Please Help Me Finding The Right Investment
Please Help Me Finding The Right Investment
23 April 2018
You think you have time, but you are wrong. Dalai Lama
"Hello, - what has time to do with Real Estate investment", you may ask.
Well, there is indeed a strong connection. Owning Real Estate makes for peace of mind. Peace of mind is central to our quality of life, and - life is short.
Should you own property not only for pure investment, but for private use and enjoyment, it is quite the same. Choose your home, make it your personal and homey castle and the quality of your life will improve. If not already done, start soon to make this way the best out of your time on earth.
Recently a friend of mine recommended a book as ’must read’: Bronnie Ware - The top 5 Regrets of the Dying. Admittedly - this is a rather sobering issue, but then again, if we ignore the need to use our time wisely, we are wasting our most important and irreplaceable commodity, - until it is too late.
Most will agree, a beautiful home, a safe and peaceful place for the kids to grow up and a surrounding which offers diversion and supports your life’s expectations has immeasurable value.
’So what’, gold also has value.
Cash in hand, or money in your savings account, have value.
The Exxon stock, which you own has value. Your bonds, futures, you name it, their value increase your wealth. Recently the Bitcoin craze created value.
However, defining value is not a simple task. One thing is for certain, monetary value and life enhancing values are not the same.
Back to the Dalai Lama. He tells the world that more money means also more anxiety. Anxiety reduces our immune system, makes sick.
Ever heard that a pretty and comfortable home makes sick?
Of course, we need some available funds to prepare for the kid’s marriage, unforeseen events, or retirement. But how much?
How much is reasonable? How much is too much?
If your calculation says that you have more than you need to cover life’s surprises and risk, it is time to think about how to make your life better again. Would it be by shopping for a yellow Lamborghini? (Not on Bali roads anyway). A yacht? A 1.8 carat piece of carbon to slide onto her finger?
Mark Twain suggested: "Buy land, they don’t make it any more". Would he have lived in Bali today he may have re-fraised: "Invest in property…
If you are interested in finding out more about the legal purchase or investment options for expats, just check our website for advice, section: Buying in Ubud. Also, last but not least - long term lease. Buying, leasing, both offer interesting positive gain. Our staff will explain.
Before we conclude anything about buying property or not, let us quick run over the most common alternatives -
and for this it is important to realize that investing is not an exact science. Even though some people seem to make money in whatever they invest, others seem to lose whenever they invest in anything. The simplest, most straightforward method for evaluating any investment is the percentage of people who buy into it and get their money back. Next thing would be to examine how many made returns above their investments, which we then can call ’good investment’.
Most successful investors are what is called hedged risk-takers. That means that they will take risks periodically if they can afford to, but they never take more risks than are considered necessary to accomplish their goals. Although there are investments that historically have reaped more financial rewards than financial disasters, many others are nothing more than bottomless pits that continually feed the never-ending thirst for speculation.
The following is not meant to replace neutral professional investment advice. It just draws your attention to which investments over the years have been most likely to produce financial gains and those that have been mostly likely to produce financial disappointment or losses. Although past performance does not necessarily guarantee the same results for the future, it does provide a standard by which nonprofessional investors can judge whether an investment is historically financially safe or detrimental.
These best and worst investments are not intended to be used as guidelines for developing investment strategies, but rather are to be seen as suggestions based on past performance.
Experts agree - Best investments are - ( in sequence of perceived performance and security )
Residential housing. Without question, the best overall investment for the majority of us has been the own home. Residential housing has kept to my knowledge almost everywhere pace with inflation. In addition, it has appreciated on the average approximately 4 percent annually. A simple investment plan to follow, is to make the ownership of our home first investment priority. Even here in Indonesia this applies to us expatriates, provided we follow the rules for buying, or engage in long-term lease of our home; this often with a lesser degree of profitability, but still positive financial outcome.
Rental properties. It is often said that the thing you know best you do best. The majority of us know how to evaluate rental properties, particularly residential housing or holiday accommodation. Therefore, they are a logical investment. If you are not sure how to calculate, come and see us. Free advice given and a cup of coffee comes with it.
However, rental properties are not for everybody. Unless you have a strong personality and are willing to evict some nonpaying tenants from time to time, you need to avoid becoming a landlord.
Hire a villa management service instead. UbudProperty is charging a modest monthly fee and is for this even marketing for rental clients and placing them in your house.
One of the attractive aspects of rental property is that the initial investment is not excessively large in many areas outside Ubud or the coastal tourist spots. In addition, once the property is rented the tenants pay off the holding expenses for you and you can even arrange for your own ’free’ holiday there.
Mutual funds. The whole concept of mutual funds is designed to attract the average investor. The pooling of a large number of small investors’ monies to buy a broad diversity of stocks and other securities is a simple way of spreading the risks. Mutual funds are good investments because (1) most allow small incremental investments, (2) they provide professional investment management, and (3) they allow great flexibility through the shifting of funds between a variety of investment assets.
Insurance products. With the dual benefit of insurance coverage plus higher yields, insurance products such as annuities and whole-life insurance have become viable products for long-term investors. Start when you are young.
Government backed securities. Government backed investments are considered to offer absolute security. Although they may not be the best performers, they are without a doubt the most secure.
… then there are the worst investments :
Commodities speculation. Commodities trading is the buying and selling of materials for future delivery. Unless you have the absolute conviction that everything you own belongs to God and can go to bed at night with the understanding that everything you have worked for most of your life can be lost while you sleep and the thought of that possibility is irrelevant to you, -don’t trade commodities.
Partnerships. The most common financial partnerships are limited partnerships, meaning that the contractual arrangement specifies a general partner and one or more limited partners. The intent is to limit the liability of the limited partners to their financial investments only. Seldom do investors recoup their initial investments in the length of time originally proposed, if ever.
Tax shelters. Tax shelters are used primarily to defer income taxes, rather than for any economic value they might have. Generally, the only people who can be profitable in tax shelter investments are those who have a large amount of passive income, rather than earned income. So, unless you seek a tax shelter in the Country where you are taxable, this is not an option anyway for most of us expats living permanently in Bali, -unless you are deemed taxable under Indonesian law and can offset your passive income, e.g. from renting, against your recognized taxable deductions.
Gemstones. The diamond on your darling’s finger is not an investment; it’s a keepsake. Most novice gem speculators usually buy high and sell low. Gem investing is for those who have nerves of steel, the strong at heart, and the rich. Seldom do investors make any money in gems, unless they are one of a small group of international gem professionals. Same applies to gold. For years already the value increase is below the inflation rates.
Collectibles. Coins, stamps, books, porcelain, works of art, and other unique items can be good investments for knowledgeable buyers who take the time and effort to become proficient at their trade or for those who collect such items as a hobby or for leisure. However, for the average non-professional collectibles investor, the market is extremely limited and slow moving—neither worth the time nor the effort when compared to the limited financial rewards.
Stocks. Although the knowledgeable, professional investors can and do make money regularly on common stock, average investors are not equipped to accurately speculate on which stock will do well and which will not. If the average investor would invest in a common stock, leave it for 10 years, and not touch it, it probably would keep up with inflation and perhaps even gain 3 or 4 percent. But seldom do average investors do that. They generally try to move their investments from stock to stock in order to reap the maximum benefits. Since they are not professionals and their knowledge is limited, most end up making little and, in many cases, losing part or all of their initial investment.
Conclusion
As property agents we are not qualified to give professional investment advice. Here we just present information that suggests what have been the best and worst investment options, based on past performance, as seen by a wide range of specializing insiders. We only propose that you consider these findings (along with prayer and seeking counsel from a trusted investment professional) before you make your investment decisions.
-Only exception: Property investing, which can be foolproof, especially when seeking free advice from a reputable local specialist. (I will not here mention UbudProperty again :o )
So, the thing which sticks out like the proverbial sore thumb is the value of owning property, -both for financial gain and your very personal enjoyment of life.
Information for this newsletter was taken from Larry Burkett’s Investing for the Future, Chapters 5 and 6,
ChariotVictor, 1999.
You think you have time, but you are wrong. Dalai Lama
"Hello, - what has time to do with Real Estate investment", you may ask.
Well, there is indeed a strong connection. Owning Real Estate makes for peace of mind. Peace of mind is central to our quality of life, and - life is short.
Should you own property not only for pure investment, but for private use and enjoyment, it is quite the same. Choose your home, make it your personal and homey castle and the quality of your life will improve. If not already done, start soon to make this way the best out of your time on earth.
Recently a friend of mine recommended a book as ’must read’: Bronnie Ware - The top 5 Regrets of the Dying. Admittedly - this is a rather sobering issue, but then again, if we ignore the need to use our time wisely, we are wasting our most important and irreplaceable commodity, - until it is too late.
Most will agree, a beautiful home, a safe and peaceful place for the kids to grow up and a surrounding which offers diversion and supports your life’s expectations has immeasurable value.
’So what’, gold also has value.
Cash in hand, or money in your savings account, have value.
The Exxon stock, which you own has value. Your bonds, futures, you name it, their value increase your wealth. Recently the Bitcoin craze created value.
However, defining value is not a simple task. One thing is for certain, monetary value and life enhancing values are not the same.
Back to the Dalai Lama. He tells the world that more money means also more anxiety. Anxiety reduces our immune system, makes sick.
Ever heard that a pretty and comfortable home makes sick?
Of course, we need some available funds to prepare for the kid’s marriage, unforeseen events, or retirement. But how much?
How much is reasonable? How much is too much?
If your calculation says that you have more than you need to cover life’s surprises and risk, it is time to think about how to make your life better again. Would it be by shopping for a yellow Lamborghini? (Not on Bali roads anyway). A yacht? A 1.8 carat piece of carbon to slide onto her finger?
Mark Twain suggested: "Buy land, they don’t make it any more". Would he have lived in Bali today he may have re-fraised: "Invest in property…
If you are interested in finding out more about the legal purchase or investment options for expats, just check our website for advice, section: Buying in Ubud. Also, last but not least - long term lease. Buying, leasing, both offer interesting positive gain. Our staff will explain.
Before we conclude anything about buying property or not, let us quick run over the most common alternatives -
and for this it is important to realize that investing is not an exact science. Even though some people seem to make money in whatever they invest, others seem to lose whenever they invest in anything. The simplest, most straightforward method for evaluating any investment is the percentage of people who buy into it and get their money back. Next thing would be to examine how many made returns above their investments, which we then can call ’good investment’.
Most successful investors are what is called hedged risk-takers. That means that they will take risks periodically if they can afford to, but they never take more risks than are considered necessary to accomplish their goals. Although there are investments that historically have reaped more financial rewards than financial disasters, many others are nothing more than bottomless pits that continually feed the never-ending thirst for speculation.
The following is not meant to replace neutral professional investment advice. It just draws your attention to which investments over the years have been most likely to produce financial gains and those that have been mostly likely to produce financial disappointment or losses. Although past performance does not necessarily guarantee the same results for the future, it does provide a standard by which nonprofessional investors can judge whether an investment is historically financially safe or detrimental.
These best and worst investments are not intended to be used as guidelines for developing investment strategies, but rather are to be seen as suggestions based on past performance.
Experts agree - Best investments are - ( in sequence of perceived performance and security )
Residential housing. Without question, the best overall investment for the majority of us has been the own home. Residential housing has kept to my knowledge almost everywhere pace with inflation. In addition, it has appreciated on the average approximately 4 percent annually. A simple investment plan to follow, is to make the ownership of our home first investment priority. Even here in Indonesia this applies to us expatriates, provided we follow the rules for buying, or engage in long-term lease of our home; this often with a lesser degree of profitability, but still positive financial outcome.
Rental properties. It is often said that the thing you know best you do best. The majority of us know how to evaluate rental properties, particularly residential housing or holiday accommodation. Therefore, they are a logical investment. If you are not sure how to calculate, come and see us. Free advice given and a cup of coffee comes with it.
However, rental properties are not for everybody. Unless you have a strong personality and are willing to evict some nonpaying tenants from time to time, you need to avoid becoming a landlord.
Hire a villa management service instead. UbudProperty is charging a modest monthly fee and is for this even marketing for rental clients and placing them in your house.
One of the attractive aspects of rental property is that the initial investment is not excessively large in many areas outside Ubud or the coastal tourist spots. In addition, once the property is rented the tenants pay off the holding expenses for you and you can even arrange for your own ’free’ holiday there.
Mutual funds. The whole concept of mutual funds is designed to attract the average investor. The pooling of a large number of small investors’ monies to buy a broad diversity of stocks and other securities is a simple way of spreading the risks. Mutual funds are good investments because (1) most allow small incremental investments, (2) they provide professional investment management, and (3) they allow great flexibility through the shifting of funds between a variety of investment assets.
Insurance products. With the dual benefit of insurance coverage plus higher yields, insurance products such as annuities and whole-life insurance have become viable products for long-term investors. Start when you are young.
Government backed securities. Government backed investments are considered to offer absolute security. Although they may not be the best performers, they are without a doubt the most secure.
… then there are the worst investments :
Commodities speculation. Commodities trading is the buying and selling of materials for future delivery. Unless you have the absolute conviction that everything you own belongs to God and can go to bed at night with the understanding that everything you have worked for most of your life can be lost while you sleep and the thought of that possibility is irrelevant to you, -don’t trade commodities.
Partnerships. The most common financial partnerships are limited partnerships, meaning that the contractual arrangement specifies a general partner and one or more limited partners. The intent is to limit the liability of the limited partners to their financial investments only. Seldom do investors recoup their initial investments in the length of time originally proposed, if ever.
Tax shelters. Tax shelters are used primarily to defer income taxes, rather than for any economic value they might have. Generally, the only people who can be profitable in tax shelter investments are those who have a large amount of passive income, rather than earned income. So, unless you seek a tax shelter in the Country where you are taxable, this is not an option anyway for most of us expats living permanently in Bali, -unless you are deemed taxable under Indonesian law and can offset your passive income, e.g. from renting, against your recognized taxable deductions.
Gemstones. The diamond on your darling’s finger is not an investment; it’s a keepsake. Most novice gem speculators usually buy high and sell low. Gem investing is for those who have nerves of steel, the strong at heart, and the rich. Seldom do investors make any money in gems, unless they are one of a small group of international gem professionals. Same applies to gold. For years already the value increase is below the inflation rates.
Collectibles. Coins, stamps, books, porcelain, works of art, and other unique items can be good investments for knowledgeable buyers who take the time and effort to become proficient at their trade or for those who collect such items as a hobby or for leisure. However, for the average non-professional collectibles investor, the market is extremely limited and slow moving—neither worth the time nor the effort when compared to the limited financial rewards.
Stocks. Although the knowledgeable, professional investors can and do make money regularly on common stock, average investors are not equipped to accurately speculate on which stock will do well and which will not. If the average investor would invest in a common stock, leave it for 10 years, and not touch it, it probably would keep up with inflation and perhaps even gain 3 or 4 percent. But seldom do average investors do that. They generally try to move their investments from stock to stock in order to reap the maximum benefits. Since they are not professionals and their knowledge is limited, most end up making little and, in many cases, losing part or all of their initial investment.
Conclusion
As property agents we are not qualified to give professional investment advice. Here we just present information that suggests what have been the best and worst investment options, based on past performance, as seen by a wide range of specializing insiders. We only propose that you consider these findings (along with prayer and seeking counsel from a trusted investment professional) before you make your investment decisions.
-Only exception: Property investing, which can be foolproof, especially when seeking free advice from a reputable local specialist. (I will not here mention UbudProperty again :o )
So, the thing which sticks out like the proverbial sore thumb is the value of owning property, -both for financial gain and your very personal enjoyment of life.
Information for this newsletter was taken from Larry Burkett’s Investing for the Future, Chapters 5 and 6,
ChariotVictor, 1999.