Junk Silver Coins A Good Investment

When you’re thinking of building a perfect and profitable business then junk silver coins should be your number one choice. For beginners, the 2008 economic crisis had helped made the reputation of silver more reputable. Today we’re awaiting an elevation in people who are thinking on going to buy junk silver coins; thus being a seller in a buyer’s market can be a really good place for numerous investor.

In any manner, prior to joining the craze, remember that you are acquainted with all the pros and cons of this type of business.

1. Becoming a coin dealer tenders you a way to reap earnings on each investment needed each time you buy junk silver coins. The truth is, coin dealership is believed to be one of the most rewarding ways of doing business that is associated to silvers. You can try becoming a coin dealer, and I’m sure you’ll be blown away that after 1-2 hours, you were able to sell and buy junk silver coins. This kind of business doesn’t need too much of work because you can immediately generate an earnings from it.

2. The silver market similar to the stock market is also very volatile. Making a transaction all relies on the value of silver which differs from day to day. That is the reason why it is really crucial that you are persistently on the look out and concise before the price of silver declines your intended price. Especially for junk silver coins where the spot price is the only one that directs the buying and selling price for junk silver coins. Keep in mind to be on guard always that way when the price of silver escalates, you can invest on it rapidly.

3. Even if there are no vital differences basing at all kinds of junk silver coins, there are still some distinction that an investor must be wary of. Like for example, Franklin half dollars somewhat a bit more expensive than Kennedy half dollars. You should remember all these things each time you sell and buy junk silver coins so you can generate a lot of money.

A few people might presume that selling and buying silver junk coins is not the best investment, this still remains to be one of the most easy businesses in the market. You can try selling and buying smaller junk silver in smaller denomination if you are planning of investing in smaller portfolios. As your capital increases from the ensuing profits, you can invest it back into the business, enabling you later on to purchase bigger silver bags that can help you make increased profits per transaction. This means that you take control of all your investments which means you are also in control of all you assets and use them once the situation becomes in favor for you.

Wise investors give thought intensely on their investments like selling and buying junk silver coins. In spite of the financial problems, the price of silver still surged up to 150%. This investment venture is though of as a very nice investment since you, as an investor, have many choices to choose from each time you cash out. The next time you consider of investing your money, remember to think of this investment option of selling and buying junk silver coins since who knows this can assist you to earn many profits.

Types of Investment Trusts – Splits

The previous part of this article summarised what actually constitutes an investment trust, including how they are run, and provided an introduction into one particular type of investment trust, the REIT. In this second part, Split Capital Investment Trusts are introduced with a quick summary of how they may be used by investors.

Split Capital Investment Trusts

Also known as Splits, this variation of an investment trust strays from the more simple template in that it can offer a number of different share types within the one trust, each with a certain profile of risk vs potential yield.

Splits tend to be run across a fixed term and therefore have a stated closing date, known as a wind-up date. At this date the assets accumulated through the fund are distributed to the investors in a predefined order depending on what class of share they have purchased, with the low risk shares paying out first, but with limited gains, and the high risk shares paying out last, but with the highest potential gains if the fund were to perform well enough.

The share classes that pay out first usually have protection on the original capital investment which is then countered by the fact that they dont receive any income and during the life of the fund and the fact that the final redemption prices is predefined (so that the potential yield, if the fund were to grow sufficiently, has a ceiling). The series of share classes to pay out next will have diminishing protection on the original capital investment, but greater shares of the income payments and of the remaining asset growth if the investments were to perform very well. Therefore, with the last share class to pay out there is a high risk that there will be very low returns after the higher priority shares have been paid if the investment trust performs below expectations, but there is no limit on the potential gains if it does indeed perform well.

This choice allows investors with differing aims to invest into the trust in accordance with their own investment strategy. For example, pension fund managers running annuity funds may find that they can take up shares with higher risk (little capital protection as they will be redeemed after the lower risk share classes) but that have the potential to pay out more income if the underlying investments perform well. Contrastingly, private small scale investors who are after long term investment returns may be better suited to zero dividend preference shares (the first to pay out) which have the security of a fixed return/capital protection but miss out on the income payments along the way.

Even within these investment trust groups there will be a significant variety in the risk and potential reward profiles from one trust to the next depending on the stated strategy of the fund manager and the company sectors (geographical, industrial etc) in which they specialise. There should therefore be investment companies offering the right shares to meet any investors needs. If the price is right of course!

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How stealing Yale’s Investment Strategy Can Make You Rich

When I spoke with Jack Meyer, the former head of Harvard University’s endowment, at the offices of Goldman Sachs on Fleet Street in London back in 2009, he was thoroughly chastened by the recent 25%+ drop in the value of Harvard’s endowment. A month or two later, Stanford University’s President John Hennessy, reflecting his Silicon Valley roots, was more optimistic about Stanford’s similar collapse, telling me: “Look, Nick, it’s not the end of the world. It just puts us back to where we were in 2006.” Hennessy’s optimism notwithstanding, the crash of 2008 turned much of the global financial world on its head. This included much-vaunted “Yale model” that had made Harvard and Stanford tens of billions of extra dollars over the past two decades.

Despite the challenges of the market meltdown of 2008, the “Yale model” remains one of the most powerful investment strategies around. And thanks to exchange-traded funds (ETFs), today you can duplicate this investment strategy in your own personal investment portfolio. It is also an investment approach I have implemented with impressive success through the “Ivy Plus” Investment Program for my clients at my investment firm Global Guru Capital.

For a period of more than 20 years, the investment strategies of top university endowments seemed blessed by fairy dust. The top three U.S. university endowments — Harvard, Yale and Stanford — consistently had returned more than 15% per year over the last decade. And even after the onset of the credit crunch in the summer of 2007, the Harvard endowment gained 8.6%, Stanford rose 6.2% and Yale climbed 4.5% through June 30, 2008. That compared with a drop of 15% in the S&P 500 over the same time period.

That all changed once the financial crisis hit in full force in 2008, and the top university endowments plummeted by 25%-30%. The joint losses for Harvard, Yale, Stanford and Princeton hit $23 billion in the 12 months ending June 30, 2009.

Maybe those Ivy League types weren’t so smart after all…

Since the dark days of 2008, top university endowments have staged a comeback. Primed by savvy investments in technology, Stanford’s endowment rose 14.4% in the year ended June 30, 2010, outshining returns at Harvard and Yale, which gained 11% and 8.9%, respectively.

Yale’s David Swensen: The “Babe Ruth of Investing”

You can trace the long-term investment success of top university endowments directly back to the efforts of a single man, Yale’s David Swensen.

As the Yale endowment’s chief investment officer for two decades, David Swensen has earned a reputation as the “Babe Ruth” of the endowment investment world

After taking over the Yale endowment in the mid 1980s, Swensen boasted 15.6% average annual returns through 2007 and no down years going back to 1987.

So, how did Swensen’s success single-handedly change the rules of institutional investing?

In 1985, around the time Swensen took over, Yale had more than 80% of its endowment invested in domestic stocks and bonds. But Swensen, an economics PhD, observed that no asset allocation model ever actually recommended that way. As long as their correlation with U.S. stocks and bonds was low, adding unconventional assets to your portfolio would both reduce your risk and increase your return. This led Yale to emphasize private equity and venture capital, real estate, hedge funds that offer long/short or absolute return strategies, raw materials, and even more esoteric investments like storage tanks, timber forests and farmland.

Until the fall of 2008, this approach worked almost like magic…

The “Yale Model”: Still the Best over the Long Run

But the relatively poor performance of the Yale endowment during the crash of 2008 put Swensen on the defensive. Critics pointed out that during the meltdown, a traditional portfolio of 60% stocks and 40% bonds would have lost only 13% of its value, rather than the 25% or more lost by the diversified portfolios of Harvard, Yale and Stanford.

But as Yale’s President Richard Levin pointed out in Newsweek magazine, that argument is astonishingly shortsighted. Over the past 10 years, including the crash, Yale’s endowment managed average annual returns of 11.7% to reach its current value of $16 billion. A 60/40 portfolio over the same period would have earned 2.1%, producing an endowment of only $4.4 billion. Put another way, Swensen’s strategy had earned Yale an extra $11.6 billion over 10 years. That indirectly made Swensen one of the world’s largest philanthropists, on par with Warren Buffett and Bill Gates.

Throughout the crisis, Swensen remained adamant that the model was viable over the long run. He pointed out that the single worst thing that you can do is to avoid risky assets after a market crash. He knew that Yale had suffered from poor decisions on asset allocations in its past — one that had put Harvard-level wealth out of its reach forever.

You see, at the time of the market crash in 1929, the endowments of Harvard and Yale were roughly the same size. But Yale’s trustees got spooked and invested heavily into “safe” bonds for the next five decades, while Harvard tilted more toward stocks. The result? Over the next 50 years, in relative terms, Yale’s endowment shrunk to half the size of Harvard’s.

Since the crash of 2008, Harvard has implemented the lessons of 1929 well. Leaving its critics aghast, Harvard actually has increased its allocation to high-risk positions in alternatives, at the expense of its “safe,” fixed-income allocation.

Yes, You Can Replicate Harvard’s Success…

In 2005, Swensen published a book, “Unconventional Success: A Fundamental Approach to Personal Investment,” which explains how you can apply Yale’s investment approach to your own portfolio. Swensen argues that Yale’s investment strategy is tough for you to duplicate. After all, Yale has 20 to 25 investment professionals (Harvard at one time had as many as 200) who devote their careers to looking for investment opportunities. Yale also has the deck stacked in its favor. Its sterling reputation allows it to invest in the very best private equity and hedge funds — asset classes that are not readily available to retail investors. As Mohamed El-Arien, a former head of the Harvard endowment put it, attempting to duplicate Harvard’s results “would be like telling my son to drop out of school and play basketball with the goal of becoming the next Michael Jordan.”

Of course, highly paid investment managers like El-Arien have every reason in the world to overstate the impact of their “skill.” But this does not dilute Swensen’s basic message: to focus on the “big-picture” asset allocation decisions and move your money out of U.S. stocks and bonds into global and other asset classes. Swensen himself recommends that you model Yale’s asset allocation through a portfolio consisting exclusively of index funds with low fees.

At my firm, Global Guru Capital, I have run an “Ivy Plus” Investment Program that replicates the investment strategy of the top university endowments using Exchange Traded Funds (ETFs) for the past two years. So far, it has behaved exactly as advertised. In the 12 months between June 30, 2009 and June 30, 2010- dates for which Havard has released performance data – the performence of the fully invested “Ivy Plus” investment program has matched the Harvard endowment almost exactly.

Of course, two years isn’t a long time. But the “Ivy Plus” strategy has outperformed some of the top hedge funds in the world during some of the toughest times ever in financial markets, by sticking to a disciplined, highly diversified asset allocation strategy.

My biggest challenge? The “Ivy Plus” investment program is a hard strategy to “sell” to my potential clients. It just seems too unexciting and straightforward to believe…

The bottom line? You may not have access to the Michael Jordans of the investment world. But diversifying out of a standard U.S. stock and bond portfolio into asset classes like commodities, real estate, and global stocks and bonds can go a long way toward generating Harvard-style returns.

Maybe those guys and gals at Harvard, Yale and Stanford aren’t so dumb, after all…

Property Investment Vs Property Speculation

Most people get Real Estate wrong for two simple reasons.:

1. They don’t understand the difference between an asset and a liability
2. They don’t understand the difference between investing and speculating

The broke majority live under the misguided belief that their family home is an asset. An asset by definition is Something valuable that an entity owns, benefits from or has use of, in generating income. The key is the words generating income. By that definition your home is not an asset, it is a liability. It does not generate income, it costs you money.

The broke majority will borrow as much as they possibly can, to buy the most expensive home they can afford, in the mistaken belief that this is a good investment. In fact they are are burdening themselves with the worst kind of debt. Long term, expensive, non-deductible debt that produces no income in return. The same kind of debt that lead to the housing collapse in the USA.

Successful investors understand this crucial point. Your home is not an investment.

The Business Dictionary defines an investment as Money committed or property acquired for future income. Now some will argue that an investment doesn’t have to produce an income and cite as an example gold bullion, collectibles or share futures contracts. By definition, none of these are investments, they are items of speculation. They can go up in value or, just as easily, go down. You are speculating on the future trade-able value, not investing in the inherent value of the income an asset represents. Tens of thousands of homeowners around the world discovered in 2009 that home values can fall and can fall dramatically and disastrously.

If you buy a house to live in with no income return expected from it, but in the hope it will increase in value, you are speculating not Investing.

If you buy a house to rent out, you are investing. The Australian government has long recognised the difference and that is why they allow you to claim the expenses relating to a rental property, including interest payments, as a tax deduction but do not allow any deductions for expenses incurred in buying a house to live in. In other words, the government is willing to share the risk of investing in income generating real estate because the risks are lower than tying up your money in your home.

Smart investors have a small or no mortgage on their own home and the majority of their borrowings are for rental property because that is the lowest risk strategy. They also get the best advice they can on quickly reducing the mortgage on their home.