Stock Investing With Minimal Time And Reduced Risk

All financial advice leads you to believe you need to hire an advisor to invest with low risk. I found that the “low risk” part depends on the quality of the advisor. Advisors have their place in annuity investing, insurance products, and even stocks and bonds. But the technology from low cost brokers provides much of the necessary information to buy stocks, bonds, and mutual funds.

Many investors, however, need some other guidance in the beginning to assess and understand “the details” that are buried in an annual report. Newsletters that charge a small yearly fee should suffice. Find a good one and the anxiety level goes way down. I take the monthly recommendations and do my own due diligence. I have lost thousands buying stocks blindly or based on advice from an unproven source, so the following lesson comes from a great deal of experience.

Starting with the Price to Earnings ratio (PE) is the best start for evaluating a newsletter recommendation. A PE of 15, preferably less, is the first check on the value of a stock. But sometimes even this well known factor is misleading. I have had success with stocks sporting a PE of much greater than 15 and was very curious about the reason for a continued rise in the price. The PE to Growth ratio (PEG) is another good indicator. If a stock is growing faster than the PE ratio than the PEG will be less than 1. Look at AAPL, for instance, as an example. The projected growth is much greater than the PE, resulting in a PEG of less than 0.7. The stock continues to rise over the long term.

Less well known stocks can also show all the right characteristics with regard to the above metrics, but can fool the average investor by hiding signs of weakness in the bowels of their annual report. That’s why a recommendation from a trusted site is the best starting point. They can dig out glaring problems like “negative cash flow” or “poor quality earnings” which can mean several different things. I don’t know about you but I find other things to do that are much more enjoyable than reading annual reports. So I don’t mind paying around $100 per year to have someone else do it.

Oh, one more thing. It seems all the above is meaningless in a bear market, or during a 2008 style financial catastrophe. Most all stocks will decline during such a period of fear and anxiety. Having the discipline to sell and wait for a low entry point is easier said than done. If you don’t have this discipline, be prepared to wait as many as two or three years, or longer, just to get back to the break even point. Many older investors can lose sleep over this when they find a need to cash out at the wrong time. So a long investment horizon and a small portfolio of less than 10 quality stocks is recommended so you can sell out quickly.

Buy low, sell high. Good luck!

Pre-Closing Steps to Create a Great Residential Investment

An investor can easily step back after placing a project under contract and feel that until closing that there is little or nothing to do. Unfortunately, this is a critical mistake. Nothing could be further from the truth. Investors have to look beyond the closing activity and focus on their reports, market studies, and other information to develop plans, budgets, capital improvements, schedules, staffing and service additions to boost earnings, reduce costs, and otherwise secure the investment.

Sometimes thousands of dollars per month can be cut with a program of leak repairs.

Developing plans to place units on individual meters can net $30 to $60 per unit in additional profitability.

Examining the current management’s operation and developing techniques to add value that converts to higher rents or higher occupancy can net huge results. In one case I’ve seen effective occupancy was 84%. By changing office hours effective occupancy increased 10% and increased the property value by more than 50% because of the marginal effect on profits.

Creating plans to accelerate changes to the property to reposition or to turn over underpaying residents can create huge increases in revenue, profitability and value. Couple this with a plan to sell the property quickly after taking over and very large gains can be netted to the investors in a very short period of time.

In another instance the property had several undeveloped unoccupied plots. Keeping these off the note actually increases the value of the property because in general value is based upon profitability for the rented units. In turn, the buyer can turn around and potentially sell plots to achieve an immediate gain.

Ideas like these are found by walking through the historical expenses, old utility statements, the appraisal, the engineering report and surveys. Next, you should examine the properties zoning and see what opportunities this may offer.

The thorough buyer will spend days investigating competing properties management and marketing. Often times, there are differences that can be exploited for real gains.

Finally, traffic studies should be reviewed and frontage compared. If a property can be acquired with strong traffic seeking signage permits often can creates significant revenue for investors.

In short, the pre-closing period is an opportunity to examine your asset and with imagination, dedication, study, and intense review profits can be increased, risks can be reduced, plans to make early gains developed and the general asset value heightened to the advantage of you and your investors. Good luck and great investing!

Investing in a Palm Oil Plantation Business

Palm oil is native to West Africa. Nigeria used to be the world’s largest producer of oil palm before the oil boom era, but Malaysia has now taken the leading position. Oil palm plantation and allied industries is now the main stay of the Malaysian economy. The palm tree can be used in various ways: the leaves are used in making brooms and for roofing materials (in the rural areas). The bark of the fond can be peeled and woven into baskets, the main trunk can be split like sawn timbers and used as part of building materials, while palm wine can also be obtained from the palm tree, as well as red palm oil, which is readily obtainable from the fresh fruit bunches.

When the fruit is processed, however, the residue obtained can be used as fuel (for cooking and fertilizer to improve soil nutrient).

Red palm oil is used in cooking, making soap, candle and margarine. Palm kernel oil can be extracted from the nut, while the residue obtainable in the process of palm kernel oil extraction, otherwise called palm kernel cake, is used as livestock feed.

Palm kernel oil is used in vegetable oil and soap making, and the shells are useful as energy source. The uses to which oil palm can be made seem non-exhaustive. This clearly indicates that investment made in the establishment of oil palm plantation is nothing but a wise one.

The market is guaranteed for all the products of oil palm plantation in this era of global food crisis.

Technical Information

To establish palm oil plantation, involves getting a good site where rich, well-drained acidic soils are abundant. The soil should have adequate quantities of potassium, magnesium and nitrogen. Soil tests should therefore be carried out to determine the nutrient status of the land. It is usually better to use the early maturing variety called ‘tenera,’ which bears fruits as from the fourth year.

Other requirements include seedlings procurement, which can be obtained from reputable nurseries. Prospective investors must engage the services of agricultural experts in the course of establishing this project.

Other cultural practices are planting, regular weeding, pruning and fertilizer application.

Financial Aspect

We are recommending 50 hectares for a start. 20 hectares oil palm plantation can conveniently service a palm oil mill that will be established by the owner when the plantation starts to bring fruit. To establish 50 hectares of plantation, the sum of N10, 500,000 will be required and this is broken down as follows:

Pre-investments: N300, 000
Land acquisition: N4, 000,000
Land clearing/preparation: N3, 000,000
Seedlings procurement: 120/ha(2400 @ N500): N1, 200,000
Other cultural practices @N100, 000/ha: N2, 000,000
Total N10, 500,000

Income Analysis

A mature plantation will start to give an investor five tons of red palm oil annually from the fourth year per hectare. 100 metric tons of oil can be obtained annually from 20 hectares of plantation.

A ton of red palm oil is a minimum of N150, 000, while gross revenue of N15 million is obtained from red palm oil.

We can also get three metric tons of palm kernels per hectare, which gives us 60 tons from 20 hectares. This translates to annual income of N4.2 million. Total income realisable is about N19.2 million, while the annual operating expense is put at N5.8 million.

This leaves us with net income of N13.4 million annually for the investor for the rest of his/her life. Serious-minded investors can be assisted in realising this worthwhile investment.