Category Archives: investing

Types of Investment Risks

There are basically two categories of financial risk: The first is referred to as Systematic Risk.

Systematic risk influences a large number of investments across a wide spectrum. The financial crisis of 2008 would be a good example. Virtually, every asset was impacted adversely. This type of risk is almost impossible to protect against. In other words, sometimes lightning strikes.

The second is referred to as Unsystematic Risk, also commonly called “Specific Risk.”

This is the type of risk that impacts a smaller number of investments across a narrow spectrum. An example of this would be a highly regarded company using dubious financial practices (think Enron). Proper diversification is the key to providing protection from this type of risk.

Now let’s explain in more detail the specific types of Unsystematic Risk that exist in the world of investing.

Market Risk

This is the type of risk that you may be most familiar with. It is simply the normal fluctuations in the price of an investment. It is most apparent in stock-related investments.

Simply put, it is the risk that an investment will decline in value, due to market forces. This is also sometimes referred to as volatility, which is really the measure of market risk. These movements in markets are what provide the ability for an investor to make money.

Credit Risk

This is also referred to as default risk. This occurs when a person or entity (company/government agency, etc.) is unable to pay what they owe on their debt. It can be either the principal or the interest. Corporate bonds tend to have a higher risk of defaulting but tend to pay higher rates of return in an attempt to compensate. Government bonds tend to have lower default rates but pay a lower rate of return. If a bond is considered (by a rating agency) to have a relatively low likelihood of risk of default, then it is referred to as investment grade. Conversely, If a bond is considered (by a rating agency) to have a relatively high likelihood of default, then it is referred to as a junk bond. This is somewhat of a misnomer, since “junk bonds” can be a solid addition to an investment portfolio and can mitigate other types of risk.

Country Risk

This refers to the risk that is inherent when a country cannot meet its financial commitments (think Greece). When a country defaults on its obligations, the impact is often that of a cascading nature. That means not only will the bonds of the country be affected but also other financial assets within the country, such as the overall stock market. In addition, other countries or companies that do business with the defaulting company can also be impacted.

Foreign-Exchange Risk

Investing in foreign countries provides many advantages, especially in terms of diversification. When you invest in assets or debt of foreign countries, note that the currency exchange rates can change the price of the asset or debt. So, even though the asset increases in value when you exchange it for your home currency, you could suffer a loss. The converse is also true: the asset could go down, but when you transfer it into your home currency, you could also realize a gain.

Interest Rate Risk

This refers to the risk when a change in interest rates affects the value of an asset or debt instrument. Typically, the risk applies to bonds in a more direct fashion than it does to stocks. However, stocks, especially preferred, convertible and high dividend ones, can also be affected. With all things being equal, as interest rates increase, the value of the bond will decrease.

Political Risk

This refers to the risk that occurs when the policies of a country change, especially if it happens in a random manner. For example, if a company is selling in country ABC and that country radically changes its tax laws and becomes business unfriendly, companies that do business in that country can be adversely affected.

Key Takeaways

1) Risk cannot be avoided and needs to be understood.

2) Through proper planning and execution, you can mitigate risk and profit from it.

3) Your goal is to minimize risk and maximize rewards.

4) Even though the market rewards risk-taking, that does not imply that just because an investment is high-risk it will be high-reward. It always has been and always will be a trade off.

5) Review all your investments to make sure you understand what type of risks you

Tips For Selecting the Best Investment Company

In terms of making the best investment, most individuals do not know exactly where to start. Bear in mind that investing is a fierce industry. Those who are not fully aware of what they are doing might end up losing their hard-earned money. And it is for this reason that most investors would want to get help from a reputable investment company.

3 Important Factors

If you start looking for an investment company, you must determine the 3 essential factors. First, you need to clearly identify your goals. These experts cannot actually help you if you do not have a clear goal. Second, new investment must perform some research regarding the background as well as the reputation of the company they want to work with. You have to make sure that it has an excellent track record and has received optimistic reviews from other investors. And third, you need to know that kind of relationships you want with the investment firm. Determining these factors will greatly help you in boosting your chances for success.

Choosing Your Goals – Your goals will have a huge impact as to what investment firm to work with. Most people today invest with 3 goals in their minds – to increase their wealth using minimal start-up funds possible, to reduce their chances for risk or loss, and to hire experts who can capitalize on all of the great opportunities accessible to them. It is actually okay for you to have different goals; however, those goals must be clearly laid out in a list prior to choosing an expert to work with.

Perform Research – Due to the fact that most people do not invest, they do not actually know how to perform research in an investment company. Well, there are also 3 things to consider – marketing materials, public trading records, and financial statements. All of these elements will yield a larger picture of how well an investment company is doing. It is important for you to look into how the company was performing in the past 5 years. Also, observe how the group performed while the market was both down and up. These pieces of information will help you properly evaluate your options.

Consider The Brokers – Few brokers are well-known in most markets. New investors like you must familiarize yourself with the career paths of the top performing brokers. Be reminded that it is normal for brokers to change companies from time to time. You must know how the companies were performing when such brokers worked with them. Moreover, you must also be aware of how the companies performed after they have left.

Alternative Investment Opportunities Available In The Market

Traditional ways of investing would be going to shares, bonds, mainstream property, cash, and other traditional asset classes. But there are more unusual, yet highly rewarding opportunities called Alternative investment, usually embarked on by smart investors because of the risks involved in it.

Here are alternative investment ideas ranked from safest to riskiest, that are available in market:

1. Structured products

This is basically a contract with a financial institution to pay you a defined return at a defined time depending on the performance of the stock market. It’s the safest of all the other alternative investments. The only way you could lose money is when the stock market is performing catastrophically badly.

2. Bridging finance

These are short-term loans used by property buyers who are expecting to get a mortgage from the bank but cannot wait for the approval. For private investors, you can invest in funds that pool bridging loans, in order to spread the risk across several borrowers. The loan is secured against the property.

3. Peer-to-peer lending

Investors meet with individuals or businesses who want to borrow money. Borrowers can get lower rates than they would be charged by a bank, while lenders can earn more money on their savings than they could from a cash account. It can be quite risky for the investors because the individual or the small business might default or become bankrupt.

4. Forestry

Returns from investing in woodland come from any increase in the value of the land and the trees on it, and any income produced by felling trees for timber. But increase in the value of the land is only good if you can also sell the forest. There are some excellent tax breaks in the market, with no income or capital gains tax to pay and exemption from inheritance tax if you hold your investment for two years.

5. Buy-to-let property

The property will form a large part of your overall wealth. You need to have at least 25% of the value of the property to use as a deposit, plus extra to cover any refurbishments and legal fees. Investors will likely face competition from professional landlords and may have to deal with rogue tenants and maintenance issues.

6. Stamps

Rare stamps will have value as long as there are stamp collectors. The most valuable can fetch six- or even seven-figure sums. Stamp values can keep on going higher, and you can search for offers for private investors.

7. Coins

Rare coins are best bought through a reputable auction house, which will provide a money-back guarantee should the coin turn out to be a forgery. As with stamps, the value is underpinned by the popularity of coin collecting as a hobby.

8. Winery

The traditional way to invest is through established wine merchants. You must have knowledge on fine wine and their exact records. More recently, wine funds have been launched which offer an alternative way to access the market. Some of these qualify for the Enterprise Investment Scheme (EIS).

9. Business Angels

When you become an angel, you invest in smaller companies that are not quoted on the stock market. Typically, you won’t see any return until the business is sold or floats on the stock market. It could take years, and you could either lose all your invested money, or reap triple returns.

10. Equity crowdfunding

This is very similar to business angels, but managed wholly online. Investors can either deal directly with the company and get your name on the shares, or let the crowdfunding website deal on behalf of hundreds or thousands of investors. However, if the business you invested in does well, a bigger investor may buy it.

11. Diamonds

Gemstone-grade diamonds have increased nearly tenfold in value since the 1960s. The diamond price is much less volatile than the price of gold. But it may be difficult to access for investors because diamonds are valued subjectively by experts.

12. Carbon credits

A carbon credit is essentially a permit to release one tonne of carbon dioxide into the atmosphere. Companies that exceed their allowances are supposed to buy more credits, according to global cooperation. Private investors have been targeted by firms trying to sell them carbon credits. This is a highly specialist market and best left to professional traders.

13. Land banking

Land banking companies take a piece of land, parcel it up and sell it off to investors; hoping that once the land is earmarked for development, it will soar in value. However, there is often no development and investors are left holding a useless piece of land either in the market or overseas. A lot of land banking schemes have been stopped by the Financial Conduct Authority (FCA).

5 Ways To Impress Any Investor

So let’s go:

Way #1: Show evidence of sale. If you want an investor to be impressed with you then you’ve got to show them evidence of sale. So make sure you sell some of the units or some of the products or some of the services before you approach an investor for funding. It doesn’t mean you need to have sold millions of services/ products. Even 10, 20, 100 units of sale can be just the evidence the investor is looking for.

Way #2: Show evidence that you have a winning team. The investor wants to know that they’re not only investing in one person but in a group of individuals/ Hence it is essential that you assemble a winning team; that has experience, knowledge and expertise in business or in that industry. When you bring together such a diverse group it demonstrates your strength as a good manager and a great leader. All of which are traits a successful entrepreneur must have.

Way #3: Show evidence of a Niche and large enough market. Investors want to know that when they put money into your business you’re going by gaining traction within a small niche and then expand your market to a larger audience. Hence, it is of interesting that your marketing a big enough to create a big payday for the investor. They are therefore impressed with you if you can demonstrate that you are in a growing market as opposed to a shrinking one!

Way #4: Show evidence that your business can make money. How do you do this? Well, what other channels will you use to make money? Will you be using a subscription model, partnerships, sale through retailers, online stores or via business websites? Will you have after sales services or sale of accessories? All these are evidence that your business can actually make money and then finally

Way #5 Show evidence that you have invested your own money. If you have not invested your money in the business what makes you think someone else should invest their money into your business. Therefore demonstrate this by creating a list of all the amount of money you spent. For example:

– Costs of creating a website,

– Travel so we did courses

– Cost of business related training

– Cost of machinery or any kind of products that went into starting the business.

Demise of Classic Investing

If investment reports were written like beer commercials, perhaps we’d all be better off.

That’s my theory, anyway. What’s the last piece of really useful financial advice you can recall hearing? Listen to a clever beer commercial just once, however, and you can’t get it out of your head. So, for instance…

“Head for the mountains” equals: Buy gold.

“Tastes great, less filling” equals: Avoid high-priced tech stocks.

Or, if you want to know how to make big investing profits in the future, just remember something really important about the past and present day: “It doesn’t get any better than this.”

In my mind, that former Old Milwaukee slogan was the ultimate point of a recent McKinsey Global Institute study.

The report itself is pretty dry (it was titled “Diminishing Returns: Why Investors May Need to Lower Their Sights”), but McKinsey – as mainstream as the investing establishment can be – meant it as a wake-up call to institutional pension-fund managers.

ETF Index Idiocy

The past three decades (1985 to 2014), according to McKinsey analysts, “have been a golden age for companies, and for large North American and Western European companies in particular.”

For stock investors, the message has been to buy the S&P 500 – and hang on at all costs. The reward? Watching one’s wealth double every nine years, with real total returns of nearly 8%. And, as the report points out, that’s three full percentage points above the 100-year long-term average.

That’s not news to us, of course. We know the reasons already: cheap borrowing rates and a Federal Reserve that is more than happy to keep spiking the punch bowl whenever the party seems to be winding down.

On a more ominous note, the McKinsey analysts say “that era is now ending,” with “total returns from both stocks and bonds in the United States and Western Europe likely to be substantially lower over the next 20 years.”

Again, we’ve been warning about that for some time. But if the folks at McKinsey are willing to acknowledge it, then that’s a broad hint that Wall Street’s plain vanilla advice, not to mention the whole cult of passive ETF index-based investing, won’t work nearly as well in the future as it did in the past.

So, where does that leave you?

It means we all need to be a lot more selective – special situations, small companies and under-the-radar ideas – when it comes to the stocks we buy as a path to wealth.

To explain the power of those opportunities, I’ll use the investing environment of the 1970s as an historical example.

As that decade started, “conglomerates” were all the rage on Wall Street. Investors couldn’t buy enough of the “Nifty Fifty” large-cap stocks that dominated the headlines and the economy. But high valuations, rising inflation and rising interest rates put an end to the mania. The post-World War II “golden era” of investing was over.

But for the really smart investors, a new “golden era” was just beginning.

For instance, in 1972, three of today’s biggest, most successful companies went public as tiny pip-squeaks. All three, I might add, fell sharply in the severe recession and bear market of 1974-1975. And yet…

  • Intel rose more than eightfold by 1980.
  • Wal-Mart more than doubled.
  • Southwest Airlines rose more than 2,000%.

By 1977-1978, the Dow Jones Industrial Average was in yet another grinding bear market. Few on Wall Street had even heard of the term “overnight package delivery.” But that didn’t stop FedEx – known then as Federal Express – from going public and watching its stock triple in value in 18 months’ time.

3 Investment Options To Top Up Your State Pension

We all dream of having a beautiful life when we get old. Unfortunately, the state pensions aren’t enough. While this is the case it doesn’t mean that you can’t have more money at your disposal when you retire. To help you out, here are some of the ways in which you can top up your state pension:

Invest in stocks

A stock is a share of ownership of a company. When you own a share of a company you have a right of claiming company assets and earnings. The more the stocks you have, the more the ownership of a company you have. Stocks are attractive as ways of investing for retirement as they are long term. You also get to receive dividends at the end of a financial year.

While they are attractive, they also come with their fair share of risks especially if the company collapses or the shares lose value. To protect your money you need to research a lot before you invest in a certain company. There are plenty of technicalities involved with the buying and selling of stocks; therefore, to have an easy time find a reputable stock broker to handle your money. The blocker will guide you on the best company to invest in and any other intricacies involved.

It’s often said that you shouldn’t put all of your eggs in one basket; therefore, it’s wise that you spread your investment in different companies.

Try out bonds

A bond is a debt security. Bonds are attractive in that they carry a low risk compared to shares. When you buy a bond, you will be lending money to a federal agency, municipality, government or corporate entity. Upon investing in a bond you receive an interest during the life of the bond. Once the bond matures, you receive back your money.

Just like when buying shares, you need to take your time to research about them. Closely read a prospectus and gather as much information as you should.

Put your money in Real estate

The real estate sector is stable thus a great place to invest for the future. There are many ways of investing in the real estate. You can buy property for development or buy land and leave it idle for its price to rise. The trick to buying property is investing in areas that are growing fast thus your property’s value also rises fast.

Conclusion

These are some of the ways of topping up your pension. If you have the money, you should consider investing in all of the different ways for a comfortable future life.

What Is an Investment?

One of the reasons many people fail, even very woefully, in the game of investing is that they play it without understanding the rules that regulate it. It is an obvious truth that you cannot win a game if you violate its rules. However, you must know the rules before you will be able to avoid violating them. Another reason people fail in investing is that they play the game without understanding what it is all about. This is why it is important to unmask the meaning of the term, ‘investment’. What is an investment? An investment is an income-generating valuable. It is very important that you take note of every word in the definition because they are important in understanding the real meaning of investment.

From the definition above, there are two key features of an investment. Every possession, belonging or property (of yours) must satisfy both conditions before it can qualify to become (or be called) an investment. Otherwise, it will be something other than an investment. The first feature of an investment is that it is a valuable – something that is very useful or important. Hence, any possession, belonging or property (of yours) that has no value is not, and cannot be, an investment. By the standard of this definition, a worthless, useless or insignificant possession, belonging or property is not an investment. Every investment has value that can be quantified monetarily. In other words, every investment has a monetary worth.

The second feature of an investment is that, in addition to being a valuable, it must be income-generating. This means that it must be able to make money for the owner, or at least, help the owner in the money-making process. Every investment has wealth-creating capacity, obligation, responsibility and function. This is an inalienable feature of an investment. Any possession, belonging or property that cannot generate income for the owner, or at least help the owner in generating income, is not, and cannot be, an investment, irrespective of how valuable or precious it may be. In addition, any belonging that cannot play any of these financial roles is not an investment, irrespective of how expensive or costly it may be.

There is another feature of an investment that is very closely related to the second feature described above which you should be very mindful of. This will also help you realise if a valuable is an investment or not. An investment that does not generate money in the strict sense, or help in generating income, saves money. Such an investment saves the owner from some expenses he would have been making in its absence, though it may lack the capacity to attract some money to the pocket of the investor. By so doing, the investment generates money for the owner, though not in the strict sense. In other words, the investment still performs a wealth-creating function for the owner/investor.

As a rule, every valuable, in addition to being something that is very useful and important, must have the capacity to generate income for the owner, or save money for him, before it can qualify to be called an investment. It is very important to emphasize the second feature of an investment (i.e. an investment as being income-generating). The reason for this claim is that most people consider only the first feature in their judgments on what constitutes an investment. They understand an investment simply as a valuable, even if the valuable is income-devouring. Such a misconception usually has serious long-term financial consequences. Such people often make costly financial mistakes that cost them fortunes in life.

Perhaps, one of the causes of this misconception is that it is acceptable in the academic world. In financial studies in conventional educational institutions and academic publications, investments – otherwise called assets – refer to valuables or properties. This is why business organisations regard all their valuables and properties as their assets, even if they do not generate any income for them. This notion of investment is unacceptable among financially literate people because it is not only incorrect, but also misleading and deceptive. This is why some organisations ignorantly consider their liabilities as their assets. This is also why some people also consider their liabilities as their assets/investments.

It is a pity that many people, especially financially ignorant people, consider valuables that consume their incomes, but do not generate any income for them, as investments. Such people record their income-consuming valuables on the list of their investments. People who do so are financial illiterates. This is why they have no future in their finances. What financially literate people describe as income-consuming valuables are considered as investments by financial illiterates. This shows a difference in perception, reasoning and mindset between financially literate people and financially illiterate and ignorant people. This is why financially literate people have future in their finances while financial illiterates do not.

From the definition above, the first thing you should consider in investing is, “How valuable is what you want to acquire with your money as an investment?” The higher the value, all things being equal, the better the investment (though the higher the cost of the acquisition will likely be). The second factor is, “How much can it generate for you?” If it is a valuable but non income-generating, then it is not (and cannot be) an investment, needless to say that it cannot be income-generating if it is not a valuable. Hence, if you cannot answer both questions in the affirmative, then what you are doing cannot be investing and what you are acquiring cannot be an investment. At best, you may be acquiring a liability.

What Is The Difference: Investing VS Trading

Investing vs Trading: What is the difference?

This is a commonly asked question that beginners have when they want to start managing their own brokerage accounts. Since most people are interested in stocks, I will use equities to explain the difference between these two strategies. Realistically, this goes far beyond equities, and there are many investment or assets types that I could use as an example.

What is an Investor?

A simple explanation of an investor is someone who buys stock in a company to make money off the companies operations. You commonly hear the terms Dividend Investor or the Buy and Hold Forever Strategy. This is someone who buys a stock because they think the company has the potential to grow in the long run. In macroeconomics, the long run is defined as over a year or more than one operating cycle. An investor will have a long-term outlook and some investors like Warren Buffet will buy and hold the same company for a lifetime.

What Does A Winning Investment Look Like?

A smart investor will look at the accounting and the fundamentals of a company because that is the way to see how a company has done in the past. Then they can speculate on how this company will do in the future.

The fundamentals of a business can be anything that gives a business an edge over their competition. For some companies, this won’t be things that directly show up in their financial statements. For example, I invested in a REIT because they had the best management team. This management team was more experienced than their competitions and this investment outperformed all the other REITS.

From an accounting perspective, a good investment will have an increasing net income, a balance sheet with improving assets, and a great looking cash flow. You don’t need to go to school and learn everything about financial statements but knowing the basics will help you with making informed investment decisions.

When someone holds a stock they want to make a profit through growth or get paid through dividends. This makes fundamentals and accounting important because they will tell you that this company can increase in size, continue paying you a dividend, or have a growing dividend.

Trading

A trader is someone who will buy and sell stock due to price volatility. Price volatility is the short-term price changes. This means that a trader will look at the short term trends instead of how well the company is doing over the long run. A trader will focus less on fundamentals and accounting. Instead, their focus is on Technical Analysis and other short-term price drivers.

The timing of a trade will be much shorter than an investor’s time frame. There are a few basic types of traders. One is a scalper or Day Trader who has extremely short term trades. By definition, these are people who hold a trade for less than a day. Another example is a swing trader. These traders hold an investment more than one day but will sell the trade off the trend swing which is normally less than a week.

What does a Successful trade look like?

This is really simple. A successful trade is when someone’s trade hits their intended price target or they hit their profit goal. Since traders are in a trade for less time they are in the market and out of the market as quickly as possible. A trader wants their trade to hit its price target as quickly as possible.

Financial Investment Services

Financial Services

Financial Services is a term used to refer to the services provided by the finance market. Financial Services is also the term used to describe organisations that deal with the management of money. Examples are the Banks, investment banks, insurance companies, credit card companies and stock brokerages.

It is part of financial system that provides different types of finance through various credit instruments, financial products and services.

These are the types of firms comprising the market, that provide a variety of money and investment related services. These services are the largest market resource within the world, in terms of earnings.

The challenges faced by the these Services market are forcing market participants to keep pace with technological advances, and to become more proactive and efficient while keeping in mind to reduce costs and risks.

These Services have been able to represent an increasingly significant financial driver, and a significant consumer of a wide range of business services and products. The current Fortune 500 has listed 40 commercial banking companies with revenues of almost a $341 trillion, up a modest 3% since last year.

Importance of Financial Services:-

It serves as the bridge that people need to take better control of their finances and make better investments. The financial services offered by a financial planner or a bank institution can help people manage their money much better. It offer clients the opportunity to understand their goals and better plan for them.

It is the presence of financial services that enables a country to improve its economic condition whereby there is more production in all the sectors leading to economic growth.

The benefit of economic growth is reflected on the people in the form of economic prosperity wherein the individual enjoys higher standard of living. It is here the financial services enable an individual to acquire or obtain various consumer products through hire purchase. In the process, there are a number of financial institutions which also earn profits. The presence of these financial institutions promote investment, production, saving etc.

Characteristics:-

Customer-Specific: These services are usually customer focused. The firms providing these services, study the needs of their customers in detail before deciding their financial strategy, giving due regard to costs, liquidity and maturity considerations.

Intangibility: In a highly competitive global environment brand image is very crucial. Unless the financial institutions providing financial products and services have good image, enjoying the confidence of their clients, they may not be successful.

Concomitant: Production of these services and supply of these services have to be concomitant. Both these functions i.e. production of new and innovative financial services and supplying of these services are to be performed simultaneously.

Tendency to Perish: Unlike any other service, financial services do tend to perish and hence cannot be stored. They have to be supplied as required by the customers. Hence financial institutions have to ensure a proper synchronisation of demand and supply.

People Based Services: Marketing of these services has to be people intensive and hence it’s subjected to variability of performance or quality of service.

Market Dynamics: The market dynamics depends to a great extent, on socioeconomic changes such as disposable income, standard of living and educational changes related to the various classes of customers. Therefore financial services have to be constantly redefined and refined taking into consideration the market dynamics.

Promoting investment: The presence of these services creates more demand for products and the producer, in order to meet the demand from the consumer goes for more investment.

Promoting savings: These services such as mutual funds provide ample opportunity for different types of saving. In fact, different types of investment options are made available for the convenience of pensioners as well as aged people so that they can be assured of a reasonable return on investment without much risks.

Minimizing the risks: The risks of both financial services as well as producers are minimized by the presence of insurance companies. Various types of risks are covered which not only offer protection from the fluctuating business conditions but also from risks caused by natural calamities.

Maximizing the Returns: The presence of these services enables businessmen to maximize their returns. This is possible due to the availability of credit at a reasonable rate. Producers can avail various types of credit facilities for acquiring assets. In certain cases, they can even go for leasing of certain assets of very high value.

Benefit to Government: The presence of these services enables the government to raise both short-term and long-term funds to meet both revenue and capital expenditure. Through the money market, government raises short term funds by the issue of Treasury Bills. These are purchased by commercial banks from out of their depositors’ money.

Capital Market: One of the barometers of any economy is the presence of a vibrant capital market. If there is hectic activity in the capital market, then it is an indication of the presence of a positive economic condition. These services ensure that all the companies are able to acquire adequate funds to boost production and to reap more profits eventually.

Is a House a Good Investment For You?

Are you among the crowd who is still thinking of where to invest the money they earned from years of working hard? There may have been unsolicited advises convincing you to put your share on various networking companies. Some may have even told you to put up a startup company. But is this the most practical thing you could probably do to your money? Perhaps, yes, if its your choice.

However, investing has its ups and downs depending on the industry you’re going to delve into. Yet, do you know that buying a house or owning one is one of the most intelligent investments you would probably make. Why?

Homes can be turned into rental properties. With necessary adjustments and with proper leasing or rental documents, you can turn your house into an additional income stream. What’s even good is rental fees tend to increase on regular intervals. There are persons who often move because of job changes. They constantly look for homes which they can rent, and yours can be their next rental homes.

Depending on a home’s location, it can also be a perfect vacation house. Typically, families, especially those with children, and those which embrace the concept of extended families – do love to have vacation houses. During specific periods of the year, the house can serve as a reunion spot for relatives to gather. So, thinking of having a vacation house? Should it be near a beach, the woods, or perhaps one that offers mountainview or cityview otherwise?

Home values typically increase. Thus, if you’re going to put your house for a resale – chances are you’re going to get good profits. So you better ask your local real estate agent which areas have markets in which home prices experience surges. Commonly, these areas include those where professionals flock because of employment opportunities.

Buying a house is also seen by financial houses as a better investment than credit cards. This is one reason why there are many lenders that charge low-interest rates on home mortgages.

Are these reasons still not enough to convince you how good of an investment is owning a house? Another bonus benefit of owning a house is the local community attachment you’re going to build. You’re start to have acquaintances who’ll later become your friends. Your neighbors will likely become close to you like family. There will be some sort of emotional attachment.