Investment Glossary
Investing Glossary, Investment Definitions, Investor Words
Increase your knowledge of Investment terms using our Investing Glossary.
| Alternative Investments [ PRODUCT ] [ GLOSSARY ] Alternative Investments are new investments that are replacing traditional investment vehicles.... |
| Equity [ GLOSSARY ] In real estate, it is the difference between what a property is worth and what the owner owes against that property (i.e. the difference between the house value and the remaining mortgage or loan payments on a house).... |
| High Yield Investments [ GLOSSARY ] A major issue faced by high yield investment programs is the involvement of a large amount of money placed at risk for a high potential gain. Many investors are looking for quick, substantial gains such as high yield, high return Trust Deeds.... |
| Real Estate IRA [ PRODUCT ] [ GLOSSARY ] Todays investor is now being made aware that you are allowed to invest in real estate with a Real Estate IRA and earn the larger yields found in that type of investment.... |
| Retirement [ GLOSSARY ] The state of being retired from one's business or occupation. Withdrawal from your position or occupation. Retirement is the point where a person stops employment completely. A person may also semi-retire and keep some sort of retirement job, out of choice rather than necessity.... |
| Self-Directed IRA [ PRODUCT ] [ GLOSSARY ] A Self-Directed Individual Retirement Account is an IRA that requires the account owner to make investment decisions and investments on behalf of the retirement plan.... |
| Trust Deeds [ PRODUCT ] [ GLOSSARY ] A Trust Deed, or deed of trust, is a document used to secure debt on a home acting as a mortgage. A trust deed is recorded as a lien on real property. However, although a deed of trust acts like a mortgage, there are differences between a mortgage and a deed of trust.... |
Alternative InvestmentsAlternative Investments are new investments that are replacing traditional investment vehicles. Alternative Investment Real Estate IRA Plans, Equity Capital and other property investments that offer the investor instant monthly dividends up to 15% profit and even higher within a 24-36 month period. These Alternative Investments are where many investors are directing their money to grow retirement plans and future financial growth. Alternative Investments are being viewed as a safe and more secure investment compared to past investment methods.[ Investment Glossary ]
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EquityIts most common meaning refers to total assets minus total liabilities, in which case it is also referred to as shareholder's equity or net worth or book value.Ownership interest in a corporation in the form of common stock or preferred stock. In real estate, it is the difference between what a property is worth and what the owner owes against that property (i.e. the difference between the house value and the remaining mortgage or loan payments on a house). In the context of a futures trading account, it is the value of the securities in the account, assuming that the account is liquidated at the going price. In the context of a brokerage account, it is the net value of the account, i.e. the value of securities in the account less any margin requirements. [ Investment Glossary ]
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High Yield InvestmentsLarge Amounts of Money: A major issue faced by high yield investment programs is the involvement of a large amount of money placed at risk for a high potential gain. Many investors are looking for quick, substantial gains and therefore, though they could start with a lower sum, they choose to invest all they can. These investors calculate the maximum amount of money they can afford to put on risk in order to take advantage of the high potential return. Some investors go as far as investing more than they can afford, though this is not recommended. Small Amounts of Money: High yield investments are investment programs that offer more potential for gain, but at a higher risk. High yield investment programs or HYIPs work on one of the basic principles of investing: the higher the risk, the greater the potential for gain. Some of the investors choose to invest a small amount of money in these high yield investment programs. This practice allows them to take advantage of high returns by putting a small investment at risk. Schemes: Another issue is that some of the high yield investment programs are well-disguised fraudulent schemes that are designed to rip investors off. Such HYIPs are illegal. Therefore, it is recommended that investors do a thorough background check of the group or person presenting the investment. While investigating, investors must also check if the investment company has insured the investments of its clients. This further establishes the credibility of the company. Risk and Reward: With HYIPs, another possibility is that they may not pay as well as anticipated or may not pay at all. Therefore, experienced and smart investors prefer to put only that amount of money in HYIPs that they can afford to loose without major consequences. To combat various issues related with high yield investment programs, experts advise to diversify the investment portfolio, as there is no real way to cushion the investment. High-yield investment can turn out to be very rewarding for investors. Although there is a certain amount of risk involved in high-yield bonds investments, they can also be very profitable for investors if they are targeted towards companies that have the potential to recover from their financial instability. Bonds: A high-yield bond, also known as a junk bond or non-investment grade bond, refers to debt security that has a very low rating. High-yield bonds are usually rated below BBB (according to Standard & Poor's) or Baa3 by Moody's; therefore they have a rating lower than the investment grade. Investors have access to high-yield bonds either through mutual funds or through individual business investments. High-yield bonds investments through the means of mutual funds are considered to be a lot safer, as they considerably reduce the chances of investing in non-profitable business trusts or companies. High-yield investments can become very profitable, as they can sometimes produce returns higher than those of solid, above investment grade bonds. High-yield bonds are a great opportunity to increase investors’ profits and they are also a good way of expanding business portfolios. The interest rates of high-yield bonds are also a lot more stable than those of investment-grade bonds and therefore they can build a stable, predictable income. Although high-yield bonds are exposed to some risks, investors are the first ones to benefit from debt insurance, therefore minimizing possible financial losses in case of bankruptcy. Choosing A Good Company: Companies that experience a temporary regression, going through less favorable financial situations, usually offer high yields to investors, in order to gain their interest. The trick in high-yield investments is to choose the right companies. Target your high-yield investments towards companies that have the ability to recover from their financial difficulties. For instance, you should avoid high-yield bond investments in companies that are constantly having difficulties in maintaining their position on the market. It is advised to invest in more powerful companies that have the ability to overcome their financial crisis. By investing in such companies through mutual funds, the risk of failure is considerably reduced. Scam Alerts: Here are some things that may indicate an investment scam:Fixed returns. If a program guarantees a time-based return (2% per day, for instance), then it is almost certainly a scam. No one has a crystal ball, and in the high yield community, uncertainty is the major force that prevails. So any one skilled at foreign exchange trading or options trading would never predict they would make 2% each and every day. No contact information. The high yield investments that are real will always let you know who is behind it, and what they do. In the normal investment world, there is a prospectus for each offering, which describes what the venture is about, and how they make money. A real high yield investment would always give you the name and resumé for the principal people behind the operation. If you don't get a name, phone number and address, it is a scam. No registration. All high yield investments will create profit, and be subject to taxation by some government somewhere in the world. If the persons offering a high yield investment have not bothered to register the venture, then it is most certainly a scam. No Contract. The high yield investments that promise great things should put things into writing, and have you agree to the terms before they begin to earn you an income. If you find a high yield investment that does not require you to sign a contract, you can be sure they will disappear eventually along with your money. The SEC "High Yields and Hot Air" List: The SEC publishes this short list of high return, high yield issues to be aware of. They call it "High Yields and Hot Air"... If it sounds too good to be true, it is. Compare promised yields with current returns on well-known stock indexes. Any investment opportunity that claims you'll get substantially more could be highly risky. And that means you might lose money. "Guaranteed returns" aren't. Every investment carries some degree of risk, and the level of risk typically correlates with the return you can expect to receive. Low risk generally means low yields, and high yields typically involve high risk. If your money is perfectly safe, you'll most likely get a low return. High returns represent potential rewards for folks who are willing to take big risks. Most fraudsters spend a lot of time trying to convince investors that extremely high returns are "guaranteed" or "can't miss." Don't believe it. Check out the company before you invest. If you've never heard of a company, broker, or adviser, spend some time checking them out before you invest. Most public companies make electronic filings with the SEC. There are computerized databases to check out brokers and advisers. Your state securities regulator may have additional information. And by the way — if a supposedly upright firm only lists a P.O. box, you'll want to do a lot of work before sending your money! If it is that good, it will wait. Scam artists usually try to create a sense of urgency — implying that if you don't act now, you'll miss out on a fabulous opportunity. But savvy investors take time to do their homework before investing. If you're being pressured to invest, especially if it is a once-in-a-lifetime, too-good-to-be-true opportunity that "just can't miss," just say "no." Your wallet will thank you. Understand your investments. Fraudsters frequently use a lot of big words and technical-sounding phrases to impress you. But have faith in yourself! If you don't understand an investment, don't buy it. If a salesman isn't able to explain a concept clearly enough for you to understand, it isn't your fault. Don't make it your problem by buying! [ Investment Glossary ]
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Real Estate IRA [ PRODUCT ]A Real Estate IRA Individual Retirement Account is an IRA that is based on Real Estate as the Investment vehicle instead of the traditional methods such as bank CD's and the stock market and others. Many investors are unaware that Real Estate has always been an option. Retirement investors are looking for alternative investments for their retirement investing and are realizing that Real Estate IRA's are not only a good idea but probably the better producer and more secure investment. [ Investment Glossary ]
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RetirementHere are some Retirement examples:
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Self-Directed IRA [ PRODUCT ]A Self-Directed Individual Retirement Account is an IRA that requires the account owner to make investment decisions and investments on behalf of the retirement plan. IRS regulations require that either a qualified trustee, or custodian hold the IRA assets on behalf of the IRA owner. Generally the trustee/custodian will maintain the assets and all transaction and other records pertaining to them, file required IRS reports, issue client statements, assist in helping clients understand the rules and regulations pertaining to certain prohibited transactions, and perform other administrative duties on behalf of the Self-directed IRA owner for the life of the IRA account. Self-directed IRA accounts are typically not limited to a select group of asset types (e.g., stocks, bonds, and mutual funds), and most truly self-directed IRA custodians will permit their clients to engage in investments in most, if not all, of the IRS permitted investment types (an almost unlimited array of possibilities including foreign real estate). Some of the additional investment options permitted under the regulations include, but are not limited to, real estate, stocks, mortgages, franchises, partnerships, private equity and tax liens. Self-directed IRAs, by allowing a wide range of investment choices, improve the account owner's opportunities to diversify their IRA portfolio(s). Some investments, such as life insurance or collectibles as defined by the Internal Revenue Service, are not permitted.. If real estate or any other investment asset held in a self-directed IRA has been used for personal use or to gain any other personal benefit (other than a return for the IRA), in the view of the IRS or the Department of Labor, the IRA may become immediately taxable. In addition, if the IRA owner is younger than 59 1/2, the IRA will be subject to an early withdrawal penalty of 10%. It is important, however, to understand that the IRA accountholder is responsible for compliance with all codes and regulations. While a custodian's job is to follow the directions of the accountholder as a non-discretionary trustee, a custodian cannot ensure compliance or give legal or tax advice. Contribution limits are normally about $4,000 or maybe $5,000 for those age 50 and above. Always confirm amount for each new calendar year. That figure could change yearly so always check. A traditional IRA comes in two flavors: deductible and nondeductible. To see if you qualify for a deductible IRA, which lets you deduct all or part of your contributions from your taxable income, use the following guidelines: If you have no retirement plan at work and you're under 70-1/2, you can invest in a deductible IRA and deduct the entire amount from your taxes. If you have a 401(k) or other retirement plan at work, you may fully or partially deduct your contribution only if your adjusted gross income (AGI) qualifies. Your AGI normally cannot exceed about $62,000 (always confirm amounts for each new calendar year) if you're single or head of household, or $103,000 if you're married and filing jointly. If you're not covered by a retirement plan, but your spouse is, you may qualify for a full or partial deduction if you file jointly and your AGI is below $166,000. (The same rule applies if you're a non-working spouse of someone covered by a retirement plan at work.) If you're not eligible to contribute to a deductible IRA, you may be eligible to contribute to a Roth IRA if your AGI is below $114,000 if you're single or $166,000 if you're married filing jointly. If you make too much to qualify for a Roth IRA and are not eligible for a deductible IRA, a nondeductible IRA is a valid option. Your contribution won't be deductible, but at least your savings will grow tax-deferred. Always confirm amounts for each new calendar year. The non-deductible is the least attractive, so open one only if you don't qualify for the other two. The choice between a deductible and a Roth is more difficult, but generally you're better off in a Roth if you expect to be in a higher tax bracket when you retire. Creating a self-directed IRA is easy. The firm keeps the books, disburse money, and collect profits for the IRA, but they may not give investment advice. Make sure the account holds enough cash to meet fees and expenses such as charges like opening accounts, record-keeping, transaction fees and annual asset-holding fees. For real estate investments, you may also need annual appraisals. [ Investment Glossary ]
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Trust Deeds - Deed of Trust [ PRODUCT ]A trust deed, or deed of trust, is a document used to secure debt on a home acting as a mortgage. A trust deed is recorded as a lien on real property. However, although a deed of trust acts like a mortgage, there are differences between a mortgage and a deed of trust. A trust deed is used as security for a loan on real property, and the specifics regarding the loan are written in a promissory note. A deed of trust is then documented at the county recorder’s office to legally notify the world that the property in question has now been pledged to secure a loan. There are three parties involved in a trust deed: 1. Beneficiary – Investor / Lender / Note Holder2. Trustor – Borrower 3. Trustee – Third party selected by the investor who has the legal power to act on the investors behalf and hold title until the note has been paid. The deed of trust recorded against the borrower’s property title is what secures the lenders investment. When making an investment in a deed of trust, the trustor (borrower) makes the property transfer, in trust, to the trustee (independent third party). The trustee then holds the conditional title on the behalf of the beneficiary (investor/lender/note holder), and then either of the following takes place: The trust deed will be returned to the borrower once they satisfy all of the terms and conditions that were outlined in the promissory noteThe property will be put up for sale should the borrower default – also known as foreclosure. In many cases, if the borrower defaults there is actually more profit in the investment. A good management company will pass along most, if not all, of this money to the investor. Trust Deed investing benefits are high returns, cash flow and capital preservation while owning an investment that is secured by real property. Trust deeds offer a way to earn a higher rate of return and be secured by an asset to minimize risk. [ Investment Glossary ]
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