Bet Against Commercial Lending
Many investing experts are saying the U.S. commercial real estate market is going to implode, much like the housing market did in 2008
In an effort to contain the spread of the Coronavirus Pandemic, many conferences and events have been cancelled or postponed indefinitely, affecting the U.S. lodging, travel and tourism sectors. Additionally, closures of retail centers, restaurants, and office buildings has become widespread.
Because of this, commercial real estate may be in big trouble. Billionaire investor Carl Icahn explained that the 2008 housing market bubble is happening all over again because of loans made to shopping malls and other retail centers in 2012.
Many banks sold mortgages on commercial real estate, and when they did those mortgages, sliced and diced them and put them in something called a CMBX, an index. They then sold their clients bonds against these mortgages.
According to Icahn, the reason COVID-19 makes this such a big issue is because commercial real estate will likely default on these loans due to their recent closers.
Consequently, lot of these bonds now are in grave dangerits like selling insurance to someone whos going to go to the electric chair in a couple of months.
Icahn also believes that while the Coronavirus may have catalyzed the markets initial drop, it still has a lot farther to fall.
How To Invest 10000 Wisely
Invest according to your attitude to risk. To work this out you need to consider your capacity for loss and your risk appetite.
- Capacity for loss = how much you can afford to lose
- Risk appetite = how you feel about losing money
You should ask yourself these questions first:
If you answered yes to the above, it sounds like you would be comfortable investing. Find out more in our beginners guide to investing.
What To Do Next
Many of the best places to invest money right now have shifted, just in the last two weeks. Keep in mind that there could be a lot of deals in commercial real estate over the next couple of years if we head into a global recession. Keeping some cash in hand for opportunity is always a good idea. The commercial market, along with stocks, have finally corrected, which like it or not, was much needed. The strongest companies will rise to the top. The question is, which companies? We will keep our eyes on how it unfolds and share it with you.
In 2021, the economy has already changed rapidly and will continue to change as we face the impacts of the COVID-19 pandemic. At RealWealth®, we help investors acquire affordable rental housing that provides positive monthly cash flow. No matter what the economy is like, people still need a place to live.
With that said, I would probably short commercial lending, as it will be headed for difficult times ahead.
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Best Places To Park Your Short Term Money For Decent Returns
You need to park money for the short term for a variety of reasons. You could need the funds in an emergency and it needs to be as liquid as possible. Secondly, you may have a confirmed cash outflow and you cannot miss out on that. Thirdly, you may have just received a lump sum payment and you are looking to park it temporarily before taking a final call. When you park for the short term , you need a mechanism that is safe, liquid and also gives returns above the rate of inflation.
So, what are the best short term investment options with high returns? Are there short term investment plans for 3 months to 1 year? Above all, what are the best short term investment options where you can get the best mix of liquidity, safety and returns. Let us look at 10 such options..
Bank savings accounts
Your savings account or your checking account is a no brainer. It is as liquid as liquid can be and you can access these funds at very short notice. Of course, the rate of interest earned on these funds is just about 4% while a handful of banks give higher rates of interest of up to 5-6%. This is a great investment avenue if liquidity and safety is your primary concern.
Bank Fixed Deposits
Short term Debt Funds
Money Market Funds
Fixed Maturity Plans
Post Office Term Deposits
Secured NCDs and company FDs
How Do You Double Up 10000
The best way to double £10,000 is by investing for the long-term, rather than trying to get rich quickly.
Consider what returns you are looking to make and over what time period but be realistic, youre unlikely to double £10,000 in a few years.
As tempting as it may be when you see some of the promised rates of returns on high-risk products or the rise of bitcoin, these are best avoided. That is, unless you absolutely know the risks and are happy to take them on.
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What Is An Emergency Fund
When it comes to our personal finances, many of us have changed the way we view our money matters. A recent survey done by Scripbox, a digital wealth manager, found that creating an emergency fund has emerged as the top financial goal in the current environment. So what is an emergency fund? It is a contingency fund that not only helps financially during most difficult times but also prevents the derailment of your saving for long term goals.
Municipal Bonds And Corporate Bonds
Municipal bonds are slightly more risky than TIPS and other Treasury investments, yet a majority of municipalities do not default on their bonds.
The more significant risk is interest rate risk. In a low-interest-rate environment, if rates rise in the marketplace, the value of the bond decreases to compensate.
If you could get 4% on a municipal bond today, thats a great return. But if rates go up and your bond loses 6% of its value, youre suddenly on the losing side of the equation. However, the decrease in the value of the bond only impacts you if you sell before maturity.
If you hold the bond to maturity, you will get 100% of your initial investment back plus the interest yielded to you.
Corporate bonds are even riskier than municipals and Treasury bonds because they are not backed by a state, local, or Federal government.
As always, increased risk can mean an increase in your rate of return.
The same interest rate risk issue applies to corporate bonds holding to maturity will eliminate this one piece of risk.
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Which Bank Should I Choose
Get personalized bank recommendations in 3 easy steps.
Whether youve come into an inheritance, earned a bonus at work or made a profit selling your house, having extra money gives you a chance to grow your savings and maybe fulfill a goal, such as saving for a down payment on a new car. But deciding on the best place to stash your cash isnt always easy.
Of course, you want some return on your money, but yield is not the first consideration. You should be looking for a very safe place to put your money, with a high degree of liquidity and minimal investment expense, says Kent Grealish, a fee-only investment planner at Grealish Investment Counseling in San Mateo, California. The return on your investment might be a factor, but its lower on the list in the short term.
The yield isnt really relevant because you get what you get. You dont want to chase yield and give up either safety or liquidity, Grealish says.
With that in mind, here are some options to consider:
Max Out Your Retirement Options
If you ever plan to stop working, then youll need to maximize your retirement savings especially if you have available cash to invest. Luckily, there are numerous options when it comes to retirement savings.
If your employer offers a 401, you should contribute as much as youre allowed. Other common types of employer-sponsored retirement accounts include 403, 457 and government thrift savings plans. Some employers will contribute matched amounts to your retirement account, which youll want to maximize if its available.
If your employer doesnt offer a retirement savings plan or if youve already maxed out your employer-sponsored plan there are other options available. An IRA allows you to deduct the investments you make from your income and let your funds grow tax-free until you withdraw them. A Roth IRA is very similar to a traditional IRA, except you contribute after-tax dollars instead of pre-tax dollars. This might be a good option for those who expect to be a higher tax bracket when they retire than they are now.
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Can I Provide Reinvestment Instructions Before My Investment Matures
Within 7 days of the term deposit maturing you will be able to provide us with reinvestment or redemption instructions, via your online AMM Client Account. You will see a Redeem and Reinvest button within the relevant term deposit summary. Please note than any reinvestment instruction prior to maturity will be classified as âPendingâ until we know what the rates are on the given maturity date.
The Classic Wayearning It Slowly
Investors who have been around for a while will remember the classic Smith Barney commercial from the 1980s in which British actor John Houseman informs viewers in his unmistakable accent that “they make money the old fashioned waythey earn it.“
When it comes to the most traditional way of doubling your money, that commercial is not too far from the truth. The time-tested way to double your money over a reasonable amount of time is to invest in a solid, non-speculative portfolio that’s diversified between blue chip stocks and investment-grade bonds.
It won’t double in a year, but it should, eventually, given the old rule of 72. The rule of 72 is a famous shortcut for calculating how long it will take for an investment to double if its growth compounds. Just divide 72 by your expected annual rate. The result is the number of years it will take to double your money.
Considering that large, blue chip stocks have returned roughly 10% annually over the last 100 years and investment-grade bonds have returned roughly 5.9% between 1928 and 2020, a portfolio divided evenly between the two should return about 8% a year. Dividing 72 by that expected return rate indicates that this portfolio should double every nine years. That’s not too shabby when you consider that it will quadruple after 18 years.
|Rate of Return|
Notice that, although it gives a quick and rough estimate, the rule of 72 gets less precise as rates of return become higher.
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Invest $50k Into A 529 Account
If you have children, investing $50,000 into a 529 account may be a solid plan now if you intend to pay for your childs higher education later on. According to the College Board, the average annual cost of college tuition and fees was between $10,560 and $37,650 for the 2020-21 academic school year.
A 529 plan can help cover your childs education expenses, from private K-12 to graduate school, by allowing you to invest in mutual funds and other investment vehicles through the plan. Even better, 529 funds can grow tax-free, and any withdrawals you take for qualified education expenses are tax-free as well.
Asset And Commodity Investments
Putting in precious metals such as gold, platinum, or silver, or in antiques, art or fine wines is increasingly popular. But theyre high-risk options.
The value of these types of purchases can fluctuate quickly. This means youre at risk of seeing your assets soar and then fall in value in a short time period.
You also dont get a chance of an ongoing income, and some cost money to store, meaning the only way to profit is to find someone willing to pay more than you did.
Online Savings Account Or Money Market Account
Potential interest rate: around 0.5%
NerdWallets current analysis shows annual percentage yields for high-yield online savings accounts and money market accounts paying between 0.4% and 0.6%. This may not sound like much, but its higher than 0.06%, the current national average interest rate on savings accounts, according to the Federal Deposit Insurance Corp. and what youll likely be offered at your hometown branch.
Both savings and money market accounts are FDIC-insured, meaning your money is protected in the event of a bank failure up to $250,000 per institution, per depositor.
The Key Is Diversification
Most of us rang in the new year in a socially distanced way — often, from our couches. We toasted with friends — eggnog glasses virtually touching — via video calls. And we were happy to put 2020 behind us. But when planning where to invest in 2021, it’s important to keep that window to last year open. To be successful now and beyond, we shouldn’t forget all that happened in the difficult year of 2020.
In 2020, investors faced an entirely new and unexpected situation: The coronavirus pandemic. Its effect on the stock market was temporary — the market crashed, then recovered. But its effect on how companies do business and how consumers operate continues. And the crisis itself continues. So, understanding this, let’s talk about the best way to invest $100,000 right now.
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Where To Invest $40000
At last, were ready to actually invest that $40k of yours. There are infinite ways to invest your money alpacas, anyone? Its necessary to warn you that investments are speculative and past results should never be understood as predictors of future performance. That said, here are the smartest destinations for your $40,000.
The Stock Market
Here is a totally uncontroversial opinion. If history is anything to go by, one of the quickest potential ways to have made your $40,000 to grow would have been by opening a trading account and investing in the stock market. But what stocks should you have bought? Chances are youve heard stories about some dude who invested a thousand bucks in Amazon in 1997 who now lives in a castle. What you dont hear about as much, however, are the stories about some other guy who went all in on Snapchat and now lives in his mom’s basement. Stock picking is extraordinarily hard. Famously rich stock picker Warren Buffett has spent the last decades discouraging pretty much everyone not named Warren Buffet from trying to make money picking individual stocks and in fact, has encouraged his heirs to invest the lions share of their inheritance in low-fee, highly diversified stock funds.
What To Consider Before You Invest
Investing your entire life savings is a very risky move. You should always have a safety net in case of emergencies and there are other things to consider too:
- Build a cash buffer of three to six months earnings for emergencies and keep in an easy-access savings account
- Pay off expensive debt like and personal loans
- Set aside some extra cash for things you might need to pay for in the next few years like a deposit on a house
- Contribute to your workplace pension scheme if you have one, particularly if your employer matches your contributions
- Make sure you weigh up your options, such as using some of the £50,000 to pay off your mortgage early or renovate your house to increase its value.
Once you have considered all these options, you can then think about investing.
We outline the steps to help you decide how to invest your £50,000.
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How Big Should The Fund Be
An emergency could be in any form a small one like car breakdown and a big one like job loss, which may continue for several months. In such a situation you will not only have to manage your household expenses but also continue paying your labilities like EMIs and credit card dues. Therefore, one should at least build an emergency corpus which can at take care of 6-9 months of family expenses.
Buy And Sell Investments Yourself
The advantage of investing yourself is that you’re in control of all the decisions. It can also be cheaper than paying someone to invest your money. The risk is that you may overrate your expertise and may not diversify.
If you invest directly, it’s important to plan and put in the time to research your investments. You should also keep track of how they’re performing.
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Rank On Fa 100 List: 90
“A post-pandemic bounce should be seen in the consumer stocks: Airlines, restaurants, hotels and resorts should see strong relative earnings compared to trough earnings caused by Covid,” said Cadinha at Cadinha & Co.
“Government interference such as price controls for pharmaceuticals, which is a goal of the proposed Biden legislation, will lower earning’s growth rates for the effected companies,” he added. “Government interference could also affect companies like Google, Facebook, and Apple.”
He said the firm is currently invested 47% in equities, 8% in short-term Treasurys and the rest in cash.
“The cash in portfolios is largely bond money that we are keeping away from bonds because of our present negative view on bonds,” Cadinha said.