Saturday, 7 January 2017

The Goal of Retirement is to Achieve Financial Independence

Today, the goal of retirement is more about achieving financial independence, than it is golfing, traveling, and doting over grandchildren.

There was a time when Canadians retired at age 65. Government benefits and employer pension payments began, and together they were enough to take care of you; even if you had no other savings. Let's face it, that traditional idea of retirement is a thing of the past. Increasingly, your ability to retire depends upon how much you save for retirement and how you manage your own money.

Today, the goal of retirement is more about achieving financial independence, than it is golfing, traveling, and doting over grandchildren. It's about reaching a point in your life where your career and lifestyle choices are no longer driven by financial necessity. Nowadays, people are saying goodbye to a full-time career in their early 60s, but are still able to maintain their lifestyle through investments and by working part-time or under a contract.

Before you can consider leaving your full-time job, you need to determine where your retirement income will come from. A single person enjoying a middle class retirement should expect to spend $28,000 to $49,000. If you were to retire at 65 with annual government benefits of $15,000 per person, you will need to make up the remainder with personal savings of $325,000 to $850,000. If you plan to retire before 65, you’ll need a bit more.

If you don’t have enough money to retire, then you’ll need to reconsider. You may need to cut back your retirement spending, or find a way to save more. The only other option is to work longer and earn more money. Now, this doesn’t mean that you have to hold your "nose to the grindstone" doing something you despise. Semi-retired workers have a growing number of part-time, contract and temporary jobs to choose from. On the other hand, if you don’t like the idea of working longer, you’ll need to significantly increase your savings. That is going to take discipline; especially if you are in your late 40s or early 50s.

I remember a time when you could put your savings into government bonds and earn 10% to 15% interest. Today a 10-year Government of Canada bond yields 2% if you're lucky. That investment return is barely able to keep up with inflation, let alone earn a healthy income. Don't get me wrong, it is important to keep a portion of your portfolio in low-risk investments so you don’t get devastated if your stock investments lose value, but you need to constantly be on the look-out for better returns.

Although fixed-income investments – like bonds - can protect your savings, you’re not likely to grow your wealth with them. To stay ahead of inflation and earn a steady income, you’ll need to keep a portion of your portfolio in investments that pay monthly and earn more than the rate of inflation.

Monday, 19 December 2016

Stocks, Bonds Are Not Enough To Reach My Investment Goals

Stocks and bonds are not enough to help me execute my investing plan. With them alone, there is no way I can reach my investment goals. I need alternatives.

In my mind, stocks, bonds are not enough to help me effectively execute my investing plan. With them alone, there is no way I can reach my most important investment goals and financial priorities. Over the last eight years, the S&P 500's returns were only mediocre; about 6.5 percent per year. Given 2016's disappointing stock market performance, I have been looking at various alternatives investments to bolster my investment portfolio.

From the research I've done, it appears that alternative investors are largely based in North America, which is where I am living. According to Strategy & PwC's consulting team, North American investment is expected to grow to nearly one-third of the market - reaching more than $6 trillion of the $18.1 trillion, by 2020! This is a positive sign that the demand for alternative investments is growing strong, particularly in my neck of the woods.

Nowadays, the investors who are investing in alternative investments are focused on emerging markets, infrastructure and real estate, private debt, private equity and other alternative sources of returns, such as tangible assets.

In times of economic instability, like Brexit and post-U.S. election 2016, many people put their trust in tangible assets; like shipping container investments for example. This is because these type of alternative investments are low risk. They exist outside of traditional investments, and thus are not really affected by economic factors in the same way as bonds and stock shares are.

The biggest challenge for me in 2017 will be to find higher returns without taking on significantly more investment risk. Because I am focused on more protection and draw-down risks, the scope and attractiveness of alternative investments is increasing. After all, they have already proven they can provide a stable, inflation-protected income stream, and also help to reduce overall volatility of my investment portfolio.

Sunday, 6 November 2016

Reviewing Shipping Container Investments With Pacific Tycoon

After a two year hiatus from container investing I am considering a return to Pacific Tycoon or perhaps a competitor that offers shipping container investments.

I have managed my own investment portfolio for more than two decades. I have held traditional investments like stocks and bonds, and I have experimented with alternative investments like shipping container investments. If asked to choose a favorite between the two (traditional or alternative), undoubtedly I would choose a non-traditional approach. From my perspective, investing in alternatives has lowered my exposure to unnecessary risk and delivered steady returns year after year.

My introduction to alternative investments came half-a-decade ago when I invested with a container leasing company called Pacific Tycoon. The company offered investments in shipping containers with returns of 12% and a container buy-back option. This was a marked departure from the other alternatives, like precious metals and real estate investments, I had experimented with in the past.

My container investment with Pacific Tycoon paid me returns each month and, before the end of the second year, I exercised the company's buy-back option and moved my proceeds back into traditional investments. Looking back at the volatility of the markets over the last few years, I should have left my money with Pacific Tycoon! With that being said, I have begun to carefully review options to (once again) include containers in my portfolio.

I am considering a return to Pacific Tycoon. However, before doing so, I would like to review the company very carefully. Also I would like to look into their competition and survey other offers to invest in containers. After all, there has been talk that Pacific Tycoon is a scam and some people have left poor reviews about the company. From my viewpoint I don't believe it. My exposure to the company was favourable and other investors had a similar experience with Pacific Tycoon.

Here is what I know. My shipping container investments paid me very well for nearly 24 months; far better than the traditional investments have performed for me in the two years since. I like the fact that the exposure to risk is low, and that Pacific Tycoon was always consistent with my monthly returns. All things considered though, I will look closely at the competition before jumping in with both feet again.

Saturday, 23 August 2014

Some Investors Focus on Yield When Choosing Investments

These are not easiest of times for investors, especially with investment returns at all-time lows, political and social turmoil disrupting key economic regions, and the constant threat of inflation looming. Regardless of the obstacles threatening global markets, private investors and asset managers from across the globe are discovering ways to make the challenges in today’s markets work in their favor, rather than against them.

Nowadays, to combat the disappointing returns and risks from traditional assets in a portfolio, an investor's strategy often begins with a focus on yield, and then works it way backward from there. In applying this approach, the portfolio's holdings are chosen because they will perform well and deliver strong and steady returns (of 8 percent to 13 percent per annum), no matter how the other asset classes or international markets perform. This type of long-term security has become increasingly important to investment-seekers everywhere, regardless of their demographic.

"Yield is at the root of every decision that we make in our portfolio, [whether it’s] buying stocks or doing asset allocations."- a Multi-Asset Product Manager at Schroders

Experienced investors know that the proper alternative asset allocation can substantially increase the value of a portfolio. This is especially true when you stop to consider that, aside from the common investment risks, markets can at times be incorrectly priced; particularly in instances where investor joy and euphoria has pushed values too high, or investor fear has (in contrast) pushed values down to extremely low levels. As most investors are aware, this is an all-too-common occurrence on Wall Street, where stocks prices are sometimes subject to unexpected influence and/or intentional manipulation.

With a focus on investing for the best return, investors are choosing investment options that are hardly influenced by politics or by the performance of investments in traditional markets. In fact, a rising number are investing in the hard assets that drive economic growth in emerging and developed nations around the world. Aside from providing a strong yield, these investments also provide security against crashing stock markets and rising inflation.

Sunday, 10 August 2014

How To Choose Investing Options That Will Meet Your Needs

Creating a sound investment strategy is not always the most simple of tasks to accomplish. There are a number of well-established factors, as well as even more unique factors from your own point of view, that must be considered and addressed in order to properly determine your best strategy for investing. Given that each investor has unique needs and desired outcomes, there is no such thing as a one-size-fits-all strategy. What works for someone else may not match up to your desired return outcomes and long-term goals. For instance, if earning a steady profit from your investments is the strategy for investing you have chosen, then you must make sure to seek-out opportunities that pay out dividends or "for-use" fees on your investment. This usually involves finding income producing assets that have a proven to provide a dividend or similar payout.

One of the proven ways of doing this is to create (what I call) a "matrix" on a spreadsheet. Doing this will illustrate your goals, identify your risk tolerance, and clearly define the desired outcome you expect from your investments. To begin, write out the return you expect on a piece of paper. Also include which of the common risk factors are of concern to you and the types of investing opportunities you are looking for. Then, begin conducting in-depth research to uncover investment types that have already demonstrated that they can meet/exceed your needs. Once again, if earning a steady profit is your goal, you are going to want to find asset purchases that are used regularly, and that usage is paid for. This includes investments like real estate (apartments, income properties or rental units), container investments (rental/lease fees) and others. Depending on how your matrix is established, you may have a lot of cash to invest, and therefore are more apt to try real estate investments; or perhaps instead you have chosen a steady return strategy as your preferred criteria. If this is the case, then the advantages of shipping container investing should certainly be considered.

When weighing your options, it is paramount that you stick closely to the investment plan that you have created (above) and only select the opportunities that meet its criteria. When necessary, find investor reviews that can help to address any underlying concerns and increase your confidence. With this in mind, I cannot begin to tell you how important it is to take the time to set the record straight about investments and investing returns, especially if you intend to make an educated decision about your financial future.

Sunday, 3 August 2014

The Long-Term Growth In Global Trade Reduces Investing Risks

As an investor, you are always trying to minimize the risks associated with your investments. It is an ongoing challenge that you must constantly wrestle with. The question investors are asking themselves is whether or not investment offerings in global markets offer less exposure to risk than investments currently offered in North American markets. The truth be told, ALL investments have some sort of inherent risk involved. In fact, the very definition of the word Investment implies that their are risks ahead:

A thing that is worth buying because it MAY be profitable or useful in the future
- Source: Google Definitions

The word "may" found in the definition above suggests that there is always a chance an investment opportunity will not pay out profitably. I cannot begin to express how important it is for the individual investor to accept this fact, manage the uncertain aspects of their portfolio, and keep investment risks to a minimum. Obviously then, the goal is to continually reduce investing risks without affecting your portfolio's overall ability to profit from your immediate holdings. The challenge is which investment road to take.

In order to reduce your investment risks, you will need to look for guarantees, or markets that almost certain to rise in the future. One of those options is to invest in emerging markets and the global trade that feeds them. Look around the world, international trade is flourishing and continuing to grow at a very decent rate. Be that what it may, the question still remains. Will investing in global trade reduce investing risks? In my mind it depends a great deal on what you invest in. However, as global trade numbers continue to grow, and are expected to continue to increase, you simply need to find an investment that grows on pace with the world's economic prosperity. In doing this, you will reduce your investment risk, by choosing an investment that promises long-term growth and profitability.

If you are looking for my recommendation, I suggest you find a vehicle that is directly involved in building and maintaining economic growth in developed and emerging countries around the world. Making an investment in the shipping industry for example, is a great means of getting involved in the global growth while at the same time, minimizing your exposure to risk.

Saturday, 19 July 2014

How I Earn a Steady Income From Investing In Alternatives

The Internet is littered with hundreds of thousands of "get-rich-quick" schemes and regrettably many investors have fallen for the lure of high return with minimum investment. The reality is though, and any investor will tell you this, it is hard to make a high return quickly without exposing yourself to risk.

One of main criteria for investments is: Can it return a steady income stream for me?. As an investor, I find tremendous value in knowing that my investments are both profitable AND provide long-term asset growth. When you factor in monthly dividends (or profits) from investments you will find that the overall return is significantly higher than most, and it is being accompanied by reduced overall risk, given that you are being paid out as your investment matures.

To be honest, there are not a lot of options when looking for this type of investment. Personally I prefer income producing assets, like real estate and investing in shipping containers, as both  provide me with a monthly dividend. Albeit income property most often comes with the added burden of having to chase after people and payments, my shipping container investments all return a steady profit each month while being managed by industry professionals. Let me take a moment to explain further ...

I have chosen to hire a broker to manage the containers I have purchased in order to simplify my involvement. Each month I receive a check with my profits - and sometimes it isn't much - however, it IS a return placed in my bank account each month without having to do anything outside of my initial investment. In fact, the company I am using to broker my container leasing has been paying me monthly dividends for 3 years and I continue to receive monthly checks from my initial investment. Furthermore - with regards to my exit strategy, my shipping container retain much of their value of time and can be sold anytime I am ready. When we compare this to real estate income properties, paying off the asset (condo, house etc) usually takes a great deal of time (15 to 20 years sometimes) and the real estate markets can be very volatile when it comes time to sell.

All things considered, alongside my modest holdings in traditional offerings (stocks, bonds, etc.,) I continue to earn a steady profit each month from my investments in alternatives. This traditional-nontraditional approach has consistently delivered performances and returns that, over the years, few other investment strategies have provided me.