Alternative Investments

An Average investor would think about shares and funds when it comes to the word “investing” but Investing has lot of other options as well. According to research, it shows that lot of people world wide, now think about alternative investment methods. Trend started with the booming of these other options of investment and the falling prizes of shares.

Thinking about other investment options with low risk margins, Real estate, exporting, Work from home, Freelancing, Social networking sites and many other alternative options come into mind. You have to think of investing your money in an industry that has the lowest risk margin.
 

Real Estate 

Real estate sector is booming all around the world, especially in Europe and Australia. Recent researches done in Australia shows that, people prefer to invest in real estate more than they do in the mining sector, which is unpredictable. Land prices have started increasing at a rate never recorded in history before. There is a risk margin again, because you have to think relatively with the average income of the majority. There is a point, that an average person will not be able to afford even a small apartment or unit. First, second and may be the third owner might make a profit by selling a house or land. You have to research the prizes of apartments and houses before you buy. The latest researches show those people, who invested in real estate sector targeting a short term profit, have the difficulty in selling their investment property. Prizes will go up eventually, but there is a threshold. Average person, usually the first home buyers will be unable to afford a home of their own. Investors should consult a financial advisor or think about the time frame they are planning to get a return from their investment.

Exporting 

Exporting opportunities have increased with the decreasing Dollar value. Manufacturing businesses are rare to profit from exporting, because still China is the largest supplier. Most manufacturers are outsourcing to China because of the low labour costs. Primary industries keep on thriving in the export market. I am not going to talk about exporting very much. Let’s see what other opportunities of alternative investing we have.

Work from home

Many people tend to start their own work from home businesses. Many women today, are work from home moms. Work from home is becoming popular rapidly. Many men also tend to work from home due to increasing pressure in their workplaces. We find lot of couples working from home these days. Government assistance to work from home businesses has increased recently. Small Business Corporation offers seminars on tendering and other business issues with advisers ever ready to give assistance. Lot of big businesses has started outsourcing work to these home businesses because they will have less problems in employing people, and also they can get the work for a cheaper prize. These home based businesses work as independent contractors. They are the starting point of outsourcing.
 

Outsourcing
 
Outsourcing to Freelancers has become very popular with the work from home moms. Now it has expanded overseas.  India has become the major freelancing market place with its highly English literate people. Many Indian IT companies are freelancers. It is very hard to beat the competitive prizes of the Indian freelancing market place. Many businesses tend to outsource to India. Many American companies have invested in the Indian freelancing market. With the sprouting network places and increased communication methods, you can do the whole accounting function of a business from overseas.
 

Social Networking places
 
Social networking places have become very popular with the increasing freelance workforce. We see that many small Social networking sites mature in to mass communication and meeting places of business people all round the globe and then sold to other companies for millions of Dollars.  

With all these businesses sprouting up over the Internet, alternative investment methods have become the most popular market place of the world. In future, AIM will be the most popular around the globe.

 

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Investing online

This article is related to my previous two articles ‘Investing your profits’ and ‘Doing research on safe investments ’. Now that you have done the preliminary preparation and research, it is time to invest.

It is advisable to invest in different sectors. Do not invest all your money in one sector or one company. Main reason for this advice is due to certain circumstances, if one sector goes down, you have other sectors that are secure. Your research will now tell you what companies you should try to invest. Allocate certain amount of money for your investments from profits. Try small and when you are an expert in this field, you can start big.

Select your preferred ratio limit. Companies within that limit will appear. Look at the prizes per share and think what shares are worth buying for. For example if you buy some shares in a number one company for a big amount per share, you can only buy very few shares and you will have to pay a transaction fee. Your expenditure for investing in shares will be the amount you spend to buy the shares plus the transaction fee. If you buy Thirty five shares for thousand dollars plus transaction fee; you will have to wait for a long period to reap the profits because when you sell your shares also, you will have to pay a transaction fee. If you calculate this, it will show you whether you are going to get a profit or loss after your targeted years for the investment. So think about companies with low share prizes where you can buy at least thousand shares.

Share prizes rise and fall due to various reasons during certain months. This might be because of the factors affecting certain industries. Companies paying dividends usually lower their share prizes after paying dividends. In the company information, you can find the dividend date listed if the company pays a dividend. This is a good time to buy. Indicators also predict the likely fall in value of a share. Target this time and quote for a possible low prize what you think a share value is likely to fall. You can cancel your order at any time before the transaction takes place. Once the transaction is done you cannot take it back. You can give your broker the option of direct debit and credit to your account or transaction via cheque. According to your instruction your broker will do the transaction and will inform you by a receipt. Keep the information of the transactions you make in a separate file well organized because you will need them for tax purposes and they are the written material that you need to assess your shares worth.

If a company pays a dividend they will have two options for you. You can have either your dividends re-invested or paid to you every time they pay their dividends. If you are investing for a long time, it is worth to opt for the dividend re-investment scheme. Some companies give you special prize reductions and benefits for dividend re-investments. Meaning of dividend re-investment is; that you invest your dividend in some more shares of the company. For example: if your dividend amount is twenty Dollars, and the company share prize is ten Dollars, the company will invest your money in two more shares. So the numbers of your shares grow and so is the worth of your dividend.

You can calculate what is best for you according to the amount you invest and the tax you have to pay for dividends. This might vary according to your needs and preferences.
Invest in different sectors like real estate, Industrial, Mining and mineral, Banking and Insurance. Always keep a vigilant eye in the sectors and companies you have invested. Listen to Finance reports and read financial reviews. Companies will send you their financial reports. But you have to be an independent observer. You are the person who is investing and you are the person liable also. Reward is, you gain your independence in choosing your own companies according to your needs whether they are long term or short term. If you invest in mining and mineral or companies that rise and fall rapidly, you have to keep an every day watch out. This way you can reap a quick amount of cash when you need instant cash.

Doing research on safe investments

This article relates to my previous article ‘Investing your profits’. Again I want to tell you please adapt this method only if you are capable and confident. Do not invest all your money in shares or debentures. Try different areas of investment and keep a fair amount in the bank as a stable deposit so you can use it during times of difficulties.

How do you start?

First go to your bank and register with the bank’s discount broker. Read the details of their broachers carefully, so you understand it well. They will give you a password and a number of assistance to set up your account and also they will give you a guidebook including all the steps you should follow while online.

After the initial set up of your account, just go to you account and play around. Do not start ordering directly. Read the news in their web page. Search for companies. Read their profile. You can go further and see their growth charts and take a good idea about the company. Do some research on as many companies as you like and keep reading your financial review every day. So you get a picture of daily trading patterns. You will get a rough idea of what sort of companies you should invest.

If you have taken a good look you might observe that shares of certain companies tend to rise or fall during certain months. By studying the graphs for at least five years, you can get a rough idea of when the prices are likely to fall or rise. Forecasts will indicate the lowest possible price and highest possible price for the year. Keep that in mind too. You can make a work sheet and include all the details in that work sheet. So you do not have to worry searching again. Some times your discount brokers will provide you the facility of saving your search results.

Get to know the (PE) ratio: Price to Earnings ratio.

P/E ratio is defined as the Market value per share divided by the Earnings per hsare. This ratio indicates the time it will take to earn back your full purchase price for you. But you cannot simply depend on the P/E ratio. Usually P/E 12-25 range companies are taken as good and stable performers. They have low risk margins. If you want to do a long term investment, it is better to invest in a company with P/E 12-25. In your brokers website there will be a search tool based on P/E. Select the range you want. Ex: 10-16. If you press search, all the companies with that range will appear on your list.

You can research on the website; the company statistics, Value, Risk, Growth, income and performance. Usually stable companies like industrial, Main food retailers, Banks, and so forth will give a higher P/E growth value than others. Mining and mineral industry will give very low P/E ratios. If you look at their growth charts, their prices go up very quickly and also when prices are falling they fall rapidly too. But you can earn quick money from these companies. Usually their shares prices are very low. Even an increase in 50 cent will be a huge amount compared to the amount of money you spent. But investing in the mining and mineral sectors is very risky and you must do this if you have plenty of extra money to play with. Otherwise don’t do it. I will come back with start investing in my next article. Until then, good luck.

Investing your profits

As a business owner you know that it is essential to analyze your profit and loss statement for the month or year. Your accounting records will show your purchases, sales and other expenses.

Now you have to decide what you should do with your profits. First make a budget for the next month or year, you can roughly figure this out if you follow your previous accounting statements. A budget is just an indication how your expenses are going to be in future. Actual values might show a little difference, because you are preparing your budget based on assumptions.

Allocate the amount you will need to cover the budgeted expenses. It is always wise to allocate a little more than budgeted. Allocate some money to pay your bills and your personal use. The amount left is the money you should use to invest in order to improve your funds in future. It is better to make your funds grow than letting it stagnate in the bank. Why not invest in shares? When advising you to invest in shares, I am not telling that every person should do this. You must have enough funds and must be able to handle a loss in a crisis. Shares can be a risky investment some times. So please do not invest all your profits in shares. To be in the safe side deposit some in a bank.

There are several methods of investing money; usually people use bonds, securities and shares. Bonds and securities give a low return but they are safer. Shares give a quick return and easy to handle. But the risk is higher than other options. Let’s see how you can invest your profits.

You can find a broker to manage your funds. They will advice you on what stock you should invest. They are experienced and will always choose the safest options. But they can also make mistakes. Share value of a company can change due to Movement of the stock market, Political issues, Taxes and many more reasons. Some factors you cannot change.

Other method is, use your bank’s discount broker and do your investing yourself. Every bank has its discount broker. They also have their advisers if you wish to get advice. But you will have to pay them for it. You should do this only if you have a good knowledge of financial indicators and ability to assume a company’s growth. You have to be very vigilant. Read financial news every day, and keep a close look at stock movements. Before you invest in shares or other investments, be aware of the financial risk involved and make sure that you are able to accept that risk. Share prices can rise or fall rapidly.

The benefit of doing your investment yourself is, you do not have to pay a broker and your brokerage fee is saved. You only have to pay the transaction fee taken by the discount broker for doing your transaction. A discount broker is always quick to process your order while a financial broker will take a bit longer. If you hire a financial broker, you will have to pay brokerage fees and other fees that apply on investing. But, again safety must be considered first. You will have your own option of investing in this way. If you want a short term good return, you can opt for it and invest in a particular industry and if you have a long term goal, you can invest in a stable slow growing company. You always have your own choice of investment using this method.

How can you invest money yourself? I do not want to make this article longer. I will be here soon with the “How can you invest money yourself?” Meanwhile I wish you all the best.