Could you please do an article on where to save? I have finally gotten my budget intact, and am saving up money with every single paycheck. The problem is, I don’t know where to put the savings because I’m planning to attend college full time next year. There are several different methods to save your money out there. I’m considering mutual funds, because they seem to pay off really well, but are there maybe some alternatives that I am missing out on??
Thanks.
Scott

Scott asks a good question. After you’ve begun to accumulate some savings, what do you do with them? Although there’s no one answer that’s perfect for every reader, we can work with some ideas that will simplify matters for you.

First, you need to do what Scott has done. That is to decide what you want to happen. And ‘making more money’ isn’t an acceptable answer. You need to have some idea when you could need the money back. If you’ll need it for college next year, you’re going to be limited to investments that make it certain that your money will be there when you want it. If, on the other hand, you’re saving for retirement fifteen years down the road you can afford to take a little risk that you might even lose money in some years.

Next, consider your ability to take risk. There are two components that determine how much risk you should assume. We just looked at one, how soon will you need the money. The more time you have before you expect to need the money, the greater the risk you can take. If you don’t need the money for ten years and your investment loses money one year but gains the other nine it’s not a big deal. If, however, you’ll need the money next year you don’t have that luxury.

Real Estate Investments

The other consideration on risk is your own personality. Some people are mountain climbers. Others prefer a day at the beach. If you’re a cautious person you won’t be comfortable with a risky, high flying investment. Even if the investment does well, the sleepless nights and money you’ll spend on ulcer medicine will make it unsuitable for you!

Finally, will you have all of the money to invest at one time? Or do you plan on saving $50 a month? Also consider how you will ultimately use the money. Will you want it all at once to buy a house? Or will you be using the money a little at a time when you’re retired?

Knowing this will help you select the right investment. For instance, if you’re saving $50 a month you won’t be buying individual stocks. Commissions will take all your money. CD’s aren’t practical, either. You’ll need to consider savings accounts, money funds or mutual funds.

By comparison, if you’ve just received an inheritance of $20,000 and want to use that as a down payment for a house in two years you’ll be able to consider individual stocks, bonds, CD’s, treasury bills and notes. All of these investments require a sizable investment to be made at one time and sold or redeemed in one transaction.

Now let’s talk a little bit about the vehicle for your investment. You must remember to separate what you’re investing in from how you’re investing in it. What does that mean? Let’s take a simple case that demonstrates how there can be confusion. One of the things that you can invest in is ownership of companies. One way to do that is to open your own restaurant. Another way is to buy a mutual fund that buys common stocks. In both cases you own either part or all of a business and would expect to benefit if the business does well.

On the most basic level, there are really only four kinds of investments. You can be a business owner (called equity). You would expect to make money if the business prospers. Typically, you’ll find that this type of investment is best if you have a longer term view. Owning a piece of the action is called for if you believe in the future of the business, industry and/or economy generally.

Another way to invest your money is to loan it to someone for interest. Here you give them a dollar today with the expectation that they will give you $1.05 or $1.10 later. It could be a loan to your brother-in-law or a bond issued by General Motors.

When you consider a debt instrument (loaning your money) there are a number of different variables that will be important to you. Safety, for instance. Money loaned to the US Treasury should be safe. Your brother-in-law will not be so safe. Typically you can expect to earn more interest from a borrower who is less safe. You’ll need to balance the interest you earn with the risk of losing your money.

A key variable is the ‘term’ of the loan. A certificate of deposit is for a relatively short period of time. A few months or years. By comparison, a corporate bond could be issued for 20 or even 30 years. You’ll find that shorter term loans are usually safer, but pay less interest. Again, there’s a number of different ways to make this kind of investment. You can buy individual CD’s or bonds. You can also buy a mutual fund that buys bonds.

A similar category is called ‘cash equivalents’. That’s where you loan your money for a short period of time (usually one year or less) and expect that your principal will be there whenever you want it without risk of loss. CD’s, savings accounts and money funds are good examples.

The last category is made up of ‘hard assets’. These are things that are usually found in the earth and/or cannot be easily reproduced by man. Gold, oil and real estate fall into the category. This type of investment will do better in inflationary times. Again, you can buy an ounce of gold or buy a mutual fund that invests in gold companies.

Most beginning investors should begin with cash equivalents until they have a fund big enough to meet unexpected family expenses. After that, you’ll want to begin with equity and debt investments. Finally, some hard assets for balance.

Although not the only good answer, mutual funds often are a good selection for beginning investors. Most make putting money in or taking it out in smaller amounts easy. Many mutual fund companies have choices in each of the categories making it easy to match your needs. Yes, there are an awful lot of funds to choose from. And yes, some are better than others. But that’s the subject for another column!

Ask a question to an Expert E-mail to

andrey.udolkin@incareg.com

Andrey Udolkin
Senior Sales Agent
Telephone 212-203-0979
Cell phone: 347-558-2850
Panama Real Estate www.homeswaiting.com

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An example: i wish to search Real Estate news in wordpress, then i have to search “real estate wordpress”

• The economy is growing more than 6% annually with the possibility of exceeding 7% in 2007.
  
• There are currently more than 15,000 Americans living in Panama. English is widely spoken.
• Panama is a Technologically advanced country, offers high speed internet, good cel phone coverage, fast install of home and business phone systems, and TV with English channels
• There is no property tax for retirees until a home is sold, and a 20-year exoneration from taxes on new homes.
• Discounts up to 50% for retirees, retirees find more for less in Panama
• Excellent incentive program for retirees. Panama’s Pensionado law is written so Today’s pensioners will be protected tomorrow
• Panama has a warm, but diverse climate- the lowlands of Panama are hot and can be humid, yet there are year round cooler temperatures in the mountain areas
• In October 2006, Panamanians approved an ambitious plan to expand the Canal. The project, which is to begin in 2007 and could double the Canal’s capacity, is expected to be completed in 2014-15.
• Panama in December 2006 independently negotiated a free trade agreement with the US, which, when implemented, will help promote the country’s economic growth.

Ask a question to an Expert E-mail to andrey.udolkin@incareg.com

Andrey Udolkin

Senior Sales Agent

Inca Real Estate Group

Telephone: 212-203-0979 Cell phone: 347-558-2850

www.homeswaiting.com Panama Real Estate
]]> http://allwayssharing.wordpress.com/2007/04/19/27/feed/ 2 alojeda81 http://allwayssharing.wordpress.com/2007/04/18/creating-wealth-with-real-estate-a-simple-plan/ http://allwayssharing.wordpress.com/2007/04/18/creating-wealth-with-real-estate-a-simple-plan/#comments Wed, 18 Apr 2007 02:32:43 +0000 alojeda81 http://allwayssharing.wordpress.com/2007/04/18/creating-wealth-with-real-estate-a-simple-plan/ ]]> By Robert Phillips – Real Estate Investing 123

Several real-life millionaires are profiled in the book, “The Millionaire Real Estate Investor,” by Gary Keller. Collectively they reveal several ways to become a millionaire by investing in real estate although each of them took a different path.

That alone is reason enough to read the book. For those of us who are serious about real estate investing, is there anyone better to learn from than someone who has actually achieved the goal and provided a roadmap? The simple answer is that there is no one better to learn from. You model their attitudes and beliefs and follow their proven plan and ultimately you’ll achieve the same results. It’s as simple as that.

One of the plans from the book stood out from the rest so that’s the one I’ll focus on in this article. But first you need to decide what you want to create with real estate: income or wealth? They are not the same thing.

Ask a question to an Expert E-mail to

andrey.udolkin@incareg.com
Andrey Udolkin
Senior Sales Agent
Telephone 212-203-0979 Cell phone: 347-558-2850

Panama Real Estate www.homeswaiting.com

Basically income is what you earn and wealth is what you keep. It’s not uncommon for six-figure income earners to be almost bankrupt because they spend, spend, spend. On the other hand, it’s not difficult to find others who have become millionaires on meager wages because they were smart enough to invest all they could and watch it grow.

OK so what’s the plan? This particular investor and his wife began by paying the mortgage on their personal residence. Each month, they paid the regular mortgage payment plus whatever they could afford to pay extra. I believe it took or years. Considering the average mortgage is 30 years, that’s excellent.

Then they bought an investment property and put a renter in it. Since their own house was paid off, they had more cash flow to pay off their first investment home. The rent plus the cash they had been paying towards their own mortgage went to pay off this mortgage. This house was paid off in or years.

They simply repeated this process over and over again. However, each time they bought another investment house, they had more cash flow to pay off the mortgage and consequently they owned the house free & clear more quickly with each property. For example, on the third house, they had not only the money that had been going to pay off the house they lived in, but the rent from the second house (since it was owned free & clear) plus the rental income from the third house itself. They owned the third house free & clear in less than 3 years.

It’s not a way to get rich quick, but it’s a practical plan for creating wealth. They owned two investment properties free and clear in about 10 years. In 15 years, they owned about 4 houses free and clear. And they’d own 8 houses totally free of debt in around 20 years. How much is the median home price in your city? Multiply that by or by. You could live quite comfortably off that, right? If that average price of a house where you live is $250,000, you’d have one million dollars in real estate free & clear in only 15 years.

Appreciation, the annual increase in value, is one of the best qualities of real estate and we haven’t even mentioned that yet. If you needed cash, you simply take out a mortage on one of the properties and deposit the proceeds in your bank account…tax free!! That’s a fact. The IRS does not impose
taxes on the proceeds of a mortgage. That’s a fabulous plan

Ask a question to an Expert E-mail to andrey.udolkin@incareg.com

Tel 212-203-0979 Cell: 347-558-2850

Ask a question to an Expert E-mail to andrey.udolkin@incareg.com

Tel 212.203.0979 Cell: 347.558.2850

To post an ad , select a category (Real Estate) click Go and select Lycos , a Real Estate that offer Free national classifieds marketplace.

Ask a question to an Expert E-mail to andrey.udolkin@incareg.com
Tel 212.203.0979 Cell: 347.558.2850

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