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Category Archives: Investmen

Making a Room Into an Arabian Tent

If your idea of an exotic room decor is an Arabian tent with a canopy overhead, thick carpets underfoot, and lots of comfortable seating and pillows, you can create that look, in resplendent style, with the use of plenty of luxurious fabrics. An authentic or near-to-authentic Arabian tent room will be a true oasis of comfort and serenity, a place for meditation, a nap, or conversation. You can take your design concept as far as you like, but the most convincing treatment will be complete, erasing all vestiges of a modern European or North American (Western culture) room.Capture the flavor of a Middle Eastern tent room with this decorating scheme.Colors

  • Choose your color palette. Your tent room should be filled with a happy melange of colors, all in “jewel” primary color tones like ruby red, amber yellow, lapis or sapphire blue. Balance these colors with off-white or light beige, in generous portions, such as in the “tent” fabrics and wall-to-wall carpeting so these strong primary colors don’t overwhelm the senses.Remove Any Ceiling FixturesTurn off power to the room at the main circuit breaker box if there are any ceiling fixtures or wall sconces in the room. Since you will be upholstering the ceilings and walls with fabric, you won’t be able to use these lighting fixtures again for safety reasons. Remove all of these light fixtures. Cap off all the wires in the electrical boxes with plastic electrical nuts and close all the boxes with metal plate covers. If you intend to install a new Arabian-looking light fixture, like a Moroccan lantern, in the center of the ceiling, extend these the fixture wires approximately 8 to 12 inches below the electrical box. Cap these wires off, temporarily, with electrical nuts. Restore power to the room.Tent the CeilingCover the ceiling with pleated fabric to form a “tent canopy” overhead. Begin with a section of fabric and staple one end to a point that marks the center of the ceiling. Stay clear of the area where the ceiling light fixture electrical box might have been located: staple the fabric around this hole, approximately 2 inches away from the hole, and avoid contact with the capped off electrical wires as you do this, if they are present. Gather the fabric with your fingers to form loose pleats as you staple. Extend the length of the fabric to the place where the wall meets the ceiling, directly opposite your starting point on the ceiling. Pull the fabric tight. Staple this end of the fabric to a point on the wall that is approximately 12 inches below the ceiling line to create a gentle, sloped effect. Continue to gather the fabric to form the pleats as you staple this end to the wall. Install a second section of fabric alongside the first section, starting at the center of the ceiling and working out toward the corresponding area on the opposite wall. Overlap the two side-by-side sections by 2 inches so the seam between the two sections is somewhat masked. Work all the way around the room, section by section, until the ceiling is completely covered with pleated fabric.Create a round ceiling medallion, cut out of 3/4 inch plywood, that is large enough to cover the place where the fabric has been stapled to the center of the ceiling. Drill a hole through the center of this medallion to accomodate the light fixture wires if you intend to install a hanging light here. Mount this medallion securely to the ceiling with molly bolts. Decorate the medallion with paint or upholster it with more of the ceiling fabric: do this only after installing a hanging light fixture from the medallion if that is in your plans.Optional: Install an appropriate ceiling light fixture such as a Moroccan hanging lantern. The larger the lantern the better. Turn off power to the room at the circuit box. Mount the fixture to the plywood ceiling medallionand connect the fixture using the capped wires. Restore power to the room and test the fixture.Tent the WallsLine the walls with lengths of fabric. Use the same material employed in the ceiling, or a slightly different or darker fabric for contrast. Staple the fabric, loosely pleating it as you go, to long strips of 1-inch-by-2-inch lumber. Wrap the fabric around the wood and staple it on the back side of the wooden strip so the staples won’t show. Staple the top end of the fabric to a strip of wood, and then staple the bottom end of the fabric to another strip of wood to form one wall “panel” of fabric with a top and a bottom wooden “rail.” Raise the top rail and place it against the wall so it covers over the stapled ends of the ceiling “tent.” Nail or screw the rail to the wall here. Align the bottom rail at floor level and nail or screw it to the wall as well. Repeat this until you have covered all the wall surfaces from floor to ceiling, even over windows. Try to place fabric over any windows in such a way that two sections overlap at the windows: you will be able to part the fabric with your hands when you need to reach and operate the windows. It helps to start by installing two fabric sections at the window locations and working around the room from there to be sure two sections come together at the windows. Install short “filler” panels over the tops of doors; don’t cover the doors.Remove any doors in the room and replace them with heavy velvet curtains. Mount the curtains on cafe curtain rods installed inside the door jambs.Carpet the FloorsCarpet the room if it is not already carpeted, wall to wall. A neutral or “sand” tone is best. Add layers upon layers of Oriental or Arabian carpets and rugs, one over the other. Two or three layers of different carpets are typical. These carpets should each be different in design and coloring.Furnishings and AccentsFurnish the room with a ring of comfortable low couches and masses of pillows of all sizes. Traditional Western furniture is acceptable but wall-to-wall couches is the look you want. Pepper the room with small tables with round or octagonal tops, all placed in front of the couches, not at the ends. The wood finish on these tables should be a dark red mahogany.Decorate with Middle Eastern accent pieces, including mosaics, brass vessels, and tapestries. Remember that depictions of human beings are not acceptable art subjects in Middle Eastern design so stick with art based on Middle Eastern design patterns and animals.

Retail Solutions Advisors offers quality commercial property management services

 

When you’ve bought Commercial Property in order to increase your investments, something you might not have counted on is the sheer work involved with Property Management. Whether for good or ill, commercial property ownership doesn’t stop with the purchase – it has only just begun. If you are truly unprepared for this development, you could have just lost money instead of gaining a good investment and how you deal with that is going to affect your ROI for some time to come. It might be a great idea to team up with a firm that provides property management services. Doing this lets experts take care of the details you might lose to the cracks in your own knowledge base.

The best firm going for property management in the state of Florida is Retail Solutions Advisors, hands down. The laundry list of services they provide for commercial real estate is impressive on its own, but when you dig a little deeper into each category, well that is when you will know you picked a winner. When it comes to property management they go even further than above and beyond to get the job done. As an example, let’s list some of the factors you need to think about with property management so you can get a feeling for scope.

You need to think about the condition of the property – from building to parking lot – everything needs to be evaluated to ensure it is up to code, can support the technology tenants will demand, is clean and free of obvious or excessive dirt/stains/broken elements, and is safe and secure for tenants coming and going. And this is just the tip of the iceberg. There is marketing the building to put it in front of potential retailers who’d want to be there doing business – if no one knows you have the space to lease out, they’re aren’t going to come.

You need to perform regular maintenance on the building to keep everything in working order, clean, and secure – no one is going to rent and stay in a building where the plumbing is dodgy or the alarm system doesn’t work. And customers for the retailers who lease from you aren’t going to come, or come back, or recommend others come, if the property is unattractive, dirty or in a general state of disrepair.

Are you wishing you’d not bought that shopping center yet? Seriously, don’t despair. When you have Retail Solutions Advisors in your corner, all your concerns can fade to black because they have you and your property in their capable hands. Over 100 years of combined experience in commercial real estate is what you get with Retail Solutions Advisors – they know what you and your property need, and they can get the jobs done, no problem. Dealing with development on the property and contractors and inspectors? No problem. Dealing with tenants leasing agreements? No problem.

Property management is just simply no problem for the experts from Retail Solutions Advisors. This isn’t just their job, it’s their passion and when you do what you love you do it better than anyone else. Get your property management taken care of with Retail Solutions Advisors.

If you have Commercial Property, you need the
Property Management services offered by Retail Solutions Advisors. Call or click today.

 

Is Real Estate Really the Best Investment?

Last decade’s housing bubble is becoming a distant memory. Mortgage rates are near historic lows, interest-only loans are back and everyone loves real estate as an investment again.

More than 1 in 4 Americans (27 percent) said real estate was the best investment for money they would not need for at least a decade, according to a new Bankrate.com survey of 1,000 investors. Cash came in second with 23 percent of investors, only 17 percent said the stock market is their preferred place for long-term money and just 5 percent said they would put their long-term money in bonds.

It is the first time real estate has taken the top spot in the three years Bankrate has been conducting the survey. Cash was investors’ favorite in 2013 and 2014. “It begs the questions if more Americans are once again viewing real estate as a golden ticket,” said Greg McBride, chief financial analyst for Bankrate.

Credit is harder to come by than a decade ago and lenders face more regulations, but financial advisors say many clients are catching the real estate bug again.

“Justlast week,a high-tech corporate boomer client with no experience in renovating and selling real estate told us he wanted to go into flipping a property with his friend, who does this for a living,” said Jon Ulin, certified financial planner and managing principal of Ulin & Co. Wealth Management in Boca Raton, Florida. His client wanted to liquidate 25 percent of his IRA to invest in the project and told Ulin it would “diversify” his portfolio.

“I advised him that putting a quarter or more of his life savings into flipping and renovating one property with the hopes of making a possible 14 percent profit is not a good idea and a gamble,” Ulin said.

Real estate has curb appeal that other financial assets can’t match.

“For many investors, the tangible nature of real estate simply offers much more peace of mind than the intangible nature of stock and bonds,” said Stephen Doucette, a certified financial planner and vice president of Proctor Financial in Sherborn, Massachusetts. “Real estate pricing also adds peace of mind to investors as pricing seems more stable because it is not updated daily by the media.”

Investors should weigh the long-term return potential of real estate investing compared with other assets.

The S&P/Case-Shiller 20-City Composite Home Price Index, which measures the value of residential real estate in 20 major metropolitan areas, has generated a hearty annualized 9.2 percent return over the past three years through June 30, but produced an annualized 0.4 percent loss over the past decade. Meanwhile, the S&P 500 index, a broad measure of the U.S. stock market, grew an annualized 14.8 percent over the past three years and 5.87 percent over the past 10 years.

But investors with good credit can borrow to buy real estate, which can enhance returns—or magnify losses, depending on the market. “The singular and best reason to own real estate as an investment is to use leverage,” said Stephen Lovell, a certified financial planner in Walnut Creek, California. “Without it, your return on investment tends to be about 2 percent to 3 percent.”

Real estate also comes with different risks than other financial assets. You cannot sell it as quickly as stocks and bonds. You have to pay for insurance, maintenance and property taxes that can eat into your profits.

“You can’t sell real estate short so you cannot hedge against a down market and the market for real estate is too local,” warns Wes Shannon, a certified financial planner with SJK Financial Planning in Hurst, Texas. “You may live in a state or city going through an economic boom, but if the other houses on your street start to decline or convert to rentals you can see a depreciation of your [home] value … even one bad neighbor can ruin an investment in real estate.”

What Are the Functions of Investment Companies?

The risks of investing in investment companies depend on the riskiness of the strategies they employ.
An investment company is a financial services firm that holds securities of other companies purely for investment purposes. Investment companies come in different forms: exchange-traded funds, mutual funds, money-market funds, and index funds. Investment companies collect funds from institutional and retail investors, and are entrusted with making investments in financial instruments according to the strategies that were previously agreed with the investors.

Collect Investments

  • Investment companies collect funds by issuing and selling shares to investors. There are basically two types of investment companies: close-end and open-end companies. Close-end companies issue a limited amount of shares that can then be traded in the secondary market–on a stock exchange–whereas open-end company funds, e.g. mutual funds, issue new shares every time an investor wants to buy its stocks.

Invest in Financial Instruments

  • Investment companies invest in financial instruments according to the strategy of which that they made investors aware. There are a wide range of strategies and financial instruments that investment companies use, offering investors different exposures to risks. Investment companies invest in equities (stocks), fixed-income (bonds), currencies, commodities and other assets.

Pay Out the Profits

  • The profits and losses that an investment company makes are shared among its shareholders. Depending on the type–close-end or open-end–and the structure of the investment company, investors can redeem their shares for cash from the company, sell the shares to another firm or individual, or receive capital distributions when assets held by the investment company are sold.

What Are the Advantages & Disadvantages of Investing in a Bank Account?

Bank investments can be very safe but not very lucrative.
While stock tips and investment advice are all the rage, there are other options that can be explored by investors. Some of these options are available at your bank. From savings accounts to certificates of deposit, banks offer a variety of ways to earn returns on your money. But these financial investments come with a set of advantages and disadvantages of which budding investors should be aware.

Different Bank Account Types

  • When “investing” your money in a bank, there are a few options. You can put your money in a checking account or a savings account, where it will accrue a small amount of interest. Or you can invest in a bank’s money market account, which functions somewhat like a savings account but with higher returns and more restrictions. Lastly, you can invest in a certificate of deposit (CD), which features some of the higher interest return rates but contains some serious restrictions on what you can do with your money.

Advantage: Security

  • With all of the investment or financial tools available at a bank comes one serious advantage: security. When you invest in an American bank, your money is safe even if you invest it in a CD or money market account. Should the bank fail or some other disaster strike, your money is guaranteed by the FDIC, a federal insurer that guarantees deposits up to $250,000 should something happen to an FDIC-insured bank. Most, if not all, banks in this country are insured in this way. In comparison to the stock market, bank investments are safe investments; you won’t lose money from market swings or economic trends.

Disadvantage: Returns

  • The ironclad security of bank investments, whether in accounts or CDs, is balanced out by the painfully low returns on these financial services. Checking accounts earn no interest; savings accounts earn a very small amount, usually amounting to 1 or 2 percent. Even with a large amount of money invested, you’ll be earning pennies with these types of investments. Money market accounts and CDs earn more. Typical rates for a CD are 5 percent, according to BYG Publishing.

Liquidity

  • Depending on the type of bank investment you make, liquidity can be either an advantage or a disadvantage. It is an advantage if you possess a savings account. While you may earn small returns, you typically have access to money in a savings account at any time. For CDs and money market accounts, there are limits on when you can access your money. In opposition to this, stock market investments are, in theory, very liquid: You can sell your stock at any time. But, the practicalities of the market dictate that to recoup money lost or to realize higher returns, you may be forced to leave your money in stocks until the price reaches a point where you can make money or make back money lost.

What Is the Importance of Investing?

Your financial goals should determine the content of your financial portfolio.
Many Americans lack an understanding of financial markets and how to begin an investment program. More importantly, they may not recognize the importance of investing, which is to build wealth and financial security by ensuring the money they earn also has earning power. You begin an investment program by asking why you’ll need money and how much money you’ll need at different points in time. Once you recognize these investment goals, you’re better prepared to identify investment vehicles that will support your financial objectives.

Investment Time Horizon

  • The time horizon for achieving an investment goal varies from one goal to the next. In addition, some goals are reoccurring, such as travel, and others are more rare occurrences, such as a college education or the purchase of a home. In general, the greater amount of time you have to accumulate the money you’ll need, the more risk you can tolerate and the greater return an investment might earn due to the power of compound interest. The criticality of the need, such as saving for retirement, and the time you have to meet the financial need will determine your return requirements and your ability to tolerate investment risk.

Short-Term Investment Goals

  • You arrange your investment goals by the deadline you set for achieving each one. For example, short-term goals might include a wedding, vacations and major household goods, such as furniture or appliances. Your short-term goals should also include the creation of an emergency fund that consists of three to six months of living expenses. To accomplish these goals, you might choose investments with short-term maturity dates that allow you to access your money without incurring a penalty. Both a Federal Deposit Insurance Company-insured money market account and savings bonds allow you to you earn money on your deposits that will help you accomplish your short-term goals.

Mid-Term Investment Goals

  • Saving money for your mid-term investment goals is next on your investment agenda. Mid-term goals include money for a house down payment or house renovation, as well as a vacation home or business investment. You can accomplish these investment goals with investments that entail more risk, such as stocks, because the longer time horizon provides you time to recoup any losses.

Long-Term Investment Goals

  • Your long-term goals are a critical element of you investment plan that might include a degree program, a family inheritance and a retirement fund. The retirement fund, which means you won’t be required to work throughout your life, is one important reason to invest for the long-term as frequently and as inexpensively as possible. You’ll want to accumulate your desired annual income after you retire multiplied by your life expectancy after retirement. For example, assume your retirement investments must generate $100,000 yearly when you retire and that your life expectancy is 25 years after retirement. In this case, 25 times $100,000 is $2.5 million. If you earn a 5 percent return every year during your retirement years, your investments will generate your desired $100,000 income.

Why Is Per Capita Income Important?

If per capita income is high, people may spend more, stabilizing the economy.
Two or more regions can compare income just as two individuals can compare income to determine who is more financially stable. The way economists compare regional income is through per capita figures. Per capita divides all available income in a region by the area’s population. These comparisons are important for investment, economic stability and appeals for aid.

Stability and Wealth Measurement

  • In the broadest sense, per capita income matters because it serves as a measurement of the stability and wealth within an economy. Per capita income is a ratio of the amount of all a region’s income divided its population. Thus, if the ratio rises, it suggests that members of the population are more prosperous than they have been in the past. Conversely, a reduced per capita figure suggests that the standard of living in a region has decreased, assuming the price of goods has either stayed the same or increased with inflation.

Aid

  • Because per capita income is a measurement of prosperity for a region, it is useful for determining what regions are in need of financial assistance, assuming that the cost of living is the same in those regions. For instance, if the cost of rice is a dollar in country Y, but two dollars in country X, and country X’s per capita income is higher, members of country X may be just as prosperous as those in country Y. If country X has the same per capita income as county Y, then the higher cost of rice would be an issue. If per capita income is the same, agencies that provide aid or financial assistance to those in country X, because members of country X would be financially worse off.

Investment

  • A higher per capita income represents a higher purchasing power, as members of the community have more money to spend. This is useful in investment. For instance, in a new business, you would want to approach shareholders who actually afford to invest. Otherwise, you would waste resources trying to market your company to people who won’t back you financially. Additionally, investing in businesses in areas with higher per capita ratios may yield a higher return, as the income of the area suggests that people have the purchasing power to buy the business’ products or services.

Considerations

  • Even though per capita income is important, it is only useful when there isa relatively low number of very high earners in the community. High earners raise the amount of income in a per capita ratio, so including the very wealthy in per capita figures may give a skewed representation of what people actually make. Additionally, because per capita figures don’t tell you how income is distributed, it can mask social issues, which cause the average income in those regions to rise or fall.

How to Show Investments on a Balance Sheet

Investments on a balance sheet may be short-term or long-term.

The balance sheet is a financial statement that reflects a company’s assets, liabilities and equity for the financial year. Short and long-term investments are typically comprised of real estate, stocks, bonds, and investments made towards a company’s subsidiaries or affiliate companies. These balances are reflected in a specific section on the balance sheet. Here’s how to show these investments accurately on the balance sheet reporting schedule.

Instructions

  1. Calculate both the at cost and market value of stocks purchased in the financial year. The lower of the two will be reported in the short-term investment section if the company plans to sell the stocks within the upcoming year and reported under the Current Assets section. If the company plans on holding onto the stock for more than a year, the stock value will be reported as a long-term investment under the Fixed Assets section in the left hand column of the balance sheet.
  2. Calculate both the at cost and market value of bonds purchased by the company. The lower of the two will be reported in the short-term investment section if the company plans to hold the bonds for less than a year, and in the long-term investment section if the company plans to hold the bonds for longer than a year. These will be reported under the Current Assets if they are short-term investments, and Fixed Assets section if they are long-term investments.
  3. Calculate both the at cost and market value of real estate purchased in the financial year. The lower of the two will typically be reported in the long-term investment section of the balance sheet. Real estate investments can be reported under the Current Assets if they are short-term investments, and Fixed Assets section if they are long-term investments.
  4. Determine the value of investments made towards the company’s affiliate accounts. These can be company affiliations or partnership agreements where the company has invested stock or cash into certain projects. These are typically short-term investments which are then reported under the Current Assets section.
  5. Determine the value of stock invested in subsidiary companies. These stock investments are typically long-term investments and are reported under the Fixed Assets section.

How to Become a Licensed Investment Broker

An investment broker is another name for stockbroker. To become a professional stockbroker, you must pass a licensing exam. Being a broker can be a lucrative career choice for people who like investing other people’s money in stocks, corporate and municipal bonds, mutual funds, options and treasuries, such as T-Bills. For making investment recommendations and financial analysis, the broker receives a commission based on the amount of money a person invests. The financial services industry is regulated and requires anyone involved with the buying and selling of securities to not only be licensed, but meet other requirements as well

Instructions

  1. Visit the FINRA website (see link in References). The Financial Industry Regulatory Authority (FINRA) is the first place to start when seeking a career as an investment broker. All stockbrokers are licensed by the FINRA which also administers the exam. The FINRA provides invaluable information on what is needed to be an investment or stock broker and offers detailed job descriptions.
  2. Register with the FINRA. All persons who wish to have careers as a broker must register with this agency. The registration form asks for personal information such as name, address, Social Security number, residences for the past few years, employment history and other relevant information asked for most careers. You must also supply fingerprints. You can get fingerprinted at a local police station for a small fee.
  3. Study for the licensing exam. Passing exams is also a part of the registration process. There is usually just one exam that you need to pass. The General Securities Registered Representative Examination is commonly known as the Series 7 Exam. This exam is required of all investment brokers. Some states, however, also require a person to pass the Uniform Securities Agents State Law Examination, which is known as the Series 63 Exam. Check with your state’s licensing board to see if the Series 63 exam in necessary to be a broker in your state. To study for these exams, you have several options. There are books, online courses, classroom work, CD and DVD courses. The FINRA also offers training for the exams.
  4. Schedule an appointment to take the exam. When you are ready to take the test, schedule an appointment at any of the authorized testing centers throughout the country. The test is available 7 days a week in most large cities. The test is computerized so you receive your score immediately upon completion.
  5. Pass the background check. Once you register with the FINRA, your information is sent to the Federal Bureau of Investigation for a background check. Any criminal history will probably prevent you from becoming a broker even if you pass the exam. FINRA wants professionals who are knowledgeable about investments and also ethical.
  6. Once you have passed the exam(s) and the background check, you now have what you need to get a job as an investment broker. There are large brokerage houses that provide a small salary and training, while small firms let you sink or swim on your own. There are many places to get a job with a Series 7 license, such as full service brokerage houses and discount brokers.

Advantages and Disadvantages of Investing

Types

  • There are a lot of different types of investments that an investor to put their money into. An investor could purchase a real asset such as residential or commercial real estate or collectibles or they could buy securities or financial assets such as bonds and company shares on the market. All of these investments are vulnerable to the vagaries of the market and can rise or fall in value.

Function

  • You can invest your money directly, by researching the markets, analysing valuations and making your own decisions on what to put money into. Many people, however, use intermediaries instead, letting the bank invest their money or joining investment clubs. The intermediary invests the money given to them by everyone involved in the scheme and then each individual shares in the profits and loss. This method gives the investor the benefit of professional advice.

Advantages

  • Investing is the process of making your money work for you, instead of simply sitting safely in the back, and it is increasingly a necessity of modern life. It is frequently no longer possible for an individual to work in one job all their life and retire on their pension. People move from job to job, or from career to career, and due to government cutbacks the responsibility for providing for their retirement falls increasingly on the individual. By investing your money wisely you can make a profit that you can then re-invest or put aside as a nest-egg. A good return on an investment can maximise earning potential.

Disadvantages

  • The major disadvantage of investing is that it is always possible to lose money on whatever investment you make. If you invest in a rare collectible, the value of it can rise or fall depending on its popularity and its availability on the market. Stock prices fluctuate based on everything from how the competition is doing to public confidence in the market. 2008 demonstrated how even house prices, traditionally the most secure investment, are not a guaranteed return.

Warning

  • An investment shouldn’t be a gamble. The investor should research the market where they are investing thoroughly before they ever decide to commit their money. Although there is always a risk that the vagaries of the market will result in the investor losing money, they should always have a reasonable expectation that they will make a profit when they make the investment.

The Difference Between Warrant & Convertible Securities

Warrants and convertible securities offer low-risk investment opportunities.

Companies offer warrants and convertible securities to spur investments. Investors gain opportunities for low-risk investment as a result. Warrants and convertibles, though similar in objective, differ in several regards.
Time Frame
Warrants are a fixed price on company stock, for a predetermined period of time. For example, a stockholder could be offered a warrant of $2 per share for one year. Even if the stock rises to $5 per share, an investor can still purchase at the $2 rate, making an immediate profit. Convertible bonds do not have a fixed price term.
Conversion
Convertible bonds mature and are able to be cashed in and treated as a regular bond would; however, they can also be converted into shares of company stock. Should the convertibles be issued as preferred stock, investors have the option of converting shares to common stock as well. Warrants deal with stock prices, and shares cannot be converted to other securities.
Further Investment
Convertible securities are one-time investments. Investors purchase more stock at a later date to maximize the profitability of a warrant.
Investment Period
Investors typically view convertible securities as long-term options. Warrants carry an expiration date and, therefore, are considered short-term in comparison.

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How to Create an Investment Plan

Developing an investment plan is an important part of financial planning. Many individuals, particularly young people, fail to spend the time and effort required to develop an investment plan that will meet their financial goals. There is a wide array of investment products to choose from, and creating an investment plan will help you prioritize and sort through a broad range of investment options.

Instructions

  1. Prioritize your financial goals according to their respective timeframes. If you have a child who is two years away from going to college, you should rely on cash or ultra-safe fixed-income investments to pay for that expense. By contrast, if you are in your twenties and are simply saving for retirement, you should place your retirement funds in riskier stock investments since you will not be retiring for many years.
  2. Select your asset allocation based on the prioritization of your financial goals. Assets generally fall into three classes: stocks, which are riskier in the short-term but may generate higher long-term returns; bonds, which are less risky than stocks but have lower potential long-term returns; and cash, which is extremely safe but generates very little financial return. If most of your financial goals are more than five years out, you should invest most of your money in stocks. By contrast, if most of your financial goals fall within the next two years, you should keep most of your money in cash. Regardless of your goals, it is generally a good idea to have some portion of your money in all three of these asset classes.
  3. Diversify all of your investments within each asset class. Regardless of which asset class you focus on, you should never put all of your money in one or two securities. If you want to own stocks, you should invest in a diversified basket of stocks rather than in one or two stocks.
  4. Choose whether you want to invest directly in stocks and bonds or whether you prefer mutual funds. Mutual funds are diversified pools of securities. The main advantage of mutual funds is the level of diversification they provide while the main drawback is the management fees they charge, which erode your returns. If you have limited cash to invest, you should consider investing in low-cost mutual funds (that is, mutual funds with very low management fees).
  5. Open an online brokerage account with a company such as E*Trade, TD Ameritrade, or Scottrade. Online brokerage accounts are cheaper and easier to use than traditional brokers, and they provide you with the resources you need to research different stocks, bonds and mutual funds.