Asset Allocation Management Without Mutual Funds

Many Investment Gurus, with a straight face and a gleam in their eye, will insist that successful investing is a function of expansive research, skillful market timing, and detailed technical analysis. Others emphasize fundamental information about companies, industries, and markets. But trends and numbers are secondary to a thorough understanding of the basic principles of Investing and Management, and their interrelationships. The ingredients for a successful investment portfolio are these: stubborn belief in the Quality, Diversification, and Income trinity from Investments 101, and operations that employ the Planning, Leading, Organizing, and Controlling skills introduced in Freshman Management. Here are some things to keep in mind while you season your experience with patience and marinate your investment process with discipline:

* A viable Investment Program begins with the private development of an Investment Plan. The first step is the identification of personal goals and objectives and a time frame for goal achievement. The end result should be a near autopilot, long-term and increasing, retirement income. Asset Allocation is used to structure the portfolio so that it operates in a goal directed manner. The finished Plan must be flexible in design, based upon reasonable expectations, simple in structure and operation, and easy to supervise.

* Use a "cost based" Asset Allocation Model. Although most of the Investment World operates on a Market Value basis for everything from performance analysis to Asset Allocation and Diversification decision modeling, you will improve your long-term results and stay within your allocation and diversification guidelines better by using a system based upon Working Capital. This widely unknown Asset Allocation "model" takes the hype out of daily stock market reporting and keeps the income investor's focus on appropriate statistics.

* Control your emotions, among other things. Clearly, fear and greed are the two that require the most control in the investment environment... particularly in these days of a reckless media, Internet empowered scam merchants, high-speed information gathering/processing, and cheap personalized trading capabilities. Love and hate need to be dealt with as well, but there are fewer out-of-body influences on these. Only strictly disciplined decision makers need apply for your Investment Management position... and you may not be the ideal candidate. Investment Management is a continual responsibility, not a weekend and occasional evenings avocation.

* Avoid hindsightful analysis, and uninformed (or salesperson) criticism. It is painfully comical how hindsight has taken over in our society... in sports, finance, politics, and the professions, everywhere... everyone you hear is second-guessing and finger pointing. No one is willing to take responsibility for their own actions and everyone is willing to sue whoever coulda', woulda' or shoulda' prevented whatever happened. Investors cannot afford to be Little League crybabies. Make one of the three basic decisions (which are?) and don't look back. No person or program can predict the future, and your portfolio requires management today. The playing field for the investment game is uncertainty.

* Establish a profit-taking target for every security you purchase. The purpose of investing is to make more money than you could in a guaranteed, non-negotiable instrument. This larger money making expectation comes with an assumption of some form of risk... there are several, and its "in there" in all investments. In Equities, set a reasonable profit target and take less if you can get it quickly. With income investments, never say no to a profit equal to a year's income, or 10% if you like round numbers. There are always new investment opportunities, and there is no such thing as a bad profit... or a good loss.

* Examine Market Value numbers at intelligent intervals. Frequent examination is stressful and non-productive. There are no averages or indices that compare with a properly diversified Investment Portfolio, particularly if your Equity selections are screened for Quality and Income. Investing is a long-term endeavor, and neither Shock(sic) Market symbols nor current yields operate on a calendar year schedule. Look at market peaks and troughs over significant time periods that include "cycles"... and do separate your analysis by class.

* Avoid what the crowd is doing and shun investment products. Consumers buy products; Investors buy securities. The crowd is driven by the very emotions that you must learn to control. Stay focused on your plan; analyze your annual income and trading statistics. Buy and hold creates more real tax problems than real millionaires, and gimmicks and fads last just slightly longer than spring fashions. Always buy good stuff on bad news and sell into good news announcements.

* Don't try to save the world with your investment decisions. Never limit your investment opportunities artificially. Votes work better when it comes to changing your world, and corporations should not be the targets of your political hates... get rid of incumbents, state and local, until there are changes in the tax code, social security, tort law, environmental issues, etc. In the meantime, invest with your head, not your heart. The business of a capitalist society is...

* Keep in mind that you need Income to pay the bills, and that your cost of living in retirement will be higher than you think. If you insist on some income from every Equity security you ever own, and beat-the-bank income from income securities, you will obtain two important things: An annually increasing cash flow that will rise at a rate greater than most normal inflation rates, and a higher quality investment portfolio for better long-term investment performance. (If you use a cost based Asset Allocation model with at least 30% invested in income securities and no open end Mutual Funds or Index ETFs.) Never settle for tiny short-term yields or get hooked on those that are unsustainably high.

* Investing is not a competitive event, ever. You don't need to beat the market. You need to accomplish a set of personalized goals. Not even your twin's portfolio should be the same as yours. The faster you run, the less likely it is that you will succeed over time. Big risks, foolproof gimmicks, and exotic computer programs occasion more failures than success stories. Remember the Investment gods? They created Stocks and Bonds... only Stocks and Bonds!

* Avoid Unrealized Gains, Embrace Volatility, Increase Annual Income, and remember that all key investment moments are only visible in rear view mirrors. Most unrealized gains become Schedule D realized losses. As of today there has never been a correction (rally) that has not succumbed to the next rally (correction). Only an increasing income level can beat back inflation... a bigger market value number just doesn't do it.

Perge'

Steve Selengut http://www.sancoservices.com http://www.valuestockbuylistprogram.com Professional Portfolio Management since 1979 Author of: "The Brainwashing of the American Investor: The Book that Wall Street Does Not Want YOU to Read", and "A Millionaire's Secret Investment Strategy"

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customize a program for each of their clients that will dramatically increase
the monies recovered from past due accounts, as well as decrease the amount of
time accounts are outstanding. National Asset & Risk Management, LLC, NARM,
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collection agencies operate.  There is absolutely no way to match the
advantage of a debt and commercial collection agency that is part of the credit
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Good Property Management Keeps Bills Down

In keeping with last weeks blog on how to stay in your home we are going to take a quick view of the markets this week and then offer some articles on how to maximize your tax benefits and how to manage property if you now realize you want to rent rather than sell until the dust clears.

First a quick look at the markets this week:

MSNBC: Housing worst isn?t here yet. According to Richard Syron, chairman and CEO of Freddie Mac ?The mortgages written in 2006 in the sub prime market are probably the most troublesome. They haven?t hit the reset point yet on interest rates.?

Syon went on to say "These steps are focused on helping individual people, and it will help the market. But once you get one of these market dynamics going, you don?t reverse them without it taking some time .... Theyve got to play themselves out.? NOTE: This is the best wisdom on changing markets yet! You can talk about it all day long....but trends play out according to changing circumstances and can be inconsistent.

International Herald Tribune: The S&P Housing index was released and it is an index based on twenty cities. The famed Robert Schiller is involved in crating this index and "He said the numbers indicate "a widespread downward trend" that started at the end of 2006 and has extended into the beginning of this year." How Steep a Downturn? The index looking at ten major metro cities notes a 1.5% decline in sales of single family homes. Seattle and Portland are the lucky ones with modest price increases.

Freddie Mac: Weak home sales are keeping a lid on mortgage rates. The 30-year fixed-rate mortgage (FRM) averaged 6.16 percent down slightly from last week. Last year at this time, the 30-year FRM averaged 6.58 percent. The fifteen year FRM this week was 5.87 and down slightly form the week before.

Now for the good news: Seattle, Portland and Dallas saw rising prices... There are always minor trends within a major trend...in other words its still a local market. Relief is on the way, to be sure it isnt enough to turn a trend but we hope to keep enough bad news out of the markets to keep this downturn moderate and cyclical. Here are some of the important institutions helping to keep people in their homes:

1. Washington Mutual Inc., one of the country?s largest financial institutions, said it will refinance up to $2 billion in sub prime mortgages to help borrowers avoid default and foreclosure.
2. Citigroup and Bank of America have pledged $1 billion of mortgage financing to help sub prime borrowers who are facing the loss of their homes
3. Freddie Mac will buy as much as $20 billion in fixed-rate and adjustable-rate mortgages to help borrowers with high-priced loans keep their homes. Hopes are this should be in place by mid summer.

What if You cant sell Now

If your home or condo has lost value an you are willing to wait the market out, then its a good time to rent. generally, when sales are down rentals are in more demand since people have to live somewheres. Strong rental markets are making rental property increasingly lucrative. Keep in mind that managing property is really work. You have to begin to see your home as a cash flow investment and rent wisely using good tenant screening policy. Renting requires a working knowledge of your local rental markets and a good understanding of how to price your rental so that it rents quickly and at the right price. Too low and you will rent very quickly at at a loss....too high and it will sit on the market and you will lose months of valuable rental income.

Good Property Management Keeps Costs Down

Focus on fixed costs are where we think successful property management is made. Mortgages and Insurance are necessary but prices vary considerably. Always comparison shop these products and have agents bid against each other and keep more of your money. Yourpropertypath.com is a good place to get bids and have agents compete for your business

Taxes and tax credits are areas where savings can be had but you must know whats available. We found a few good articles that can serve as a tutorial. Please do take a look:

A Tax-break Tutorial For New Homeowners: By Bill Bischoff. While the cost of renting is generally a nondeductible expense (except for when part of the home is used for business purposes), homeowners can claim an itemized deduction for interest on up to $1 million worth of mortgage debt used to acquire or improve their principal residence. Ditto for interest on up to $100,000 of home-equity debt secured by their principal residence. Real-estate property taxes can be claimed as an itemized deduction, too. You also can generally deduct any points you paid (or the seller paid on your behalf) to take out the mortgage"

A Primer on Homeowner Tax breaks: Now for the tax-law catches your realtor probably never told you about. Don't worry: What's detailed below probably won't have you running back into the arms of your landlord. But it just might give you a more realistic expectation of how home ownership will affect your future tax bills.

Mortgage insurance Gaining Steam: "This time next year, some homeowners who pay mortgage insurance will have an extra deduction on their federal income tax returns."

"In recent years, many borrowers have opted to get around using the insurance by taking two loans: a primary mortgage as well as a second, "piggyback" loan in the form of a home equity loan or line of credit. The equity from the second loan fulfills the down payment of the first, and there are tax breaks on the interest of both loans.

But many piggyback mortgages have variable rates( see articles on mortgages and how to shop for the best rate at yourpropertypath.com) that fluctuate based on the prime rate, which has risen over the last year. The set rate for mortgage insurance has become attractive to homeowners aiming for predictable loan costs, Katkov said. There's also the lure of simplicity that the mortgage insurance offers, since borrowers only need to deal with one set of loan documents in that option, he added. "

Its your property

Rental Property Management Software

Property management, as the name suggests, is meant to deal with the proper management services and scrutiny of various properties. Property management is a particular discipline of defining and achieving targets in matters of properties. At the same time, its primary purpose is to optimize the utilization of resources such as energy, space, time, people, technology and many others.

To track the income and expenditures related to the holdings and rental properties, rental property management software solutions are ideal. Apart from this tracking of cash flows from the rentals, these software solutions facilitate the completion of the IRS Schedule E, come tax time. Most rental property management software is armored to do these basic rental property maintenance functions in a simple and clean way, providing a sturdy interface to support those tasks admirably. The software is also equipped to do documentation of expenses in a similar process.

A few benefits of the software are: automatic creation of the standardized supporting documents and analysis; time-saving to great extent in negotiating and approving leases; and helping the company with updated information on all ongoing lease negotiations

Some of the notable features of the software include sorting all kinds of deals by the virtue of status, leasing agent, property, unit or tenant. Most of the high quality and user-friendly software supports standard formats in MS Word and Excel. The supporting documents that are very important in matters of rental properties can be created and supported by the rental software. They are: lease agreement, construction estimate, and construction drawing.

Property Management Software provides detailed information on Property Management Software, Real Estate Property Management Software, Rental Property Management Software, Property Management Accounting Software and more. Property Management Software is affiliated with Healthcare PM Software.

Financial Planning and Interest Only Mortgages - Property Management Business

I have observed many changes in my life over the course of living it, and I can tell you that as you grow older, Caution will become your friend; when you're young, you simply throw him to the wind. As you get older, you wait for him to blow by, and then you reel him back in, why? Caution has only a few friends, but several adversaries: Haste and Waste; after several trips around the block with these two, Caution begins to look like a much better friend. Part of the requirement for being a friend to Cautious, is that you take the time to examine all your options, and make a good sound decision. This is when I was introduced to Financial Planning, 401(k) s, Retirement Funds, etc. I've told this from a story standpoint, but it is in all honesty, the truth. As you get older you do become more cautious in your investments, with your time and your money. Interest only mortgages are one of those options, that if you're investing in real estate for the short term, and you've consulted with a reputable financial advisor, you might want to consider. Investment portfolios do not generally include real estate, so more than likely this is a business venture or an investment business. In either situation, financial planning is a must. This is one of those options, that should however, be considered only after careful planning and thought. The trade off, may be or may not be to your benefit. Long-term investments, those with capital gains, and purposes other than a quick profit, I don't' believe are candidates for the interest only mortgage. The interest only mortgage doesn't offer much in the way of building and growing investment value, because you simply never increase the value of the asset to you. You increase the value of the loan for the lending institution, because you are continually providing a profitable situation for the lender. Your principal investment responsibility never decreases. What about the short-term implications and your financial planning? Well, this leaves many doors unopened and many avenues unexplored. However, given the fact that you're considering the impact of the interest only mortgage product on your financial planning expectations, there aren't very many "short-term" considerations open for discussion. The only short-term advantage to interest only is that your monthly payment is often very low during the term of the interest only payment. When you consider the impact your 401(k), an MSA, an IRA, or any other tax deferred savings or retirement program can have on your bottom line, the interest only mortgage doesn't really have that much to offer in the realm of tax savings, or tax deferment; yes, it's true that your mortgage interest is tax deductible, but not on a one-to-one ratio. Tax deferred retirement accounts, even SEPs, for the self-employed individual have a one-to-one ratio of tax savings. Another long-term financial planning consideration: when you would normally have paid out a regularly amortized loan, you will still be paying on the interest only mortgage. What could the potential savings be, for you, if you weren't still paying on a mortgage? The time value of money is a concept that few consumers ever learn to appreciate. It means the dollar you have today, will be worth less tomorrow than it is today, therefore saving today yields a much better benefit than waiting until you're 35 or 40 to begin saving and planning for retirement. Quite often, your home is your greatest asset, and is the only savings that many consumers have managed to accumulate. If the only payments you have made were for the interest due on the principal, you effectively have no accumulated savings. Now, that might not be an issue for someone in their 20s or early 30s; however, by the time you reach your 40s, you have begun to contemplate retirement, and ways to save for that phase of your life. As I stated earlier, caution and good sound financial planning may determine that an interest only mortgage will benefit you greatly. But, I would only consider this option only after I had taken time for careful consideration and good financial planning.

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