How to find a location to invest in is one of the key questions that are asked by budding property investors. There are many different theories, depending on who you talk to, as regards to how to find a profitable location to invest in. If you have been looking into property investing for any length of time, especially if you live in the south of England you will know that it is not always easy to get the figures to stack up and for the rent to cover the mortgage. In fact, I will go even further than that and say that it is almost impossible (almost) to get the rent to cover the mortgage in many parts of the UK. Because of this very reason many investors venture far and wide to try and find the best yields. This is not a bad strategy, however in practice what you will find is that the most successful, I am talking about the top 30% of property investors, will generally focus their portfolio in 1-3 different locations only.
Novice investors or the investors with twenty or less properties that are struggling to manage them all in such a way that they can give up their full time job are normally the ones with properties scattered all over the country. They may have two in Newcastle, one in Leeds, one in Manchester, three in Burnley and so on.
As mentioned earlier the majority of the really successful investors only concentrate on 1-3 locations and these locations all tend to be within a commutable distance from their home. They may still have the odd property outside these areas but the large majority of their portfolio will be within them. The problem with getting into property investing in today's property market is where to find the properties that the figures stack up on so that the rent covers the mortgage, without having to travel to Wales or Scotland or somewhere similar to invest.
However, just because it is difficult doesn’t mean it is impossible. What investors ideally want to aim for is to invest in a location within 75 minutes commutable distance from their house (ideally within 45 minutes or less, but for those that live in an area like London this can be difficult). Then it is a case of using a website like rightmove.com to break your search down, you can do things like specify how far from your post code you want to search, so for example you can specify up to thirty miles from W5 4SS. You can also specify what your price range is and what sort of property you are looking for.
After you have properties that meet you specification price wise, you can also use right move to check what sort of rent you would expect to get from them. If after all your checks you are still finding it difficult to get the figures to add up then here are three options still at your disposal.
search for a different type of property, so if you were looking for 4 bed-roomed houses before you might want to now explore 3 and then 2 bed and if necessary even flats and maisonettes. The most important thing is for the figures to add up so if you have to adjust your investment strategy for that to happen then do so. Once you have a few of these properties under your belt and money in the bank you can always then choose to have another look at the 4 bed-roomed houses if you like. Work out how much you would have to buy the properties at in order for the figures to add up and then learn and use effective techniques to buy properties below market value at the price you need to. Speak to other local property investors and find out what sort of properties they are investing in and how they make the figures add up. You can do this by joining a local property investors club and groups
If you do these three things effectively you should start to find that the problem of how to find location to invest in is no longer a problem you have to worry about as much as before.
Sunday, September 16, 2007
How to invest in Stocks
There are three popular ways for individual investors to invest in the stock market: buying stocks directly, mutual funds, and ETFs (exchange traded funds). Each of these options have their pluses and minuses.
Buying stocks:
The most simple and straightforward method to invest in stocks is to just buy them! All you need to do is sign up at a broker and buy whichever companies you decide are the best investments. The benefits of this method is you choose which companies you believe will perform best. Of course, the drawbacks here are that you may not have enough time to identify which stocks make the best investments. It is also sometimes hard to diversify your portfolio, since you likely will not have substantial knowledge on a variety of stocks from various sectors.
Mutual funds:
If you decide you want someone to do the investing for you, consider investing in mutual funds. When you put money into a mutual fund, you are pooling your money with other investors and allowing professionals to invest it for you. The advantage here is that you do not have to follow your investments yourself, since someone else is doing the work for you. Also, mutual funds tend to buy hundreds or even thousands of stocks, so even just buying one mutual fund can give you diversification. The drawback is that most mutual funds under perform the market (due to fees and asset bloats), so most of the time you are actually better off just randomly picking stocks yourself!
ETFs:
An ETF is like a mutual fund, except it passively tracks an index like the S&P 500. The advantages of the ETF are the same as the advantages of the S&P 500. Also, since ETFs just buy whatever stocks make up an index, they have lower fees than mutual funds. However, by its nature, an ETF will never beat the market since it just attempts to mirror the market. ETFs have become increasingly popular though since many investors have become disillusioned with mutual funds.
Buying stocks:
The most simple and straightforward method to invest in stocks is to just buy them! All you need to do is sign up at a broker and buy whichever companies you decide are the best investments. The benefits of this method is you choose which companies you believe will perform best. Of course, the drawbacks here are that you may not have enough time to identify which stocks make the best investments. It is also sometimes hard to diversify your portfolio, since you likely will not have substantial knowledge on a variety of stocks from various sectors.
Mutual funds:
If you decide you want someone to do the investing for you, consider investing in mutual funds. When you put money into a mutual fund, you are pooling your money with other investors and allowing professionals to invest it for you. The advantage here is that you do not have to follow your investments yourself, since someone else is doing the work for you. Also, mutual funds tend to buy hundreds or even thousands of stocks, so even just buying one mutual fund can give you diversification. The drawback is that most mutual funds under perform the market (due to fees and asset bloats), so most of the time you are actually better off just randomly picking stocks yourself!
ETFs:
An ETF is like a mutual fund, except it passively tracks an index like the S&P 500. The advantages of the ETF are the same as the advantages of the S&P 500. Also, since ETFs just buy whatever stocks make up an index, they have lower fees than mutual funds. However, by its nature, an ETF will never beat the market since it just attempts to mirror the market. ETFs have become increasingly popular though since many investors have become disillusioned with mutual funds.
Why should you invest?
How many times have you wondered how the rich and famous have acquired the wealth that they have and how do they keep it growing? Are there times when you have dreamt about retiring early or even about retiring at all? Do you have an interest in the stock markets but do not know where to begin in respect of investing in them?
If you have answered yes to any of the questions that have been posed above, then you may wish to explore investing. However, although to the uninitiated the financial world can seem intimidating and overwhelming, once they have learnt a few major concepts and some of the basic vocabulary relating to it; it does not seem so overwhelming after all. However, what anyone should remember who is interested in investing is that it will not make them rich overnight. Unfortunately investing is not a get rich quick scheme but a way for people to take control over their personal finances and although building a financial wealth for you and your family may seem difficult in the beginning it can be a very rewarding experience eventually. Certainly the benefits of investing far out weigh the effort required to take part. Although money may not make you happy, it could certainly make your life a little easier. You will often find that people avoid the stock market as they do not understand investing and sometimes that they feel that financial professional will place their money in directions that they do not understand or want it to go.
But what is investing? It basically means making your money work for you and it requires a change from you in how you think about money. Many people are taught during their childhood that money is made only by getting a job and working hard. Then when you grow up that exactly what you do, so if you need more money you need to work more hours. Unfortunately a draw back with this is that you are restricted to how much money you are able to earn from just getting up everyday and then heading off to work. So what’s the point of having money if you can not enjoy it? But through investing you will find that whilst you are at work, cutting the lawn, playing with your children or even when you are sleeping your money is working for you. Thus no longer is your financial stability and security solely dependent on a raise a work, or you working over time or even the type of career that you have.
You will soon find that there are many different ways in which you can invest your money and it can include you putting money into stocks, bonds, mutual funds or even real estate (property). However, each of these have positives and negatives to them and each one should be fully researched so that you understand the risks and benefits that are associated with each one of them.
Certainly one of the main reasons why people avoid investing is that they see it as gambling. Where gambling is risking money on an outcome that is uncertain and you will find that most real investors do not just throw there money at any random stock that they find and hope that they get a return on their money, rather they only invest after that have carried out extensive research which will analyse the risks and rewards. Once they can see a reasonable expectation of profit on an investment will they commit any money?
But why should you invest? Certainly one of the most popular reasons for investing is to increase a person’s financial stability, which results in more personal freedom and security that their family will happy and well cared for in the future. Although in the past investing use to only be a luxury that the rich and affluent could afford, in today’s society investment is becoming a necessity. Today the days working in the same job for 30 years or more, then retiring and collecting a pension at the end are now long gone and certainly the only way that many people are able to retire and maintain the lifestyle they are use to is by investing. Many governments around the world are now cutting the social security benefits that they offer to their citizens and thus the responsibility for planning for retirement is shifted from them to you. Certainly more and more the viability of many old age pensions plans are becoming uncertain in today’s society and many financial experts believe that in about 20 years time they will no longer exist. So why leave it to chance and consider investing today.
If you have answered yes to any of the questions that have been posed above, then you may wish to explore investing. However, although to the uninitiated the financial world can seem intimidating and overwhelming, once they have learnt a few major concepts and some of the basic vocabulary relating to it; it does not seem so overwhelming after all. However, what anyone should remember who is interested in investing is that it will not make them rich overnight. Unfortunately investing is not a get rich quick scheme but a way for people to take control over their personal finances and although building a financial wealth for you and your family may seem difficult in the beginning it can be a very rewarding experience eventually. Certainly the benefits of investing far out weigh the effort required to take part. Although money may not make you happy, it could certainly make your life a little easier. You will often find that people avoid the stock market as they do not understand investing and sometimes that they feel that financial professional will place their money in directions that they do not understand or want it to go.
But what is investing? It basically means making your money work for you and it requires a change from you in how you think about money. Many people are taught during their childhood that money is made only by getting a job and working hard. Then when you grow up that exactly what you do, so if you need more money you need to work more hours. Unfortunately a draw back with this is that you are restricted to how much money you are able to earn from just getting up everyday and then heading off to work. So what’s the point of having money if you can not enjoy it? But through investing you will find that whilst you are at work, cutting the lawn, playing with your children or even when you are sleeping your money is working for you. Thus no longer is your financial stability and security solely dependent on a raise a work, or you working over time or even the type of career that you have.
You will soon find that there are many different ways in which you can invest your money and it can include you putting money into stocks, bonds, mutual funds or even real estate (property). However, each of these have positives and negatives to them and each one should be fully researched so that you understand the risks and benefits that are associated with each one of them.
Certainly one of the main reasons why people avoid investing is that they see it as gambling. Where gambling is risking money on an outcome that is uncertain and you will find that most real investors do not just throw there money at any random stock that they find and hope that they get a return on their money, rather they only invest after that have carried out extensive research which will analyse the risks and rewards. Once they can see a reasonable expectation of profit on an investment will they commit any money?
But why should you invest? Certainly one of the most popular reasons for investing is to increase a person’s financial stability, which results in more personal freedom and security that their family will happy and well cared for in the future. Although in the past investing use to only be a luxury that the rich and affluent could afford, in today’s society investment is becoming a necessity. Today the days working in the same job for 30 years or more, then retiring and collecting a pension at the end are now long gone and certainly the only way that many people are able to retire and maintain the lifestyle they are use to is by investing. Many governments around the world are now cutting the social security benefits that they offer to their citizens and thus the responsibility for planning for retirement is shifted from them to you. Certainly more and more the viability of many old age pensions plans are becoming uncertain in today’s society and many financial experts believe that in about 20 years time they will no longer exist. So why leave it to chance and consider investing today.
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