The Importance of Diversification by Ravinder Tulsiani
“Don’t put all of your eggs in one basket!” You’ve probably heard that
over and over again throughout your life…and when it comes to
investing, it is very true. Diversification is the key to successful
investing. All successful investors build portfolios that are widely
diversified, and you should too!
Diversifying your investments might include purchasing various stocks
in many different industries. It may include purchasing bonds,
investing in money market accounts, or even in some real property. The
key is to invest in several different areas – not just one.
Over time, research has shown that investors who have diversified
portfolios usually see more consistent and stable returns on their
investments than those who just invest in one thing. By investing in
several different markets, you will actually be at less risk also.
For instance, if you have invested all of your money in one stock, and
that stock takes a significant plunge, you will most likely find that
you have lost all of your money. On the other hand, if you have
invested in ten different stocks, and nine are doing well while one
plunges, you are still in reasonably good shape.
A good diversification will usually include stocks, bonds, real
property, and cash. It may take time to diversify your portfolio.
Depending on how much you have to initially invest, you may have to
start with one type of investment, and invest in other areas as time
goes by.
This is okay, but if you can divide your initial investment funds
among various types of investments, you will find that you have a
lower risk of losing your money, and over time, you will see better
returns.
Experts also suggest that you spread your investment money evenly
among your investments. In other words, if you start with $100,000 to
invest, invest $25,000 in stocks, $25,000 in real property, $25,000 in
bonds, and put $25,000 in an interest bearing savings account.
About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing.
Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
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Friday, December 24, 2010
Understanding Bonds by Ravinder Tulsiani
Understanding Bonds by Ravinder Tulsiani
There are certain things you must understand about bonds before you
start investing in them. Not understanding these things may cause you
to purchase the wrong bonds, at the wrong maturity date.
The three most important things that must be considered when
purchasing a bond include the par value, the maturity date, and the
coupon rate.
The par value of a bond refers to the amount of money you will receive
when the bond reaches its maturity date. In other words, you will
receive your initial investment back when the bond reaches maturity.
The maturity date is of course the date that the bond will reach its
full value. On this date, you will receive your initial investment,
plus the interest that your money has earned.
Corporate and State and Local Government bonds can be ‘called’ before
they reach their maturity, at which time the corporation or issuing
Government will return your initial investment, along with the
interest that it has earned thus far. Federal bonds cannot be
‘called.’
The coupon rate is the interest that you will receive when the bond
reaches maturity. This number is written as a percentage, and you must
use other information to find out what the interest will be. A bond
that has a par value of $2000, with a coupon rate of 5% would earn
$100 per year until it reaches maturity.
Because bonds are not issued by banks, many people don’t understand
how to go about buying one. There are two ways this can be done.
You can use a broker or brokerage firm to make the purchase for you or
you can go directly to the Government. If you use a brokerage, you
will more than likely be charged a commission fee. If you want to use
a broker, shop around for the lowest commissions!
Purchasing directly through the Government isn’t nearly as hard as it
once was. There is a program called Treasury Direct which will allow
you to purchase bonds and all of your bonds will be held in one
account, that you will have easy access to. This will allow you to
avoid using a broker or brokerage firm.
About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing.
There are certain things you must understand about bonds before you
start investing in them. Not understanding these things may cause you
to purchase the wrong bonds, at the wrong maturity date.
The three most important things that must be considered when
purchasing a bond include the par value, the maturity date, and the
coupon rate.
The par value of a bond refers to the amount of money you will receive
when the bond reaches its maturity date. In other words, you will
receive your initial investment back when the bond reaches maturity.
The maturity date is of course the date that the bond will reach its
full value. On this date, you will receive your initial investment,
plus the interest that your money has earned.
Corporate and State and Local Government bonds can be ‘called’ before
they reach their maturity, at which time the corporation or issuing
Government will return your initial investment, along with the
interest that it has earned thus far. Federal bonds cannot be
‘called.’
The coupon rate is the interest that you will receive when the bond
reaches maturity. This number is written as a percentage, and you must
use other information to find out what the interest will be. A bond
that has a par value of $2000, with a coupon rate of 5% would earn
$100 per year until it reaches maturity.
Because bonds are not issued by banks, many people don’t understand
how to go about buying one. There are two ways this can be done.
You can use a broker or brokerage firm to make the purchase for you or
you can go directly to the Government. If you use a brokerage, you
will more than likely be charged a commission fee. If you want to use
a broker, shop around for the lowest commissions!
Purchasing directly through the Government isn’t nearly as hard as it
once was. There is a program called Treasury Direct which will allow
you to purchase bonds and all of your bonds will be held in one
account, that you will have easy access to. This will allow you to
avoid using a broker or brokerage firm.
About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing.
What Is Your Investment Style? by Ravinder Tulsiani
What Is Your Investment Style? by Ravinder Tulsiani
Knowing what your risk tolerance and investment style are will help
you choose investments more wisely. While there are many different
types of investments that one can make, there are really only three
specific investment styles – and those three styles tie in with your
risk tolerance. The three investment styles are conservative,
moderate, and aggressive.
Naturally, if you find that you have a low tolerance for risk, your
investment style will most likely be conservative or moderate at best.
If you have a high tolerance for risk, you will most likely be a
moderate or aggressive investor. At the same time, your financial
goals will also determine what style of investing you use.
If you are saving for retirement in your early twenties, you should
use a conservative or moderate style of investing – but if you are
trying to get together the funds to buy a home in the next year or
two, you would want to use an aggressive style.
Conservative investors want to maintain their initial investment. In
other words, if they invest $5000 they want to be sure that they will
get their initial $5000 back. This type of investor usually invests in
common stocks and bonds and short term money market accounts.
An interest earning savings account is very common for conservative
investors.
A moderate investor usually invests much like a conservative investor,
but will use a portion of their investment funds for higher risk
investments. Many moderate investors invest 50% of their investment
funds in safe or conservative investments, and invest the remainder in
riskier investments.
An aggressive investor is willing to take risks that other investors
won’t take. They invest higher amounts of money in riskier ventures in
the hopes of achieving larger returns – either over time or in a short
amount of time. Aggressive investors often have all or most of their
investment funds tied up in the stock market.
Again, determining what style of investing you will use will be
determined by your financial goals and your risk tolerance. No matter
what type of investing you do, however, you should carefully research
that investment. Never invest without having all of the facts!
About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing
Knowing what your risk tolerance and investment style are will help
you choose investments more wisely. While there are many different
types of investments that one can make, there are really only three
specific investment styles – and those three styles tie in with your
risk tolerance. The three investment styles are conservative,
moderate, and aggressive.
Naturally, if you find that you have a low tolerance for risk, your
investment style will most likely be conservative or moderate at best.
If you have a high tolerance for risk, you will most likely be a
moderate or aggressive investor. At the same time, your financial
goals will also determine what style of investing you use.
If you are saving for retirement in your early twenties, you should
use a conservative or moderate style of investing – but if you are
trying to get together the funds to buy a home in the next year or
two, you would want to use an aggressive style.
Conservative investors want to maintain their initial investment. In
other words, if they invest $5000 they want to be sure that they will
get their initial $5000 back. This type of investor usually invests in
common stocks and bonds and short term money market accounts.
An interest earning savings account is very common for conservative
investors.
A moderate investor usually invests much like a conservative investor,
but will use a portion of their investment funds for higher risk
investments. Many moderate investors invest 50% of their investment
funds in safe or conservative investments, and invest the remainder in
riskier investments.
An aggressive investor is willing to take risks that other investors
won’t take. They invest higher amounts of money in riskier ventures in
the hopes of achieving larger returns – either over time or in a short
amount of time. Aggressive investors often have all or most of their
investment funds tied up in the stock market.
Again, determining what style of investing you will use will be
determined by your financial goals and your risk tolerance. No matter
what type of investing you do, however, you should carefully research
that investment. Never invest without having all of the facts!
About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing
Why You Should Invest by Ravinder Tulsiani
Why You Should Invest by Ravinder Tulsiani
Investing has become increasingly important over the years, as the
future of social security benefits becomes unknown.
People want to insure their futures, and they know that if they are
depending on Social Security benefits, and in some cases retirement
plans, that they may be in for a rude awakening when they no longer
have the ability to earn a steady income. Investing is the answer to
the unknowns of the future.
You may have been saving money in a low interest savings account over
the years. Now, you want to see that money grow at a faster pace.
Perhaps you’ve inherited money or realized some other type of
windfall, and you need a way to make that money grow. Again, investing
is the answer.
Investing is also a way of attaining the things that you want, such as
a new home, a college education for your children, or expensive
‘toys.’ Of course, your financial goals will determine what type of
investing you do.
If you want or need to make a lot of money fast, you would be more
interested in higher risk investing, which will give you a larger
return in a shorter amount of time. If you are saving for something in
the far off future, such as retirement, you would want to make safer
investments that grow over a longer period of time.
The overall purpose in investing is to create wealth and security,
over a period of time. It is important to remember that you will not
always be able to earn an income… you will eventually want to retire.
You also cannot count on the social security system to do what you
expect it to do. As we have seen with Enron, you also cannot
necessarily depend on your company’s retirement plan either. So,
again, investing is the key to insuring your own financial future, but
you must make smart investments!
About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing.
Investing has become increasingly important over the years, as the
future of social security benefits becomes unknown.
People want to insure their futures, and they know that if they are
depending on Social Security benefits, and in some cases retirement
plans, that they may be in for a rude awakening when they no longer
have the ability to earn a steady income. Investing is the answer to
the unknowns of the future.
You may have been saving money in a low interest savings account over
the years. Now, you want to see that money grow at a faster pace.
Perhaps you’ve inherited money or realized some other type of
windfall, and you need a way to make that money grow. Again, investing
is the answer.
Investing is also a way of attaining the things that you want, such as
a new home, a college education for your children, or expensive
‘toys.’ Of course, your financial goals will determine what type of
investing you do.
If you want or need to make a lot of money fast, you would be more
interested in higher risk investing, which will give you a larger
return in a shorter amount of time. If you are saving for something in
the far off future, such as retirement, you would want to make safer
investments that grow over a longer period of time.
The overall purpose in investing is to create wealth and security,
over a period of time. It is important to remember that you will not
always be able to earn an income… you will eventually want to retire.
You also cannot count on the social security system to do what you
expect it to do. As we have seen with Enron, you also cannot
necessarily depend on your company’s retirement plan either. So,
again, investing is the key to insuring your own financial future, but
you must make smart investments!
About the Author: Ravinder Tulsiani is a published author who has
written about personal finance, real estate, self-help and online
marketing.
Wednesday, December 22, 2010
The Upcoming Financial Security Crisis by Ravinder Tulsiani
In a previous article titled "Reasons Not To Invest In Real Estate", we mentioned that corporate pensions are seriously under-funded. In this article, I will point out how big business and the government have responded to this quiet crisis.
In essence, they haven't.
In fact, to avoid this problem, over the past few decades big businesses have moved away from defined benefit plan (DBP) to defined contributions plan (DCP) or to Group RRSPs. So what does that mean? While in the past, upon retirement the employer was on the hook for any shortfalls between your pension savings and your benefit payout during retirement; this liability was quietly transferred over to individual in the form of group RSP or DCP. The spin doctors sold this bag of goods by suggesting that DCP & Group RSPs offer greater choice, certainty, product selection and ultimately better control by the individual over his or her retirement money.
The reality is, that the big businesses have now capped their maximum exposure up-front, they are now only offering to match employee contributions on a percentage basis, and have no obligation in the event of a short fall at retirement; guess who is now responsible...? Us!
So, where is the government on this? Well, do you really expect the Canada Pension Plan to bail out all the baby boom generations expected to retire over the next 15 to 20 years? The shortfall is expected to be in the billions. Who would pay for it... taxpayers? Here is good way to know if a government plan is in trouble... if the leader of the ruling party promises to keep it alive during an election promise... you know it's in trouble. I hope it stays too, but relying on the government for a bailout is a poor retirement plan.
As mentioned in the above article, we mentioned that a study commissioned by TD Waterhouse found that two-thirds of people polled who have not retired are stressed-out about retirement investing, mainly because of uncertainty or a lack of money.
If you're in the two-thirds category who are concerned about out-living your savings at retirement... what are you doing to avoid being another statistic? Do you feel secure that your current investments will give you the returns needed to secure the financial future for you and your family?
If not, you should strongly consider investing in real estate. Why? Today's term deposits and market obligations offer minimal growth, which are insufficient to creating a successful wealth accumulation investment plan. Furthermore, the stock market's meager results and fluctuations do not offer the stability and profitability required to solidify these types of earnings. On the other hand, real estate has proven over time to be the primary choice of the wealthy for investing their money. In fact, over 90% of the wealthy became so through real estate.
You now have a choice...
You can choose to follow the remaining 10% who became wealthy through other investment vehicles, or you can put the odds in your favour and follow the path of least resistance by investing in real estate.
About the Author
Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
In essence, they haven't.
In fact, to avoid this problem, over the past few decades big businesses have moved away from defined benefit plan (DBP) to defined contributions plan (DCP) or to Group RRSPs. So what does that mean? While in the past, upon retirement the employer was on the hook for any shortfalls between your pension savings and your benefit payout during retirement; this liability was quietly transferred over to individual in the form of group RSP or DCP. The spin doctors sold this bag of goods by suggesting that DCP & Group RSPs offer greater choice, certainty, product selection and ultimately better control by the individual over his or her retirement money.
The reality is, that the big businesses have now capped their maximum exposure up-front, they are now only offering to match employee contributions on a percentage basis, and have no obligation in the event of a short fall at retirement; guess who is now responsible...? Us!
So, where is the government on this? Well, do you really expect the Canada Pension Plan to bail out all the baby boom generations expected to retire over the next 15 to 20 years? The shortfall is expected to be in the billions. Who would pay for it... taxpayers? Here is good way to know if a government plan is in trouble... if the leader of the ruling party promises to keep it alive during an election promise... you know it's in trouble. I hope it stays too, but relying on the government for a bailout is a poor retirement plan.
As mentioned in the above article, we mentioned that a study commissioned by TD Waterhouse found that two-thirds of people polled who have not retired are stressed-out about retirement investing, mainly because of uncertainty or a lack of money.
If you're in the two-thirds category who are concerned about out-living your savings at retirement... what are you doing to avoid being another statistic? Do you feel secure that your current investments will give you the returns needed to secure the financial future for you and your family?
If not, you should strongly consider investing in real estate. Why? Today's term deposits and market obligations offer minimal growth, which are insufficient to creating a successful wealth accumulation investment plan. Furthermore, the stock market's meager results and fluctuations do not offer the stability and profitability required to solidify these types of earnings. On the other hand, real estate has proven over time to be the primary choice of the wealthy for investing their money. In fact, over 90% of the wealthy became so through real estate.
You now have a choice...
You can choose to follow the remaining 10% who became wealthy through other investment vehicles, or you can put the odds in your favour and follow the path of least resistance by investing in real estate.
About the Author
Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
Real Estate Market Due for a Correction? by Ravinder Tulsiani
There is a lot of speculation and fear about the bubble in the marketplace. While bubble concerns are visible in some marketplaces in the US and perhaps Vancouver, is there a cause for concern for the rest of Canada?
The Normal Market
Similar to the stock market, real estate market also has a cycle. First, there is the annual cycle of certain months being slower months than others - winter is slow time, summer is usually more active time for buyers and sellers. Second, demand & supply, interest rates will cause occasional adjustments in the marketplace.
It is important to note that a "Bubble" is not part of the normal market cycle. It is an artificial rise in demand - which is unjustified by fundamentals usually fueled by speculation, misinformation and greed.
What is a Bubble?
In the dot com era, technology stocks were trading at extremely high price-earning ratios, which were not supported by market fundamentals - that is, the stock valuation had a weak correlation to the profitability of the company; rather it was based on expectation (speculation). People expected dot com companies to be the waive of the future and were willing to finance it, these companies had no real income or collateral to back up the equity loans they were taking out. While some dot com companies made it big, like Amazon and Google, the vast majority failed. The technology bubble burst due to one simple reason, all of these companies came out at the same time causing an excess of supply with no corresponding rise in demand for the products it offered. Buying and trading was being done almost solely on dreams of future cash. That is the basis of almost all, if not all, "bubbles".
What about Real Estate Bubble?
In contrast, real estate is a basic need - everyone needs a place to stay. It has a finite supply - land is scarce since no one is making anymore of it. In addition, artificial barriers introduced by government (greenbelt, conservation land, farm land) cause land to be even more scarce and push the demand up for other available land for development purposes.
Population is on the rise largely due to immigration, demand is boosted for real estate around business hubs (like Toronto, Vancouver, Edmonton, Montreal). Since land is more expensive in these areas, developers will likely address the higher density issue by building up (high rise condos) in these areas. And since the vast majority of people prefer a single family home and builder's are expected to build less of it in these areas, these types of homes will also see a rise in price.
To sum up so far, a bubble is fueled by artificial demand unjustified by fundamentals (normal supply and demand) - people begin to buy and sell based purely on speculation with no current market justifications for the higher demand. Real estate has a consistent rising demand and a limited supply which is unexpected to change anytime soon.
It's all up for Real Estate?
Does this mean that the housing prices will not fall, absolutely not. As part of normal real estate cycle, prices will occasionally adjust to reflect the current supply and demand situation of the market.
Let's first look at the crash of the 90's to see if similar fundamentals are visible in today's market place.
Crash of the 90's
Over 30% of the people buying in the Toronto area in the 90's were investors, with consistently rising interest rates, these investors could no longer afford the financing costs which caused them to either sell or be foreclosed on by the banks, which caused an excess supply of properties (especially condos) in the marketplace; the excess supply caused the prices to fall. The falling in prices caused investors who had crystallized their losses recently to stay away from the market place (further lowering demand). And end buyers noticed the falling trend and decided to wait a little longer hoping that the property values would drop further and properties could be picked up for a bargain. This waiting game lasted years.
Last year, only 19% of the condos in Toronto were rental units (according to CMHC's Housing Market Outlook from the second half of 2005) and vacancy rates are dropping. This is because more people are buying for themselves and not on speculation. So even if the rental markets slowed and vacancy rates started to rise, the real estate market is not likely to be flooded like they were in the early 90's.
Affordability
A major factor that caused the adjustment in the early 90's was the interest rates. In May of 1990 the interest rates were a whopping 14.21% (according it CMHC), making mortgage payments $11.89 for every thousand dollars of your mortgage. This would make a $400,000 mortgage cost $4,755.97 per month. You can currently get a 5-year mortgage at a rate of about 5.25% or $5.96 per thousand dollars on your mortgage. This means that a $400,000 mortgage today will cost you $2,383.67 per month. That means that the effective cost of owning a house is half the amount that you would pay back in 1990 and yet the average price is only 5%-10% higher now than it was in 1989.
Conclusion
The adjustment in the early 1990s was a response to too many speculators and excessively high interest rates. In the late 90s and until now there has been another adjustment to account for the housing markets being under valued in the 90s and consumer attitudes changing to acknowledge that homes were affordable again. Now as prices are starting to reach a level where affordable houses are affordable, we are likely to see prices moderate with slower increases in price and the occasional peaks and valleys that represent a normal market.
About the Author
Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
The Normal Market
Similar to the stock market, real estate market also has a cycle. First, there is the annual cycle of certain months being slower months than others - winter is slow time, summer is usually more active time for buyers and sellers. Second, demand & supply, interest rates will cause occasional adjustments in the marketplace.
It is important to note that a "Bubble" is not part of the normal market cycle. It is an artificial rise in demand - which is unjustified by fundamentals usually fueled by speculation, misinformation and greed.
What is a Bubble?
In the dot com era, technology stocks were trading at extremely high price-earning ratios, which were not supported by market fundamentals - that is, the stock valuation had a weak correlation to the profitability of the company; rather it was based on expectation (speculation). People expected dot com companies to be the waive of the future and were willing to finance it, these companies had no real income or collateral to back up the equity loans they were taking out. While some dot com companies made it big, like Amazon and Google, the vast majority failed. The technology bubble burst due to one simple reason, all of these companies came out at the same time causing an excess of supply with no corresponding rise in demand for the products it offered. Buying and trading was being done almost solely on dreams of future cash. That is the basis of almost all, if not all, "bubbles".
What about Real Estate Bubble?
In contrast, real estate is a basic need - everyone needs a place to stay. It has a finite supply - land is scarce since no one is making anymore of it. In addition, artificial barriers introduced by government (greenbelt, conservation land, farm land) cause land to be even more scarce and push the demand up for other available land for development purposes.
Population is on the rise largely due to immigration, demand is boosted for real estate around business hubs (like Toronto, Vancouver, Edmonton, Montreal). Since land is more expensive in these areas, developers will likely address the higher density issue by building up (high rise condos) in these areas. And since the vast majority of people prefer a single family home and builder's are expected to build less of it in these areas, these types of homes will also see a rise in price.
To sum up so far, a bubble is fueled by artificial demand unjustified by fundamentals (normal supply and demand) - people begin to buy and sell based purely on speculation with no current market justifications for the higher demand. Real estate has a consistent rising demand and a limited supply which is unexpected to change anytime soon.
It's all up for Real Estate?
Does this mean that the housing prices will not fall, absolutely not. As part of normal real estate cycle, prices will occasionally adjust to reflect the current supply and demand situation of the market.
Let's first look at the crash of the 90's to see if similar fundamentals are visible in today's market place.
Crash of the 90's
Over 30% of the people buying in the Toronto area in the 90's were investors, with consistently rising interest rates, these investors could no longer afford the financing costs which caused them to either sell or be foreclosed on by the banks, which caused an excess supply of properties (especially condos) in the marketplace; the excess supply caused the prices to fall. The falling in prices caused investors who had crystallized their losses recently to stay away from the market place (further lowering demand). And end buyers noticed the falling trend and decided to wait a little longer hoping that the property values would drop further and properties could be picked up for a bargain. This waiting game lasted years.
Last year, only 19% of the condos in Toronto were rental units (according to CMHC's Housing Market Outlook from the second half of 2005) and vacancy rates are dropping. This is because more people are buying for themselves and not on speculation. So even if the rental markets slowed and vacancy rates started to rise, the real estate market is not likely to be flooded like they were in the early 90's.
Affordability
A major factor that caused the adjustment in the early 90's was the interest rates. In May of 1990 the interest rates were a whopping 14.21% (according it CMHC), making mortgage payments $11.89 for every thousand dollars of your mortgage. This would make a $400,000 mortgage cost $4,755.97 per month. You can currently get a 5-year mortgage at a rate of about 5.25% or $5.96 per thousand dollars on your mortgage. This means that a $400,000 mortgage today will cost you $2,383.67 per month. That means that the effective cost of owning a house is half the amount that you would pay back in 1990 and yet the average price is only 5%-10% higher now than it was in 1989.
Conclusion
The adjustment in the early 1990s was a response to too many speculators and excessively high interest rates. In the late 90s and until now there has been another adjustment to account for the housing markets being under valued in the 90s and consumer attitudes changing to acknowledge that homes were affordable again. Now as prices are starting to reach a level where affordable houses are affordable, we are likely to see prices moderate with slower increases in price and the occasional peaks and valleys that represent a normal market.
About the Author
Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
Where Are the Banks Investing Their Money? by Ravinder Tulsiani
Banks are considered conservative in nature, very few banks go bankrupt, they make millions... right! Would you say that they have a successful business model? If so, let's look at what they invest their money in... is it stocks? Mutual funds or GICs? No, they are in the business of lending money!
Just ask yourself, would the bank lend you 100% money to invest in the stock market or mutual funds secured only by the investment you purchased? Try this... tell the bank that you will take 100% of the money borrowed and invest it back into their own bank stock, would they lend you the money? Absolutely not, unless you secure it against your house or other suitable collateral. Why? Because it is a poor collateral!
Banks are conservative in nature and will have no problem lending you money against Real Estate! Why, because the banks know that real estate is one of the best collateral out there... it's more stable than the stock market and it's a hard asset.
The banks spend a lot of money convincing the general public that they should invest their hard earned money into GICs, mutual funds or stocks... but they focus on investing and making millions through lending against real estate. Look at what they do, not what they tell you to do!
So, let's go back to risk in real estate... yes there is risk, but if you do it right, it can be a very conservative investment and very profitable...
About the Author:
Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
Just ask yourself, would the bank lend you 100% money to invest in the stock market or mutual funds secured only by the investment you purchased? Try this... tell the bank that you will take 100% of the money borrowed and invest it back into their own bank stock, would they lend you the money? Absolutely not, unless you secure it against your house or other suitable collateral. Why? Because it is a poor collateral!
Banks are conservative in nature and will have no problem lending you money against Real Estate! Why, because the banks know that real estate is one of the best collateral out there... it's more stable than the stock market and it's a hard asset.
The banks spend a lot of money convincing the general public that they should invest their hard earned money into GICs, mutual funds or stocks... but they focus on investing and making millions through lending against real estate. Look at what they do, not what they tell you to do!
So, let's go back to risk in real estate... yes there is risk, but if you do it right, it can be a very conservative investment and very profitable...
About the Author:
Ravinder Tulsiani is a published author who has written about personal finance, real estate, self-help and online marketing.
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