How a prospective stock investor can select the right company

Are you interested in stock investments but face a tough challenge in choosing the right company? One of the most critical requirements that some investors often ignore is a careful evaluation of the company they are investing in before making the final step of buying shares. While it is sometimes difficult to guarantee the success of stock, it is critical to avoid a carefree style of investment. This requires conducting due diligence on the company. Let us look at some of the key considerations you should make in the evaluation of a company before buying shares.

Profitability record

When selecting the right stock to invest in, ensure that you review the past and current prospects of a company based on trends. Some of the fundamental aspects that should be keenly observed are earnings and cash flow, which generally provide a reliable reflection of the financial health of a company. 

 

Management

Poor management can significantly harm even the most profitable of companies. It is crucial to invest in companies with a competent management structure and culture. Such companies have a higher likelihood of being innovative and profitable in the long term. In the case of scandals, ensure that you determine the level of harm it can cause the company stocks. Always pay attention to red flags such as accounting practices that may cast doubt on the company’s integrity. 

 

Strength in the industry

Another way of determining the prospects of a company is assessing its strength in the industry by comparing it with other players in the sector or competitors. Every company always aims at taking the largest share of a market. Some markets are ruled by monopolies; few companies dominate other industries, while in some cases a sector may be highly fragmented.

 

Momentum and stability

Evaluating the recent profit records is not satisfactory in providing a more comprehensive and extensive overview of earnings in the company without looking at its momentum and stability. These two factors are essential because they give a reasonable picture of the acceleration or slowing down of earnings over a given period. Stability is particularly important in the assessment of stock values and their fluctuations under different economic conditions. 

Making the right stock investment starts with settling for a suitable company. Other critical factors you should also consider are dividends, capital structure, asset utilisation, debt to equity ratio, and sustainability of a company’s competitive edge. All these require meticulous collection and analysis of a company’s data.

 

Is UK residential property a good investment for 2019?

The introduction of more stringent controls and legislation has led many buy-to-let landlords to sell their investments, and move into alternative fixed assets. However, property is still seen as a prudent, long term investment for many individuals looking for growth and security, and some of the reasons for this are discussed below.

 

Reasons UK property is still a good investment option

Some of the most popular reasons to invest in the UK residential property market include:

– Fantastic property value growth levels seen in the past 20 years

– Ease of obtaining buy-to-let mortgages

– High numbers of consumers seeking good quality home rentals

 

The economist Rob Thomas highlighted in 2015 that buy-to-let returns had beaten all other asset classes for up to 18 years, and this trend seemed set to continue. Thomas showed that average annual returns for buy-to-let amounted to 16.2%, which was far in excess of the 6.2% average seen for other UK equities.

 

Areas all property investors need to research

A substantial proportion of profits seen from residential buy-to-lets was down to the massive hike seen in property markets, so existing lacklustre property markets mean many potential investors are hedging their bets at the moment. This can be explained by the difficulty of forecasting the impact that Brexit will have on the property market. However, this is creating a buyers’ market in the UK, particularly in popular locations, such as London and the south of England, where property prices have fallen dramatically.

Although residential property tends to be a long term investment, it is still an appealing investment option. Recent figures published by the ONS shed some light on average UK house prices, although prices can vary dramatically in different areas: 

– Average house prices for January 2018: £224 418 

– Average prices for April 2018: £225 829

– Average house prices for July 2018: £231 128

– Average house prices for November 2018: £230 704

– Average house prices for January 2019: £228 147

 

We specialise in tailoring investment opportunities to meet our clients’ needs, so if you’re contemplating investing in residential or commercial property, why not get in touch for a confidential discussion. We appreciate that all our clients have different objectives, and can offer you the solution that’s more closely aligned to your circumstances and investment goals.

 

The importance of diversity in your investment portfolio

Diversification is an approach to investing that involves allocating funds to investments that fall within different investment categories. Your funds may be invested across different industries across different areas of the global economy.

 

Why is diversification important?

The key goal of diversification is to maximise the potential returns of your investment portfolio. The various categories of investment will react in different ways to the same financial event. So by prioritising the diversification of your portfolio, this approach seeks to increase your returns and protect your overall investment portfolio against fluctuations.

As with all investments, there will always be an element of risk, without which your portfolio funds would be unable to grow. However, diversification plays a key role in making the most of your portfolio’s potential for growth in the longer term while protecting your funds from the impacts of any financial events that may occur within the global economy.

How does diversification work?

Some types of risk can be mitigated by the diversification of an investment portfolio, while other types of risk are systemic and cannot be managed through diversification. In some ways, this approach can seem complicated and there are expenses incurred, however, most finance professionals agree that it is a key tool for investors to achieve their investment goals. As with any approach that manages the potential risk to investments, the potential reward is also brought within certain parameters. As with all investment portfolios, decisions must be made by the investor with regards to the amount of risk they are able to tolerate with regards to their financial situation. 

 

The key takeaway

Diversification can play a key role in the management of investment risk and decrease the potential volatility of investment values. As important as this tool is, some systemic types of risk cannot be managed in this way and there will always be some element of investment risk. The goal for your investment portfolio is to achieve a balance between the return you wish to see on your investments and the level of risk you are able to tolerate.

Please get in touch with our team today to discuss more about your portfolio diversification.

 

The Impact of An Accurate Register On Fixed Asset Management

If you have been in the asset management world long enough then you know that if you count all your assets, you’ll always get profit. Regardless, more than 80% of SMEs don’t have an accurate view of all their assets. While large companies hire accountants and auditors to leverage the value of fixed assets, you’ll find that most small and medium-sized businesses choose to do it themselves. 

The problem with this is that they use spreadsheets, and write-offs tend to increase. Despite the fact that most businesses know assets help in income generation, they fail to keep accurate records of those assets. They fail to understand that an accurate asset register could have a significant impact on their revenue.

 

What Is An Asset Register?

An asset register is a list containing all the business fixed assets investments. It details the location, owner/user, and condition of said assets. This register keeps the business up to date with the procurement date, price, status, current value, and depreciation of the assets. 

Types of Fixed Asset Registers

Small businesses could use just one register, known as a fixed asset register, since they may not own many assets. Medium and large companies, however, could have specified registers to narrow down the lists and make tracking manageable. For instance, they could have an IT register or a digital asset register.

 

The Best Way to Keep the Register Accurate

Accurate records of your fixed asset investments are highly important. Export all the records available on your asset management software then have a physical audit to see whether the list matches. If there happens to be a difference, then you have ghost assets, which you can write off. 

If you have unusable assets, have them repaired or write them off if that’s not an option. If you have multiple assets, it may be hard to keep track, especially if they move across different locations. Have them tagged with a barcode or RFID label to make tracking easier. You can also carry out a physical audit at least once or twice a year depending on the number 

 

4 simple ways to make a lucrative real estate investment

Real estate has long been considered one of the safest and close to assurance on return on investment. Let’s face it; more and more people are being born, more businesses and companies are growing, providing a steady and growing market. What makes real estate a more exciting investment strategy is that unlike bonds and stocks, investors may use their investment as leverage to acquire or purchase another property. If you are unsure of how to make a real estate investment, these four tips should help you to make wise decisions.

 

  1. Be a landlord

Being a landlord is best suited for investors with renovation, DIY skills, and the patience required to cope up with tenants. However, the initial capital required is usually high for finance maintenance costs and to make up for vacant months. On the positive side, rental investment provides a regular stream of income and can also be used to maximise capital gains through leverage. For maximum profit on a rental property, landlords opt to hire property management companies as tenants can at times be rowdy and damage property.

  1. Join a real estate investment group 

For investors who wish to join real estate without necessarily facing the hassle of running it, real estate investment groups are the place to be. All an investor requires to enter a real estate group is access to financing and capital cushion. The advantage of such a group is that it provides a more hands-off investment approach that still yields appreciation and income.

  1. Flipping

Flipping is a form of investment that includes real estate trading. It is more suitable for investors who are well versed in marketing and real estate assessment. All a prospective investor requires is the skills to oversee repairs and capital to invest. Additionally, the time frame in tying up money and effort is usually short. Flipping can, therefore, realise high returns even within a shorter period depending on the market conditions.

 

  1. Real Estate Investment Trusts (REITs)

REITs are suitable for investors who wish to venture into real estate without a traditional real estate transaction by using portfolio exposure. All a prospective investor requires is investment capital. As REITs are essentially dividend-paying stocks, investors get to earn money through cash producing leases. However, this means that leverage, in this case, does not apply.

Deciding on a suitable type of real estate investment inevitably depends on a number of factors, so it is essential that you are able to make an informed decision.

 

How to strengthen your investment portfolio

Building and maintaining the strength of your investment portfolio may prove to be a daunting task if you are not well acquainted with a few secrets of investing. While some of the below tips may sound overly basic for you, ignoring them has led to the downfall of many investments. If you steadfastly implement the concepts, then your investments are more likely to be successful. Here are some secrets to strengthening your investments portfolio:

Lay out clear objectives: Any investment portfolio requires clearly defined objectives, which will provide the owner with valuable insight on what to expect as returns from the invested money. A portfolio that lacks clear objectives is like a rudderless ship in deep waters with no sense of direction and purpose.

Keep your costs at a minimum: Every amount of money, however small it may seem counts in the long run. Do not give up any money without taking the time to consider if the decision benefits your investment. Any successful investor should be aware of the basic requirements in making a successful investment journey. Managing costs is a critical aspect of this journey. Therefore, avoid spending money in the form of any fees if it is likely to cause unrecoverable losses.

Expand your investments: Why should you keep all your money in a single investment when there are plenty of opportunities to venture in successfully? For your portfolio to be stronger, it should be diverse and able to stand the test of tough economic times. The underperformance or bankruptcy of one investment should cause a minimal ripple effect on the overall operation of your portfolio due to the spreading of risks.

Minimize your investment turnover: Many poorly performing investments have also been associated with unhealthy high turnovers. Low turnover might be what your investment portfolio needs to become strong. Always keep in mind that the market for short-term stocks can be insanely unpredictable, and volatile. Therefore, investing in new shares should be well thought and understood.

Becoming an incredibly successful investor will require you to apply these secrets even as you improve your skills and constantly adapt to the needs of your sector. Strong investment portfolios you see today were not built in a single day. It takes effort, patience, and trials to achieve such status. Always be ready to learn the dynamics of the financial world and your sector even as you aim at strengthening your investment portfolio.

 

The changing face of energy investment

Any investor will tell you that the key to success is looking to the future. Investing in a company or sector is all about assessing its value now, and trying to predict its value going forward. 

The energy sector, which is going through a radical period of transformation, is an area where savvy investors can make huge profits in a short period of time. However, doing this is absolutely reliant upon being very aware of the current state of the industry, and being able to accurately analyse the trends of tomorrow.

So, with that in mind, what should you be aware of when contemplating investing in the energy sector?

 

The growth of renewables

The move away from fossil fuels and towards renewables is a trend that is taking place the world over. This is, quite simply, inevitable; with fossil fuels such as oil and gas eventually going to run out, it is essential that alternatives are sought. And when it comes to the UK, it would appear that we are on the verge of a huge renewables boom.

According to research by GlobalData, the UK’s renewables capacity is expected to ‘at least double’ by 2030. With all of the country’s coal power stations – as well as all but one of its nuclear power stations – set to be closed by this period, such upcoming reliance on renewables makes sense.

And, with National Grid having announced recently that it is going to invest a whopping £58.9 million in renewables infrastructure over the next 12 months, it would seem that there is no slowing the renewables boom.

The end of nuclear?

Nuclear was once regarded as the future of energy, but it would appear that it is now falling out of favour, with renewables set to overtake it in terms of global output.

Currently, 10% of the planet’s energy supply is created via nuclear power, with 9% via renewables. However, a report recently released by BP suggests that renewables will overtake nuclear ‘in the very near future’. And, according to the experts who drafted the report, that overtake could even occur by the end of 2019.

 

6 common investment mistakes to avoid

Making investments can be a very exciting experience. Unfortunately, there are many mistakes that can be made when it comes to deciding what exactly you should invest in. Here we look at 6 common investments that you need to avoid to have a better chance of success.

 

Not knowing the industry

If you don’t know a business then how are you going to be able to accurately predict what their next move is going to be? If you’re interested in an investment opportunity but are a bit in the dark about the industry, make sure you do your research.

 

Heart over head

There could be an industry that you have a personal interest in or a company that you personally know or have an affinity to. You shouldn’t use these sorts of emotional questions to make your decisions, use your head instead of following your heart.

 

Not using your patience

There have been countless times when people have cashed out early only to find out that it was a terrible idea. Sometimes it can be tempting to snatch at an increase in share value rather than waiting to see how far it goes.

Not accepting the loss

On the opposite of patience, when people see the value fall they can often wait too long, desperate for it to get higher. You need to look at the reasons and make a solid judgment but sometimes it’s the best idea to accept a small loss and move on.

 

Not diversifying

If you’re an expert in one industry then you may be tempted to only invest in companies around that. The problem comes when there is an industry shift which can then affect all your investments. You want to spread them around to protect yourself.

 

Getting too emotional

It’s extremely difficult not to get emotional when it comes to your investments. If you’ve lost big then you always want to chase it and make everything right again. Instead, take time and analyze everything and don’t make any decisions in haste. It’s a simple step to take but one that at times can be easier said than done.

 

Too Good to Be True? 3 Warning Signs of an Investment Scam

There are plenty of legitimate investments out there, from stocks and bonds to mutual funds and rental real estate, but there are also lots of scams. These investment scams often sound great up front, but there is danger lurking in the shadows. 

It is all too easy to fall for an investment scam, and even sophisticated investors have been taken in. Whether it’s a business opportunity that seems too good to be true or the promise of outsized returns on a supposedly risk-free investment, these types of scams often follow a classic pattern – and make the same tired promises. Here are three classic warning signs of an investment scam.

The Promise of a Risk-Free Investment 

Every investment, from stocks and mutual funds to government bonds, carries some level of risk. Whether that risk involves rising interest rates or plunging profits, it is always there. The lure of a totally risk-free investment is a classic warning sign of a scam. 

Con artists understand how scary risk is, and they use that fact to their advantage. Whether they are touting a Ponzi scheme or looking for investors for a fake company, the bad guys know how to play the risk angle. Unfortunately, their promises of risk-free investing turn out to be anything but, and those who fall for the scam are left high and dry.

 

The Lure of Outsized Returns 

The lure of an outsized return on investment is another classic sign of an investment scam, and another reason to use extreme caution. Before you invest a single penny, you need to research prevailing market rates on fixed-income investments and historical averages for the stock market. 

If the person selling the investment is touting a return that is much higher than those averages, chances are it is a scam. This is doubly true if the seller guarantees those returns – nothing is guaranteed in the world of investment.

Assurances of High Short-Term Profits 

Over the years and decades, the stock market has amassed a strong track record. Over the short term, the swings have often been wild and downright frightening. Those basic facts illustrate the utter folly of promising high short-term profits. 

Scam artists know that investors are often looking for a sure thing and that they are drawn to the idea of guaranteed short-term profits. That is why they lure the unsuspecting with those promises, touting high short-term profits and using those promises to separate investors from their hard-earned money.

If the person touting the investment makes any of the above promises, it is time to grab your chequebook and head the other way. These scams are more common than ever before, and it is important to protect yourself and your money from the bad guys. Knowing what to look for is half the battle, and the sooner you learn them the better off you will be.

 

Is Bitcoin now a vital part of any fixed asset investment portfolio?

With new developments in the cryptocurrency space, namely Facebook’s recent announcement of its planned ‘Libra’ project for next year, it’s worth giving an updated overview of the ‘big daddy’ of cryptos: Bitcoin. Many have decided to pin Bitcoin’s recent rapid gains on such news, but the reality is that positive sentiment has been returning for most of 2019. Let’s take a look at why.

More simply, Bitcoin remains the exciting story of our times, threatening at any moment to rise up and steal much shine from gold as a fixed asset investment (there are only 21 million coins), or threaten financial stability with its added utility as an easy-to-use, reliable and cheap means of value transfer. Its vast, revolutionary and robust distributed blockchain technology powers transparent and largely traceable transactions, unstoppable and global. Its integration throughout the cryptocurrency space is deeper than ever, and the unique nature of its protocol, despite not being ideal in terms of energy-efficiency and scalability, proves highly secure. Development continues on its efficiency, including second-layer solutions and decentralised ‘dApps’ that reference its network. 

Amusingly, misunderstandings about the inherent value of Bitcoin continue to bluster about. We’ve had a ‘blockchain not bitcoin’ trend in 2018 until people realised that adoption and security are not easily acquired medals in the blockchain world, so now we’re seeing more of a ‘bitcoin not blockchain’ narrative again along with its price dominance in the space. The fact remains that both are ground-breaking, and here to stay. 

Is it still risky? There’s no doubt that many investors are smarting from the losses of 2018, but more likely this was another year of education and progress in the cycles of bitcoin ‘awareness’. As its price shot ‘to the moon’ in December 2017, many expected it to grow even further due to its combined attributes, but a barrage of regulation scare stories, exchange hacks and anti-hype sentiment (and misinformation) deflated the price action throughout 2018 whilst pouring new development (via ICOs) into the space. And all the while, the mining hash-rate of Bitcoin has been rising to new and extraordinary levels.

To conclude, there is much pointing to the likelihood that greater adoption of cryptocurrency is coming thanks to other blockchains rising, developing dApps and exciting, monetized social media features, collectibles and games. Financial institutions and regulators have more threats, targets and headaches than ever. And as greater adoption comes, the labels of ‘risky asset’ and volatility concerns will start to diminish. 

Of course, there will no doubt be huge surges and pull-backs still to come but with Bitcoin the mentality of ‘no pain, no gain’ has never been more apt, since it is much more than just money.