5
Oct
2009
How swiftly can you process your emotions?
Stocks trade on exchanges. Because dividends are either small or nonexistent, the value of your stock is determined solely by what other investors are willing to pay for it. In a calm market, you will experience a sense of unmanageability, because there is nothing you can do to force others to raise the price of your stocks. Even small losses in calm markets can be troubling because investors rarely want to admit their mistakes, feel the pain of loss, and move on. Focusing on prices rather than the cause of the losses, they hang on to losers until they can break even.
Optimism can grow into fantasy. Investors sometimes fall in love with their companies. They fantasize about new products and skyrocketing stock prices. All evidence of deteriorating fundamentals is rationalized away or ignored. Individual stocks can decline for years or decades. Believing fantasy can lead to many years of pain even in calm markets. However, we have seen few calm markets in recent years, and volatile markets are more troublesome.
In most markets, stock losses happen quickly. A bad earnings report can cut a stock price in half. An unexpected rate hike by the federal government can knock the whole market down 15 percent in a month. For still unexplained reasons, the whole market dropped 22 percent on October 19, 1987. Few investments move so quickly. Real estate rarely moves 1 percent a month. Unless you can process your emotions quickly, stocks will cause you a lot of pain.
28
Aug
2009
Bank loans are taken out and bonds are issued
Highly public maneuvers can dilute your interests as well. Bank loans are taken out and bonds are issued, taking control of the company away from you and granting it to bankers and the whims of the bond market. New shares issues are sold to the public, diluting your stake. Mergers and acquisitions of other companies further dilute your power and tighten the hold of management over your earnings.
Investor relations departments are set up to divert your attention from what is really going on and to placate your reaction. Companies often buy back their own shares, indicating that this will increase your ownership interest. What is really going on is that your interest is transferred elsewhere.
Bought-back shares are placed in employee stock ownership plans or financed by bonds and bank loans. When it is all over, employees and lenders own more of the company and you own less.
Ask yourself: How does all this makes me feel? You may feel betrayed or abandoned. Your broker or financial planner never mentioned the fact that simply buying stock is likely to make a sucker out of you. Certainly, a sense of unmanageability begins at this level.
4
Aug
2009
The 3 Steps of Investing
To get from the chaos of your investment life to your comfort zone, you need to take three steps: study the emotional content of different investments, study your own emotional makeup, and match your emotional makeup to the appropriate investments.
To avoid confusion, I have divided this book into three steps rather than three parts:
Step 1: Chapters 3 through 7 set out the emotional content of the different investments. Step 1 requires study but no writing or analysis. The material in Step 1 will also be used as a reference when you reach Step 3. Per the discussion in Step 1, saving, investing, and speculating are different activities. However, throughout this book, the term “investor” is used to signify a person engaged in all three activities unless otherwise specified. The term “investment” also includes savings, investments, and speculations unless clarified. Among other things, Step 1 is about learning the difference between a saver, an investor, and a speculator.
Step 2: Chapter 8 shows you how to study your emotional makeup. It requires writing and analysis. Step 2 is the workbook section of Comfort Zone Investing.
Step 3: Chapters 9 matches you to the appropriate investments.
26
Apr
2009
Real Estates Taxes
Although tax shouldn’t be the most important consideration when choosing a property, it’s not to be overlooked. The tax implications vary in complexity and impact according to the country you are investing in and what you intend to do with the property. In addition, you need to take into account that the United States taxes you on your worldwide income. Taxes levied on international property investments usually fall into the following categories:
- Capital acquisitions tax, inheritance tax, stamp duty, or transfer tax for purchasing, inheriting, or transferring property
- Local and national property taxes and land tax for owning and/or residing on the property
- Income tax on rents received, of which there may be additional taxes imposed on nonresident or foreign landlords
- Capital gains tax, gift taxes, or death duties and estate taxes for disposing of the property
To avoid or minimize taxation, there are countries or jurisdictions with no taxes on income or capital gains, such as the Turks and Caicos Islands. However, some of these tax havens are an option only for the very wealthy who are willing to contribute substantially to the local economy and purchase luxury real estate, and some of these locations limit the number of foreigners permitted residence or work permits. In comparison, governments in nontax-haven countries tend to impose fewer restrictions on nonresidents purchasing property, yet the likelihood is that you will face more taxes on your investment. But some high-tax countries provide advantages over the long term. For instance, in France rents over the last fifty years have averaged a net operating income (NOI) of about 7 percent, which is not terrific. But if you hold onto the property for at least fifteen years, your tax on capital gains is vastly reduced. And when you consider that property values have gone up about the same rate as rents, you will have an enormous gain.
24
Apr
2009
Real Estate Investment – When in Rome…
To make your real estate investment opportunities fare well in other countries and societies, consider the following.
Learn the language. Having just a small vocabulary goes a long way in the success of your investment. Knowing past, present, and future tense is very helpful. After all, that is the time line in which your real estate deal operates.
Learn the culture and local customs. Read up on and experience the culture. The culture you see on vacation is different from day to day. Religion makes up a large portion of culture and society.
Whether it is nonexistent, polytheistic, monotheistic, all have an influence on the society in which you plan to do business. Failure to understand and respect the nuances and roles that culture, customs, and religion play can cause your deal to fall apart or change adversely. Knowledge and understanding is power. Humility on your part is not weakness.
Understand the local economy. The local economy is usually different from the national economy. What makes the local economy self-sustaining: building aircraft, growing wine, services and to whom, education, fishing, tourism, a combination thereof? How does this fit into your personal and real estate goals and objectives, in both the short and long term? Is the local economy working, and what is its future? Will the area be deserted or abandoned in a few years? All these factors can affect your investment.
23
Apr
2009
Real Estate and Tax (Dis)Advantages
Investing outside of the United States adds another tax dimension, so it’s a good idea to understand the tax codes of the country that you are investing in. When determining whether an investment property will generate positive cash flow, you must include the tax implications of the income in your calculation, because U.S. taxpayers are taxed on their worldwide income. You should also take into account that there are certain legal tax advantages available in the United States when investing in property. For example, you can acquire investment property with your retirement funds, which offers tax-free or tax-deferred opportunities, or you can make tax-deferred 1031 exchanges of like-kind property. Some of these tax advantages are not available outside the United States. You cannot do a 1031 exchange for property outside the United States. You can, however, invest selfdirected Individual Retirement Accounts (IRAs) and 401(k) money everywhere, but you may still be obligated to pay taxes in another country. For instance, with a Roth IRA, you pay tax once and then any profits made are tax free—tax free forever in the United States, that is. It does not mean they are tax free outside of the United States. No country outside the United States recognizes American retirement plans and so local taxes may apply.
26
Sep
2008
New tenants bonus cuts taxes
Not just house builders, but also the tenant may have been recently on an entirely legitimate form of tax savings are happy: The operating costs for a rented property in the tax may be specified. New rules for household services make it possible – even retroactively. Unless the outstanding tax can also operating costs for 2003 through 2005 be claimed. But how does it all?
Material costs are not included
Those who work in the apartment by professionals it leaves, can be 20 percent pure wage settle. Material costs remain ignored. But the operating expenses of the landlord to the tenant continues, there can be claimed for tax. Caretaker costs and repairs in the house belong to the garbage disposal is not.
Wage and material separately indicate
Since this year, a landlord wage and material cost of operating separately in payroll specify. Thus, it is easier for tenants, wage costs in the cover sheet indicated the tax return. Older settlements are often not separate costs. It remains the only tenant left, the wage cost estimate. A test compass of the German Federal helps tenants here, the corresponding cost for the chimney sweep or caretakers correctly.
For outstanding tax applies:
Who operating in the outstanding tax assessments fit, you must note that for the years 2003 to 2005 only the work are deductible, the tenant would even work. , Professional work ‘(eg, maintenance of a heating system) can therefore for this period are not invoked.
26
Sep
2008
Patronage Websites
The following websites are currently under our patronage:
- Business Digest Blog – Current information about business affairs
- http://money.best-real-estates.com/ – Experts’ advice on money investments
- Loans Insider Blog – Professional advice on loans and mortgage
- Real Estate Informer Blog – Fresh update on real estate market situation
- http://finances.best-real-estates.com/ – Personalized help for money investors
- http://investments.best-real-estates.com/ – Your source of information about investments
6
Sep
2008
Introduction to Best Real Estates Blog
Welcome to the best real estates blog! This blog was established for people who would like to familiarize themselves with up-to-date information on real estate issues dealing with insurance, mortgage and loans or various real estate opportunities. It is our intention to present only confirmed and unbiased information. Those who are interested in becoming members of the best-real-estates team are encouraged to contact us by email.