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Many people over the years purchased diamonds as an investment. Some made the purchase with the idea of a future goal – a child’s wedding, or the like. Others bought it simply thinking diamonds would be a good investment, considering the intrinsic value pretty much always goes up over time. They figured if they bought some diamonds and put them away for a few good years, they could eventually sell them for a nice return on investment.

The truth is that “buy diamonds as an investment” was always a big scam and you should never buy a diamond thinking of it as a good investment. It is a horrible investment. There are other reasons to buy diamonds – love, romance, beauty – but “investment” is not one of them.

A friend once approached me, knowing I worked in the diamond industry. He was looking for a contact – about 25 years prior he had purchased a diamond thinking it was a good investment. His daughter had just been born and he figured if he bought a diamond and put it away, he could sell it eventually to pay for her wedding, or at least a nice portion of it.

So 25 years later his daughter is engaged to be married. He contacts me and asks if I can help him with finding someone who will buy his diamond from him. I ask around and most of the diamond guys I spoke with had no interest in meeting with him, as they had no interest in buying his diamond. One agreed to meet with him, though I felt it was more of as a favor to me that out of any real interest in buying this diamond.

I put my friend in contact with the diamond guy and they meet. Being that this was his only option after many attempts, he basically felt like he had to take what was offered. He had to sell the diamond, as he needed money to pay for the wedding. They meet, he shows the stone, and the die guy ended up buying the diamond. My friend sold the diamond at far less than he had ever expected – he sold it at a loss from what he had paid for it 25 years earlier.

Can you imagine that? He bought a diamond as an investment, being told by diamond sellers at the time that diamonds are a great investment, he holds the stone for 25 years and then sells it at a loss. Amazing!

Diamonds are not a good investment. The markup a stone goes through before you buy it on the retail market is so great that there is no way you can make that back reselling it back to the diamond market at wholesale prices, which is what they will pay. The only way you can make your money is if you find an unsuspecting buyer willing to pay retail value, which is never going to happen. The only place for you to sell your diamond is to a diamond dealer, and they only pay wholesale prices marked down.

There are several types of investments you can make like long term ones or short term ones. Some investments can be in the form of stocks, shares, bonds, mutual funds, real estate, and savings. No matter what your investment is, the expectation is always there that you should get more returns. However, there is no type of investment that comes completely risk free. Some amount of risk is present everywhere.

However, there are ways through which you can reduce these risk factors. A lot of the precautions work well for shares and stocks. The DCA or dollar cost averaging technique is one of them.

When investing in stocks, the DCA technique ensures that higher priced shares are bought in smaller numbers and the lower priced shares are bought in higher numbers. This rule applies for just a month and every month is calculated individually. You are actually spreading the risks by investing in different types of stocks or shares. The profits always get maximized through this technique. However, the risk is when the time period is stretched.

The DVA or the dollar value averaging is another method used to cut risks. In this method the value of the portfolio and the sum total is increased by adding shares which offer greater returns. Using this method, the portfolio balance increases by a set amount immaterial of the way the market performs. When the market slumps, the investor ends up contributing more money and when the market performs well, the investor contributes less money. So, when the market is more the investor is actually contributing less and when the markets are higher the investor is contributing more. This method is preferred more by investors than the cost averaging method because the investment goes down since the value of the purchased share increases.

So you want to increase your wealth by investing in ASX Shares? You’ll want to read this: start out on the right foot and you could eventually supplement the income from your job. But make one of a few fatal mistakes and you could see yourself right out of the market, never to trade again.

What do I mean? Let me give you an example: Let’s say you started putting $150 a month into ASX Shares in 1980. That’s around $5 a day. It earns an average of 15% per annum over the years including dividends. If you re-invested all your returns, today it would be worth over one million dollars – $1,038,490 to be exact.

But not everyone makes it that far. In fact statistics show that over 82% of traders lose a large portion of their capital and never trade again. If you are investing for the long term, your odds are slightly better (although 2008 scared a lot of investors out as well). But the thing is – now they miss out of the rest of those gains, on that million dollars that we discovered.

So here is the important part – what you need to know when trading ASX shares. It is often the most overlooked part of trading or investing: It’s your Trading Plan. In fact, don’t trade shares without one. But finding a trading plan can be a daunting task. Where do you start?

Well, if you take 100 different people, you will probably get 100 different trading plans. We are all individuals, and we all have different thresholds for risk. Therefore a good place to start with a trading plan is the following:

1: Your Rules for Buying and Selling – these are the rules you have tested that determine when you buy and when you sell a share. Whether it is buying for fundamental reasons, like company earnings or book price, or whether it is for technical reasons like crossing a trend line or Dow theory it doesn’t matter: so long as it suits you.

2: Your Money Management rules – these rules tell you how much you invest in a single share, and how many positions you invest in total. Here it is important not to risk too much in one share – if it tanks you will be in trouble. Usually the optimum is between 6 to 12 positions. This way you are diversified, but also not too diversified. Having too many positions can actually have a negative effect.

While some people can spend years determining the right trading plan – it doesn’t need to be complicated. With these rules you are well on your way to success in ASX shares.

Are high yield CDs still a good investment in 2010? That’s a good question. But, the answer isn’t an easy yes or no. Investing in high yield CDs depends upon your individual situation. First of all, let’s define what a high yield certificate of deposit is. In simple terms, it’s a CD that will give you a good return. But in 2010, how high of a yield are we talking about? Let’s take a closer look.

One of the best websites for comparing CD rates is Bankrate.com. To get a high yield certificate of deposit, you are going to have to invest your money for a longer period of time. Investing in a one-year CD is going to give you a measly CD rate of less than 2% APY (Annual Percentage Yield). So, the first thing you need to decide is whether you can afford to invest your money for a longer period of time. If you think that you will need your money within the next five years, a high yield CD is not for you. Assuming you can invest your money for five years, currently you can get a CD rate of between 3.15% and 3.55% (APY) with as little as $1,000. Now here is where the guessing comes in. In the next five years, will CD rates rise or fall or stay the same? CD rates can’t go very much lower. If the Federal Reserve keeps its fund rate low, then certificate of deposit rates won’t rise. But, if the economy improves, the Federal Reserve will raise the fund rate and CD rates will slowly climb. There is no way, short of a crystal ball, to know when or how fast the rates will rise.

If you have enough money to invest in CDs, your best bet is to invest by laddering. For instance, invest $1,000 in a one-year CD, $1,000 in a two-year CD and so on until you get to a five-year CD. When the one year CD matures, you would invest in another five-year CD. As each CD matures, you would do this same thing. This spreads the CD rates out over a number of years and is a safer way to invest.

Another way to invest in a certificate of deposit, is look for a bank that is offering the opportunity to raise your rate. Currently, Ally Bank is offering a two-year CD at an interest rate of 2.10% APY and will allow you to raise your rate once during the two years. So if interest rates rise, you won’t lose out.High yield investment program is similar to online betting where the risk is on higher side.

With the property market in a bit of a slump due to the current world economic crisis, the ability to find profitable investment properties has become an ever more risky affair. General opinion is that this is a very risky of the market to be in at the moment, but this need not be the case.

As is inevitable in any economic crisis or slump, there are many people who unfortunately are caught unaware or rather unprepared for this type of turn of events. The result being that more often than not if someone has been living above their means, they will be required to downscale their lifestyle to be able to adapt to the situation.

Now, this is where the opportunity comes in, during this time they will be looking to decrease their debt at a rapid rate in order to be able to meet their financial commitments, thus leaving the market wide open for you to make the property investment of a life time.

Of course there is the opinion “If only it was that easy!” which is absolutely correct. Now this is where the trick comes in, actually it is not a trick but a well mastered, tried and tested and accurately calculated skill.

Using the correct tools and systems one is actually able to predict the best offer to make on a property, the cost implications to you and whether it is a viable deal to enter into even before you make an offer to purchase.

As with any other form of business, having the correct tools in hand is a vital part of being able to make calculated and accurate decisions when you decide to look around for investment properties. By following this route one is able to minimize the risk and predict the potential profit before signing any form of deal which may lead to a potential property investment.

When it comes to the idea of attending a property investment seminar, a lot of people are hesitant as they do not understand the wealth of knowledge which they may be able to get by simply taking the time to attend. Our lives are so rushed that we often consider attending a property seminar and at the last minute decide that we do not have the time.

Well the great news is that nowadays the internet has changed all this. A lot of these property investment seminars are now available as free downloads over the internet which enables you to download them and view them in the comfort of your own home.

The great thing about a seminar is that it enables one to evaluate the type of information which the person presenting it has to offer you without any commitment from your side. All that is required of you is to take the time to listen to what they have to say and decide if it will be of value to you.

There are many different speakers offering seminars, so my advice is to listen to as many as you can and then decide which of them may be able to supply you with the information which you are looking for.

Property investment has always been a very calculated field and having the access to additional knowledge can only benefit you. Who knows what pearls of wisdom you will be able to learn to be able to reduce the risks when you make an investment and the way in which you should go about it to make your next investment the most worthwhile and profitable so far.

As I said, these decisions will be able to be made from the comfort of your own home as these investment seminars are downloadable for free from the internet.

So why not help yourself to be able to make profitable decisions by using the information which could be very helpful the next time you want to make a property investment.

How does it Work?
Equity investment is a good way of getting involved into the business decision making process. As an owner, the equity investor has certain control over both operational and strategic issues concerning the business.

An equity investor’s unique interest in and aspiration for certain business sectors and industries influence his or her equity investment decisions as to select what businesses.

The perceived synergy and chemistry between the management of the business/existing owner(s) and the equity investor(s) are important to the success of the joint venture.

Different Types of Equity Investment
Venture capital investment. Venture capitalists invest in businesses at early stages when success or failure of a business is everything but certain. Venture capital investment carries higher risks but also potentially bigger rewards.
Private equity investment. Private equity firms invest in publicly listed companies and then take them private. Away from the public eye, Private equity firms seek to do what they do best, that is, improving management and business efficiencies to make a company more profitable.

Leveraged buyout. This is a rare way to become an equity investor without really investing much of your own equity capital. When a company’s existing owners wish for a way out but can’t find an investor with cash to buy the business, they locate someone called financial sponsor instead, normally a private equity firm but without committing itself to investing its own capital. Next, a business loan called LBO loan is arranged with the owners’ company as the borrower and the cash raised buys out the existing owners, leaving the financial sponsor to be the care taker of the company. The new debt has recourse only on the company, not on the private equity firm. The bootstrap transaction makes the equity firm, the financial sponsor, now the sole “owner” of the company.

Is an equity investment right for you, the investor?
Equity investment is having a business partner. Do you have enough business passions and are ready to get deeply involved in business operations. Or you are better off by lending money and then staying on the side line?

Do you have good inter-personal communication skills to interact well with management of the business.

Are you prepared to risk losing your investment capital if the business fails?

Advantage

As an equity investor, you stand to gain big if the business you invested in prospers.

You learn first-hand knowledge about running a business.

Disadvantage

Potential conflicts with management and existing owners over business decisions.

Your investment capital is potentially a risk capital.

Finding a business

There are many start-ups that may be in need of capital support, as well as some companies in later stages.

If you’re a serious a private equity investor, consider taking an underperforming public company private and turn it around.

You can always invest through the stock market. By accumulating enough shares publicly, try to be a good corporate raider, getting on the company’s board and influencing management for better business.

What do businesses look for?

Show business owners that you as an investor have the same business passions as they do.

Assure both management and owners that you’ll contribute in a good way and leave them enough autonomy.

Convince the business that accepting an equity investment is better than looking for a debt financing, given that they may be short on cash flows from operations at this point of their business.

And finally let them know that you’re a savvy investor and have invested in many businesses successfully.

Checklist

Check against alternative debt investment.

Is the business selected the right kind for you as an investor?

Be ready to have ongoing presentation with management.

Hire a business or management consultant as your advisor to assist you in this business investment venture.

FAQ
Where can I find businesses?

Get in touch with business community, especially through various trade organizations. Attend events sponsored by your local Business Link and chamber of commerce, also other investor conferences where businesses are invited to make their capital-raising pitches to investors.

When someone is seeking investment advice, the subject of exchange-traded funds (ETFs) often arises since they are becoming a popular investment vehicle. ETFs are a great way for someone with a small amount to invest to get a decent investment. In order to use this type of investment to your advantage, you have to understand how they work.

You are probably familiar with mutual funds because they are more common. Mutual funds and ETFs are similar in some respects. Like a mutual, an EFT holds multiple investments within it. Unlike these funds, ETFs are traded through an exchange, like NYSE, and are not purchased from an issuing company. Other differences are the redemption structure and the tax efficiency.

ETFs have some distinct benefits that mutual funds do not have. Here are five of benefits:

1 – ETFs are an attractive investment because of intraday pricing. This means they are traded on an active stock exchange so the sales are immediate and not based on the price at the close of trading. Essentially
this means you could purchase ETFs at a reduced price or get a premium when selling them.

2 – Tax efficiency makes ETFs much more attractive than mutual funds. When a fund is sold, there is typically a capital gains distribution. When you sell an ETF, there are no gains to be distributed. However if a major component of the ETF is changed, it may trigger a distribution of gains.

3 – Exchange-traded funds are beneficial because they have much lower fees than mutual funds. Since an ETF is a no-load fund, you do not pay redemption fees when you decide to liquidate it. They also tend to have much lower annual fees. Although rare, on occasion the fee can be higher.

4 – Unlike many mutual funds, exchange-traded funds do not require a minimum investment. With a fund, you often have to invest at least $2,500 dollars. Since this is not true of ETFs, they are great to diversify your investments.

5 – Another major benefit of exchange-traded funds is their liquidity. That means you are able to keep your portfolio balanced by using your ETFs for the liquid component. You can even set a limit just as you would with stocks, which makes for more flexible trading that you could never get with a mutual. Remember to check your ETF, because they do not have all this liquidity.

Although the points laid out are benefits, they can quickly become liabilities. So remember to be careful when buying and selling ETFs. They are a great way to diversifying a smaller investment but do require you to ensure they are managed well.You might want to get custom stainless steel decal kits of your company logo if you have success with ETFs.

During the past sixty years, most economic, market, and interest rate cycles have lasted from two to five years, peak-to-peak. Rarely have any of the cycle-tracking market indices moved in tandem, and none of the cycles are considered to be particularly predictable.

Individual securities (the stuff that indices are made of) complicate things significantly by having even less predictable cycles of their own. This generally uncertain atmosphere is the very nature of the financial markets. If investors could come to grips with the non-calendar, cyclical, nature of markets, it is likely that they could improve their investment performance considerably.

In spite of decades of irrefutable evidence to the contrary, Wall Street has convinced most investors and far too many financial professionals that the calendar year is somehow investment relevant. Simple, yes; tax-code friendly, perhaps; but investment realistic— not.

Too many experts have abandoned the financial world’s fascinating cyclical undulations for the simplicity of the planet’s annual orbit around the sun. It’s time for a change in direction— one that doesn’t ignore the realities of the investment markets. It’s time to get back on our “hogs”, and ride!

Regardless of direction, all cyclical movements have proven to be excellent investment opportunities for Market Cycle Investment Management (MCIM) navigators. The MCIM Program uses a time-proven methodology that befriends market and interest rate cycles by using strategies that most often should produce:

* Higher market value lows during market downturns.
* Moves to cash before corrections take over from rallies.
* Maintenance of planned income during financial crises.
* Faster movement to new market value highs.
* Steady growth in “working capital” in all market environments.
* Annual growth of realized “base income” in all portfolios.
* No major disappearing (unrealized) profits.
* Much better than average peak-to-peak market value numbers.
* Auto pilot maintenance of asset allocation structure.
* Reduction of analysis paralysis, appreciation of both rallies and corrections, and love of market volatility.

The past twelve years have included two major market cycles and one significant economic crisis. Email me to see how well Market Cycle Investment Management accounts fared during this interesting segment of financial history.

All investors should become familiar with Market Cycle Investment Management accounts and the strategies they employ to keep portfolios on track from start up to retirement. As a family evolves over time, separately managed, “life cycle” friendly, portfolios will become necessary. For example:

Group One -Taxable income and Investment Grade Value Stock (IGVSI) portfolios for tax deferred accounts

* 70% IGVSI Equities and 30% Taxable CEFs
* 50% IGVSI Equities and 50% Taxable CEFs
* 30% IGVSI Equities and 70% Taxable CEFs

Group Two – Tax free income and Investment Grade Value Stock (IGVSI) portfolios for taxable accounts

* 70% IGVSI Equities and 30% Tax Free CEFs
* 50% IGVSI Equities and 50% Tax Free CEFs
* 30% IGVSI Equities and 70% Tax Free CEFs

Group Three – Tax managed portfolios, asset allocated as in Group Two, for taxable accounts.

Notes: (1) Group One and Two portfolios would be managed in accordance with The Working Capital Model, as documented profusely in the books and articles of Investment Manager Steve Selengut. (2) Group Three portfolios would be managed similarly; however, tax loss selling will be used annually to offset a significant portion of trading gains.

Reasonable Expectations: (1) Portfolios should lose less market value during market corrections and recover to new highs more quickly. (2) Profit taking during rallies, regular cash flow, and strict stock purchase rules should produce quicker recoveries. (3) Income production from equities, combined with a significant income securities bucket, assure annual increases in “base income” levels.

Market Cycle Investment Management replaces the racetrack mentality that runs today’s investment performance evaluation methodologies with a calmer, more cerebral, strategy.

By looking at things cyclically, and analytically, instead of celestially and emotionally, we allow our strategy to prove itself over a reasonable period of time— as it has since 1970.

If the investment strategy makes sense in the long run, why knock yourself out in months, quarters, and years? Pick the MCIM program or programs that suit you best today and let them work you through the cycles the investment gods are preparing for your future.

The best investment fund for average investors would be an investment fund for all seasons, your best investment to just buy and hold. This investment package would be a fund of mutual funds to hold in good times and bad. Where do you find such an investment?

The majority of investors need total balance in their investment portfolio in order to make their money grow while avoiding heavy investment losses. Even the best funds today fall a bit short of this goal, but you can assemble your own best investment fund from the list of mutual funds available from the major fund families like Fidelity and Vanguard. Here are the instructions.

The best investment fund formula: Two parts traditional balanced fund, plus one part money market and one part alternative investment fund. Mix together and stir once a year for best investment results. Putting together this investment fund requires only three steps, and the first two are simple. Here’s what you do.

Put ½ of your money that’s earmarked for long-term growth in a traditional balanced fund that allocates 60% to stocks and most of the rest to bonds. This is the traditional balanced portfolio for growth and higher income. Then put ¼ in a money market fund for safety with interest income in the form of dividends. Now you have just one step left to achieve total balance and the best investment portfolio to hold year in and year out, in good times and bad. Risk level: moderate.

Our final step requires some assembly because to my knowledge no fund company offers an alternative investment fund; but some offer the pieces and parts (funds) you need to complete the job. They fall under the following categories of equity (stock) funds: international, gold, real estate, and natural resources (or energy). The last three are referred to as specialty funds because they specialize in specific sectors or industries. These particular sectors focus on areas that qualify as alternative investments.

The remaining ¼ of your money goes to this alternative investment fund, in mutual fund categories as follows: 2 parts international, and 1 part gold, 1 part real estate, and 1 part natural resources or energy. You now have assembled the best investment fund I can come up with, and it will look like this: 50% balanced funds, 25% money market, 10% international, and 5% each to gold, real estate and natural resources. I call this portfolio a total balance fund… set up to weather good times and bad.

It’s the alternative investment ¼ that really makes the difference and creates total balance in your overall portfolio. When the U.S. stock and/or bond market are performing poorly, you’ve got a back up in the form of international investments, gold, real estate and natural resources or energy.

Some day the major mutual fund companies will likely launch a total balance and/or alternative investment fund because it makes good investment sense. Pension funds and other large institutional investors expanded their investment horizons years ago. Until that time, putting together your best investment fund will require a bit of assembly.

Once a year you should check to assure that your allocation percentages of 50%, 25%, 10%, 5%, 5%, 5% are on track and total 100%. When any of them gets out of line by a couple of percentage points or more its time to move money to get your balance back in line. That’s not a lot of maintenance considering the fact that the rest of the time you’ve got real balance working for you year after year.