We favor investments that are low cost, tax efficient, diversified, liquid, and simple. Many investors often run into trouble when they invest in things that do not have these five characteristics. Investments with these five characteristics have been profitable over time, but typically are not very exciting. There is generally not a “hot story that you need to act on now!” associated with them. The financial services industry generally does not favor these type of investments because they generate very little profit from them. We are in the business of helping to maximize the wealth of our clients, not the financial services industry. Keep in mind that this list of investment characteristics is not comprehensive. Other factors to look for in investments might include attractive valuation, low correlation to your other holdings, a nice dividend yield or interest income, a tilt towards areas of the market that have produced higher returns such as value stocks, an appropriate risk level for you, etc.
Low Cost. We typically invest in low cost index based funds and exchange traded funds (ETF’s). The funds we invest in have an average expense ratio of only.30% per year. The typical actively traded equity mutual fund has an average expense ratio of 1% or more. With investment funds, the best predictor of future relative performance is the expense ratio on the fund; the lower the better. Hedge funds typically have annual expense ratios of 2% plus 20% of any profits earned. Some variable annuities and permanent life insurance “investments” can have annual expenses of 2% or more. By keeping a close eye on the costs of our investments, we can save our clients significant amounts of money each year and help them achieve higher returns over time (all else being equal). With investment products, you don’t get better performance with a higher cost product, in fact you typically get worse performance.
Tax Efficient. Our investments (index based funds and ETF’s) are extremely tax efficient and they allow the investor to have some control over the timing of the taxes. These types of funds have low turnover (trading activity), which is a common characteristic of tax efficient investments. We recommend avoiding mutual funds with high turnover due to their tax inefficiency. After the recent big increase in the U.S. stock market, many active equity mutual funds have “imbedded” capital gains of as much as 30%-45%. If you buy those mutual funds now you may end up paying capital gains taxes on those imbedded gains even if you didn’t own the fund during the increase. ETF’s typically do not generate long and short-term capital gain distributions at yearend, and they do not have imbedded capital gains like active mutual funds. Hedge funds are typically tax inefficient due to their very high turnover. In addition to investing in tax-efficient products we also do many other things to help keep our client taxes minimized such as tax loss harvesting, keeping our turnover/trading low, putting the right type of investments in the right type of accounts (tax location), using losses to offset capital gains, using holdings with large capital gains for gifting, investing in tax-free municipal bonds, etc.
Diversified. We like to invest in diversified funds because they reduce your stock specific risk, and the overall risk of your portfolio. Bad news released about one stock may cause it to drop 50%, which is horrible news if that stock is 20% of your whole portfolio, but will be barely noticed in a fund of 1,000 stock positions. We tend to favor funds that typically have at least a hundred holdings and often several hundred holdings or more. These diversified funds give you broad representation of the whole asset class you are trying to get exposure to, while eliminating the stock specific risk. We are not likely to invest in the newest Solar Energy Company Equity Fund with 10 stock positions, for example. We don’t believe in taking any risks (such as stock specific risk) that you will not get paid for in higher expected return.
Liquid. We like investments that you can sell in one minute or one day if you decide to do so, and those which you can sell at or very close to the prevailing market price. With liquid investments you always (daily) know the exact price and value of your investments. All of the investment funds we recommend meet this standard. We don’t like investments which you are locked into for years without the ability to get your money back at all or without paying large exit fees. Examples of illiquid investments would be hedge funds, private equity funds, annuities, private company stock, tiny publicly traded stocks, startup company stock or debt, illiquid obscure bonds, structured products, some life insurance “investments,” private real estate partnerships, etc. We prefer investment funds that have been around for some time, are large in size, and have high average daily trading volumes.
Simple. We prefer investments that are simple, transparent, and easy to understand. If you don’t understand it, don’t invest in it. All of our investments are simple and transparent; we know exactly what we own. Complicated investment products are designed in favor of the seller, not the buyer, and usually have high hidden fees. Examples of complicated and non-transparent investments that we generally avoid are hedge funds, private equity funds, structured products, some life insurance “investment” products, variable annuities, private company stock, startup company stock or loans, etc. “Make everything as simple as possible, but not simpler.” -Albert Einstein.
We believe most investors should have the majority of their portfolio invested in things that have these five excellent characteristics. By doing so you will avoid plenty of mistakes, negative surprises, and risks along the way. In addition, we believe your after tax investment returns will likely be higher over long periods of time. Of course not every smart or good investment will have all of these characteristics. For example, income producing real estate property is illiquid (and often not diversified) but can be an excellent long-term investment if purchased and managed properly. Owning your own business is illiquid and not diversified but can be an excellent way to build wealth as well. We believe these five investment characteristics become even more important as you enter retirement, since at that point you may be more focused on reducing risk and preserving your wealth than building it, and you may need the liquidity to spend and gift part of your wealth during retirement. These five excellent investment characteristics can be a good screening device for possible investments and good factors to think about when investing.
Most people have heard of the term Bitcoin but don’t have a clear idea of what it really is. Simply defined, Bitcoin is a decentralized, peer to peer, digital currency system, designed to give online users the ability to process transactions via digital unit of exchange known as Bitcoins. In other words, it is a virtual currency.
The Bitcoin system was created in the year 2009 by an undisclosed programmer(s). Since then, Bitcoin has garnered huge attention as well as controversy as an alternative to US dollar, Euros and commodity currencies such as gold and silver.
A private network of computers connected by a shared program is used to carry out transactions and process payments in Bitcoin. The creation of Bitcoins are based on increasingly complex mathematical algorithms and its purchase is made with standard national money currencies. Users of Bitcoin can access their coins with their smart phones or computers.
As a new and growing virtual currency, Bitcoin has certain distinct advantages over the conventional government flat currencies. Here are 5 benefits that you will enjoy when using Bitcoin
1) No Taxation
When you make purchases via dollars, euros or any other government flat currency, you have to pay an addition sum of money to the government as tax. Every purchasable item has its own designated tax rate. However, when you’re making a purchase through Bitcoin, sales taxes are not added to your purchase. This is deemed as a legal form of tax evasion and is one of the major advantages of being a Bitcoin user.
With zero tax rates, Bitcoin can come in handy especially when purchasing luxury items that are exclusive to a foreign land. Such items, more often than not, are heavily taxed by the government.
2) Flexible Online Payments
Bitcoin is an online payment system and just like any other such system, the users of Bitcoin have the luxury of paying for their coins from any corner of the world that has an internet connection. This means that you could be lying on your bed and purchasing coins instead of taking the pain of travelling to a specific bank or store to get your work done.
Moreover, an online payment via Bitcoin does not require you to fill in details about your personal information. Hence, Bitcoin processing Bitcoin transactions is a lot simpler than those carried out through U.S. Bank accounts and credit cards.
3) Minimal Transaction Fees
Fees and exchange costs are a part and parcel of standard wire transfers and international purchases. Bitcoin is not monitored or moderated by any intermediary institution or government agency. Therefore, the costs of transacting are kept very low unlike international transactions made via conventional currencies.
In addition to this, transactions in Bitcoin are not known to be time consuming since it does not involve the complications of typical authorization requirements and waiting periods.
4) Concealed User Identity
All Bitcoin transactions are discrete, or in other words Bitcoin gives you the option of User anonymity. Bitcoins are similar to cash only purchases in the sense that your transactions can never be tracked back to you and these purchases are never connected with your personal identity. As a matter of fact, the Bitcoin address that is created for user purchases is never the same for two different transactions.
If you want to, you do have the option of voluntarily revealing and publishing your Bitcoin transactions but in most cases users keep their identities secret.
5) No outside interventions
One of the greatest advantages of Bitcoin is that it eliminates third party interruptions. This means that governments, banks and other financial intermediaries have no authority whatsoever to disrupt user transactions or freeze a Bitcoin account. As mentioned before, Bitcoin is based strictly on a peer to peer system. Hence, the users of Bitcoin enjoy greater liberty when making purchases with Bitcoins than they do when using conventional national currencies.
Digital currencies such as the Bitcoin are comparatively new and haven’t yet been put through major tests. As a result, many feel that there are certain risks involved in the usage of Bitcoin. Regardless of the potential disadvantages of Bitcoin, it’s evident that its merits are strong enough to make it a legitimate contender to challenge conventional currencies in the not so distant future.
Investments can be helpful in achieving financial stability. They should be explored by people who are planning ahead. Good advice in this area can assist in choosing the best investment tool to use. There are a number of investment instruments available for people to take advantage of; however, prudence must be exercised when choosing. This article will act as a guide in assisting individuals to make the right choice, and also, to provide information you need to know.
An investment can be defined as the commitment of money or capital to purchase financial instruments or other assets to gain profitable returns in the form of interest, income or increase of the value of the instrument. Investments includes, using the good produced or its money equivalent, to create a durable consumer or producer good or the investor may choose to lend the original good to another in exchange for either interest or a share of the profit.
How can we be successful at investing? Well, we must first have the desire to invest. After acquiring the desire, we need to be motivated to save, no matter how small the amount. The fact is that emphasis should not be placed on the amount being saved, but rather; how often it is being done. After we have mastered the art of saving, the next step is investing. It is incumbent on persons to educate themselves on the subject so that they will be able to make an informed decision.
Financial investments can be extremely beneficial to individuals who seek good advice on identifying a good investment product. With this in mind investors can apply certain principles in order to benefit from their work. First of all, investors need to invest with a margin of safety. This principle is particularly useful when seeking to identify safe investments, and involves the purchase of securities at significant discount to its intrinsic or true value. Applying this principle can benefit the investor in two ways, for one, it may provide high return investment opportunities; it may also minimize the downside risk of an investment.
High return investment products are usually sought after by investors, however, individuals need to be aware that there are certain strategies that when applied, can increase the rate of return on their investment, these includes; increasing savings; investing in a manner that will result in a reduction in the amount of tax paid; invest in a variety of safe investment products; getting involved in international investments, and doing a revision of your portfolio’s performance each year.
Investment options will always be available for investors to take advantage of. These options, when carefully selected, can provide a steady source of income. It is the responsibility of each investor to do the necessary research and seek the necessary professional advice to land a good investment.
Are you willing to invest in a more long-term and reliable organic traffic source for your website? Then let’s look at a search engine that can assist you in increasing your traffic.
Interview an Influencer or Get Interviewed by a High-traffic Website
Have you heard of Tim Ferriss, the author of the Four-Hour Work Week?
His podcast is nowadays a staple content type that he provides to his viewers. Tim’s show has world-class performers who share their insights on a variety of topics, and he is well-liked on social media. Do Tim’s fans enjoy the show? So far, the show has received over 50 million downloads. On most days, it’s the most popular business podcast on iTunes.
Interviews, whether on video or audio, are inherently conversational, lively, and engaging. The great aspect is that it’s a win-win situation for both sides. The interviewer is exposed to a new audience, while the interviewee is able to provide his website visitors with new fascinating and authoritative information. You can ask an industry influencer to share your interview with their followers on social media if you interview them. Consider the organic traffic you’ll get from their social media followers, which number in the hundreds of thousands. Consider the level of interest generated by a prior Derek Sivers interview on the Tim Ferriss Show. Derek shared the show’s URL with his 283K followers on Twitter. It won’t hurt if you establish a relationship with the influencer as a result of the interview.
Similarly, being interviewed by a high-ranking website can result in a significant increase in search engine traffic. Harsh Agrawal’s blog, Shoutmeloud, received 35,000+ views in a single day after he was profiled by YourStory. That was the blog’s most popular search engine traffic source (with 600,000+ monthly visitors). Because interviews provide consolidated value, they can be used as a long-term lead generating source for your company. Consider how many bloggers you’ve learned about through interviews on YouTube and other high-authority websites.
You may also conduct a Reddit AMA if you have a very compelling storey to tell. Mateen’s AMA got about generating $85,000 in profit by selling TeeSpring shirts/hoodies received 2000 page views. He also boosted the number of visitors to his website on a daily basis.
By registering as a source with HARO, you can also answer queries from journalists. On HARO, Christopher from Snappa came across this question from Inc Magazine about the future of content marketing. He swiftly responded with a thorough response. He was mentioned in Inc a few weeks later as a result of this. HARO is an excellent strategy to have your brand mentioned on authoritative news sites such as Entrepreneur and Inc. Those backlinks will enhance your search engine traffic and increase your marketing strategy by improving your reputation in Google’s eyes. Contact an SEO agency to find out how you can do this and how they can manage it for you while you work on the bottom line of your business.