Today’s economy is in transition. Investors are seeking new venues to explore and energize with capital. Emerging markets are a major factor in capital development. Today the United States has less than 50% of the world’s capital investments. Current statistics place 70% of the world’s population living in developing countries with 46% of the land mass and 31% of the GDP. Opportunities are in abundance for astute investors with a conservative attitude and approach.
Setting financial money investment goals is a critical first step in any financial plan, personal or business related. Many investment fund companies have a selection of products from annuities to fixed rate return investment packages; your goals will help you select the appropriate product or combination of products as well as rate of return. Next will be to select a reputable investment firm that markets the type of funds you have determined will satisfy your plan.
With the current world situation of financial challenges, working with a company that offers reputation, longevity, experience and skilled advisers and fund managers who will listen, provide advice and work on your behalf with ethics and high professional standards is essential. Companies that have been in operation for several decades offer the dependability and security an investor wants without the staleness of ideas and inertia other older companies might be carry as the baggage of age.
The questions in what to invest and how much of your savings to invest are on top of the mind of every investor. Let’s have a look at a much quoted rule of thumb on this topic and what type of tools are available for this on the web.
A much quoted rule of thumb and a simplified asset allocation guide on how much to invest in stocks and bonds is the age related rule:
Allocate a percentage of your portfolio equal to 100 minus your age to equity stocks, and invest the rest in bonds. For example, if you were 45 years old, then you would hold 100 – 45 = 55 or 55% of your investments in stocks or stock funds, and 65% percent of your assets in bonds or bond funds.
The background argumentation for this model is that when large cap stocks are held for periods of 15 years or longer, they in general have a better return than bonds. But because of the higher fluctuations in stock prices than in bond prices, stocks offer a higher risk and should be a smaller part of your investments when getting closer to retirement. The assumption is that you need the money when you retire and you cannot afford then that your stocks have lost a lot of value.
The following issues are often highlighted around this simplified model:
The locale that was once part of the Soviet Bloc is now open to financial investment from its former adversaries. These areas have huge amounts of natural resources, growing populations, local businesses beginning to produce products to market worldwide, and a need for investment capital to fuel the process. Money investment firms are beginning to respond to this opportunity with investment fund capital for projects ranging from energy exploration and production, mining, and industrial building projects. Conservative investors are beginning to see the valuable opportunities that are evident from the success of projects completed and contracted under these investments. How does an informed investor get involved in this new enterprise?
At first this might seem to be the antithesis of conservative investing, but this is not quite so. Any investment process ethically requires the investor to plan and investigate all the particulars to the potential investment. First is to consider what their goals are, whether a fixed rate payment, annuity, or other form of rate of investment return. Considering financial products and who can offer them is next. Selecting a money investment firm requires getting answers to certain questions, beginning with security. The headquarters of the candidate is important since that is where the bank from which funds will be kept is located. One obvious choice is Switzerland since the stability of its banking system is legendary. Other countries with a history of successful banking and financial policies are excellent considerations as well.
Brown and Greenfield Investing
Teak is a prime tropical hardwood, which requires 20 – 25 years to grow in a commercial plantation environment. If the investor enters at project start this is defined as Greenfield investing. The other option, a Brownfield investment, means that a buyer enters later and buys into an existing but older plantation. On the market there are various investment opportunities available at different ages, in teak and other tropical woods, thus providing a wide choice for investors.
Main Risks for Teak Plantations
Teak plantations bear certain risks. From a technical point of view key risks are e.g. the soil quality of the site, the suitability of the location, climate and fire to name the major ones. Normally detailed soil analysis is performed before planting in order to determine the right planting strategy. A plantation manager should be familiar with the site as observation over time can tell best what grows on the respective site. The results of the original plantation strategy become visible in the years thereafter. In most cases the tree diameters are measured and compared towards industry benchmarks to evaluate the progress in growth.
From a financial point of view, main risk is that the management company would run out of money. Teak trees require pruning, thinning and clearing of the underwood for maintenance. Doing this properly ensures that the tree,s commercial value is maximized. However, this comes at a certain cost. Given the project period is 20 – 25 years, strict discipline on cash management is required. In case the plantation manager runs out of money, the investor looses two fold: First requiring additional financing and second the commercial value of the trees might be suboptimal due to savings in maintenance.
Spending longer time in Central America will at one point require a residency permit as tourist visas require to be renewed after 90 days. The following points summarize the main reasons to obtain residency in Central America:
– Relocating to an exotic country in Central America is a dream followed by many retiring baby boomers from the US and Europe.
– Central America is home of several developing countries and offers many exciting business opportunities for entrepreneurs. Work permits as employees are hardly available and in most cases are reserved for high-skilled workers from multinational companies. Thus in practice an investor visa or a pension income is required to start legal activities
– countries in Latin America tax income mostly on domestic sources only, thus income earned from sources outside the country remain tax free
– the residency permit is a first step to obtain a second passport
In the US alone, 76 million children were born between 1945 – 1964. This large population group is called the Baby Boomers. Today they control over 80% of all personal financial assets (Source: Wikipedia). This generation of baby boomers is reaching retirement age and many of them will evaluate international living options such as relocating to Central America due to lower costs of living and the warm tropical climate.