Investing Advice, Investing News, Investing Tools

Finding Offshore Accounts - Don't Leave Yours to Chance

2008-09-26T06:50:00.004-07:00

Finding offshore accounts is as simple as using the right information to find the best choice for your investing strategy. However, choosing the wrong offshore bank could result in a number of senseless headaches and additional fees. In addition, it may not be a good vehicle for your investing strategy. Therefore, we have included a few tips to help you do a better job of finding offshore accounts which will be the best for you:

1. Pick an offshore bank that uses the common law over the civil law.

For most Americans and British investors, you will want to choose offshore jurisdictions where they follow the English common law. This is the system that is most like your current legal systems. Generally, you will find this in countries which were formally a part of the British empire. Some examples include the British Virgin Islands, Cayman Islands, Bermuda, Guernsey, Jersey and many others.

2. Choose a bank whose time zone is similar to yours.

This will help make it easier to make transactions and will not require you to stay awake in the middle of the night so you can contact your offshore banker. By choosing an offshore bank in a time zone that is similar to yours, you make it far easier for you to do business.

3. Avoid banks that have high wire transfer costs.

Wire transfers will most likely be your main course of sending money back and forth. Depending on how much money moving you anticipate for your investing needs, these wire charges can add up really quickly. For this reason, be on the lookout for offshore banks that offer reasonable rates for them.

4. If privacy is very important, make sure your offshore jurisdiction is strong there.

For many investors, privacy of their transactions and funds is their highest priority. For this reason, you should only select banks which have very strong privacy laws and regulations. However, even after selecting one, you must actively watch the jurisdiction for news that they may relax their privacy regulations. For investors that want the most privacy, you will have to stay vigilant.

By keeping these tips in mind, finding offshore accounts to meet your needs should be much easier. Remember spending a little time upfront with good research can you save you serious time, energy, and money down the road.

Will History Repeat Itself - Speculation Against the Fed?

2008-09-26T06:50:00.003-07:00

In the eighties there was this system called the EMS and it got attacked twice during those years in 1982 and 1985. Soros was held responsible for one of them. Today Soros name is heard again. We haven't seen him a while but all of a sudden he appears in interviews. During the internet-bubble we acknowledge that "he had lost it," but perhaps these times are when he feels more at ease.

It is also possible that the same may happen as in 1982 when the EMS got attacked. People - politician - argued that cold speculators had brought the system down.

I didn't believe it by that time, and wrote a thesis about those attacks. Speculation when the odds are on your side is merely investing, nothing more. Real speculation can never bring a financial system down.

Politics however can bring things down. That is what we see. The mister liberal markets chosen by Ronald Reagan is now seen as the master of incredibility, A system without rules doesn't work for long. And politicians are sending mixed messages to the market. In the end it is the market that will make up their own story.

One of such a message is a hold on short selling on financials. Listen to it carefully and think about it. What does it mean? The politicians are reacting like the bank of England in the eighties; they were afraid of speculators. But the chances that the pound would be able to stick to the EMS were too low to fail any bet on it. And so it happened. Soros was held responsible, but it was the government of (the bank of) England where the real problem resided.

Best Investment Ideas For New Investors

2008-09-26T06:50:00.002-07:00

Actually if you think about it, the best investments for new investors is in the capital markets. This type of institutional investment is typically quite safe if you stay away from the speculative penny stocks. By avoiding those volatile penny stocks and sticking to your Googles and Walmarts and company's of this caliber your money is quite safe over the long term despite the historical ups and downs of the stock market.

Unfortunately for new investors, the stock market will appreciate by around 7% per year. That is nothing to write home about if all you have is two solitary shares of Google which at this time are worth around $800 The return in say ten years will be quite small even at 7%

This sort of institutional investing is perfect for individuals with deep pockets whose bank balance is $1 million dollars or more but terrible to think that a new investor may spend their $1000 dollars and get really not too much after 10 or even 20 years of patient waiting.

Many new investors therefore get a little more aggressive in their investment activity and I don't think that is necessarily a bad idea. It is quite true that investment with higher risk typically have a higher return too, but the risk is significant so losing ALL ones investment is sometimes a possibility. There are ways to hedge your high risk investments so the risk is significantly reduced and that is the way most new investors should travel because sitting it in the stock market for 20 years you may as well just leave it in the bank.

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Where to Invest $600 For Huge Returns

2008-09-26T06:50:00.001-07:00

Let's face it, $600 bucks is not a lot of money, to many people it is quite a significant amount but when talking investment you are in affluent circles and the typical majority would consider your $600 dollars as not even a few cents in terms of investment capital.

Very little research and financial information is available for people who wish to invest and get a return but on small amounts of capital and the reason for this is that most investors are prudent and look for very very modest yearly returns but are usually very well funded and have millions to be careful with, so these are the people the industry caters for and not the small guy that has $600 dollars or a grand.

But in actual fact, if you think about it, $600 bucks can be turned into $1000 in under a week and $1000 could be turned into $2000 in another week and so on. If you understand compounding you will realize if you use a calculator right now that if you started with just $100 dollars today, you will have over $1.4 million dollars in just 14 months if you can compound your capital by 100% each month for 14 months.

Pretty amazing and true, the math says it is. But how could you compound your money every month by 100% Well...if you could compound your capital by 20% per week you would have your 100% per month. Now it starts to become more possible. What if you bought a bike this week for $100, something you noticed was very cheap and good value and you resold it for $120 that is a 20% return. I mean you made a profit even if it was an old second hand mountain bike right? So it is after all an investment. Could you think of ways to double your money every month for just 14 months?

Invest in Internet Ideas - The Coming Dot Com Boom

2008-09-26T06:50:00.000-07:00

Looking back over the years the current oil crisis is not something new but part of the big picture and the pattern of the economy. The economy goes in cycles as investors flock from one commodity to another. From real estate to oil, from gold to cash in the bank, from cash in the bank to internet start up...what? What did I just say?

You will realize there is something special about this economy, something never seen before. There is a new dance partner in the economic cycle and that is the internet. The first one was not just a boom it went nuclear. The heady days of the 2000 boom was a spectacle to watch as any mom and pop in their spare bedroom became an instant multi millionaire by simply making a website with some potential.

The people that make ipo's (initial public offers) which is how a company is floated on the stock exchange were making an absolute killing and so were the internet people making these websites because investor demand just saw no end in sight. This new player, the internet, is in existence due to the developed technology but something even more interesting has occurred.

In the years of the first dot com boom, there was crazy investor demand but it was mainly institutional investors and professional speculators. But today, due to current maturation of technology like cheap and prevalent broad band means millions and millions of people are participating in the internet. There is a more stable audience and therefore more profits to be made. Another dot com boom is in sight, it might come this year or it may eventuate in 5 years but this type of commodity is definitely going to be back and I see this time, the boom will go into the stratosphere.

Appreciating Silver Or Depreciating Doo-Dads - The Choice is Yours

2008-09-07T08:40:00.001-07:00

What if instead of buying a $50 depreciating doo-dad, you bought $50 of appreciating Silver? Doo-Dads come in all shapes and sizes; clothing, food items, refreshments, home decor, automobiles, toys, sporting goods, electronics, kids toys, and the list goes on and on... Many people spend $100's per month on depreciating doo-dads. That's $100's in potential Silver Asset buying power. I can guarantee you; Silver will not end up in a garage sale two years from now selling for pennies on the dollar.

Here's the point. We all spend money on depreciating doo-dads. We enjoy our doo- dads, that stuff we acquire through life that we could probably live without. Doo-dads fulfill a temporal need. They make us feel warm and fuzzy for a short time. When the warm and fuzzy feeling leaves, we go out and buy another doo-dad and go through the same cycle again.

I have heard this objection to buying Silver, "I don't want to purchase Silver right now, the price is too high. What if the price goes down?" Humor me for a moment and let's put this into perspective. What if on an emotional whim, you purchased a $50 pair of shoes. (this goes for guys and gals) You purchase the pair of shoes to wear once in while. They sit in your closet for two years. One day while rummaging through your closet, you see your shoes. Your taste has changed so you throw them in the garage sale pile. What's more valuable, a $50 extra pair of shoes that you wore a few times over two years or some American Eagle Silver Coins. Even if the Silver depreciated by 70%, it would still be worth 4 times the value of shoes you only wore a few times. Silver will always be worth more!

Balanced Investment Strategy For Portfolio Management

2008-09-07T08:39:00.003-07:00

Balanced investment strategy is perhaps the most followed and successful investment strategy for portfolio management. Its primary aim is to keep a balance between investment risk and return. A balanced investment strategy combines the merit of aggressive and defensive investing strategies.

Aggressive investment strategy involves investing in high return high risk investments with the sole purpose of maximizing return from investments. It involves allocating major portion of portfolio capital to invest in equities, equity based funds and highly volatile markets. Investors following aggressive investment strategy often look for comparatively short-term profiting and wish to invest more in growth stocks, and small caps and mid cap stocks. Advantages of aggressive investing include quick profit, high return over investment and no need of large portfolio capital. It can work really well for experienced investors and investors who are very strict in their money management. Disadvantages include high risk, high volatility in total portfolio value and no surety of profit. It less supports novice investors and investor looking for monthly earnings or living costs.

Defensive investment strategy is just opposite of aggressive investment; it's purpose is to preserve the capital and ensure some return from investments. It involves investing in low profit low risk investments like bonds, money market funds, treasury notes, and equities with minimum price volatility and good dividends. Defensive investors look for long-term profits and/or monthly earnings. Advantages of defensive investment strategy include reduced risk, predictable income, better investment planning and diversification of portfolio. This strategy mainly suits beginners. Disadvantages include low return from investments and requirement of high capital investments.

In balanced investment strategy, the investor tries to keep a balance between his aggressive and defensive behaviors. It involves balancing of both return and risk by diversifying investments in both high return high risk and low return low risk investments. Balanced investors often follow a portfolio capital allocation rule telling how much to invest in equities and bonds and how much to invest in treasury notes, precious metals and funds. Usually one portion of portfolio is actively managed and other portion is left to grow automatically. Balanced investment strategy can be slightly aggressive or slightly defensive with respect to investments made.

The greatest advantage of balanced investment strategy is the diversification of portfolio and hedging against high total portfolio value volatility. It is good for investors looking for medium-term (3 to 5 years) profits. Other advantages include flexibility in portfolio management, better results with better capital investments, (almost) predictable income and manageable portfolio risk. Balanced investment strategy support both beginners and experienced investors and can be an option for monthly earnings for living.

Now is the Time to Invest in the US Dollar

2008-09-07T08:39:00.001-07:00

If you are an investor in the foreign exchange (currency or forex or FX) market now may be the time to invest in the United States dollar, or USD. For those that do not know, Forex is a market in which one currency is traded for another currency. The global Forex market and its related structures make up a market worth over $4 trillion dollars. With this in mind and the current economic climate, the right investment can potentially bring in high returns. With this in mind, now is the time to look into the USD.

Ever since the 1970's the United States dollar has been following a consistent trend of 5-7 year cycles of up and down trends. In late 2001, early 2002, its value reached its high point when measured against the Euro. Since that time, it has been in a decline for nearly 6 years, just as the trend has been for over 30 years. With this in mind, it would suggest that the dollars time to rise in value again should be coming soon.

As a matter of fact, the dollar has seen gains in recent days. Since the middle of July the USD has gone up 8% against the Euro and 5% against the Japanese Yen. This comes as recent reports shows the European and Japanese economies going through an economic slow down and certain U.S. economic conditions improving, such as lower oil prices.

Based on past economic trends, it is time for the US dollar to begin its rise again. The upward trend in the pattern usually follows suit after the dollar hits the bottom. Last month it had reached a diminished value that was nearly half of its Euro counterpart.

When the value of the dollar is low, it makes American goods cheaper, therefore increasing the number of exports and shrinking the trade deficit. Two months ago, exports made its largest jump in 4 years. As business comes to America, investments in American mutual funds are up as well. The mutual funds that invest abroad has only netted $9 billion in inflows in the first 6 months of this year, compared to the $80 over the same period in 2007.

If you invest in Forex and the U.S. dollar, now may be the time to invest in it. The economic trend's history shows that the dollar's rise should be on its way and its recent gains in the later part of last month suggests that its comeback has already begun. While some are still questioning the economic conditions around the globe, you can take a risk and invest in the dollar. Its time is coming, if you get it early, profits can be satisfactory.

Investments in Costa Rica - Not Exactly What You Think

2008-09-07T08:38:00.000-07:00

Investments in Costa Rica?... isn't that an island?...somewhere in the Caribbean?

My wife and I moved to Costa Rica six years ago from the frigid climate of Minnesota where we had owned a printing business for 15 years. For as long as we could remember we had worked 12 hour days and spent most of our time figuring out how to stay even...getting ahead wasn't even in the cards.

Then 9/11 happened. And for us it was an epiphany. Life was too short to spend the balance of our lives on a treadmill that went nowhere. We accelerated our retirement plans by almost ten years.
And over the next year we sold everything we owned and eventually found ourselves in Costa Rica (which, mind you, we had only visited once previously...and on vacation at that !).

Stupid? In retrospect, sure. To move to a foreign country where we knew no one, didn't know the language and our only exposure was the internet? Of course, it was stupid.

But...we loved it, even in spite of the fact that life here was completely different than the books portrayed or the internet showed. We rented a small home about an hour outside of San Jose in a community which was rural, coffee country and yet still large enough to have a hospital and within 45 minutes of the main airport.

And we purchased land...and we built a house. And luckily, Rhonda had the temperament to deal with the local builders, even though we didn't understand much Spanish. I still remained a type A and the manana attitude drove me crazy.

And much of the real estate and construction business was definitely not in any "how to..." book that we ever found. And we definitely made mistakes. But luckily they didn't hurt us TOO much financially. And we asked a lot of questions and we learned, little by little, how the real estate market functioned in Costa Rica.

And we decided that we wanted to let others know the things that we had to learn the hard way. We started a real estate company whose sole aim was to present properties which reflected prices that locals paid...because there is a two tier real estate market in Costa Rica...one for "gringos" and one for Ticos (locals, as Costa Ricans call themselves).

Because there are very few rules or regulations for real estate here, our "exposure" of the market didn't make us very popular with other real estate people. (remember, Costa Rica is a VERY small country...about the size of West Virginia or Houston). So our website didn't exactly endear us to local agents who were used to charging whatever prices and commissions that they thought the traffic would bear.

And slowly we began to get a reputation...admittedly, some was good, some bad...depending upon who you talked to. And we began to get publicity...unsolicited publicity from magazines like Newsweek and Investors Business Daily. And our business grew. And grew some more.

As our business grew we began to meet more people from Costa Rica...some influential, some not... some quality, some not. And we became exposed to many more types of investments that were totally foreign to us. And we learned who really "controls" the country and which people control investment capital and have the influence to make policy. To illustrate how much of our education was "coincidence" (and I personally do not believe in coincidences... I believe that they happen for a reason) our third attorney was introduced to us purely second hand at a local gathering; "coincidentally" his wife was from Minnesota...Rhonda was then invited to a weekly gathering of "gringas", all of which married Ticos 35-40 years ago and who have now ALL become very influential ; e.g., Minister of Finance; Minister of Agriculture and two other former cabinet members.

Because of our real estate organization (see it here: www.cr-home.com) we are able to see daily what people are seeking and watch the ebb and flow of interest. And not only are we able to gauge areas of interest but also types of properties or homes that are attracting the most interest...e.g., we know that beach properties or condominiums at present are receiving very little interest and the high end beach properties sales are very slow. We have our own hypotheses as to why this is occurring but we are dealing with "what is", not what we think "should be"...nor do we look for esoteric explanations to explain the status. We are big believers in the KISS philosophy..." keep it simple, stupid."

Over the past three years we have made a number of investments here...none have shown a loss and others have turned a 100% return within a 60 day period. Some have unrealized profits. We have yet to take a loss. Please understand here that we are not professional investors (if there indeed is such an animal)... we have simply taken advantage of situations that we consider to be extremely low risk. WE ARE NOT SIMPLY "HOPPING ON THE COSTA RICAN REAL ESTATE BANDWAGON"...because if we had done that, we would have already lost a significant amount of money.

Let me explain...
Our website and mission statement is all about value...and it is about education and knowing "the good, bad and ugly" BEFORE buying. Too many people get caught up in the emotion and beauty of Costa Rica and buy on impulse. And these are the people that ultimately run the risk of losing their entire investment. (con men and fraud exist everywhere but are more common here simply because of the lack of comprehensive rules and regulations concerning real estate and construction). That being said...we attract a different type of clientele...one that typically wants to ensure that he gets the most value for his or her money....and definitely not one that is an impulse buyer. We deal primarily with the "baby boomer" who is looking at Costa Rica as a retirement destination AND the buyer who wants to ensure that he or she gets the most value for their investment.
And the above paragraph illustrates the best, most concise reason why our business is almost recession proof and not affected by the "subprime crisis" and will allow us to continue to capitalize of various forms of investment in Costa Rica.

So...now that we have established our background...WHY are we recommending Costa Rica as a basis for specific types of investments?
We are not attempting to "sell" Costa Rica because we expect anyone who is examining Costa Rica as an investment to do their own due diligence. So...
- Costa Rica is home to the longest running democracy in Latin America. Its stability is unquestioned and it is allied closely with the U.S.
- Almost a third of the land mass of Costa Rica is set aside for national parks. Costa Ricans themselves are huge lovers of wildlife, flora and fauna.
- There is virtually no mineral exploration and absolutely no oil drilling in Costa Rica for environmental protection.
- The literacy rate in Costa Rica exceeds that of the States or Canada.
- Medical care is superb and available to everyone...even to those who are unable to pay.
- Costa Rica is more familiar to Americans than nearly any other foreign destination...for vacation. Nearly everyone who has visited Costa Rica wants to return and, in fact, Costa Rica has the highest return rate for vacationers of any other destination in the world.
- While Costa Rica is technically a "second world country", its infrastructure is excellent.
- Costa Rica's economy, while operating at a deficit, is in excellent shape.
- Costa Rica has no standing army, thus expends no funds on a national defense.
- Costa Rica espouses family values and many visitors liken it to the States from the 50s. The pace of living is slower and the Costa Rican people (Ticos) have different values than their counter parts in America and Canada.
- There are literally dozens of microclimates within a two hour drive from anywhere in the country. Where else can you drive for a day and see two oceans, several volcanoes, sandy beaches, mountains, waterfalls, lakes, rain forests, cloud forests, agricultural land, hot springs, wildlife preserves, and much much more...?
- Cost of living estimated at approximately 30% of equivalent lifestyle cost in the States or Canada.
- An estimated 30% of the population speaks or understand some degree of English.
This is only the abbreviated version of the positives of Costa Rica...other countries such as nearby Panama, Nicaragua and Mexico are attempting to woo the "baby boomers" but OUR belief is that the "blue chip" of Latin American investment will almost always win out. Just because land in Nicaragua or Panama maybe 20% cheaper or because the government offers one time incentives to expats....does not necessarily mean that it is worth the risk of your hard earned savings. Weigh the pros and cons. Some say that Costa Rica is overpriced...some say that its time has passed for investment...we say "take a look at the number of people that visit here...and that return...do your homework...then make your decision."

Okay, we have subjectives about Costa Rica and why people visit here and keep returning. Now we need facts.
During the first six months of 2008, more than 125,000 foreigners visited Costa Rica...and this is a 16% increase over last year. And remember, this is in a so called recession which is worldwide. Don't believe that the trend will continue?...try this: ask your friends what their impressions are of Costa Rica or what they have heard ABOUT Costa Rica. I can guarantee that the responses will be overwhelmingly positive. Subjective ? Yes, but still highly convincing and you will not get these types of responses from any other location or destination.

Numbers of weekly airline flights are climbing...ranging from American Airlines with 43, to Continental with 25, Delta with 24 down to Spirit and U.S. Airways each with 7. This does obviously not take into account visitors from other parts of the globe. Currently, the States and Canada account for over half of all visitors and tourists to Costa Rica. Europe accounts for nearly 20% and the rest of the world, the balance. This is another good rationale why our business is expanding instead of collapsing like many of the local pundits have predicted...the slowdown in the States is more than counterbalanced by Canada (which is experiencing a VERY strong economy and a very strong currency) and Europeans... who are also experiencing gains with the rise of the euro vs. the dollar and other currencies. The Costa Rican real estate market is simply not dependent upon one country or group of people to experience strong real estate interest. And please also keep in mind that Costa Rican real estate is a microcosm of Economics 101...the areas of interest for the "boomers" and second home buyers are small and it is easy to see that there are more buyers than sellers (which is really what the markets are all about... remember our KISS theory?)

We have established statistically that more and more visitors are arriving in Costa Rica. Now we need to establish a base for our investment philosophies...and it is primarily centered upon the huge number of "baby boomers" which are just beginning their retirement years. We do not need a huge elaboration as to why "boomers" are examining overseas destinations in increasing numbers...but here are a few of the major reasons:
- Cost of living...it is no surprise that costs of almost everything are climbing daily. The equivalent cost of living in Costa Rica is roughly a third as much.
- Medical care is excellent and only at a fraction of the cost.
- There is a tremendous amount of diversity here and an almost unending list of activities and sightseeing which is available daily...you will definitely never be bored!
- Stable government and environment.
- High literacy rate and people are genuinely friendly.
- Only a short plane ride from the States.
- Infrastructure is good and water is drinkable everywhere in the country.
- The banking system is excellent and safe.
- There is a huge amount of flora and fauna here which is literally unequalled anywhere in the world...and over 25% of the country's land is set aside for national parks.
- Land and construction is still extremely affordable by comparison.
- Crime is still relatively low, especially when compared to its counterparts and "competition".
Okay, now that we have established that Costa Rica is a viable, growing and stable marketplace AND that the "boomers" have the potential to have a major influence on the marketplace in Costa Rica...let's pinpoint specifics which will allow us to make significant investment gains:
Most "gringos" say that they would prefer beach living. The reality is that over 50% of all people who buy on the beach sell within five years. We have found over the past five years that most gringos prefer acreage with the following features:
- Views...either the ocean from a distance or the Central Valley
- Access to good medical and professional services
- Not "too remote"
- Good shopping and dining accessibility within a reasonable drive.
- Internet availability...good infrastructure
- More moderate temperatures
- More rural than urban but still amenities available closeby
- Within a "reasonable" drive to an international airport.
- Private, but not too private; i.e., neighbors nearby but not TOO close.
- At least half to an acre of land...river, waterfall or lake if possible.
- Fruit trees and other vegetation a major plus.

With the above in mind, Rhonda and I settled in Grecia which was approximately half an hour from the country's major airport, 45 minutes from a first class hospital (yet only 10 minutes to a municipal hospital, in Grecia). We chose to be in the mountains overlooking the town and the Central Valley. Major shopping was 45 minutes away as was "better dining" and (for me) bookstores. Notice how we fit the above "profile"? BTW, we also had a river on our property. Why do we bring this up here?...because our "property preferences" were (and are) the same as 80% of most gringos that move to Costa Rica to retire (full or part time.)

Next factor: there are very very few rules and regulations when it comes to real estate and construction in this country. There are ways to protect yourself legally but there are no sure methods of ascertaining what is a "fair and honest" price. There is no MLS system and there is not a system of comparables. For the most part, real estate is bought and sold the way it has been for decades...primarily word of mouth. This is specifically why people flock to the real estate industry...because of "net selling" or the simple fact that it is almost impossible to know what is a fair price. (net selling refers to "marking up" a property over and above what the seller wishes to "net...very commonplace here.)

Next: There are very few American style houses for sale here... and Tico houses simply are not satisfactory for 98% of "gringos" that move here (lower ceilings, smaller rooms, not enough land, no 220V power, no views, etc). This obviously brings up the logical conclusion...if there is a market, and it appears that it is highly skewed in favor of the sellers...is there an opportunity here to capitalize on that imbalance? (for those of you who are thinking ahead here...remodeling is difficult because almost all construction here is block and steel and all wiring and plumbing is encased in concrete...remodeling costs actually exceed "STARTING FROM SCRATCH".)

Because there is a two tier market here...one for locals and one for "everyone else" it is important to ensure that pricing received is comparable to others of comparison (as much as possible in a country where "comparables" are simply conversation over coffee.) A "gringo" certainly can look for his or her own property but it is almost a guarantee that prices will be at least 50% higher as locals share the common perception that "gringos" have money trees "back home" and that we will pay almost "any asking price" because we don't know the culture or the area.

And remember we know the markets...who is buying, what they are seeking and what they will pay. And then obviously the determination has to be made if it is possible to make a profit.

The last item to take into account is the simple fact of Costa Rican land itself...without the "gringo factor". Ticos (Costa Ricans) are accustomed to an inflation rate of around 12% annually and many compensate by buying additional land and simply holding hard assets. And when selling, Ticos know that if they do not get their price today...they will in six months or in a year. The trick then becomes to truly know the markets and to be able to take advantage of buyers that MUST sell and that need money.

On to "brass tacks" and specifics...
1. The void of, and lack of, American style houses in many areas is crying to be filled. The following is a quick "down and dirty" summary of approximate profits to be made from such an investment: Land cost: (one acre...view property in Grecia or environs) $50,000; American style house of 3 BR, 1500-1600 sq. meters: $75,000...misc costs including architect, utilities and landscaping: $10,000. Selling price: $190-195,000, possibly more. Estimated gross ROI (before payout to limited partner or construction supervisor)...50%.

2. Smaller developments can be even more profitable...we prefer to stick with a much smaller number of homes as it is more manageable and you fly under the municipality's radar...nothing illegal, just avoiding the possibility of locals swarming around with their hands out. Typically, we raise money in smaller increments (shares) as the amounts normally exceed $250,000.

Profit estimates here are extraordinary.
3. Oftentimes, at least bimonthly, we see a property at an extraordinary price...one that we know is substantially below market value. Sometimes these properties can be resold almost immediately...other times they involve buying a larger piece and reselling smaller units of land. A good example is a block of four quarter acre beach front parcels which are titled and located only 1 ½ hours from San Jose on the Central Pacific coast. The owner is in the States and is admittedly desperate. The units can be picked up as a whole and resold for at least a 50% profit (our opinion). They are RARE and gorgeous.

4. Recently, we were contacted by the owner of a small house in Grecia. We had previously listed it at a decent price...but no takers. It has a gorgeous view and the house needs probably $5000 worthy of work. In our opinion, the owner is now willing to sell for close to land value only. Not a huge winner, but percentage wise, probably a 50% profit is available. Estimated ROI to the investor...50%+

5. Occasionally we are shown properties which have a "glitch" in their titles...not major problems but simple filings to correct them. "informacion processoria" properties are normally those which have passed down from family member to family member over the years without doing proper registration or filings. It is a simple matter for a competent attorney to correct the oversight (and, in many cases, it was simply not done for lack of funds). These properties can oftentimes be had at substantial discounts. A good example is a property currently being offered of nearly two acres just on the outskirts of San Jose...a suburb called Aserri. The property HAD to be sold (family financial emergency)...asking price was actually less than 20% of what comparable properties were currently selling for ADJACENT to this property. Estimated "fix" time is six months...properties like this do not often surface and, most of the time they are "no brainers".

Now, we are the first to admit that 99.9% of people that read about these investments are not able to do them themselves. This is why we have typically set up "arrangements" or agreements to handle the everyday details and carry the project from start to finish. Obviously, investments such as the Aserri property, or others that are shorter term investments that can be resold quickly, do not need "special handling".

Hopefully, this investment overview has sparked your interest. We have met nearly all of our investors...some before the physical and actual investment, other afterward. We have an annual pigroast in January and typically nearly all of our investors along with friends and neighbors from Costa Rica get together for fun and an overview of each investment status. In the past it has been a huge hit...plus of course, it is a great excuse to come to Costa Rica.

Equalizer For Investments

2008-09-07T08:33:00.000-07:00

Making money using long term growth has always been a popular path to financial success. The concern of not only the individual but business has always been to find ways to not only ensure money for short term benefits but to also find innovative ways to make money over the long haul of time. There are so many ways to make money it becomes a major decision on exactly what is the correct choice for people and businesses.

Some choose the stock market buying and selling stocks. Sometimes they use short cycles and sometimes longer commitments. Placing money in banks or CD's or Money Markets or many other ways within the financial institutions of today are utilized. Other avenues include IRA's which are Individual Retirement Account retirement plans that provide some tax advantages for retirement savings in the United States.

There are a number of different types of IRA's which may be employer-provided or self-provided plans. The types include a Roth IRA which are contributions made with after-tax assets and all transactions within the IRA have no tax impact and withdrawals are usually tax-free. A Traditional IRA whereas the contributions are often tax-deductible. A SEP IRA which has a provision that allows the employer to make retirement plan contributions into a Traditional IRA established in the employee's name instead of to a pension fund account in the company's name. A SIMPLE IRA which is a simplified employee pension plan that allows both employer and employee contributions, similar to a 401k plan but with lower contribution limits and easier administration. And the popular Self-Directed IRA which permits the account holder to make investments on behalf of the retirement plan.

Also popular are Real Estate and Development Projects which are attractive for many in today's economic world and many choose that option to grow their wealth. Building communities and being a part of a development project can be very exciting to the investor, not only financially but also watching and seeing the end result can be very rewarding.

No matter what the choice or the decision of each person or business may end up being of where to invest their money, the way to protect the future of money is to invest money in the future. And that in itself is the great Equalizer in financial security. Investing your money is always a smart decision for your financial future.

Benefits of Exchange Trade Fund Investment

2008-08-25T09:09:00.002-07:00

Exchange Trade Funds are an investment tool which is becoming more widely used by financial institutions and private traders alike. But what makes ETF trading so popular? What are the benefits you can derive from investing in Exchange Trade Funds?

The first benefit is ease of use. There are thousands upon thousands of stocks traded in every country and sector. Picking the right ones can be an arduous and complicated thing. This is something which not many regular people, with jobs and family obligations, can find the time to do well. An ETF is much easier to analyze and monitor.

The second benefit Exchange Trade Funds provide are in relations to traditional funds and is in terms of management fees which can take a substantial bite out of your profits. ETFs usually charge a mere fraction of the fee which regular funds require.

The third benefit is in terms of ROI. Many studies found the managed funds often don't beat the index or sector in which they specialize. This means that you pay management fees but don't really benefit from the supposed specialty of the fund manager. An Exchange Trade Fund replaces the need for that manager as it follows the index or sector blindly. They often beat managed funds despite the "expertise" of fund managers.

The fourth benefit of investing in ETFs is the fact that you can trade them flexibly, much more than a fund. You can buy and sell ETFs at all trading hours, just like a stock, meaning that this is a fluid investment and an easy one to manage.

The 5th benefit of trading Exchange Trade funds lie in the fact that they allow you to invest in an entire sector through a single position. This means that you can invest in the oil market, for example, but don't have to pick and choose specific stocks. This means that you're less exposed to the risk of one single company taking a bad turn, which can happen at anytime due to many reasons which may not influence the rest of the companies in that financial segment.

Overall, investing in Exchange Trade Funds can be a massively beneficial course of action for you to take.

The Best Safe Investments

2008-08-25T09:09:00.001-07:00

Many people spend their time working hard to earn money for the security and well being of their family, not only for the present day, but also for the future. If this sounds like you, then you will probably been keen to invest some money and hope that you see a good return. There any many options when it comes to investments. Some are risky and some are safe. What you need to know is which are the best safe investments.

It would be comforting to know that any money that we put into an account, or use to buy stocks with, is going to be safe. Unfortunately it is not always easy to know which are the best safe investments and which are high risk. As a general rule, you will probably find that if the percentage return on your money is fixed at a fairly low rate, the investment will be secure. If, however, you buy high risk stocks and shares, the return will be potentially a lot higher.... or possibly you may end up with nothing!

The Federal Government has an investment scheme which is very secure. If you are keen to know more about just which are the best safe investments, you should have a look at the Government Treasuries. There are three types of treasuries, all of which are similar aside from the length of the term. Treasury Bills have a term length of one year or less, Notes are offered from one to ten years and Bonds for ten years and longer. The Government will use the money that you pay for these treasuries for investment and, in return, will guarantee you a fixed rate of interest. This interest rate is not high as you have the backing and 'full faith and credit' of the United States Government.

Government Agency Bonds are a little more risky but offer a higher interest rate. They do not carry the same 'full faith and credit' backing of the Government, but are still some of the best safe investments available. One of the downfalls that you may be concerned about with GABs is the possibility of the loan associated with your investment being prepaid. If this loan should be paid early and this falls during the allowable call period of your investment, you may find the life of your bond is decreased and no further interest paid upon it. Both treasuries and bond are exempt from state and local taxes. There other safe investments that come with the backing of the Government, but the above two are probably the two most common.

Any schemes that carry the guarantee of the Federal Government are going to be the best safe investments. Although you may find that you are not getting a very high interest rate with this type of investment plan, as least you will know that you will have a safe and secured return on your hard earned money.

Allocating to Alternative Investments? - Read This First

2008-08-25T09:08:00.002-07:00

Are you in the market for an alternative investment? If you are one of the prudent investors who is seeking to allocate a portion of assets to strategies not normally employed by the investing public this article is a must read.

There are primarily two forms of alternative investment management, hedge funds and managed futures. Hedge funds are invested in a vast number of products, both exchange listed and Over-the-Counter (OTC) derivatives. Managed futures are generally only invested in exchange listed commodity futures contracts, regulated by the Commodity Futures Trading Commission (CFTC). Be careful! If the wrong investment is chosen the investor may be left with a bad experience of alternative investment products. This article will focus on the very important issues of transparency, liquidity, lock ups, returns and taxes in regards to the alternative asset class. Readers should leave with a better understanding of a few of the primary issues involving any alternative asset investment.

TRANSPARENCY

Transparency is an issue with any investment. Most investors want to know exactly what their money is doing at all times. Giving money to someone who claims to have returns of X without knowing what the manager is actually doing is generally a bad idea. Transparency is becoming more and more of an issue as the universe of investable products grows exponentially. The recent hedge fund "blow-ups" are a case in point.

Hedge funds are alternative investment vehicles that can be invested in anything from Johnson and Johnson common stock to over the counter derivatives based in Zimbabwe. The universe of products is virtually limitless. When an investor becomes a limited partner of a hedge fund, in most cases he/she is giving it free reign over the funds they have invested. If the manager chooses to, he/she could invest in waffles and chances are the investor would never have any idea. Hedge funds are not required to tell investors exactly where capital is being deployed. To make matters worse, many of the products do not have a closing value at the end of the day, so even if the investors knew what the funds were invested in they would have no idea what their investment was actually worth on any given day. There is absolutely no transparency. All the investors get is a quarterly statement informing them of gains or losses and maybe some commentary if the manager is not too busy. In some cases investors hear that, virtually overnight, more than 50% of their funds have been lost. Long-Term Capital Management is the most infamous case of a hedge fund "blowing up," but recently there have been quite a few more that are going down in history, such as Amaranth's $6 billion loss in 2006, Absolute Capital Groups' 30-40% loss and Focus Capital's 80% loss in early 2008.

The story is much clearer if the investor is involved in a managed futures product, or with a Commodity Trading Advisor (CTA). A CTA generally has a very specific strategy that is defined in the investor's disclosure document, which is similar to a prospectus. The CTA is required to state exactly what products the investor's money will be invested in as well as exactly how the manager plans to invest. What's more, once invested with a CTA investors will receive a statement every time a trade is placed. At the end of every day the products in which investor capital is deployed are marked with a closing price determined by the exchange. This allows the investor to know exactly what his/her investment is worth.

It is really up to the investor as to what makes him or her comfortable. If one person does fine not know where his assets are invested then the transparency issue may not need to be considered, but for most of us it is of the utmost importance.

LIQUIDITY

Liquidity: a business, economics or investment term that refers to an assets ability to be easily converted to cash through an act of buying or selling without causing a significant movement in the price and with minimum loss of value. (defined by wikipedia.org)

Liquidity can be an issue with both hedge funds and managed futures, but a good manager will tend to avoid instruments that are illiquid or difficult to trade in and out of.

As stated previously, hedge fund managers can and do invest in a vast array of products. Many of these products are OTC derivatives or products that are traded between banks and the hedge funds directly. If the hedge fund buys an OTC derivative from a bank, and later decides it needs to sell that particular product back, the bank alone determines what they will buy it back for, or worse, if they can buy it back at all. In that case the hedge fund may not be able to get out of a losing position.

Liquidity is an issue that has gripped a number of hedge funds lately. Many have been forced to shut down because they were invested in highly illiquid derivatives linked to sub-prime mortgages. When the counter parties began to refuse to buy the products back the funds had no choice but to liquidate their portfolios at extremely discounted prices and shut their doors, or refuse investors' requests to withdraw their money.

Unfortunately liquidity can be an issue for managed futures as well. Most managers only trade in highly liquid commodities; however, there are times when even the most liquid commodity can become illiquid very fast. Illiquidity can be caused by many factors, from politics to supply and demand imbalances to general investor fear and greed. A prudent manager will prevent investors from being too exposed to liquidity risks by implementing some sort of hedge, diversification or proper position sizing of the account.

When dealing in listed markets, as most managed futures products do, the counter party to any trade usually has a number of other counter parties willing to buy or sell at specified prices. This kind of open auction system generally allows for prices to be fair. To give investors even more comfort each account is guaranteed by the exchange clearing house through customer margin deposits, meaning that the chance of a counter party defaulting on any given transaction is drastically reduced. However, when dealing with obscure OTC markets, as many hedge funds do, most of the time there is only one counter party to the trade, meaning it is not guaranteed by anyone, which not only makes the chance of default higher but at the same time makes the likelihood of getting a fair price on any given trade much less.

When investing in a hedge fund or managed futures product it is important to understand how liquidity can affect the investment. If a manager is using too much leverage or is consistently involved in thinly traded OTC products that are less liquid it may be a sign that investing in that vehicle at that time is not wise.

LOCK UP PERIOD

A lock up period is the time after the initial investment in which the investor is not allowed to withdraw funds from that particular vehicle. After the specified lock up period investors are free to withdraw funds as defined in the disclosure document of each hedge fund.

Almost all hedge funds have a lock up period. This period can range from as little as three months to longer than two years. Generally the more established the fund the longer the lock up period. A lock up period is generally good for managers and not so good for investors. If a manager has a lock up period of one year and immediately after making an investment the trading starts to go poorly, that manager has a right to continue trading that money until the lock up period is over; because the investor has previously agreed to the terms and conditions in the disclosure document he or she is not able to request redemption until the specified time period is up.

Managed futures products are different. Most managed futures products do not have lock up periods. There are a few that have lock ups ranging anywhere from three months to a year, but this is not the status quo in the industry. If an investment in a managed futures product needs to be redeemed it can generally be taken care of within a few hours. This is very beneficial if you have taxes due, college tuition that needs to be paid or any unexpected expenses that comes up.

Lock up periods will be foreign to most investors who have not invested in alternative investments before. Make sure when reading the disclosure document that the lock up and withdrawal periods are properly discussed. Also, note that in many cases the lock up period is an area that can be negotiated to the investor's benefit.

RETURNS

Returns are returns, right? Wrong! Returns are a very deceiving form of analysis for any alternative investment. Most investors make investment decisions based on previous returns, but this is a flawed concept. The main issue is that past returns have absolutely nothing to do with future returns. This has been proven time and time again as managers that were once out-performing begin to under-perform and managers that were struggling rise to the top. Wise investors will not base their investment decisions on past returns or assumptions made about future returns.

The fact of the matter is that no manager really knows what returns will be from year to year. Managers can target a certain return but there is absolutely no guarantee that the goal will be achieved. If any manager, whether hedge fund or CTA, specifically promises a return that is a sign to seek a different manager. Likewise, if a manager touts his/her past returns it is a sign he/she does not fully understand that returns are completely unrelated to each other and have no bearing on the future.

There are numerous databases in which managers can post monthly returns and potential investors view them, but this is completely the wrong way to make any investment decision. Chasing returns leads investors down the wrong path and can have devastating effects on their capital (see "Transparency").

What investors need to do is search through these alternative investment managers by strategy, not by returns. The investor should pick a few advisors from each category after reading about the managers' approach to the market. Once a few are decided on, the investor should call each manager and request more information and/or a meeting. All managers will have a disclosure document and possibly some marketing material that can be given to potential investors. Meeting the manager of a hedge fund can be a difficult task unless the investor is placing a very large sum. CTAs, however, are generally much more open and willing to meet with investors, so getting a meeting with them is entirely possible.

Once the proper due diligence is done and the investor likes the manager's strategy and approach, an investment can be made. Be careful not to invest too many assets with any one manager or specific style, as that is not proper diversification. It is wise for the investor to build a portfolio of alternative asset managers over a wide range of strategies, as this may reduce the risk of any one particular manager or style.

TAXES

Hedge funds often provide the investor with very unfavorable tax treatment because they are invested in many different products all over the world. This may have a vast array of consequences on the investor's overall taxes. Hedge funds uniformly report investors' gains or losses in August after each tax year, forcing an extension of filing. Additionally, the tax returns are very complex, often over 30 pages for each fund invested in. To try and explain all the possible tax consequences of a hedge fund would probably require an entire book. In the interest of time the entire spectrum of hedge fund tax accounting simply cannot be delved into at this point.

For managed futures products the tax accounting is very simple. Since most trades take place within Regulated Futures Contracts (RFC) regulated by the CFTC, contracts receive Internal Revenue Code Section 1256 treatment. In this case 60% of profits are taxed at the long-term capital gains rate and 40% are taxed at the short-term capital gains rate. For a profitable managed futures product this effective tax rate of 23% provides a 12% advantage over hedge funds that trade frequently. This can, however, be a stumbling block in the case of large losses. When a loss is recorded and 60/40 treatment has been elected the investor is only allowed to carry forward $3000 of those losses every year. If the investor's loss is large this can be a real headache, as he/she will be carrying forward losses indefinitely. There is a bright side, and that is if the investor has created a portfolio of managed futures products and another manager has produced gains the investor can write off the loss against the gains of that other manager.

In the end calculating taxes for a managed futures product is much simpler than for a hedge fund. For some investors this may not be an issue, as their CPAs will manage everything, but it would be important to consult with the CPA prior to investing to make sure he/she fully understands the implications involved with the new investment.

WHAT IS THE CONCLUSION?

As a responsible investor it is prudent to have up to 20% of assets invested in the alternative investments. This can be achieved by utilizing hedge funds or managed futures products. It is the investor's choice as to which is better suited for their portfolio. It is important to not be too heavily invested in one particular alternative asset manager or specific alternative asset strategy. Investors are encouraged to create a portfolio of alternative asset managers, just as they create a portfolio of mutual funds, stocks and bonds. Numerous studies have shown how diversification into alternative assets can, over time, smooth out the volatility of an investor's portfolio.

The topics discussed above represent only a small portion of the differences between these two popular alternative investment styles. Proper due diligence is the sole responsibility of the investor and requires a much closer look than these few issues. Careful consideration of one's own financial condition must be taken into account, as the risk of loss can be substantial in any alternative investment.

What Are Safe Investments?

2008-08-25T09:08:00.001-07:00

If you are considering investing money and are not sure which is the safest place, it is best to get some professional advice. The last thing that you want is to risk losing all your hard earned money due to a poor recommendation given over a drink in a bar. So, what are safe investments?

If you need to know what are safe investments as opposed to high risk investments, there are many qualified consultants who will be able to give you some sound advice. Many safe investments are Government backed and will guarantee you a predetermined interest rate and return on your money. Even then, you are faced with a choice of which to opt for. You will probably hear the words Treasury Bond, Note and Bill being used in conjunction with Government backed investments. These are three types of low interest investment which have Federal Government backing and are as secure as you will get.

You will possibly wish to consider questions such as 'What are safe investments going to realize when it comes time to withdraw my capital? One point that you must understand is that it is rare to get something for nothing. This is true in the financial world probably more than anywhere else! To have the security that you want you will no doubt find that you have to make sacrifices when it comes to the interest rate. Investment schemes such as Treasury Bonds, Bills and Notes do not carry a high return.

If you wish to opt for a higher rate of interest you will have to forego some of the assurance that you get from such a stable and secure option and put your money into a more risky market. This could include investing in the stocks and shares market yourself. If you have a considerable sum of money available you would be advised to use a specialist consultant for this. They have knowledge of the current situations and will be able to invest for you. Obviously this will not be a free service. They will know what are safe investments at any given time and are on the same side as you when it comes to wanting to increase your capital... they will probably be working on a commission basis!

Even though such a consultant may have knowledge of what are safe investments on the open market, you cannot expect these to be as reliable as Government backed schemes. You can, however, look forward to a higher return for your money. It is quite exciting being a part of the world of stocks and shares but always remember the saying "do not put all your eggs in one basket"!

So, what are safe investments? A truly safe scheme is one with the Government backing and guarantee but at the end of the day the choice is yours. Your idea of safe may be slightly different to someone else!

Investment - How's, When's and Where's

2008-08-25T09:07:00.001-07:00

The investment options in its broadest sense can be diversified into:

- Physical assets like real estate, gold/jewellery, commodities etc.

- Financial assets such as fixed deposits with banks, small saving instruments with post offices, insurance/provident/pension fund etc. or securities market related instruments like shares, bonds, debentures etc.

Now,for those of us having investments in the first category wont be reading this solely for the matter that they are much ahead of me in realizing their dream cos the first category of investment requires a fairly large capital to begin with:-(.But, for those for whom the first category is some years away and the second category seems all gibberish with jargon's imported from the planet MARS, we shall ask MR.IT to help us enciphering the second category.I am not focusing on the first category for the reason i mentioned earlier though,with the realization of the second,we will be moving to first for sure:-)

Now,Financial assets,as they are called are the most popular tools in the market for the sole reason since they allow for comparatively lesser lump sums of investment money and also regular investment.But,they aren't a piece of cake to understand.Are they?? I am still breaking my head over a lot of them:-) The financial assets can be further d emerged into 1.Debt Instruments 2.Equity & Equity Related Instruments Before we get into the details ,a point worth mentioning which i picked up from a very good magazine is that,the indulgence in these two instruments should be on a mixed basis to ensure capital gain as well as security.A generic approach suggests a 25%(debt) and 75%(equity) exposure ,but then these change according to one financial goals,age and obviously various factors which we will come across later.

Debt Instruments::: These are nothing but a glorified form of a savings bank account in more ways than one. The primary being that these are oriented protecting your capital and then, aim to maximize returns. In other words,they are virtually risk free but don't aim at high returns.Most of these instruments earn a decent 10 odd % on the investment with pros and cons of their own.So,the investors(aren't we all supposed to be addressed like this) with a low risk-appetite, this is the way to go.I am briefly discussing the few options available:

1.Post Office Savings: Post Office Monthly Income Scheme is a low risk saving instrument, which can be availed through any post office. It provides an interest rate of 8% per year, which is paid monthly. Minimum amount, which can be invested, is Rs. 1,000/- and additional investment in multiples of 1,000/-.

2.Public Provident Fund: A long term savings instrument with a maturity of 15 years and interest payable at 8% per year compounded annually. A PPF account can be opened through a nationalized bank at anytime during the year and is open all through the year for depositing money. Tax benefits can be availed for the amount invested and interest accrued is tax-free.

3.Fixed Deposits with Banks are also referred to as term deposits and minimum investment period for bank FD is 30 days. Fixed Deposits can be considered for 6-12 months investment period.

This is just and insight into one of the very few commonly used debt instruments,which are available in the markets.Since,this form of investment is not my forte i will not divulging a lot into it.Though,i would love to clarify any doubts if one comes across.Any one willing to put their money in these instruments should take extreme caution and undergo a complete research before opting for any of these.

Investing in Gold - 3 Critical Financial Events That Gold Bullion Investors Should Not Ignore

2008-08-09T07:37:00.000-07:00

There is never a wrong time to be investing in gold. However, the recent failure of IndyMac Bank, the collapse and bailout of the GSEs, and the sharp rise in the CPI made it more imperative than ever, for you to protect your wealth with gold. I'm going to go over those three financial events and explain why I feel that it's more crucial than ever for you to buy gold bullion now.

The Failure of IndyMac Bank

Recently, IndyMac became the largest bank to fail in two decades. On the Monday morning after the news of the failure was announced, depositors lined up for blocks and waited for hours to withdraw their money from the bank. If their deposits on account were over the FDIC limit, (the exact amount depends on how the accounts were structured) they were out of luck.

At this point, no one knows how long depositors will have to wait to receive the remainder of their funds or exactly how much they will eventually receive. That is, of course, if they collect anything at all.

What Could Happen

1. The problems at IndyMac are not just an isolated incident, but indicative of a U.S. banking system that has been deeply affected by the worsening credit-mortgage crisis.
2. The FDIC's insurance fund has a capital reserve of $53 billion. The IndyMac failure could use up 10% of those reserves.
3. The FDIC has a secret list of 90 other 'problem' banks. The FDIC chairman has assured the public that its reserves would be adequate to handle the additional bank failures that are expected to occur.
4. A few more well publicized bank failures could cause depositors to start pulling money out of even the strongest banks. A widespread panic could start a nation-wide bank run.

Why You Should Buy Gold

Investors who own gold do not have to worry about FDIC insurance, bank failures, and the danger of holding large amounts of cash. Gold is safe, stable, and secure.

The Bailout of the GSEs

Over the same weekend that the failure of IndyMac bank occurred, another catastrophic financial event occurred. Investors began to lose confidence in Fannie Mae and Freddie Mac, the government-sponsored enterprises (GSEs) that either guarantee or own an astonishing $5.3 trillion in outstanding U.S. home loans. The Federal Reserve and the U.S. Treasury attempted to restore faltering investor confidence in Freddie Mae and Freddie Mac by agreeing to open up their discount lending window (loan money) to the beleaguered GSEs. For the time being, it seems to have worked.

The Treasury successfully lobbied Congress for a permission to invest (buy shares) in either company and increase the companies' $2.25 billion dollar lines of credit. The Senate passed the Fannie Mae-Freddie Mac-housing bailout bill and President Bush signed it into law.

What Could Happen

A government bailout of the GSEs would increase our national debt, increasing interest rates at a time when the economy can hardly afford it.

1. A government bailout of the GSEs would increase our national debt, increasing interest rates at a time when the economy can hardly afford it.
2. The Federal Reserve insists that the GSEs are in no danger of failing. But, what if they're wrong? Between the two of them, Fannie and Freddie guarantee almost half of all the $12 trillion U.S. mortgage debt.
3. Their ability to function is critical for mortgage prices.
4. However, if they collapse, the ability to obtain a cheap mortgage will be the least of anyone's worries. Their collapse would potentially drag down the entire U.S. economy and banking system.

Why You Should Invest In Gold

Owning gold is like having an insurance policy. It has been around for centuries and will continue to exist for centuries more. Owning gold will give you peace of mind and protect your assets from any possible financial catastrophe.

The Rise in Consumer Prices

Recently, the Bureau of Labor Statistics reported that the Consumer Price Index (CPI) rose 1.1% in May and is up 5% from a year ago. That's a seasonally adjusted annual rate of 7.9%. Over the same period, food rose 8.7%. And, energy alone is up almost 54%.

That means if you have cash invested in a typical bank savings account, CD, or Treasury bond or bill, you are getting a negative return on your money.

What Could Happen

1. Inflation is rising but the Federal Reserve will be hard pressed to raise interest rates because of the weak economy and stressed-out financial system.
2. That means a weaker dollar. A weaker dollar means a continued rise in inflation. If your investments don't keep pace with inflation, that means less and less purchasing power as time goes on.

Why You Should Be Buying Gold

Gold is a proven hedge against inflation. Did you know that during the five years after WW II that inflation was at its highest, gold had a real return of over 130% compared to a negative 12% for the Dow Industrial Average? Gold is a stable asset that keeps its purchasing power and preserves wealth.

Still not convinced that you should be investing in gold? Throughout history, fiat currencies have collapsed. Stocks, bonds, futures, and options are subject to the fate of the markets and companies associated with them. We've experienced hyperinflation, recessions, and depressions. Both governments and countries have risen and fallen. But, through it all, gold has survived and will continue to be a safe-haven for those wise enough to recognize its true value.

Please take this opportunity to protect your hard-earned money from bank failures, financial catastrophes, and the devastating effects of high inflation with pure gold bullion coins You can find a huge selection of discount gold bullion coins at: http://bullionbargains.com

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