Forex Trading, Forex Exchange, Foreign Exchagne, Dollar Rates
Posts tagged assets
STOCKS, BUSINESS OR PROPERTY – WHICH ASSETS SHOULD YOU CHOOSE?
Jun 12th
If you want to create financial independence and one day lead the lifestyle you’ve always dreamed of then building your own assets is the only way to do this.
People mistakenly believe that their belongings are assets. But these are in fact liabilities because they cost you money. Your car, your computer, even your home is a liability because it costs you money to live in it because of all the bills you have to pay to occupy it. Assets are something that actually put money into your pocket and help you to create wealth.
Anyone, even those with no experience of investing, can learn how to create enough assets to achieve financial independence. When you’ve reached this point you’ll have built up enough assets to be able to receive a passive income that comes to you every month, year after year, without you ever needing to work again.
So what types of assets are there and which should you invest in?
1. Shares: whilst there is money to be made in shares, if you don’t know what you’re doing with the stock market you can lose a lot of money very quickly. Whilst many people have made their fortune on the stock exchange, many more have lost it all. Whilst it’s not recommended you use shares to create the income you need for retirement due to the volatile nature of the stock exchange, shares can be a good asset to start accumulating the funds required to invest in other assets, especially if you haven’t got a great deal of starting capital. However, do not jump in too soon to investing in this asset class, as you may get burned very quickly by investing without sufficient knowledge and education.
2. Business: highly successful businesses can build huge fortunes. Look at Microsoft and Google. They started from ideas and then small enterprises that became global billion dollar empires. Aside from the financial gain, it can also be an extremely rewarding experience on a personal level to create your own business where you’re working for yourself. However transforming a great idea into a profitable business can be more work than you ever imagined. If you’re successful you’ll be rewarded in far greater amounts than you could ever expect to receive from working in a job. If you’re unsuccessful, you’ll unfortunately join the 80% of businesses that fail.
3. Property: I strongly advocate that property is the best asset class of all for the majority of people who want to build real long term wealth and financial security. This is because it offers great capital growth potential long term, provides the potential for a rising passive income from rental each year and gives you the potential to leverage the asset by using the equity in one property to fund the purchase of more property.
Best Wishes
Clayton J.Moore
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Author, Financial Coach and Entrepreneur Clayton Moore has written ‘Your Money Puzzle’ and publishes the ‘Think Tomorrow Today’ weekly ezine to help people gain control over their future financial security. If you’re ready to jump-start your finances, make more money, and have more fun in your creating the life you desire, get your FREE tips now at http://www.claytonjmoore.com. Also visit my daily blog at [http://www.claytonjmoore.com/blog] for some great content.
Author: Clayton J Moore
Article Source: EzineArticles.com
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INTERNATIONAL FINANCIAL ASSETS AND THE EXCHANGE RATE
May 1st
Foreign currency is bought and sold to buy or sell foreign assets. U.S. companies and individuals buy foreign assets for much the same reasons as they hold domestic assets – they are balancing expected returns and anticipated risks. For example, some U.S. pension funds include foreign stocks and bonds in their portfolio of assets. U.S. multinational companies purchase factories and office buildings overseas. Pension fund managers and multinational corporate treasurers may think that the returns to foreign assets are higher than the return to U.S. assets, or they may think that the overall risk of their portfolio of assets is reduced by diversifying and including foreign assets. Similarly, foreigners purchase U.S. assets, such as U.S. government securities, real estate in New York or Los Angeles, or factories in Ohio.
All of these transactions involve foreign exchange. For example, a Japanese insurance company may decide to purchase an office building in Los Angeles. It deposits funds in yen into an account in a Japanese bank and the bank then arranges to exchange the amount in yen and transfer it into a deposit in a dollar account in a U.S. bank. These funds in dollars are then used to purchase the building. Because international investors require foreign exchange, international buyers and sellers of assets participate in foreign-exchange markets along with importers and exporters of goods and services.
Individuals and institutions that manage portfolios of assets look for the best combination of risk and return they can find. If the best opportunities are from buying financial assets in another country, then this is what they will do. Similarly, companies with profits to reinvest will weigh the returns from building a new factory at home against the returns from buying out a foreign company or expanding one they already own.
When people or companies hold foreign assets, there is an extra source of possible gain or loss, over and above the rate of interest or rate of profit earned by the asset itself. The extra risk comes from fluctuations in the exchange rate of the currencies involved. Gains or losses in the value of a foreign asset can be reversed or increased by changes in currency values, even when there is no change in the economic performance of the asset.
Consider specifically the return to holding a foreign financial asset, such as a government or commercial bond. The return on the bond will depend on the interest earned and on the future value of the bond when converted back to domestic currency. Since the rate of conversion that will apply to the future payments of interest and principal is the future exchange rate, the decision to purchase a foreign asset is affected by both the interest rate earned on the asset and expectations about the future value of the exchange rate.
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Nick Larson
Author: Nick Larson
Article Source: EzineArticles.com
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