Difference between investment and speculation according to Benjamin Graham

Investment and speculation are two concepts widely used in the world of the stock. Often used interchangeably, although they have very different connotations from the perspective of value investing .

In this article we look at the difference between investment and speculation according to Benjamin Graham , analyze the characteristics required for a financial transaction not qualifying considered speculative and end the separation between the two.

Definition of investment and speculation by Benjamin Graham

Benjamin Graham defines investment in his book "The Intelligent Investor" as follows:

"An investment operation is one which, upon thorough analysis, promises security to principal and an adequate return"

Speculation is defined by Graham opposed to investment:

"Operations not meeting these requirements are speculative"

The 3 requirements of a non-speculative investment by Graham

• Comprehensive analysis of the company

For Graham, a comprehensive analysis is:

"The study of the facts in light of the established safety criteria"

Therefore, an inversion to be made ​​without prior analysis is speculative. The greater the depth of analysis, less investment is speculative.

• Security of our investment

According Benjamin Graham, this implies:

"Protection against losses under conditions or normal variations or reasonable"

As we see, this is a rather vague concept or subjective, so this will depend on what we consider normal. Warren Buffett is much more forceful with the requirement of investment security with its historic phrase:

"Rule No.1 is never lose money. Rule # 2 is never forget rule # 1 "

• Adequate performance

Graham considered adequate or satisfactory performance:

"Any type or quantity of performance, small it may be, that the investor is willing to accept as long as it acts with reasonable intelligence"

Again this is a subjective concept, because it depends on the investor's return objectives.

Is it possible to invest without speculating?

For Graham, any financial transaction that does not meet the requirements enumerated above are considered speculative. However, I consider it necessary to clarify the difference between investment and speculation of Benjamin Graham.

First, we must start from the fact that all investments are subject to some uncertainty, however small. As there is always the possibility of losing our investment, we can say that any investment involves speculation in varying degrees. There may be speculation without investment, but not without some speculation investment.

Although there is the economic concept of "risk-free rate" (rate of return without risk), this no longer an abstract concept nonexistent in practice. For many American bonds or German bonds are practical representations of this concept. However, it is possible (although unlikely) that these countries can not pay if it happens some totally unforeseen event, such as a war or a natural disaster.

What we try to do is minimize speculation to maximize the safety of our investments and, therefore, minimize the risk. We have three methods reduce speculation and, therefore, increase the security of our investments:

• We invest in companies easily assessed, typically those with more predictable revenues.
• Deeper analysis of companies.
• Better analyze our investments, increasing our knowledge and experience.

The combination of these three methods, along with a large dose of common sense and experience, is what has made Warren Buffett the third richest man in the world and the best investor in history. Ye may not be investing in the list of world's richest by Forbes magazine, but with a little effort will succeed a good return for your savings sleeping well at night.

Five crowdfunding platforms with which they seek funding for your project

The topic of crowdfunding (or collective financing) through online platforms through which anyone can contribute their own funds to a project has been running for the past few years but lately the issue has taken special importance not only for the current situation, in which for certain projects can come better than ever as crowdfunding support, but for some specific cases in which it has raised exaggerated amounts of money and have made ​​headlines everywhere.
I'm thinking now in the case of Double Fine , the game studio owned by Tim Schafer (one of the creators of 'The Secret of Monkey Island' , in case you helps the data) that in February this year Kickstarter opened a campaign with the goal of getting $ 400,000 to develop a new graphic adventure and eventually reached $ 3,336,371 thanks to the contributions of 87,142 people. A truly absurd figure.
It is because of cases like Double Fine when this route of financing charges a much larger role and anyone who has a project in mind you will be going through your head the possibility of doing things differently. As there are many crowdfunding platforms available to us I think are worth knowing at least the most powerful and interesting (two of them are American and three Spanish) to know where to direct us depending on the type of project you have in hand. Some do not delimit by type, others do.
Normally they all have a number of common features: one that starts a campaign puts an economic objective to be achieved in a time limit (usually around the month, month and a half) and a series of rewards for those who choose to contribute some amount. The greater the input, the reward juicier. On the other hand it is essential to know that the amount you choose to provide will only become effective if the campaign reaches the target set within the stipulated time.

Kickstarter

Kickstarter is a crowdfunding platform fashion. Of U.S. origin and born in 2008, has thousands of active campaigns of all types and a very large user community that make it the most interesting.
The bad news for those who live outside the United States is that in principle allows only based projects in that country (requires a bank account to receive funds there as well). What we can do is support existing campaigns, but I have to emphasize that only supports a payment method: Amazon Payments. Kickstarter keeps 5% of the target quantity in a campaign as long as it is reached. Otherwise there is no charge.
Official Site | Kickstarter

Verkami

Verkami was one of the first crowdfunding platform created in Spain. His proposal, as opposed to Kickstarter, is aimed solely at those independent creators who want to finance their projects through this channel. The created a father and his two sons in 2010 and during this short period of time have made some renown.
Make it clear that the creators of the works that are generated through the capital raised through rights Verkami keep them (CDs, books, etc..).
Verkami charges 5% of each project only if they get funding.
Official Site | Verkami

Drip

Drip is a crowdfunding platform and distributed collaboration (services, infrastructure, microtasks) for projects that promote the commons, open source and / or free knowledge. The code of the platform, as have those responsible, will be opened when it is structured properly tested. They have no place here, therefore, for-profit projects or fundraising for charity, for example.
If funding is achieved, the commission is 8%.
Official Site | Drip

Indiegogo

The Indiegogo operation is almost similar to Kickstarter, but has a remarkable difference. While all of these platforms are carried by their leaders rule 5% of the total amount achieved by a campaign funded in Indiegogo Two types of funding. In the Flexible Funding they take 4% if the target is achieved and 9% if not achieved, but the campaign creator gets the amount he had managed to run out the time limit for the campaign. This forces seeking funding to set reasonable prices and promote the campaign well.
Then there is the Fixed Funding, where Indiegoo takes 4% if the target is achieved and nothing if not achieved, but the creator also earn a single dollar. This is the system that is used more commonly in other platforms, although it is true that Indiegogo takes the lowest percentage (4% vs. 5% standard).
Official Site | Indiegogo

Lánzanos

In the above platforms we have seen the maximum time for each project is determined by the service itself and is usually around 30 to 40 days. In Lánzanos is the creator of the campaign which sets the time it expects to raise the targeted amount of funding. And there is no maximum, but once started the campaign and can not be modified.
Lánzanos makers take 5% of each successfully funded, a figure that is reduced to 1% if it is a charity project. Payments can be made via PayPal or by using the payment gateway of La Caixa.
Official Site | Lánzanos
As said earlier, the network can find many crowdfunding platforms, but these five are the most powerful, if not more. I hope you will be helpful.

how to Invest in renewables energy

In recent years, renewable energy investment has increased in popularity largely because the world is becoming increasingly aware that the current economic model is based on finite resources and this has to change. Although crude oil and other fossil fuels will last us for the foreseeable future, there will come a time when our energy consumption will have to look for alternative and renewable sources.
And here come into play renewable energy, although this sector is still relatively immature in global terms, the growth opportunities presented are huge and it is worth considering exposure to renewable energy.

How to invest in alternative energy?

Biofuels:

Biofuels are an alternative form of energy derived from carbon based organisms. There are many different options including bio-alcohols, biodiesel, green diesel, vegetable oil ... Recently, the International Energy Agency has stated that biofuels have the potential to replace 27% of transport fuels by 2050, effectively reducing emissions greenhouse gases by 2.1 million tons per year. Even some countries already have existing mandates requiring companies to blend biofuels with gasoline, giving these various fuels with high growth potential.
Some companies with which exposure to biofuels, and thereby to alternative energies are:

• Archer-Daniels-Midland Company (ADM) company dedicated to the production of different agricultural commodities and also has many of its operations based in the biofuels industry.
• Methanex Corporation (MeOH): this is a company dedicated to the production and sale of methanol, a chemical that, among other things, is a very popular agent mixed with gasoline. Methanol is also one of the key components of biodiesel. MeOH pays a dividend yield of 2.6%.

Hydropower:

Hydroelectric power has become the most powerful energy alternative at this time, but of the least popular. Hydropower generates water currents moving and exercising more on large dams and rivers.
It is presented as one of the alternative energy sectors with greatest growth opportunity.

• China Hydroelectric Corporation (CHC): This company is engaged in the acquisition, ownership and development of hydropower in China. HCC has assets of $ 77 million.
• Zhaoheng Hydropower Ltd. (ZHYLF.PK): Zhaoheng generates electricity mainly in the southern and midwestern China.

Nuclear:

After the tragedy of Fukushima has questioned the safety of many nuclear plants, and that is why Germany has completely abandoned nuclear power. But with the new facilities are much safer and more efficient nuclear plants like Fukushima, so that investors take into account this energy Fuenta its considerable growth potential.
We expose ourselves to nuclear energy by investing in ETFs or companies related to these materials:

• Market Vectors Uranium + Nuclear Energy ETF (NLR): This ETF provides direct exposure to nuclear energy because it has stakes in companies such as Exelon Corp, Uranium One, and Areva engaged in the manufacture of this alternative energy.
• Uranium ETF (URA) ETF focuses on the mining of uranium it is considered a direct exposure to nuclear energy and impact the growth of this industry.

Solar:

The solar energy sector is the fastest growing developed in recent years, and a favorite for investors. The industry is still relatively small, but has an average growth of 39% annually over the last decade and a strong predictions for the future. For now, China dominates the solar market, and most companies base their operations in emerging markets.
To be exposed to this alternative energy we can choose companies or ETFs:

• First Solar, Inc. (FSLR): This US-based company is one of the best known in the solar energy sector. Even after the death of CEO of First Solar the company's future is uncertain.
• Market Vectors Solar Energy ETF (KWT): This ETF invests in companies that, on a weighted basis, get a 90% or more of their income from the solar energy sector. The main investments of the fund are in companies like First Solar, GT Solar and MEMC Electronic Materials.

Aeolian:

Wind power is one of the most established alternative energy in the world, and many countries have chosen it as an alternative to fossil fuels. Currently, wind power amounts to just over 2% of the world's energy supply, but its growth rate is increasing, and this figure is expected alcanzace 8% in 2018. Like so many other forms of renewable energy, energy companies are hard to find in equities, but this trend will change as the industry continues to grow.

• Broadwind Energy, Inc. (BWEN) sector company wind energies, based in Chicago. Owns more than $ 44 million in assets.
• Iberdrola SA (IBE.MC): This Spanish utility company, is part of your business based on wind energy production by Iberdrola Renovables, so it is an attractive investment option.
• ISE Global Wind Energy Index Fund (FAN): a fund that focuses all his interest in the wind industry. Your participation is divided into different companies, those companies which are exclusively in the wind business receive a higher weight than those with a broader business model.

What other way to invest in renewable energy you know?

Investing in gold, yes or no?

Is it a good idea to invest in gold? At this time I found two quite substantiated opinions about investing in gold. Both are by people who I think are experts on the subject and I do not have a secondary interest in the subject. So I find it interesting to hear.

On one side in favor of investing in gold is Marc Garrigasat, the blog author Investors Conundrum and president of the Koala Capital SICAV. According to Marc Gold is the true currency of payment of the planet universally accepted, is much older and is not affected by debt that may have taken the issuing state.

On the other side is that of John Reed, author of several books and articles on real estate investment in the United States and one about protecting the savings in bad times. He says that gold is a bad asset to hedge against inflation. Although he recognized advantages such as high density value, says that gold holds its value can lower long-term, and that in the future end up losing because value is above its historical average inflation-adjusted.

In full crisis investing in gold this who would be at the whim of rich sound, but we must also recognize that the turbulence and the high price of it are causing many mediates class people engaged in buying gold, no more than see the shops and businesses that have emerged, some of them with great success and attention given by the media. In fact it has spoken to install gold vending machines . All this without counting the movements of large investors (investment funds, banks, etc.) that are around gold.

Who is right? Should we sell everything we have and buy yellow metal or should we invest in other intangible assets? Personally I think the future imagined by each of the persons mentioned is different, and the period in which the investments contemplated. Meanwhile asks readers? Invest in gold or invest in gold?

The most profitable mutual funds 2012 , Hedge funds.

I found it very interesting annual returns are able to get the big hedge funds, also known as the most profitable investment funds in the world.   We understand how big hedge funds who manage more than 1,000 million dollars. In the list we have the 100 with better performance in 2012 (from 01-01-12 to 31-10-12) and we can compare it with the result obtained in the previous year (2,011).
In the list we can see that most of Hedge Funds exceeds 1,000 million managed and some 5,000 million. The best-performing hedge funds have gained hover between 20% and 40%, which is not bad considering the vast amounts of capital managed.
In this post I put the list of the top 12, with photo of the manager and all data relating to the company, the name of the fund, the strategy used and the yields obtained. The full list of the 100 best in the big hedge funds you have it here .

1st. Background: Metacapital Mortgage Opportunities . Manager: Deepak Narula. Location: USA.
Company: Metacapital Management. Strategy: Mortgage-backed arbitrage
Managed capital: 1,500 million
Performance in the year 2012 (from 01-01-12 to 31-10-12): 37.8%
Performance in the year 2011: 23.6%

2nd. Background: Pine River Fixed Income. Manager: Steve Kuhn. Location: USA.
Company: Pine River Capital Management. Strategy: Mortgage-backed arbitrage
Managed capital: 3.600 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 32.9%
Performance in the year 2011: 4.8%

3rd. Background: CQS Directional Opportunities. manager Michael Hintze
Company: CQS. Location: UK Strategy: Multistrategy
Managed capital: 1.500 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 28.9%
Performance in the year 2011: -10.4%

4th. Background: Pine River Liquid Mortgage . Manager: Steve Kuhn. Location: USA
Company: Chen Jiayi Pine River Capital Management. Strategy: Mortgage-backed arbitrage
Managed capital: 1.100 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 28.0%
Performance in the year 2011: 7.2%

5th. Background: Omega Overseas Partners . Manager: Leon Cooperman
Company: Omega Advisors. Location: USA. Strategy: Long / short
Managed capital: 1.400 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 21.7%
Performance in the year 2011: -1.4%

6th. Fund: European Odey. manager: Crispin Odey. Location: UK
Company: Odey Asset Management. Strategy: Macro
Managed capital: 1.800 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 24.1%
Performance in the year 2011: -20.3%

7th. Background: Marathon Securitized Credit . Managers: Bruce Richards, Louis Hanover
Company: Marathon Asset Management. Location: USA. Strategy: Asset backed
Managed capital: 1.200 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 24.0%
Performance in the year 2011: - 4.2%

8th. Background: Palomino . Manager: David Tepper
Company: Appaloosa Management. Location: USA. Strategy: Multistrategy
Managed capital: 4.900 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 24.0%
Performance in the year 2011: -3.5%

9th. Background: BTG Pactual GEMM. Managers: Team managed (Andre Esteves)
Company: BTG Pactual Global Asset Management. Location: USA. Strategy: Macro
Managed capital: 3.600 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 23.1%
Performance in the year 2011: 3.4%

10 °. Fund: Third Point Ultra . Manager: Daniel Loeb
Company: Third Point. Location: USA. Strategy: Multistrategy
Managed capital: 1.300 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 22.1%
Performance in the year 2011: -2.3%

11 º. Background: Seer Capital Partners. Manager: Philip Weingord
Company: Seer Capital Management. Location: USA. Strategy: Asset backed
Managed capital: 1.200 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 21.6%
Performance in the year 2011: 2.1%

12 º. Background: Tiger Global . Managers: Feroz Dewan, Chase Coleman
Company: Tiger Global Management. Location: USA. Strategy: Long / short
Managed capital: 6.000 billion.
Performance in the year 2012 (from 01-01-12 to 31-10-12): 21.0%
Performance in the year 2011: 45.0%

The Compound Interest (part I)

Often one has talked about this on the net. In fact Einstein once said and the power it has is brutal and compared it to the most important laws that came to discover in his time.

Everyone can invest at compound interest is more, everyone should invest in this way.

The only concept that you have to hold in your mind is that the interest earned on the investment, whatever, have to be reinvested. If you get X amount take an additional 10% for your next investment will be in X amount plus 10%, and so on.

 











Each time you will be investing a larger amount, and over the years you might have considerable capital.

A clear example of safe investment, how deposits, can be combined with compound interest, a powerful tool to raise capital face higher.

You just need to have two things: time and patience. With the very fact continuously reinvest our capital interest is increasing and if you also add fruit saving periodic contributions and the issue is more interesting.

It is clear that the more interest you can get faster increase our capital, but since most people do not want to take greater risks, take for good the interest that we can offer a bank or, how are all the rage now, some bonds autonomous. Although there are many other options how large corporations that offer senior notes, for example, at a good interest and security of solvency.

Well, what we were going. An initial capital plus an acceptable interest and adding a regular savings result gives how, over time, a capital that many do not even have arisen in life.

In the next part of the article we will make a realistic example of how awesome it is compound interest, and never too late to start, but since one of the requirements asked of us is the time because the sooner we start better, more joys reach have.

An advance is not difficult to reach € 300,000.

Strategy for change Euros into another currency. The right way.

There are quite a stir with the Spanish financial system and not for less. There are many people who come to the blog through an article I wrote about how to protect ourselves in case of financial playpen . Well, there are many readers who ask about the foreign exchange, exchange euros for dollars or Swiss francs.

A priori there is no secret but deep down is a dangerous operation to our heritage and here we will explain some concepts.

We will explain a strategy to follow if you want to change our euros for another currency, so whether there playpen, etc. back to the peseta.

Let's start from the premise that there is a strategy for all profiles and you have to be very clear concepts, which has a high risk and often not worth the want to protect with the end result.

To protect small amounts best and most practical refrain would buy U.S. stocks, get the money from the bank and save it at home or invest in a product that is not in euros and that is outside of our national borders.

Come to the point. It turns out that if we change our euros for Swiss francs Swiss francs have more euros as it changes at a rate of 1.20 francs per euro. If you always had this change of currency would not have any problem but not, it fluctuates daily and can vary significantly over time. For example, the October 12, 2007 was changed at a rate of 1.67 euro and Swiss franc on August 10 de 2011 to 1.04 francs a euro, almost parity.

What does that mean? Somebody would have changed 1000 euros into Swiss francs maximum day would have had 1670 Swiss francs and minimum day with the same 1000 euros only 1040 Swiss francs.

Example. If we change 10,000 euros to obtain CHF 12,000 CHF (Swiss Francs). (We do not have commissions to make it easier).

The change of today is 1 Euro 1.20 CHF but if in one year we have to recover the money and change is in 1.40 not recover the 10,000 euros but we have to do the following calculation: 12,000 / 1.40 = 8571 euros. With only twenty cents change coin we lost 1429 euros.

On the contrary if we do change to 1.10 Swiss francs will earn 10 cents euro the currency exchange and we bagged 900 euros obtaining a total of 10,900 euros.

So far there is no secret, pure mathematics. Doing this is very simple but do it well and minimizing risk is more complicated.

What would we do? Would open an account with a Forex broker (broker who works with currencies) and we we would have to create a hedge on our exchange.

If bought at 1.20 and increases (1.25, 1.30 ...) lose money so we will long (buy) in the EUR / CHF, ie bet that the change will continue to grow, that way currency exchange our money but lose our operation in derivatives will win, and more or less have to compensate.

We detect that the price turns and the Swiss franc starts to revalue against the euro, as long as we closed our investment in itself is no longer in losses.

If detected again as trends change can re-open a long or short hedging.

Summarizing. If the investment goes well we do nothing, if it goes wrong we opened a financial derivative currency pair opposite to our investment and investment lose but win with derivatives, to compensate. By detecting turnaround derivative will be closed and that our investment will not pro our derivative loss itself.

Surely there are people who do not understand these concepts, as I said at the start that it is a strategy for people who have some mastery of finance. But basically it's not complicated. You just have to learn to manage financial derivatives in Forex is tricky as there are lots of leverage and we can be more expensive the coverage of investment loss itself.

He opened the floor to questions

Waiting for the big-market bond rotation

The OECD issued its latest revision on global economic growth prospects, in the first of his two appointments or annual reviews. The overall impression is of slow growth and downward adjustments in earlier projections.

In USA GDP will expand even more slowly, at rates of 1.9% this year and 2.8% in 2014.

In Europe much more pessimistic, expecting a contraction of 0.36% of GDP this year and moderate growth of 1.1% in 2014. The main problem remains the debt.

For Asia disparate and curious vision, the two largest economies China and Japan grow although downgrades the first, to 7.8% and the second upward to 1.6%. Curious because if China grows below 7.8% will be a warning sign of weakness and would alert the government while if Japan grows by 1.6% all happy ... not the Nikkei has left a 5.15% on the session.

U.S. bond markets nervous, considering that the expected growth without being robust, it could be enough to affect the asset purchase program by the Fed.

Furthermore bonds approaching resistance area (in profitability or price support, as you look) interesting from a technical perspective, the 10 years in 2.4%, which if exceeded invite managers to modify some strategies.

The technical aspect of fixed income USA invites caution for months, as I come through the graphic exposing long stretch following:

Bonds "high Yied" are also suffering falling sales and prices in line with the sovereign. You can read at this link an interesting article about the risks of rising rates, derived from the tendency to convexity hedging.

A reference to the debt market USA is the ETF (AGG) designed to track the performance of all U.S. debt, Total U.S. Bond Market ETF (37% Treasuries, 28% MBS and the rest in corporate and agencies) capitalization of $ 15,600 million is also falling in price and this will be five weeks straight and falling sales.

Generally, when the bonds fall weak moves financial markets assembly and intermediate trends ruptures tend to bring major changes in the outlook and portfolio adjustment, feeding additional losses in assets.

This time, before such change in the mindset presumed investor and as turbulent markets, handled all markets fall? Unison or there will be a mass migration of Fixed Income Funds Equity?.

Uncertainty about the Great Rotation is debated and concern among fund managers and selectors will depend largely on market confidence about staying "apuntaladora" Bernanke and real economic opportunities.

In view of the behavior of the Fed, it could be argued that the Great Rotation want to further enhance asset reflation and get the expected wealth effect that can finally bring down the pernicious tendency of the money multiplier.

Specific corrections in stock prices are necessary and "healthy" for the strength of trends, there should be an adjustment at any time, perhaps coinciding with breaks bearish on bonds.

After an eventual correction will attract capital bags different sources, one of them raised liquidity proceed with the settings fixed income portfolio and if the helicopter flies over satin, as the FED-BAG correlation is 85%.

True, stock valuations discounted cash flow worsen with rising interest rates and subtract bag. However, the bag can also grow through multiples expansion as we tested several times.

The music continues to play and as said the CEO of City before the debacle, must keep on dancing ... but unlike Mr. Charles Prince also closely monitoring the situation to avoid being caught in an artificial rise will end in tears, as the rest.

Redemption Mortgage or leave the money on deposit?

This question always comes up in every discussion forums and in all conversations. In this blog will have generated enough comments like: 'I lack to pay 130,000 euros of mortgage and I have 40,000 in a deposit. What do I do with the savings? Amortized mortgage or leave it in the tank I might be giving interests?

The response itself is quite simple but you have to consider several factors. Not everything is to achieve maximum profitability.

If the 40,000 we have them in a tank get 4.5% APR 1422 after tax per year in interest.

If amortize mortgage until 9040 the maximum possible for us desgravamos holder a maximum of 15%, ie 1356 per year. But if the ownership of the mortgage there are two people you can deduct twice, 18.080 euros. With 15% return we will get 2712 euros hacienda.

 

 

The tariff includes fee, interest and principal. Therefore, if we pay a mortgage of 500 euros a month is 6000 a year and we should (in case of sole holder of the mortgage) repay to the maximum of 9040, ie add 3040 euros extra. Looking at it another way, we will have a deposit of 15% per year 9040.

If our mortgage fee is 850 euros per month 10,200 annual pay, therefore you should not write off anything because you spend the maximum in 1160, and in this case if you should leave the deposit at 4.5% APR and you probably have higher interest than you are paying for the mortgage.

If mortgage paid 650 euros a month (€ 7,800 per year) but we are two holders (my partner and I) we can deduct a maximum of 18,080 euros per year. That is, at the end of the fiscal year, in December, we'll add 10,280 euros to get the most and so will be like you have a deposit of 18,080 euros to 15% APR.

So much for the options to be financially profitable. But keep in mind that it is often better to pay a little more and have liquidity savings will run out sooner repay. I guess there are all kinds mentalities and before doing anything better inquire as to what may be the best option.

In case you want to ever repay mortgage amortized time and capital, since we got rid of shortening the time and lowering interest fee we will reduce some of the money to pay monthly but will also be paying interest to the bank.

Anyway people to purchase a residence from January 1, 2013 will no longer be tax deductible anything, so that 15% is canceled. In that scenario have the money saved to a good interest monetized over paid on the mortgage will be most profitable.

Difference between active and passive

Of all the definitions of assets and liabilities are only have to stay with the most important, and you have to remember forever.

An asset is something, an investment that puts money in your pocket. However slightly.

A liability is something that takes away the money from his pocket. An expense.

Do not confuse these two concepts as there are many people who think that the house where he lives is an asset and a good investment and nothing is further from reality. A commonly used house is a liability because it does not receive any income from it, and will only be active if one day we decided to sell it to cash, and keep the money.

 

While the home where you live "cost you" money as much as your expectations make you think that in ten years you will get high returns are sitting on a pile of bricks and not on an investment.

Could encompass how active an investment in stock , bonds , a house to rent a bank deposit ...

And conversely a liability would be for example the commonly used home, second homes, a car and all that to make ends meet instead of giving money taketh away.

Spain is deeply rooted in the idea of ​​buying a flat / house and think it's an investment, "a piggy bank" for the future in case of contingencies or just spend the feel you're going to have a possession to be worth tens of thousands euros and you feel you've "invested" or you're going to invest the money.

And you have to be very careful as always not buy is more profitable than renting . The other day I read that 80% of people who have a mortgage for 5-10 years ago is paying more than it is actually worth your floor. And that's not an investment. It is a liability how a house never better.

From the moment you decide to live financially in an efficient manner have an obligation to be creating assets and go slowly getting rid of liabilities that have made ​​previously, and we saw what is the best way to start eliminating debt .

A monthly savings combined with any investment, simple or complicated, and applied over time with compound interest is the best way to create quality assets that slowly but gradually will be putting money in your pocket.

And you've started to build assets? We invite you to tell us what is your strategy to get more and more in his pocket.

Equities vs. fixed income

We want to invest but do not know where to start. We heard that a neighbor buys shares, another has-bills ... but it sounds like Chinese. The most common among the ordinary people, not familiar with the investment world is to know the stock exchange. Equities bag not associated with on many occasions.

If we go a step further, on the other side of the sidewalk, no bonds. Four out of five people questioned in the street has never heard of the bonds, but the bonds of state and treasury bills.

There is a lack of knowledge of concepts and the association has to be clear that equity = stock exchange = buy / sell shares on an exchange.

And fixed income = letters / bonds / debentures, although in this case it is not so easy to explain as above.

I am often asked which is better, if the fixed or variable?, is an open question as it is not a duel to be the best way to invest, but every one of the options requires a plan or strategy determined and made ​​to measure.

By email I have received a comment on why equities RECOMMEND even. I have to say that I've never done, just position myself where best suits me and I adapt to the rules of the game on the fly. Who else who ever invested less in stock, if not he will have done so indirectly through your bank in a structured deposit or a mutual fund. Of all the people who have bought shares being aware of what they did, probably 8 out of 10 will have lost money, have won something and that ten will be made ​​in August. It's pure statistics. To earn a few most be missed.

The bag is fascinating. But never an individual investor may invest to a "higher level" because just as fascinating is equally manipulable. If I want to buy shares of Google I can do with a few mouse clicks. I can think that the company is "on fire" and that will go far. But managers may hedge funds, pension funds and large investment funds do not think the same and withdraw their positions. In that case the action begin letting down caught out if I have not heard before, either by choice or by the use of a stop loss (stop loss).

The strategy followed by these three groups of investors is quite simple in concept. They come in solid companies with good growth and the mere fact of having a reputation draws lots of people, and I do not mean people like you and me (also), but managers and smaller funds and large investors capital private. When the action is "hot" is said, the great go through the back door, by stealth, reaping the benefits and leaving others with an action that is devalued by simply taking away a part of its value . This happens every day, and is to blame for that 8 out of 10 of us lose money in stock market.

If you look at a recent case we can see if Apple / Google. The first was the world's most powerful company, shares more than 700 usd and bank account filled to the brim, to say nothing of the benefits you get. Until one day a great manager decides he has had enough and leaves, of course others are wary and follow him. There is no reason. Humans are like dogs when you shoot with a stick.

Source | Yahoo! Finance

So where has the money gone? Much of it directly to Google. In six months is up 40% to more than 900 usd per share, your business is going well or very well, but Apple is stronger and gets more benefits. And the box (cash money) is several times larger than that of the search engine block. But the funds are positioned in the search, making skyrocket while Apple already looks like 700 usd far and passes through a discrete (to be what it is) 400 usd.

Source | Yahoo! Finance

Until some lit, some other privileged information worldwide leading company, decides to abandon positions. The action will begin to lose because it is what makes the law of supply and demand. If a site is removed as there are less.

With fixed income this can not happen in this measure. Market does not work like this. As much as the bond is not fixed for the purpose of this type of investment is not the same. In this market, commonly, it comes knowing what is going to win, and although we can speculate without any problem, large funds do not use this method. In this market, which we are most knowing the outcome. Knowing that the current uncertainty is no reason for you to lose money, and if all goes well I will recover the initial capital plus interest at maturity.

Clearly positioning myself for fixed income, but that does not mean they do not use the equity (if I use it) but I move into what best suits my investment method.

I see it like a business. Imagine you are the manager of a company and you have two possible scenarios for the end of year results. Think of your choice dependent jobs. On one side of the table is the aggressive option (the reference to equities), this option is as follows: if the thing goes well the company will earn a 25% in this fiscal year. If something goes wrong the company will lose 15% and you have to make a cut of 30% of the workforce.

Across the table is the most relaxed (relating to bonds), in that you will not lose in that year but the benefits will not 8%.

Which do you prefer?

Sure you reflect on this example you have decided that the bond is better. No, not better. It's different. It is used for different things. It depends on your plan and your ambition. Not the same winning by 8% to 25%, but it is the same to win by 8% to lose 15%.

Quite some time I am in favor of adding 8 at 8, and not from adding 25 +10 -15 -8. I hope you understand. I am more than convinced that long-term earning just over fixed income than equities.

Just to give an example, a well-known blog (I will not say the name), which have a public investment portfolio. Since 2008, have achieved 16% revalue. A 16% cumulative, then dividing by the years from the start date is plus or minus 3%.

  In fixed income, and without being a "master business" minimum multiply that number by two.

This is not to say it's easy and those who invest in equities fools. Not at all. Only that each tool is used to a certain way of working.

Bank deposit. You know how it works?

When hiring a bank deposit must look at several things and although it seems to be the easiest investment there, it is not the end of the post and I will tell you that if it is, we have to fix on the characteristics of product we hired, mostly to give us for a ride and at the end we get on a good scare and anger.

Before everything. A bank deposit, fixed term or fixed-term deposit is the same. You will leave some money to the bank to do its thing and he in return gives you a interest as compensation. It has a fixed duration and fixed remuneration contract is fixed, ie before entering already know what you're going to win. They are also guaranteed by the state (FGD) 100,000 per entity and person in case of bank failure.

This strong interest is mainly governed by the Euribor (interest rate to lend money to, including, entities) but with the whole issue of the crisis the illiquidity of banks have had to forget the taxes low interest rates by the European Central Bank (ECB) and make aggressive campaigns to individual customers a higher interest rate.

While official interest rates are at 1% banks are paying them to liabilities with 4.6% APR and without any connection from the client.

We will explain in more understandable words what the previous sentence. THE European Central Bank fixed in 1% the interest rate at which it lends money to banks, that is, that when you decide to open a window of liquidity to banks in need come to him to refinance because only charged 1% APR, which is very little.

But as always there are windows of liquidity banks must ingéniaselas to get more money and this is where the competition starts to get money from ordinary citizens.

Clearly, there are many people who prefer not to earn a little extra to have to change banks but there are many people and with real money if you are willing to move to earn more.

Therefore, the most interest is willing to offer, in theory, is the one with more numbers to get more funding. (Although other factors influence how the country of origin of the entity, rating rating and even if you drop close to home or if you are good at managing the Internet).

Once we are clear because there are going to explain bank deposits which typically offer entities and that we'll be looking.

There are several types of deposits but of course we say that we are interested only pure and hard deposits without additional links, no credit, no insurance, or payroll or anything.

Being a low-risk investment, and suitable for every investor profiles, we can see that the investment triangle occupy a very relaxed site to be a liquid investment, low risk and therefore unprofitable.

Investing in this way we will not get rich but how low we will not lose money, and I say now lose because if you go to a lot of companies and they offer a lower interest rate to 3% and enter missing. So clear.

If you want a band inflation eats it otherwise you better grab your money and spend it how you will at least give pleasure.

We also have to look at whether the associated account where interest is exempt receive commissions or we will charge between 6 and 20 euros per year. Thing that still remains for the low profitability that we provide.

Now we are chastened and they do but you have to be careful that we do not give any kind of product then selling costs or recover the money, you can leereste article preferred to go deeper on the subject.

Remember that the bank is to serve. 's not your friend , and if not keep his promises or not treating you how you deserve there are dozens of them scattered throughout the geography.

As a final conclusion and summary say that everyone who has "some" money should try to get some performance to keep purchasing power and try to at least get something "extra". Do not be charging for anything and remember that it is you who is indebted to the bank money and not leaving you giving interests.

Finally, always read the fine print to take no surprises.

Indeed, investment is simpler than having no money at home. In contrast is the least profitable of all but ultimately is an investment at 0% APR.

I hope this clarification have no hesitation in going to the bank to make "some investment" and if you do not hesitate to contact me.