complex calculation of yield to maturity comes into play, including a combination of interest plus the net discount or minus the net premium. The adjustment is spread over the time remaining to maturity. So an investor buying a bond at premium or discount has to be concerned with three different versions of yield: Current yield, nominal yield, and yield to maturity.

Because debt investments are complex and contain a range of risks, most new investors will opt for money market or income mutual funds. In that way, they rely on professional management to pick bonds and other debts to include in a diversified portfolio.

Michael C. Thomsett is author of over 60 books, including Winning with Stocks and Annual Reports 101 (both published by Amacom Books), and Getting Started in Stock Investing and Trading (John Wiley and Sons, scheduled for release in Fall, 2010). He lives in Nashville, Tennessee and writes fulltime.

Investing 101: How Bonds Are Priced was provided by Minyanville.com.

Understanding the Financial Crisis for Kids and Grownups

 

It is so easy to forget what really happened to cause the financial Crisis situation we are living in today.  Sometimes a good reminder as well as a ‘visual’ helps…especially with regard to explanation we give our  kids.  Leaving our kids unaware of the facts is NOT using it all as a powerful learning experience, which is exactly what it is and should be.

Record low mortgage rates, but are they beneficial?

By Colin Barr

From Fortune Magazine Online

Mortgage rates hit a record low this week, but few people will be taking advantage.

Freddie Mac said Thursday the going rate on a 30-year fixed rate mortgage fell to 4.69%, its lowest level since the company started keeping track 38 years ago.

The news comes as investors have been shunning stocks in favor of bonds, especially those backed by the federal government. Money has flowed out of stock funds and into bond funds for seven straight weeks, while surging demand for U.S. Treasury debt has taken the yield on the 10-year Treasury note down near 3% — a level last seen in the meltdown of 2008.

Lower mortgage rates, of course, make it cheaper to buy a house. But with unemployment stubbornly high, wages stagnant and tax incentives expiring, few people are taking the plunge.

New home sales tumbled to an all-time low last month (see chart above), and economists at Capital Economics in Toronto say another round of house price declines is waiting in the wings.

“Once home sales fall back to fairly depressed levels, house prices will start declining too,” economist Paul Dales wrote in a note to clients this week. “By the end of next year, we think they will be at least 5% lower.”

Though lower prices obviously will be good for buyers, a second leg down means our long national housing nightmare — think foreclosures and bank failures — is far from over.

Stock Market Investment: An Overview

Stock Market Investment: an overview

by Mohamed Hossam

From SelfGrowth.com

Stock market investment is one of the best ways to protect your hard earned money. During recession most of the companies struggled to keep their heads above water and the majority of the regular citizens started to protect their savings from irreparable loss. Most of the regular stock buyers started to walk away from the share markets, but few people who are intelligent purchased the shares which were at an unbelievable lower price. When stock value of big companies fall you can purchase the stock at lower price and it is the best time to buy shares.

Stock market investment is no more a mystery, thanks to the era of internet which helps you to set up your own account from home and start a modern way of investing in the stock market. In the past, people have to run after the share brokers to know about value of shares and to have a look at their account details. But these days everything has become transparent and you can have a view at your account details and the recent prices of the stocks from being at home comfortably.

Here are few tips that help you to get more profits

(a) Follow the thumb rule “never lose money”, so you have to be cautious while choosing the stocks. Choose a stock which is worthy.

(b) It is always wise to have a margin of safety. The worth between the stock and its price is the margin of safety, if the price of the stock is 2 dollar and if you buy it for 1 dollar, then the margin of safety is 50%. Always purchase the stock at a lower price and maintain at least fifty percent margin of safety.

(c) Invest the amount on a long term; if you invest for a short term then there are more chances of encountering a loss. Long term investment adds compounding value to your investment.

(d) You must be well aware when to sell out and when to not sell your stocks, when price starts to increase you shouldn’t sell it immediately. You have to wait for a long period of time and watch until the stock reaches a higher value.

(e) It is wise to keep the cash with you when there are no good stocks to buy. In addition it is always good to buy a worthy stock otherwise it may cause you loss in course of time. Also keeping cash with you helps to buy stocks whenever the price decreases for a higher value stock.

Author’s Bio

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