Archive for Investing

Securities Demystified

When learning about investing, people hear a lot of terms. It is easy to get confused. When discussing securities, you’re basically just talking about things you already know but haven’t realized it. Equities fall into two basic categories and combine to make a third category. The following is a brief overview of these categories and if you’re interested in actually investing, you should talk to someone with tax trader status. It’s important you get advice before putting any money into any form of investment.

Equity Securities

Equity securities refer mostly to stocks: publicly traded shares of ownership of a company, partnership, or trust. The investor makes money from selling the shares at a higher price, also known as capital gains, or by receiving a dividend from the entity issuing the shares. Dividends are a portion of the entity’s profits spread out amongst the shareholders.

In short, equity means profit, so buying equity security means you have a way to make a profit from the investment. Be aware of any profit made from investing in equity securities, because they can be subject to taxation, even dividends. This is called a capital gains tax, and it can be anywhere from 0%, 15% or even 20% depending on income and filing status. Make sure you get help when preparing your income tax return in order to avoid having a high tax bill because you made a mistake somewhere.

Debt Securities

Debt securities mainly refer to bonds. This doesn’t mean you go into debt investing in these, not unless the entity issuing the bond goes out of business. No, it refers to the fact the entity issuing the bond goes into debt issuing the bond. They are using the bonds as a way to raise money, and when the bond comes due, they owe you the money you loaned them plus interest. Bonds are safer than stocks, but only if the entity remains solvent over the life of the bond.

Hybrid Securities

Hybrid securities are a combination of both stocks and bonds. An example of a hybrid equity security is an equity warrant. These allow shareholders to buy shares at a special price during a specific time such as a limited time sale on shares.

An example of a hybrid debt security is a convertible bond. These are bonds that can be turned into shares in the issuing entity. Entities will issue convertible bonds when their money is tight but their stock is on the rise. The bonds are converted into common stock shares in the hopes the price of the stocks they are converted into will be higher than the market price of the stocks thus encouraging the holder to sell. This then greatly reduces the entity’s debt.

Five Ways to Invest for Retirement is a great article to read about the basics of investing if you want to do further research on the topic of investing in general. The author, and the site, both have a lot of useful information about investing, and not just in securities.

To learn more about securities and the market they are traded in, explains more about the SEC, the Securities and Exchange Commission.

The information above is just a trio of the types of securities you can invest in. There are more, far more, but these are the best ones for the beginner. They will help you get a toe wet in the ocean of investing and get some experience to keep you from drowning. Securities trading and investing isn’t something to be scared of. They are just another vehicle to make money for retirement, or anything else you need money for and have time to save.

This article is only intended to inform, not to advise. Investing is not a sure-fire way to make money, and everyone has their own reason for wanting to invest. Knowing how much you have and how much risk you want to take, along with having more than a passing idea of what investing entails, will go a long way in helping you make wise decisions about what to do with your money.

Investing in Times of Volatility: A Look at P2P Lending

stock market

2020 has brought on its fair share of volatility, as was evident with the coronavirus stock market crash in March, where the S&P 500 index fell by more than 30% after reaching record highs just the month before. This is a harsh reminder of just how volatile the stocks and shares market can be at times.

If you?re looking to diversify your portfolio with alternative investments that are less prone to volatility, P2P lending could be a viable alternative to add to your list of choices.

stock market

How Does P2P Lending Work?

Peer to Peer platforms offer quick, personal and accessible loans to individuals and business owners through an online platform. Additionally, P2P investors in the UK can make tax-free returns* on their investment as a result of the government?s IF-ISA arrangement.

This arrangement allows investors to invest up to ?20,000 within a tax year, without having to pay capital gains tax on returns accumulated during the course of this period.

A Viable Alternative in Volatile Times

Peer to Peer lending is a viable investment alternative in volatile times.  Look at how it performs relative to market volatility, as well as considering its direct involvement with the property market.

Providers continue to mitigate investor risk by maintaining high levels of due diligence on new loan approvals*. They also provide additional support for borrowers who may be struggling to meet payment deadlines.

P2P Investments and Volatility

P2P investments are less prone to volatility as a result of borrowers needing to service their loans regularly*. While the coronavirus pandemic may mean that payments are delayed, this won?t necessarily have a bearing on the investors? payout at the end of the day*. The same can?t be said for all types of investments.

Investments Secured by Property

P2P lending allows for investment into loans that are secured by property. If the borrower defaults, it will only take a few months for the P2P platform to sell the property in order to recover costs*.

Finding a provider that holds first legal charges (meaning they are first in line to take control of the property in case of a default) is a great way to get additional peace of mind**.

property market

Increased Support for the Property Market

It?s also useful to note that support for the general property market has remained steady, even amidst the pandemic.

The FCA has announced a three-month payment holiday for homeowners and landlords. The Bank of England has also cut its interest rates for mortgages to a historic low of 0.1%pa, providing additional short-term relief.

Stringent Credit Committees

P2P lending platforms have stringent credit committees to vet each loan before it is approved.  Platforms are covering all bases before approving new business loans to ensure that they are viable. This is another means of increasing investor confidence.

Additional Support for Borrowers

Peer to Peer platforms tend to offer a more personalised service than banks, working with borrowers to help them find suitable solutions in unpredictable times.

Additional support is typically available through the Collections team of any provider – they can help find an appropriate solution in case a borrower is struggling to meet payment deadlines***.


Getting Curious About Other Investment Types

In times of uncertainty, and especially with the increased volatility of the stocks and shares market during the coronavirus pandemic, investors have a responsibility to get more curious about finding alternative options to continue growing and diversifying their portfolios.

As the key factors in this article suggest, P2P lending is one of the prospects worth keeping in mind during your decision making process.

*Capital is at risk.  HMRC Rules Apply. 

**Securing investments against UK property does not guarantee that your investments will be repaid and returns may be delayed.

***Failure to meet the repayment criteria of a loan could result in the security being repossessed

How to Start Investing in Real Estate

real estate

Do you wish to invest in real estate but lack the knowledge needed to begin the process? Billionaire Andrew Carnegie is famously quoted as saying that 90 percent of millionaires got their fortunes from investing in real estate. It?s no secret that investing in real estate is a viable way to generate wealth. If you are interested in profiting from real estate investing, the following tips will help you get started.

real estate

Research Your Local Market

The main objective is to locate properties that are priced below the value of the market and are in need of repairs. In the real estate industry, they refer to these properties as ?handyman specials.?

Determine Funding Options

If you are looking to invest, you are unable to get approved for a conventional loan. If you are not going to purchase the property with your own cash, you will have to find what is referred to as a ?hard money lender.? Hard money lenders typically charge higher interest rates and have shorter pay-back terms. Use a mortgage estimator to figure out what your potential monthly payments will be.

In regards to the down payment, ten percent is usually the lowest down payment that you will pay as an investor. There are times when you will find a seller that will allow you to purchase a property with no money down.

Enter Into a Purchase Agreement

Once you figure out your funding solution, you are ready to enter into a purchase agreement for the subject property. Once you and the seller agree upon terms and a sales price, you can execute the sales contract with your signatures. The next phase in the process is the appraisal and title search.

Appraisal and Title Work

The appraisal determines if the property is indeed worth the price it is being sold for?or the after-repair value (ARV). An appraiser is paid to visit the property and conduct a thorough evaluation. The appraisal report is based primarily on the condition of the property, and the comparison of similar properties recently sold in the area.?

A title search is performed by a real estate attorney or a title company (depending on the state). The title search assures that the property is free of encumbrances and solely owned by the seller.


Once the property is appraised and the title work is completed, the attorney or title company will schedule the closing. At the closing, you will sign the closing documentation and receive the keys to your new home. After taking possession of the property, dedicate your nights and weekends to rehabbing the home.


Now that you have a more profound understanding of the real estate investment process, you can proceed with confidence. You now possess the information needed to begin your life as a real estate investor. Once you successfully complete your first deal, you can repeat the process. By multiplying your efforts, you will be able to quickly begin generating wealth as a real estate investor.

Five Tips for Financing Investment Property

real estate

In today?s financial climate, many investors are exploring the real estate market and considering it a welcome addition to their portfolios. Investment properties can provide a steady, reliable source of income as well as lucrative returns. Most people, however, don?t have enough cash on hand to purchase these rental properties outright. In this article, we will explore five tips to keep in mind when financing your investment properties.

real estate
  • Plan on Making a Significant Down Payment ? Mortgage insurance does not cover investment or rental properties, so you will usually need to put down at least 20 percent if you plan on getting traditional financing from a lender. If you are apt to consider an even heftier down payment, it could help you qualify for the best interest rates.??
  • Look for Creative Options ? You?ve found the perfect investment property, but perhaps traditional financing options may not yet be available to you in your current situation. If this is the case, there are creative options out there you can use to finance your investment property (or to get the funds you need for your down payment). Credit cards, home equity lines of credit, and even life insurance policies can all help you get the cash you need to appear more attractive to lenders.????
  • Consider Owner Financing ? Since stellar credit scores are not as easy to come by as they used to be, and lending terms are increasingly strict, owner financing is becoming an acceptable alternative to traditional funding for investment properties. In this type of financing, the seller accepts your down payment; then, they extend credit to you for the rest of the purchase price. If you decide to explore this route, make sure to have a good game plan in place before approaching the seller ? they need to be sold on accepting both owner financing and you.?
  • Check Your Credit Score and Put Some Extra Money Away ? Having a good credit score is helpful in all types of financing situations, and investment properties are no exception. Therefore, you will want to check your credit score before trying to secure the financing of an investment property. If your credit score is under 740, you will be required to pay additional fees (or points) to get the interest rate you want.?

Additionally, make sure you have some extra money put aside in the bank. When making a loan decision, lenders will look to see if you have at least six months of reserves to pay not only for investment properties but for your personal expenses as well. Showing that you have a good debt-to-income ratio helps ensure to the lender that you will be okay should you encounter any rental vacancies. Hiring a rental property management company can help you fill these vacancies should they occur.? ? ? ? ? ? ?

  • Try Different Banks ? If you have extenuating circumstances, or if you have a small down payment for your rental property, try going to a local bank instead of a large financial institution. Typically, these smaller ?neighborhood? banks have more flexibility, understand the surrounding area well, and they also are more prone to invest locally.

Now, first things first, it?s time to find that perfect investment property. Get started today and use these tips to help guide you through the process. 

How to Make Money by Investing in Ranch Land


When most people think of investing in real estate, they think of multi-family homes or commercial properties. But there is another property class which you might want to consider adding to your property portfolio ? ranch land.

Just as the name implies, ranch lands are wide open vistas used by grazing animals such as cows. These days investors are not only buying up these properties for ranching, but they are also converting properties into mixed-use developments, some of which are ultra-luxurious.


But as a budding investor, you need to crawl before you and walk and this article will give you some of the insights, you?ll need to know about how to make money in ranch land ? or any other undeveloped property for that matter.

Why Should You Invest in Ranch Land?

For starters, they are not making any more. But unlike other limited resources ranch lands on a per-acre price are often less expensive than other parcels on offer. This is because ranch lands are often in remote locations, but this shouldn?t dissuade you.

In fact, investors can either choose to keep their investment properties as working ranches, bring on others to develop a resort, or just bank the land until another developer makes you an offer you can refuse.

Beyond this, the land is a hard asset which you can use with banks as collateral when needed.? Note, this is not meant to advocate taking on bank debt but having available assets which you can pledge for a loan are useful when you are trying to ensure your financial independence.

Yet another reason to invest in ranch land is that is often less expensive and thus you can acquire more property for less. From there you could even subdivide the property to make back some of the money you invested in the land ? thus ensuring your return.

This approach can be very profitable as it means that you are acquiring the land for a discount, but you also don?t need to worry about the cost of capital improvements and ongoing maintenance.? If this interests you, then you might want to check out Land Broker MLS, which has a database of undeveloped land and ranch land available throughout the country.

Just keep in mind that no investment is without risk and if you do decide to acquire a property, then you will want to make sure you have a plan for it and have conducted your due diligence.

Common Investment Strategies

As outlined, investment in ranch land can be profitable but did you know that there are several strategies buyers use to make money. These include a buy and hold strategy, leasing the property back to a farmer or a rancher (known as a leaseback), and even donating the property as a nature reserve.

The latter is not only good for the environment as it allows the land to return to its natural state, but it can also be used to offset a tax liability from another investment. Just make sure that the structure used to hand over the land aligns with recently updated tax rules as this will make sure that you can maximize your deduction.

No matter your investment strategy, you will want to keep in mind that bank loans for vacant land often has different criteria compared to purchasing a home. As such, many buyers opt for what is known as seller financing. This is when the seller will offer the financing to acquire the property ? though keep in mind that the interest rate might be slightly higher than standard bank rates.

However, the advantage of this approach is that it allows for the transaction to be completed to quicker than waiting for a bank to approve a loan application. Just keep in mind that a default will mean the seller will not only retake possession of the property, but you will not be eligible for any payments made to that point. The exception being when a sale of the land for more than the amount owed might net you a small profit.

What Else to Think About?

Investing in ranch land or other vacant lands might not be for everyone and before acquiring these types of properties you should know why this investment works for you. In some cases, you might just want to bank the land, while in other cases you might have a plan to develop the property in the future.

Either way, you will want to make sure you have a plan for your investment, or you?ll end up with a property and no idea how to make money from it. Remember, investing is about managing risk to maximize your returns and if you want to make money from any investment, then you should make sure you have done your homework first.