What is Asset Management

What is Asset Management

What is Asset Management with examples?

Asset Management leverages your portfolio, put your lazy money to work, give you a highly favorable taxation position, and allow you to still retain complete control of your money. This blog explains what is Asset Management in detail.

 

The ability to leverage the same dollar into multiple different venues is the core reason why this product and our utilization model are so efficient and desirable for IAN members.

 

We have found that more often than not, clients who understand what we are saying and follow our plan are more inclined to do additional investing because we have given them control and responsibility for their finances that is unmatched by any competitor.

 

Our plan integrates and complements everything from Short-term Real Estate, Long-term Real Estate, Gold and Silver, Hedge Funds, Oil and Gas, Business Development, and Business acquisition.

 

My point is this, while this plan is designed to run as a stand-alone retirement plan, the flexibility this plan affords may allow you to leverage into avenues previously perceived as unobtainable. This is THE retirement plan for those who want control over their money.

 

This plan is so solid, so safe, so liquid, has such favorable rate of return, has such tax-efficiency, and has such a low expense ratio, that it is safe and solid enough to make it a stand-alone, voluntary retirement vehicle.

 

I feel very confident that this product is flexible enough to meet your needs, goals, and wants in ways you may have never thought possible.

 

Whether you care more about security in retirement, reducing a tax burden, making your portfolio efficient, or being able to have complete control in a very unstable time, you will find value here today, unlike anything you have ever been presented before.

 

How to Evaluate an Asset

There are 5 key elements in any good financial asset. These elements are Liquidity, Safety, Expense Ratio, Return, and Tax-Efficiency. You can use the acronym LiSERT to remember these evaluation points. It is vital to evaluate all assets in your portfolio against these measurements.

  • Liquid - Can you put your hands on the money in less than 72 hours?
  • Safety - Do you have a potential for loss? How likely is the loss, and how much can you lose?
  • Expense Ratio - How much does it cost me to have or how much does it cost me NOT to have it?
  • Return - What is my potential for return?
  • Tax-efficiency - How is my tax position affected if the asset’s value decreases, increases, or stays level?

 

As we look for the ideal asset to serve as the foundation for a solid retirement, we must look for assets that exhibit the attributes listed above.

 

Taking those attributes, it stands to reason that a perfect asset would be: 100% liquid from day one, 100% safe with no possibility of loss in any scenario, 100% free, have an infinite return, and tax-deductible going in, tax-deferred while growing, and tax-free when you distribute it out.

 

The asset I just described does not exist. This may explain why you have some level of discomfort with your portfolio! However, it stands to reason that some assets may have more of these attributes than others. Therefore, when considering a foundational asset, it makes sense to look for an asset that has the highest scores on all the above-listed attributes.

 

Each client’s entity structure will be unique based on his goals, assets, income, values, and desires. Our approach is designed to maximize your asset protection while minimizing your income and estate taxes.

 

Entity structuring and tax strategies are not a “do it yourself” project; they are properly left to capable professionals. Make sure to make such professionals part of your team so that you are “Structured to Win”.

 

Commodities and Metals

By commodities, we mean physical goods produced by agriculture or the mining industry, for example, and standardized in order to be used as underlying assets in a trade.

 

Commodities (energy, precious and other metals, agricultural products) are usually traded on futures markets. Under contractual agreements, investors can buy or sell futures contracts related to the price movement of a given commodity.

 

The price of these different commodities fluctuates according to supply and demand on each of these markets, but this asset class provides attractive future prospects. High demand due to world population growth, finite reserves, the development of renewable energy, and the appearance of a middle class in some emerging countries are all increasing the attractiveness of commodities.

 

It is worth noting that meat consumption is related to GDP growth and that several kilos of grain and hundreds of liters of water are required to produce a kilo of meat. From a social and ethical perspective, however, it is debatable whether investors “should” invest, or speculate, on price rises for basic foodstuffs.

 

In our view, this speculation, which can contribute to world hunger, should be excluded from any investment decision, and only the energy and precious or industrial metals sectors should be considered.

 

At this stage, it is also important to mention the development of socially responsible, ethical and environmentally respectful investments with various themes and involving various industries.

 

For example, “responsible” investors who share this approach to investment can favor clean energy or alternative energy equity funds, which invest in the development of renewable energy or alternatives to highly-polluting traditional energy sources.

 

Commodities are organized into three broad categories: energy, agricultural products, and precious and industrial metals.

 

a) Energy

Prices in the energy sector essentially depend on supply and demand in the market, influenced in particular by geopolitical factors, which also cause a risk premium to be included in pricing.

 

Natural gas is perhaps destined eventually to replace or supplement the oil supply. There is also significant growth in demand for electricity, requiring modifications in terms of supply and capacity.

 

As for oil, price increases for black gold seem inevitable in the long term. Demand, linked to the economic climate, as well as the level of US oil stocks, are essential factors in price setting.

 

b) Agricultural Products

Agricultural products are reputed to be volatile, difficult to access and depend above all on the structural conditions governing the market in question (assessment of the planting or operational area relative to demand). For example, producers earn two times less by planting cotton than soya beans.

 

A smaller production surface and the appeal of natural products can, therefore, help sustain cotton prices. As for timber, prices have fallen sharply due to problems triggered by the real estate crisis. The recession in the construction industry has pushed prices down, offering new investment opportunities.

 

It would be overambitious to review each of these markets here. We will simply note that overall, economic and climate conditions influence levels of supply and demand and therefore, ultimately, prices. Furthermore, speculators often abound on these markets. For these reasons, a detailed analysis is essential before making any investment.

 

c) Precious Metals

For centuries, gold has been coveted for its rarity, beauty and near inalterability. Central banks hold gold stockpiles as reserves of wealth. Gold is mainly used for jewelry, electronics, coins, dentistry and decoration (art). India is the biggest consumer of gold, followed by China and the United States.

 

Malkiel considers that gold plays a limited role in a portfolio, in that it does not generate income and can undergo severe fluctuations. Nonetheless, gold is a highly appreciated investment and is usually present in portfolios, especially those of conservative clients.

 

The financial crisis and fears of banks going bankrupt have boosted demand for physical gold, which has seen its price rise above 1000 dollars—recently up to almost 2000 dollars—an ounce. It is truly considered to be a safe investment by investors and probably seen as an alternative to weak currencies such as US dollar.

 

Silver is the best conductor of heat and electricity. It is used for antibacterial purposes, electricity, jewelry, silverware, and photography. Unlike gold, silver is not really regarded as a safe investment, and its price fluctuates in a more cyclical manner due to its industrial use.

 

Palladium is used mainly for catalytic converters, electronics, jewelry, dentistry, and chemistry. Finally, platinum is used for catalytic converters, jewelry, chemicals, electronics, glass, and oil.

 

d) Industrial Metals

The prices of industrial metals change in a more cyclical manner due to their link with industry and the economic climate.

Aluminum and its alloys are included in the composition of many industrial and commercial products for uses ranging from soft drink cans to airplanes, aluminum foil, and power lines.

 

Copper has many household, industrial and technological applications. It is both ductile and resistant to corrosion and is a good conductor of heat and electricity. Its main uses are electricity, coins, water pipes, microprocessors, and construction.

 

Private Equity

Private equity is a form of venture capital financing for companies that are not publicly traded on a stock exchange or, exceptionally, who wish to delist. These investments usually occur at the early stages of a company's development, when future prospects are uncertain and risks are higher.

 

Private equity investments made in young companies or start-ups with high growth potential are often referred to as venture capital. But private equity can also take the form of capital made available to a young company just before its initial public offering, or IPO, for example (mezzanine financing).

 

Generally, this form of financing is structured so that the proceeds from the IPO are sufficient to repay the company's shareholders all or part of their participation. When used to finance a change of owner, in the case of delisting, for example, this is more often called a buyout.

 

This type of investment may be made directly, or indirectly through a private equity fund. However, in this case, there is no guarantee that the fund manager will be able to acquire the shares and make the capital gains expected of this type of investment.

 

REAL DIVIDENDS

Dividends are paid to those who own the company’s shares on the record date. For instance, the board of directors might declare a $1 dividend to be paid on March 1 to those who own stock on the record date of February 15.

 

To allow for the processing of transactions, the NYSE and most other exchanges use an ex-dividend (excluding dividend) date two business days before the record date; those who buy the stock ex-dividend do not receive the dividend.

 

The Get Rich Investment Guide published by Consumers Digest offered this moneymaking tip:

Obviously, one strategy is to know when the stock will go ex-dividend and buy a day or two before the cutoff. Then you can receive the dividends, and you can sell the shares as soon as you have [received the dividend].

 

So, $100 bills are lying on the sidewalk for anyone who can figure out when a stock goes ex-dividend? That doesn’t seem difficult, so there must be a flaw in this strategy. The flaw is that a stock’s price falls when it goes ex-dividend.

 

Consider a company with one million shares valued at $100. If the company pays a $1 dividend, the aggregate market value of the company falls from $100 million to $99 million, because its assets have been reduced by the $1 million it paid in dividends.

 

The price of each share should drop to $99. Someone who buys the stock for $100 before it goes ex-dividend gets the $1 dividend, but can only sell the stock for $99. (I’m ignoring other, unpredictable price changes.)

 

If dividends are nonevents, why bother? Some shareholders may welcome using dividends to pay their bills, but they could always sell some of their stock. This is a classic puzzle in finance—why do companies pay dividends?

 

One answer is that cash dividends are clear and unambiguous proof that the firm really is making money. Firms can use creative accounting to create an illusion of profits, but you can’t fake dividends. Firms that pay dividends are making real profits, not imaginary ones.

 

Additional Resources

Even the full-time trader can’t trade full-time all the time—this I understand. Busy schedules get in the way, social life calls, mandatory weekend work trips are suddenly tossed our way.

Fortunately, these minor disturbances in our Forex trading time don’t mean we need to exit all of our current positions in order to eliminate any risks that come from an extended absence.

 

There’s an abundance of trading programs out there that are specifically designed for full-time traders who can’t always be, well, full-time traders. These trading programs are also equally helpful for traders who struggle to separate their emotions from logical decision-making during prime trading endeavors.

 

Or, if you’re a part-time trader who just happens to be reading this section, these trading programs are also ideal for you—they allow you to become more active in the Forex marketplace without actually physically trading. Sounds great, right? Well, that’s because these trading programs are great.

 

And let it be said that these trading programs are smart. You can either program the trading tools yourself, or you can purchase the ready-to-use software. I’d recommend the former option for those more experienced with analytical and trading software, and recommend the latter option for those just beginning to trade Forex.

 

Nonetheless, once programming is complete and trading preferences are entered into the system, trading will commence. Trades will be made on your behalf without you needing to spend hours of your time sitting by your computer and monitoring a currency pairing’s every movement.

 

Perhaps more importantly, the trading software makes unbiased and educated trading decisions, as it has rather unlimited access to charts, tables, data, and other financial resources.

 

In short, trading programs will reduce your involvement in the trading process, if you so desire, and will eliminate any degree of emotional investment during the decision-making process.

 

My top pick among the many Forex trading programs is:

MetaTrader4 (MT4)

This trading platform is one of the best available—it helps you trade Forex successfully, provides access to financial experts who analyze financial markets and data, grants access to advanced technical analysis, caters to all experience levels, and provides Forex Signal services so that you can copy the trades of other experienced and successful traders.

 

Best of all, you can keep this incredibly helpful application in your pocket, always within arm’s reach (it’s available on personal computers and in mobile application forms suitable for both Android and iPhone/iPad users).

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