Friday, October 26, 2012

Investment and Financial Potpourri's

IMO, when investing, the decision should be yours and yours alone - after a careful research and evaluation of various information that you have obtained. You should be aware that many Guru's and financial advisers trumpets their self interests i.e. sometimes to be part of your financial decisions for them to profit, directly or indirectly.

As it is difficult to discern what it best and right, here are some salient Investment and Financial Potpourri's you should read and ponder. IMO, know honestly yourself, your limits, your cash flow etc. before investing - it is yourself that is the key.

  • Real Estate, Stocks and Bonds are three asset classes to consider when Investing. Real Estate requires huge capital and for most a mortgage is required. A rental property though offsets the costs and may yield 8 to 10% to an enterprising Investor. Stocks provides ownership interest in a business and can be considered as near cash and can easily be liquidated. Bonds provides a fixed  interest income . The Phils richest people have their businesses listed in the stock market. That should give us an idea where to start our own investments.
  • The safest thing is to invest in an Index Fund if a first time Investor. On a 10 to 20 year time horizon this is the best to accumulate wealth. Stocks are actually risk free if bought at bargain levels. The goal of the Investor is to value the business and buy when it suits their book. Due diligence is required.
  • If you were to borrow before mastering your cash flow, you may find yourself defaulting on your loans. What’s worse, you may end up in the negative database of financial institutions, which would make your name pop up as a credit risk every time you attempt to borrow money, even if you have a certificate of full payment on a past due debt. I am told it is difficult, if not impossible to get your name out of the negative database. 
  • You should also not attempt to buy life insurance (risk management) if you still have a mountain of debts to pay. Between incurring penalty charges and losing life insurance coverage due to a lapsed policy, the tendency would be just to lose the policy coverage. This is because there is no immediately perceived loss with a policy lapsing versus incurring the interest and penalty charges on debt. Also, collection agencies will not allow you to easily forget past due obligations with their persistent tactics.