GOLD PRICE HITS RECORD LEVELS
Gold hits a record high
Gold has hit a record high and one wonders how high it will go before it starts falling but with interest rates so low and coronavirus not going away anytime soon it could reach dazzling heights. It is important to take a step back and not get carried away because the fundamentals of investing still need to be observed.
Whenever there is an opportunity for capital gain there is an opportunity for capital loss therefore never make speculative investments with money you cannot afford to lose but rather, use your discretionary spending for this purpose whether it be money you would have otherwise used for nights out or holidaying.
You do not necessarily have to purchase gold bullions to take advantage of the rising gold price. Investing in gold companies on the sharemarket is one option. You need to do your homework on the company and only invest in one with a proven track record.
In New Zealand small investors can drip feed money into the sharemarket through Sharesies. This is not the only share trading platform but with Sharesies investors are able to invest money into individual companies.
I think investing in companies which mine gold may not necessarily be a good long term strategy because gold is likely to start failing at some point but nobody knows when that day will come. What is likely to happen is investors will see their gold and invest the money elsewhere.
Investing in gold coins is another option providing you have a safe place to store it.
You can easily purchase these from ebay or other auction sites.
The beauty of owning gold coins is they can easily be converted back to cash.
Something is only worth what others are prepared to pay for and that is applicable whether it is gold, silver, property, art, or whatever it is.
It pays to do your homework and not invest in something unless you know something about it. Goldco has some informative articles on it’s website, you can find out more here:
COLLECTING GOLD COINS
Collecting Gold Coins
People choose to become involved in various hobbies for several different personal reasons. Some do it for the pure pleasure and fulfillment they get from the hobby itself (whether collecting, drawing, painting, writing, or some other hobby), while others partake of a specific hobby more readily for profit. This is the classic divide between people in all aspects of hobby work, including the collection of gold coins. Why would any individual choose to collect gold coins as a hobby over something more exciting and active? Again, some people choose their hobbies based on their own ideas of pleasurable activities, while others simply aim to make a solid profit.
The reason an individual consider investing in a collection of gold coins can be influenced in several ways from many different sources. Perhaps someone in this individual’s family – a father or a grandmother or even a favored aunt – collected gold coins throughout this individual’s childhood and simply built interest in the youth or eventually passed on the collection to the young one. It was simply a matter of deciding whether or not they wanted to add more gold coins to this collection and based their entire decision on sentimentality.
Another way a collection of gold coins may have started in reality is through the receipt of a single gift – for a birthday or other special occasion this person received a gold coin from a relative or close friend. From that small gift, the entire collection of gold coins began as a hobby. In these cases, the person enjoys the game of hunting down rare gold coins more than actually acquiring them, or maybe he or she simply likes to display an impressive collection.
Others may collect gold coins to make a profit. Some of these gold coins can be worth a great deal of money, especially rare gold coins, and often, such materials actually appreciate over time. Often, a good collection of gold coins, especially one containing several rare or limited edition gold coins, can be appraised at a high price.
Hundreds of thousands of individuals across the world invest billions of dollars and hundreds of thousands of hours in the collection of gold coins, building huge lots that can be worth a great deal of money in the future.
Whatever item you are collecting it pays to gain knowledge about it by reading all you can about it because in this way you will be able to see something listed online at below its true value.
If investing in gold interests you or it is something you may want to look into then check out the website below:
https://affiliates.goldco.com/l/1VRW1MU2Q/
LESSON FOR SHAREMARKET INVESTORS
The article below is of the opinion of the writer, if you require advice from a qualified professional then see your financial advisor, bank manager, or budget advisor
Do your homework lesson for do-it-yourself investors
Written by R. A. Stewart
On the news recently was an article about sharemarket investors in New Zealand who got their fingers burned by investing in a company whose price dropped dramatically after the company was revalued. The previous valuation was an error and a lot more than its real worth. Its share price tumbled quite dramatically.
Some young investors who used the share trading platform Sharesies got their fingers burned with one losing $10,000 as the reporter stated.
The share price increased by 1000% in a short time so looking at the maths of all of this, for a share price to increase by 1000%, it would have to be worth ten times its listing value so if the investors who was said to have lost $10,000 would have invested $1,000 to begin with.
So that would have been his actual loss.
The company was one I had never even heard of and the lesson here is to do your homework first. Don’t invest in anything unless you know something about it.
A presenter said, “Shouldn’t Shareies have done more to warn investors?”
My view is this; Sharesies are not there to spoon feed their investors, it is up to everyone to do their due diligence. With Sharesies, investors have the choice between investing in individual companies or managed funds.
With managed funds, your investments are chosen by the fund manager. They are experts in their field and know what they are doing.
Investing in individual companies requires investors to use their own judgement but is a great way to learn about the markets and those who lose money in this way should learn the lesson and grin and bear it.
If you are from New Zealand and would like to have a go at online investing then I recommend Sharesies, I am with them myself, you can join here:
MAKING MONEY MADE SIMPLE
Book review
Making Money made simple
By R. A. Stewart
MAKING MONEY MADE SIMPLE
Written by Noel Whittaker, “Making Money made simple,” is a very informative book on finance. It is a very practical guide which covers all types of investments.
In it Whittaker says people’s financial situation places them into one of three categories;
1-The Seriously challenged
2-Those who are reading water
3-Those needing direction
He describes the process of setting goals and taking action.
He also describes the rule of 72 which is to divide 72 into the annual rate of return. This will give you the number of years it will take to double your money.
He says the keys to prosperity, which are, 1. Spend less than you earn, 2. Take responsibility for your financial future up to and including retirement, 3. Avoid the traps that reduce your wealth, and 3. Get inertia working for you and not against you.
Also in the book Noel gives his thoughts about the various kinds of investments.
Other issues he talks about are Managed Funds, gold and silver, borrowing traps, buying a home, and gearing-speeding up the way to wealth.
As far as financial books go, this is up there with the best.
THE MONEY SCHOOL
Book review by R. A. Stewart
The Money School
THE MONEY SCHOOL
written by Lacey Filipich is an interesting book which explains the advantages and disadvantages of the various types of investments available. Lacey founded Money School in 2010 (Australia) to build financial literacy in adults. There is also a course for kids to teach them money skills. Lacey’s courses have been used by people from around the world to improve the financial well-being.
If you…
Ever wondered where your hard earned money goes.
Want to be financially independent years before your time
How to make the most of what you have.
Then this book is for you.
Here are some subjects she deals with;
Saving money and living within your means which is basically pay yourself first.
Diversifying your investing
Buying assets and avoiding bad debt.
On Property and negative gearing she says tax advantages are a terrible reason to buy property because they are so minimal. Negative gearing is where you spend so much money renovating the property that you show a loss on it can be claimed against your other income. She rightly points out that governments can change the tax rules so that property investors cannot claim losses against other income.
As far as Bitcoin and the like are concerned she says you may want to invest the money you would have otherwise have spent on the horses or casino in bitcoin instead. She does concede though that no one knows where crypto currency will go considering it’s short history.
Other types of investments such as bonds, cash, and the sharemarket are also covered.
THE TACTIC OF AVERAGING
This article is of the opinion of the writer and not intended as financial advice. If you require qualified finance advice see your bank manager, financial advisor, or budget advisor.
The Sharemarket-Averaging
Averaging in the sharemarket is when you purchase shares in a company and as the share price declines you purchase more shares in the company therefore reducing the average price paid per share.
Here is an example of how averaging would work.
Price Number amount Price per share Total average
$4.00 1000 $4000 $4.00 $4000 $4.00
$3.50 1000 $3500 $3.75 $7500 $3.75
$3.00 1000 $3000 $3.50 $10500 $3.50
$2.50 1000 $2500 $3.25 $13000 $3.25
$2.00 1000 $2000 $3.00 $15000 $3.00
In this example you began by purchasing 1000 shares at $4 per share but in a sliding market where the price in this companies shares have continued to slide, if you buy this company’s stock as it’s share price continues to fall, the average price you will have paid per stock will be reduced. This is called averaging.
This kind of strategy can be used in the cryptocurrency market but it should be pointed out that only money which you can afford to lose should be risked in Bitcoin.
Investing in gold or other precious metals is another form of capital gains which can form part of your wealth-building strategy, you can find more about it here:
RETIRE TO GREYMOUTH
Retire to Greymouth in New Zealand
Written by Robert A. Stewart
Where would you like to retire in New Zealand if you had the choice?
How about Greymouth on the South Island’s West Coast?
It is a town of some 10,000+ residents, Greymouth is the largest town on the West Coast. It has all of the facilities of similar sized towns and more.
The best part of Greymouth to go searching for a house are Karoro, South Beach, and Paroa. These areas don’t have the problem of crime as others, and are not as cold as the centre of town.
Cobden bears the brunt of the easterly wind roaring down the Grey River, Coal Creek and Kaiata suffer from flooding now and again, and Blaketown gets the faces the strong westerly winds.
As for public transport, Greymouth is well-served by taxis, which includes a service to Hokitika airport, 26 miles away.
If you are keen to travel further afield, Greymouth is the only town on the West Coast with a train station. The world famous Tranzalpine is among one of the best train journeys in the world. It has to be on your bucket list. The train leaves Greymouth at 2pm arriving in Christchurch at around 6pm. It leaves Christchurch at 8 in the morning.
There are daily bus services to Nelson and Christchurch. Check with the ladies at the train station for time tables and brochures.
So what is there to do in Greymouth?
Heaps if you are an outdoor person who enjoys fishing, hunting, tramping, cycling, and other outdoor activities.
The West Coast has lots of cycle trails and bush walks for those who feel energetic. The newest one is the Blackball to Punakaiki track, named, “The Paparoa Track.” This is by no means the only one. Ask at your local tourist information Centre for further information on these.
The climate on the West Coast is mild compared to other parts of New Zealand. In August 2019, Greymouth had snow for the first time since 1995. It was a novelty for the locals. That does not mean that other parts of the West Coast does not receive snow. Otira on the Western side of the Southern Alps receives it’s share of snow every winter. In fact, roads between Christchurch and Greymouth can be impassable for those without chains during periods of heavy snowfall.
Some of the small communities outside of Greymouth possess their own unique charm which makes them ideal for the retirees. Runanga, five miles north of Greymouth, Omoto just east of Greymouth, and Taylorville are all nice spots. Seaside places such as Rapahoe and Punakaiki further up the road are prone to erosion and will continue to cause headaches for those who own properties in these areas. Thought you should be warned.
Many of the high street retailers have a store in Greymouth; these include The Warehouse. Countdown Supermarket, Noel Leeming, Paper Plus, and others. The town has a wide range of cafes, restaurants, and fast foods outlets, while all of the major banks have a branch in the town.
WIFI is available throughout the town and there is FREE internet access at the public library.
Before making a commitment to retire to Greymouth it would pay to visit the town for a week or two to get the feel of the area. You won’t be disappointed.
There is an American magazine called “Retire,” it has articles on the best places around the world to retire. You can obtain a copy here:
ASSESSING RISK VERSUS REWARD
This article is of the opinion of the writer and does not constitute financial advice; if you require advice of a professional contact your financial advisor or bank manager.
Assessing Risk and Reward
Written by R. A. Stewart
Assessing the risk of loss compared to the rewards is a balancing act and requires a bit of insight and knowledge of what you are investing on. This issue has been brought to my attention a couple of times recently. It was only yesterday I received an email from a website which holds bitcoin funds; the email was promoting a special offer. Invest a minimum of $100 US into Ethereum for 4% interest. This was not an offer to purchase Ethereum itself but rather than purchase Cryptocurrency as a means of making Capital Gains you would be investing money for a guaranteed return of 4%. This is a poor return for the risk involved and of course I gave this one a miss but with the low interest rates at present there will be some people who will be tempted if offered this kind of investment.
Finance companies that offer investors higher returns to investors are lending their money to higher risk borrowers; therefore there is a greater risk of losing your money. Prior to several finance companies collapsing in New Zealand during the Global Financial Crisis of 2007/2008, many financial advisors were saying, “The higher interest rates do not reflect the higher risk investors are taking on.”
Many rejected that advice with disastrous consequences.
Sports betting and horse racing provide perfect examples of risk and reward.
In the Australian Rugby League Melbourne Storm were playing Sydney Roosters. Melbourne has won almost two-thirds of their games since their formation in 1999, therefore if you backed them in every game you would need average odds of $1.50 (1-2) just to break even, yet they were paying $2.20 (5-4). This was over the odds.
In the same weekend, Brisbane Broncos, a team that had lost it’s last five games was favourite against the NZ Warriors. Brisbane were paying $1.60 which was a poor price for an out of form team; they lost.
It is the same with horse racing. If there are equal favourites with one that has won one race in 14 starts and another that has had two starts for one win then which would you prefer? The one that had only been beaten once is the better bet.
You have to do the mathematics and ask yourself this question, “If I backed this horse at all of it’s starts would I be in front with the odds it is paying in today’s race?”
Getting back to investing in the financial markets one has to assess the risk and weigh it up as opposed to the rewards.
One very important point to remember is this; “Whenever there is a possibility of capital gain then there is also the possibility of capital loss.”
Investors need to get used to losing occasionally and get into the habit of taking calculated risks. If you have not had any financial setbacks it means you are not taking risks.
Taking risks is not the same as making foolish financial decisions. Just be sensible with your investing and invest according to your plan and timeframe when you require the money.
This is some guide;
Short term (with one year) Conservative funds
Medium term (one to five years) Balanced Funds
Long Term (Six to ten years & longer) Growth Funds
Adding another category would be speculative investments.
There is no guarantee what will happen to the markets this decade and in particular post-covid, therefore it pays to diversify your investment portfolio and it is for that reason that some investors are turning to gold as another string to their financial bow but like all types of investments you have to do your research.
You can learn about investing in gold from the link below:
6 WAYS TO MAKE CAPITAL GAINS
The article below is of the sole opinion of the writer and is not considered to be financial advice. If you require advice on a financial matter then consult your bank manager or other financial advisor. You may share this article or publish it to your own site or blog.
6 Ways to Make Capital Gains
Written by R. A. Stewart
There are basically two types of investment income. Capital Gains and Investment Income.
Investment income is income you receive from an asset, examples of investment income are interest on savings, rent from property, and dividends from shares.
Capital gains is the increased value of an asset; examples of capital gains is the increased value of property, shares, and other assets.
Some investments provide capital gains but no income; examples of these are precious metals such as gold, bitcoin, antiques and other collectable items.
Here are investments which provide Capital Gains:
The Sharemarket
The sharemarket offers excellent opportunities for capital gain. For most people, investing directly into the markets is not an option because the transaction fees once taken out for buying and selling shares make it not worth their while, however, there are plenty of managed funds investors with limited means can participate in. Sharesies in New Zealand is one. Investors can drip feed money into the markets with Sharesies and there is the option of investing in various funds or individual companies. Other similar types of platforms in New Zealand are Investnow, Kernelwealth, and Hatch. These are not the only ones though.
Your retirement scheme invests in managed (Mutual Funds) and they are also a form of Capital Gains. In New Zealand joining kiwisaver is a no brainer. KIwisaver is New Zealand’s retirement scheme.
Property
The property market has been a popular Captain Gains tool for a lot of investors using not only their money but other people’s money in the form of a loan. Income is gained from rents which pays for the mortgage. All related costs are the most popular form of capital gains and the easiest one for the novice investor to get their toe wet in the markets and learn as you go because there are several mutual funds which are available and the start up costs are minimal. In New Zealand Sharesies only costs $1 to get into which gives you the chance to invest in managed funds or individual companies. It is a great way for tax deductible. This type of investment can turn to custard such as wayward tenants. If you are prepared to take the risk then this investment may suit.
Your own home is a good source of Capital Gains if you intend to sell at some point.
Another way to get in on the property ladder is to purchase shares in property investment companies in the sharemarket. This can be done by investing in individual companies or managed funds which invest in property.
Compound Interest
You must have heard of compound interest; that is when you invest in fixed term accounts for x% interest. Instead of receiving your interest payments into your bank account you let them be added on to your principal and you earn interest on your principal and previous interest payments. This is called compounded interest.
The increase to your capital is called “Capital Gains.”
Interest rates are very low at present (2020); in some instances lower than the inflation rate which makes this kind of investing less attractive. It is important therefore to do your due diligence and not be enticed by some finance company offering higher interest rates than normal, because with higher interest rates comes higher risk. These finance companies offering higher interest rates lend to higher risk types of borrowers.
I am not saying that you should not invest your money in these companies but rather do your due diligence and at least diversify your portfolio rather than plonking all of your life savings into the ione company.
Gold
This one is purely speculative but can be a good hedge against a downturn in the markets. The one drawback with gold is finding a place to store it. Another way to invest in gold is buying gold stocks in the sharemarket. Purchasing gold coins from auction sites such as Ebay and Trademe is another option. As with other investments it pays to do your homework and read all you can about gold and other precious metals. The following website provides information for those interested in gold:
https://affiliates.goldco.com/l/1VRW1MU2Q/
Crypto Currency
Crypto currency such as Bitcoin and the like should be treated as speculative investments, therefore, only invest money in this if you can afford to lose it. What I am saying is use your discretionary income to purchase crypto currency. This type of investing can be a rollercoaster but one piece of advice which may be useful is to not just purchase all your crypto currency in one transaction but to do on a weekly, fortnightly, or monthly basis so that there is a chance that you have made a purchase when the currency is low. It is called averaging.
Collectables/Antiques
Investing in collectibles can give you a sense of satisfaction and profit when you intend to sell. You really have to know your stuff when dealing in antiques. Always remember, something is only worth what others are prepared to pay for. If someone is prepared to pay $1,000 for a painting at auction then that is what it is worth, however, if another painting is sold at auction for just $10, then that is it’s worth. The value of something is only a matter of opinion.
Recently (2020), some Banksy paintings sold for over $100,000 in New Zealand. The seller of the paintings paid a total of $500 for them in London (UK) some years earlier. It just shows how one’s eye for a bargain can be profitable.
For smaller items such as postage stamps, bank notes, beer labels, and so forth collectors can list their duplicates on auction websites to help fund their hobby.
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