## Return on Investment

Rate of Return or Return on Investment (ROI) is the ratio of capital earned or lost in relation to the amount of capital invested on certain project. The amount of capital earned or lost is termed as profit or interest, while the investment is termed as capital, principal or asset. More theoretically, the estimation of ROI involves dividing the Net Profit by Net Worth. In general, expression of Rate of Return is depicted through Percentage symbol. Remember, ROI entails both gains and losses earned on the capital invested in the earlier period, current period and for the future.
Calculation of Return on Investment involves estimation of past or present investments, or determining returns on the future investments. ROI does not depict the period of investment. Return on Investment, Rate of Profit or Rate of Return is the prospective stream of cash flow or income from an invested resource. This prospective stream of cash flow or income comes from dividends, capital gains, or interest. In general, a capital gain happens when the stock market value of any investment falls or rises. However, it does not include the return gained on the specific investment.

Return on Investment Estimation:

Return on Investment is arithmetically is represented as Vf / Vi -1. Where, Vf signifies ultimate investment value and Vi denotes the preliminary investment value. Return on Investment is beneficial when the Vf / Vi -1 > 0 and is deemed to be unbeneficial when the ultimate investment value is below the value of preliminary investment.

In a dynamic sense, Yield is the original Return on Investment. Yield is based on the CI (compound Interest) rates estimated, when the investment value constantly changes over a time. Yield captures the reinvesting interest or dividends. Generally, academics use continuous compound return or natural log return for their research purposes. APY (Annual Percentage Yield) or EAR (Effective Annual Rate) implies yearly yields, if estimated by means of compound interest.

In business lines, ROI is the firm’s capacity to make use of its wealth to make extra returns for its stakeholders. Returns on assets or returns on equity are widely used by fiscal analysts to estimate the company’s profitability than other companies. Estimation of a net present value, profitability index, or internal return on investment, helps to select risk free assignments or projects that would bring maximum return for the stakeholders. These estimations come under the arena of capital budgeting methods, where the investments that are more speculative have the prospective to generate the higher returns.

Overview:

Usually, return on investments or investment returns get discount for factors such as taxes and inflations that give the actual worth of the return on investments. Investments generate incomes for the investors to compensate the time value of the money.

Finally, Rate of Return or Return on Investment is an essential part of cost benefit evaluation for prospective projects and those, which have far reaching consequences on the progress of a country or a region. Rate of Return estimations are generally used for individual’s financial decisions such as Annualized Rate of Return and Annual Rate of Return.

## Investment Advice – Are You Risking Your Financial Future With The Wrong Adviser

There is a reason most of us depend on our friends or ourselves for making important investment decisions. It’s hard to find a dependable professional source of investment advice. There is no dearth of places to turn to for investment advice, but the decision to put a portion of your financial future in someone else’s hands should be made very carefully after collecting sufficient information.

What are the different types of financial and investment advisers?
* Investment Adviser is a professional firm or an individual that advises clients on investment matters. They may manage trust funds, pension funds and personal investments like stocks and mutual funds on their customer’s behalf.

* Financial planners offer investment advice and help clients with savings, taxes, insurance, estate planning and retirement.

* Brokers buy or sell stocks, mutual funds, bonds on their customer’s behalf.

How do I pick a good investment adviser?
Ask your friends and family if they know a good investment adviser. Search the internet, checkout some of the B2B marketplaces or even ask your banker if they can recommend someone.

Interview your financial adviser extensively, judging their professionalism and experience. Let him or her learn about your tax situation, fiscal health and long term goals. Consider the following questions to narrow your search for an investment adviser.

* What experience do you have?
* Where are you registered?
* What investment services do you extend?
* Do you have all the required licenses?
* How much money do you manage for other clients?
* How have your investments performed in the past one to ten years?
* How will you assist me with my investments?
* How are you paid?
* Do you require a minimum investment?
* How are you different from other investment or financial advisers?

Learn how your adviser gains from you.

Investment advisers are paid either a percent of the asset value they handle for a customer, a fixed or hourly fee, or a combination of all. They have a fiduciary responsibility to act in your best interest while making investment decisions on your behalf. It is best to at least partially compensate the investment adviser based on his or her performance. In such an arrangement, the investment adviser makes a commission only if he or she meets your investment goals. Be wary of investments that pay a large upfront fee to the investment adviser or lock you into investments that levy a withdrawal penalty.

Check credentials and references

It is important to check references and credentials. For example in the US ask for ‘Form ADV’ for the advisers, which provides you with the advisers background, services offered, mode of payment and strategies used. Form is obtainable from the advisers, the SEC, state security regulator or those advisers managing \$25 million or more in client assets. Also inquire about the advisers educational and professional background.

Know how to evaluate your advisers

Once you have hired an investment adviser, remember to evaluate his or her performance at regular interval. It is also important to meet with them regularly to review short and long term goals and to adjust your investment portfolio. Apply the following standards for evaluation.

* Review performance: Check regularly how your money is doing in the investments advocated by your adviser. Evaluate portfolio performance with regard to investment goal and risk tolerance for invested assets. Use a proper benchmark or metric matching your investment strategy for various assets. For example if you have invested in stocks, use the market index as the benchmark for comparison.

* Cost-benefit ratio: Though your money maybe doing well, it’s significant to ascertain the investment return delivered to your adviser. Are you paying more than you thought for the investment return?

* Quality of investment recommendations: Evaluate and test your advisers knowledge of the latest investment approaches, preparedness to stay above the rest in the changing market and insights or suggestions on new investment strategies.

* Working relationship: Your investment adviser should regularly communicate and update you about your investments.

* Personalized service: adviser should regularly review your investment goals and preferences and tailor the investments accordingly. You should be wary of investment advisers who show too much reliance on software programs to create your portfolio.

Hiring a good investment adviser is important to secure your financial future. Hire someone you can trust and can easily communicate with. If you adviser does not perform as expected, set up a meeting to rectify the situation else find someone who could be more helpful.

## Which Investment Club Should You Join? Is it a Safe Stock Market Investment Club?

Would you join a safe stock market investment club where you met regularly with friends to have a good time, learn something, and hopefully make some money? If you said yes to that statement, you might want to consider joining, or starting your own, investment club.

An investment club is simply a group of people who share an interest in the stock market pooling their resources into one large investment. Investment clubs are long-term commitments. They are a wonderful way to get to know the stock market, have a good time, and, over time, make some money. But making money should not be the primary reason to join an investment club – since investing is always, even in a shared setting, a risky venture.

Generally, an investment club has between 10 and 40 members, though many seem to settle around 16 as a good number. Decisions on investing are made democratically, either in a one person, one vote fashion; or with weighted votes, where each person`s voting strength is determined by the amount they have invested in the safe stock market investment club. Safe Stock Market Investment Clubs can be partnerships, or corporations, though partnerships are more common. They can meet monthly, or twice monthly. They set up different committees, they research stocks in different ways, they each have their own investment goals.

Investment clubs are as individual as the investors that make them up. What they have in common is a desire to get to know the ins and outs of the stock market. To come together with like-minded people to realize more from your investment capital, over the long-term, and to enjoy yourself while you are doing it.

Enjoyment is a key part of an investment club. If you`re not having fun while you are participating in the safe stock market investment club, it`s probably not the safe stock market investment club for you. And it should go without saying that if you are looking to make a quick profit, an investment club is not the place to be.

Unfortunately, it`s often difficult to join an established investment club. Many of them have been operating for years, even decades, with the same members and they aren`t likely to grow. Which leaves many hopeful club members with the option of starting their own safe stock market investment club. This is a great option, but it should be considered carefully. Make sure that you fully understand what needs to happen for your safe stock market investment club to be successful, and be sure you are starting for the right reasons. Here are a few points you might want to consider:
.
Are you being realistic?
If you`re starting an investment club to make a large profit in the stock market, you`ll likely become very disappointed. The goal of an investment club is to learn more about the stock market, and to have fun. If you have dreams of becoming rich you`ll be starting the safe stock market investment club for the wrong reasons. Remember, joining an investment club means joining for a long period of time.

Are you willing to be an amateur?
Starting an investment club won`t make you an expert in the stock market overnight. In fact, an investment club is ideal for a group of amateurs who want to learn about how the stock market works and what it can do for them. An investment club is a safe environment in which you can invest without the worry of losing a large amount of your hard earned dollars when something unexpected happens.

You can start with a little.
Don`t think that you need a lot of money to start an investment club. You can set a minimal fee for each month`s contribution that will fit into your budget. You can determine what that minimum monthly contribution should be when you have your first meeting of the investment club.

There is strength in numbers.
On your own you may not have enough money to invest in the stock market in a way that will let you realize a reasonable profit. However, when you combine your investment dollars with the dollars of others in the safe stock market investment club you`ll have a significant amount of money to invest in the stocks that you think may be successful. Keep in mind that just as there is strength in numbers there is also a shared sense of security when you`re not investing alone.

Do you like democracy?
One thing that you should keep in mind is that your voice will be part of the larger group and you may not always get your way. If you`re unable to sit back when you`ve been outvoted on a favourite stock, and let another investment choice be made, then an investment club might not be for you.

Can you be satisfied with a learning experience?
You should be prepared to never realize a profit from the stock market. One of the key parts of an investment club is the benefit of studying the stock market with other people with the same interests as yourself. If you never make a penny you should still be happy with your participation as part of an investment group.

Investment clubs are great ways to get to know the stock market in a safe, supportive, and fun environment. Starting your own investment club will make sure that you have a safe stock market investment club that will closely reflect your interests, though there will be compromises in any group setting. Friends, fun, a chance to study something you are keenly interested in, and a chance to make money. An investment club can be the best of all worlds.

## BEST INVESTMENT INSURANCE PLAN

Investment insurance plan is an instrument that acts like an investment tool and provides you benefits of a life insurance plan simultaneously. Simple reasons to buy investment insurance plans:
* You can make goal-based investment i.e. investments can be made keeping educational needs, marriage, retirement needs or for a business venture
* You get peace of mind that your dependents will be taken care of when you will not be around them any more
How Investment Insurance Policy Works?
Any investment insurance plan fulfills two basic requirements i.e. investment as well as insurance. Therefore, when you acquire an Best Investment Plan in India, a part of your funds are used to provide your life cover while the rest of the part is invested in financial instruments of your choice.
The best investment insurance plan lets you utilize your savings in a systematic and planned way. You are able to choose the number of years for which you want to make an investment. Also, you are able to choose the kind of instruments you want to invest in as per your risk appetite.
Any investment insurance plan proves to be best investment plan if it suits your requirements and long term financial goals and guarantees to provide protection to your loved ones in your absence. Hence while choosing the plan you need to consider various aspects like your age, the number of years you want to invest for, the goal for which you want create funds for, your ability to pay i.e. the amount you are willing to invest as premium as well as your risk appetite i.e. the how much you are able to keep at risk if a part of your funds is invested in equity or unit-linked instruments.
On reaching the maturity, you are eligible to receive the sum insured or the maturity benefit which includes guaranteed additions and bonus, if any. In case the policy holder dies before the maturity period, maturity benefits along with guaranteed additions and bonuses is paid to his nominee.
Types of Investment Insurance Plans in India
Generally, investment insurance plans can be categorized as:
* Unit-linked insurance plan
* Traditional/endowment plan
* Guaranteed return plan
Benefits of Online Investment Insurance Plans
* You get a secured source to invest your funds
* You get to choose the number of years you want to invest for
* You are able to make goal-based investments
* You get maturity benefits on surviving the term of the policy
* In case of the death, the nominee receives the death benefit and hence the family is financially protected during the most unfortunate times.
* The premium paid for investment insurance plan is eligible for tax deduction U/S 80C and 10(D) of Income Tax Act.
* You are able to get a secured loan against the corpus built by you through investment or the surrender value of the policy at that point of time
* You need not put your funds at two different places. Single source fulfills your investment as well as insurance needs
* The amount paid as premium as well as yield on the investment made can serve to fulfill the retirement needs of the policy holder
* In case, the policy holder does not want to continue with the plan, he can opt to surrender and receive the surrender benefits , however it can be done after a specific period or as defined by the insurance company of your investment plan

## How to Make a Smart Real Estate Purchase?

Several thoughts go behind making a smart real estate investment. Though a safe investment, it’s important to analyze all the permutations prior to investing in real estate as at times there could be some risk involved.

In today’s intensely competitive market, one needs to be smarter and must do a proper research and keep a good knowledge about the market. Issues are many and they need to be addressed while investing in the real estate sector. Given ahead are some points that will help you to make a wiser decision while investing in this sector.

Tips to Invest Wisely in Real Estate

Make a Fixed Budget

It’s very important for everyone wanting to invest in a residential or commercial property to keep a fixed budget and more importantly stick to it. This is because, it’s very easy to get carried away with the properties you like and which are beyond your budget. So, there is a word ‘PLAN’ which is the key here, as you can land yourself only into trouble if you go over the budget. Thus, it’s necessary to think other than mortgage payments as well.

Search for Alternatives

One of the best ways to make a smart purchase is to explore different alternatives. It’s important that you inquire about local investment properties and converse with as many real estate developers as possible so that you know about the ongoing rates. If you are interested in buying a property then you need to note down the prices and property details from the developers and then come to a decision. It’s also seen that those who explore and research their area tend to bag a better deal than those who don’t.

Look for Long Term Benefits

There is a significant amount of capital invested in any real estate transaction, and thus you need to think of long term investments prior to making a deal. You must think as to what you intend to do with the property 5 to 10 years down the line. It’s necessary to evaluate the value of the property in the coming years. Evaluating long term goals is extremely critical in real estate investment.

Speak with an Expert

You can make a better income property by taking advice from a real estate expert prior to investing. This is because these experts have a better understanding about the dynamics of the market and will guide you in getting a good deal. You can also invest in real estate companies such as Excellence Shelters Pvt Ltd. It’s one of the trusted companies from Pune, that offers NATP sanctioned plots for investment. These plots are loaded with several offers and amenities and you can make your hard earned money worth by investing in these plots. The company has launched several of its plotting projects in the past out of which Aurum city is the one to look for. The company has also come up with a new plotting project called ‘Celebrations’ where you can get NATP sanctioned plots at affordable prices and that too loaded with several amenities.

Examine the Property

This is a very important point to remember, as examining the property before closing the deal is extremely essential. This is an extremely important feature of real estate purchase and you should not ignore it. If required, take the help of someone who can tell you the exact price of the property and help you get a good value for your money.

Go Through the Documents Properly

Last but not the least, read all the documents well before buying. Ensure that there are clauses that lets you back out from the deal if you find any flaws in them.

Making your income properties needs smart investment in the realty sectorFeature Articles, one effective way can be to buy them from top real estate companies.

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