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Investment Management
Invest Wisely
Managing Wealth
How do We Measure Performance?
Mutual Funds
Managed Futures
Real Estate, REIT, TIC
Private Equities
Reverse Mortgage
Principal Protected Growth InvestmentsSuccessful investing doesn't have to be a contradiction in terms. The experts at TMP Capital have been providing successful investment counsel for individuals and corporations for decades. We can help you navigate the maze of CDs, stocks, mutual funds, REITs, TICs, Private Equities, Bonds, Managed Futures, and every other kind of investment vehicle you need to ride to ensure that the money will be there when you need it. Make the right choice for you amongst the myriads of options available.
Investment choices are everywhere. In the eighties and nineties, investment options have exploded. Mutual Funds, Equities-Stocks, Futures, Real Estate, Equity Index Annuities, Private Equities, Principal Protected Growth Investments, and many other options have helped countless Americans realize their long-term dreams.
For many others, investments have been less than stellar knowing where to put your money and making sure it grows the way you want it to is a job for experienced professionals Like the professionals at TMP Capital. Call (209) 956-7100 for more information.
Managing personal wealth is not a competitive sport. It is an individualized effort to achieve some predetermined financial goal balancing one's personal situation, risk profile, personal needs with the desire to achieve flexibility by enhancing one's wealth.
Good wealth management practices are complex, time-consuming, requires discipline, patience, and consistency in application. Too many people fail to follow some time-tested tenets that improve the odds of achieving success in a fashion that reduces anxiety that are naturally associated with uncertain undertaking.
The following are some useful perspectives
A fool and his money are soon parted. Investment capital becomes perishable commodity if not handled properly. Be serious, pay attention to your financial affairs, take an active interest, and know your limits.There is no free lunch. Risk and return are interrelated. Set reasonable objectives using history as a guide. All returns relate to inflation. Better to be safe than sorry. Never up, never in! Most individuals underestimate the losses and stress that can result from a high risk investment or portfolio on the way down.
Don't put all your eggs in one basket. Diversify. Some times, an investment is not what it appears to be. The way you allocate your asset determines your rate of return. Stocks beat any investment over time.
Never overreach for yield or return. Remember, leverage works both ways. The equation of your performance should be your objective (plus or minus) your risk divided by time. More money has been lost searching for high numerical return or yield than at the point of a gun.
Spend interest, Never principal. If at all possible, take out less than comes in. Then your wealth grows in value and lasts forever. To do otherwise, is to diminish your wealth rapidly.
You cannot eat relative performance. Measure results on a total return, portfolio basis against your needs and your own objectives, never on someone else's.
Don't be afraid to take a loss. Mistakes are part of the game. The cost price of a stock as an example, is a matter of historical insignificance, only of interest to the IRS. Averaging down, this is different from dollar cost averaging, means the first decision was a mistake. This is a technique used to avoid admitting a mistake, or to recover a loss against the odds. When in doubt, get out. The first loss is not only the best, but usually the smallest.
Watch out for fads. Turnips, Hula hoops, bowling alley did not last. Human nature rarely changes and it is predictable. This time is different is a word for the fool. There is no permanent shortage or oversupply. Every trend creates its own countervailing force. Expect the unexpected.
Act. Make decisions. No amount of information can remove all uncertainty. Have confidence in your moves and your advisor. Better to be approximately right than to be precisely wrong!
Take the long view. Don't panic under short-term transitory developments. Stick to your plan. Prevent emotion from overtaking reason. Don't try time, it is futile. Recognize the rhythm of events.
Above all, remember the value of common sense. There is no system that works all the time. History is a guide, not a template!
What We Know For Sure >
• Stocks and bonds fluctuate in value
• Diversification reduces risk.
• Long-term reduces risk.
• Instant gratification means long-term investment failure.
• Dividends of successful companies rise long-term.
• Inflation is a long-term constant.
• The best investors never forecast short-term.
• Time is more important than timing in investing.
• Investors make money in flat markets.
• Selling at the bottom and buying at the top is natural for most people.
How do We Measure Performance?
Over-reaching for returns can be a double edged sword. Carefully measuring performance can be the difference between meeting your investment goals, and losing. You have to be responsible and hold yourself accountable.
Our performance equations are as follows:
• Goal Focus = Reaching Goal
• Managing Risk = PreservationRETURN EQUATION:
YOUR OBJECTIVE +/- YOUR RISK
YOUR TIME HORIZON = YOUR RETURN (%)
A mutual fund is an investment company that pools money from many investors to invest into stocks, bonds, and short-term financial instruments. A mutual fund could be open-end, closed-end, or a unit investment trusts (UITs).
It is a way for small investors to participate in the stock market with little capital and get (1) professional management of their money; (2) ownership in a diversified portfolio; (3) the savings in commissions. The difference between open-end and closed-end investment companies is the nature of their capital structure.
Distinguishing characteristics of a mutual funds
- Investors purchase mutual fund from the fund itself, or through a broker/dealer for the fund at the net assets value ( NAV ) plus sales load imposed by the fund
- Mutual fund shares are redeemable through the fund, or through a broker/dealer at net asset value ( NAV ) less any sales loads.
- Open-end mutual fund generally sell their shares on a continuous basis, except in cases where the fund got too large.
- The investment portfolio of mutual funds are managed by an investment advisers who are registered with the Securities and Exchange Commission.
There are index funds, stock funds, bond funds, money market funds and many more, each of them has a specific investment objectives and goals, they also have different risk, volatility, fees and expenses.
All fund charge management fees, 12-b(1) fees, and some charge a sales loads. Management fees is the cost of operating the fund, and 12-b(1) is the cost of distributions and service costs.
Managed futures are an alternative investment products designed to take the shocks out of a portfolio (diversification). From time immemorial, Economists had long understood the common sense of diversifying a portfolio, but modern portfolio theory teaches us how to measure the risk of a portfolio, and how you combine that risk for optimum returns.
Managed futures involves substantial risk and is not suitable for everyone, the general conclusion is that diversification of non-correlated assets if used in moderation (10% - 15%) of a portfolio can not only reduce the risk of a portfolio, but also enhance the performance of the portfolio.
In the chart above (left right), as you add managed futures to the portfolio from zero to 20%, the yield goes 10 ¼% to 11 ¼% while at the same time reducing the risk of the overall portfolio.
Managed futures as an asset class have been around for over 30 years, but gain popularity after the internet flame-out of 2000 because investors and money managers are looking for ways to lower the volatility of their portfolio and at the same time enhance risk.
Real Estate is a time-tested vehicle to accumulating wealth. Real Estate can either be owned actively or passively. When it is owned actively, you buy the property and mange it yourself. When it is owned passively, you either own it as a marketable security in form of a REIT or as a deeded property in form of a TIC . However, your choice of style—Location, Taxes: Appreciation & Depreciation, Financing: Interest rate and leverage, Tenants, Cash-Flow, Legal considerations, exit strategy—are some issues to carefully consider.
REIT
REIT is an acronym for Real Estate Investment Trust. A REIT is a company dedicated to owning and in most cases, operating income producing real estate such as apartments, shopping centers, offices, and warehouses. Some REITs also are engaged in financing real estate. Most importantly, to be a REIT, a company is legally required to pay virtually all of its taxable income (90%) to its shareholders every year.TIC
TIC is an acronym for Tenants-In-Common. It is a relatively new concept in real estate investing. TIC is a form of vesting title to property owned by any two or more individuals in undivided fractional interests. These fractional interests may be unequal in quantity or duration and may arise at different times. Each TIC member owns a share of the property and entitled to a comparable portion of the income, expenses, tax shelter and appreciation potential. To achieve efficiency, the TICs are sometimes coupled with NNN Leases .The key attractions to investing in a TIC for most investors are:
- Predictable monthly income.
- Flexible size to match your needs.
- Ideal for 1031 Exchange identified and closed in a timely manner.
- No management hassles.
- Pre-arranged financing.
- Economies of scale.
- Potential increased after tax cash flow.
- Diversification.
For more information on how this could fit into your investment program and suitability; speak to an Advisor at TMP Capital Call 209-956-7100.
Private equities is essentially inviting select clients to participate in direct investments in companies and then selling the business for a profit.
The business of investing in private, non-publicly-traded companies has become a fast growing area of investing asset class. Returns historically range from 4-to-8 percent above traditional equity markets. Access has been one of the main issues for anyone considering private equities as an alternative investment.
A solution is using Funds of Funds what Funds of Funds does is make PE available to broader array of clientele. The Funds of Funds neatly sidesteps two potential barriers to entry to single funds typically run by large, established firms. Due diligence and cost of entry.
Unlike with stock markets where there is a wide variety of indices that can be used as a proxy for assessing performance, there is limited historical data with respect to private equity. Private equities are illiquid investments and come with steep fee structure.
Investors consider Private Equities since it offers:
- Potential high return
- Diversification
- Alternative Investment
- Snob-appeal
Private Equities are long-term illiquid investments with typical fund having 10-15 years life span. For more information on how this could fit into your investment program and suitability, speak to an Advisor at TMP Capital Call 209-956-7100.
Reverse Mortgage is a government sponsored program for people 62 years and older. IT allows you to tap into the equity in your home in form of a no monthly payment loan on a tax-free basis.
Repayment is only required when you no longer reside in the home as your principal residence.
Who is eligible?
All homeowners 62 years and older who occupy the home as a principal residence. Properties eligible include single family homes, condominiums, town homes or a 2-to-4 unit dwelling. It is important that the home has very little or no mortgage balance. To qualify, you require no credit, on income or employment.Some of the benefits of a Reverse Mortgage include:
- You retain full ownership of your home.
- You live you home for as long as you want.
- You can use the proceeds for any purpose.
- Proceeds are not considered income, as such, not subject to taxes.
- It does not affect your social security, Medicare, SSI or Medicaid benefits.
- Your heirs can keep the home once the reverse mortgage is repaid.
For a free AARP Guide to Reverse Mortgage and to find out if Reverse Mortgage is right for you, speak with a Money Planners Advisor call 209-956-7100.
Principal Protected Growth Investments:
Managing risk is one of life's major challenges. Sometimes, awareness of risk can help steer clear of trouble; in others, avoidance can keep us from taking the actions that will help us reach our goals.
In investing, balancing risk to achieve the results we want without sacrificing a great deal in returns presents the best of all worlds for the risk averse investor, hence the principal protect growth investments.
The principal protected growth investments allow the pursuit of growth with limited risk. These styles of investing combines participation in the long-term appreciation potential of growth assets such as stocks with protection of principal, EIAs, Assured Income.
The key attractions to Principal Protected Growth for most investors are:
- Growth potential
- Guaranteed minimum return
- Low minimum
- Liquidity
For more information on how this could fit into your investment program and suitability, speak to an Advisor at TMP Capital Call 209-956-7100.
Plan for Success
© 2009 TMP Capital, Inc.
