How soon would you want to know if your investment advisor wasn't telling you about the three major investment types? If you've only heard of two - Variable and Fixed, then you may have a problem. Unfortunately, many investment advisors routinely fail to present all three types: Variable, Fixed, and Indexed as valid investment choices to their clients. This is normally because they are unable to offer all three options or they have a personal dislike for one or more of these investment types. So what is the difference in these investment types and what do the terms mean? The simplest answer is that these terms define how interest is earned on your investment. More specifically, it tells you how your money is invested and if your money is protected from market fluctuations. Let's take a look at these various investment options.
Each investor has a certain comfort level across the risk-return spectrum, and he or she does their investing within that band of the spectrum. An investor might be comfortable giving up some of their return if an investment is safer. On the other hand, the same investor might be willing take a little more risk with an investment if it translates into a higher return. In social investing, a third factor is thrown into consideration - social impact. Social impact means that the enterprise supported by the investment yields some benefit to society beyond the income it generates for investors. Conversely, an enterprise can also have some negative impact on society, and a social investor will also take this into consideration when making investments.
Just as traditional investors are willing to make a trade off between risk and return, social investors are willing to make a trade off between risk, return and social impact. If an enterprise is doing something that's improving the environment, for example, a social investor may be willing to give up some financial return or assume greater risk on that investment depending on his or her individual comfort level. In short, social investing can be defined as considering the social impact of an enterprise when making investment decisions. By this standard, a number of investment approaches fall under the umbrella of social investing: mission investing, responsible investing, double-bottom-line investing, triple-bottom-line investing, ethical investing, sustainable investing and green investing.
Within the universe of social investing, there are two broad categories: social screening and impact investing. In the social screening methodology, an investor comes up with a list of social standards that he or she wants his or her investments to meet. The investor eliminates any company that does not meet these standards and then invests in the "socially responsible" companies that do meet the standards in a way that meets the investors risk and return objectives. A number of socially responsible mutual funds have emerged that use such an approach. They adopt a social screening methodology, define a large basket of investments that adhere to those standards and then have their management company invest within that basket to meet the financial objectives of the mutual fund.
Unlike Fixed and Variable investments, Indexed investments are somewhat unique to the insurance and annuity marketplaces. An Indexed investment shares traits of both Fixed and Variable investments, but with one major difference - how interest is earned. With an Indexed investment the underlying funds are not directly invested in the stock market or an Index, nor are they directly invested in a bond, CD, or other fixed investment. They are however, secured by bonds or other conservative investments which provide a minimum guaranteed interest rate similar to a fixed investment. Generally, this minimum or fixed rate is lower than what is available in a purely fixed product. This is because Indexed products offer a higher maximum interest rate over Fixed investment products. The Indexed products determine the maximum interest earned using a formula based on three factors, all part of an option purchased by the insurance or investment company. They are the participation rate, the cap rate, and the reset period.
Remember that real estate investment is dependent on rental and the higher the proposed rental the better your monthly cash flow is. You could also purchase the property at a lower price and this would mean that your monthly cash flow would improve. Note that once your property is partly paid up, you can refinance your loan and extract out some money and purchase a second property and so on. Soon you would have multiple streams of income from the purchase of one real estate investment property. In conclusion, there are many ways to make money from real estate investment and what's missing is massive action on your part. Take massive action and start hunting for your ideal real estate investment property today and start generating substantial real estate investment property profits.
Each investor has a certain comfort level across the risk-return spectrum, and he or she does their investing within that band of the spectrum. An investor might be comfortable giving up some of their return if an investment is safer. On the other hand, the same investor might be willing take a little more risk with an investment if it translates into a higher return. In social investing, a third factor is thrown into consideration - social impact. Social impact means that the enterprise supported by the investment yields some benefit to society beyond the income it generates for investors. Conversely, an enterprise can also have some negative impact on society, and a social investor will also take this into consideration when making investments.
Just as traditional investors are willing to make a trade off between risk and return, social investors are willing to make a trade off between risk, return and social impact. If an enterprise is doing something that's improving the environment, for example, a social investor may be willing to give up some financial return or assume greater risk on that investment depending on his or her individual comfort level. In short, social investing can be defined as considering the social impact of an enterprise when making investment decisions. By this standard, a number of investment approaches fall under the umbrella of social investing: mission investing, responsible investing, double-bottom-line investing, triple-bottom-line investing, ethical investing, sustainable investing and green investing.
Within the universe of social investing, there are two broad categories: social screening and impact investing. In the social screening methodology, an investor comes up with a list of social standards that he or she wants his or her investments to meet. The investor eliminates any company that does not meet these standards and then invests in the "socially responsible" companies that do meet the standards in a way that meets the investors risk and return objectives. A number of socially responsible mutual funds have emerged that use such an approach. They adopt a social screening methodology, define a large basket of investments that adhere to those standards and then have their management company invest within that basket to meet the financial objectives of the mutual fund.
Unlike Fixed and Variable investments, Indexed investments are somewhat unique to the insurance and annuity marketplaces. An Indexed investment shares traits of both Fixed and Variable investments, but with one major difference - how interest is earned. With an Indexed investment the underlying funds are not directly invested in the stock market or an Index, nor are they directly invested in a bond, CD, or other fixed investment. They are however, secured by bonds or other conservative investments which provide a minimum guaranteed interest rate similar to a fixed investment. Generally, this minimum or fixed rate is lower than what is available in a purely fixed product. This is because Indexed products offer a higher maximum interest rate over Fixed investment products. The Indexed products determine the maximum interest earned using a formula based on three factors, all part of an option purchased by the insurance or investment company. They are the participation rate, the cap rate, and the reset period.
Remember that real estate investment is dependent on rental and the higher the proposed rental the better your monthly cash flow is. You could also purchase the property at a lower price and this would mean that your monthly cash flow would improve. Note that once your property is partly paid up, you can refinance your loan and extract out some money and purchase a second property and so on. Soon you would have multiple streams of income from the purchase of one real estate investment property. In conclusion, there are many ways to make money from real estate investment and what's missing is massive action on your part. Take massive action and start hunting for your ideal real estate investment property today and start generating substantial real estate investment property profits.
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