How to Value a Business – The Free Business Valuation Calculator

Every business owner should have a good idea of what their business is currently worth even if they don’t intend on selling the business soon or at all. But you may also need to know what a business is worth in the following non-exhaustive list of circumstances. How many reasons do you have to find out what a business is worth?

  • Buying a business or division externally or internally
  • Selling a business or division externally or internally
  • Shareholder/partner agreements and buy/sells
  • Estate and superannuation planning
  • Family law – separation and prenuptial
  • Business insurance policy structuring
  • Personal insurance policy structuring
  • Actual death or disability of the owner/(s)
  • Litigation as plaintiff or defendant

The problem is that business valuations are a complex mixture of science and art that are further confused by ‘listing prices’ displayed by business brokers and their often flawed ‘rule of thumb’ methods that make no commercial sense. The steps to value a business are fairly straightforward but need to be followed diligently.

The valuation method

The transfer price of any business (or any asset for that matter) will almost always come down to the agreed price between a knowledgeable and willing but not anxious seller and a knowledgeable and willing but not anxious buyer. The purpose of a valuation therefore is to indicate to the seller and/or the buyer what price would represent a favourable financial outcome to them based on their required rates of return. The purest method of valuation is the discounted cashflow (or net present value) approach however this method requires precise knowledge of all cash inflows and outflows between now and infinity for the business. Whilst this method is great for some financial assets with guaranteed cashflows it is impossible to apply to a business with variable cashflows.

The next best alternative used by most business valuers is a modification of the above method called the capitalisation of future maintainable earnings method. This method requires the valuer to forecast the most likely annual earnings figure (earnings before interest and tax) that will then be used as an annual recurring amount in the calculation. The valuer then applies a capitalisation rate to those earnings based on a required rate of return to give the business a value.

Future maintainable earnings (profits)

The earnings will usually be calculated based on the past performance of the business as well taking into account estimated projections. The net profit from the financial statements is adjusted to take into account various factors that are artificial or non-commercial amounts in the financial statements.

The adjusted earnings before interest and taxes (EBIT) for each historical and projected year are then weighted based on some assumptions to formulate a weighted average EBIT or future maintainable earnings, which is considered to be the likely annually recurring earnings amount going forward based on the methods and assumptions used.

Capitalisation rate

The capitalisation rate is inversely proportional to the required rate of return on the investment in the business. The higher the required rate of return, the lower the capitalisation rate and hence the lower the business value. Conversely, if there was no risk investing in a business the required rate of return may be as low as 5% and the business would be valued at 20 times the future maintainable earnings. This is almost never the case though as there are many inherent risks associated with running businesses. It is more likely that the required rate of return would be between 15% and 100% with corresponding capitalisation rates between 7 and 1 times respectively. The more risk, the higher return an investor would need compared to the investment outlay to make the investment.

As the future maintainable earnings has already been calculated the only way to change the value of the business is to change the required rate of return. The higher the required rate of return, the less that the business is valued for the same level of future maintainable earnings.

In the free business valuation calculator that I created on my website there are only 7 factors that influence the required rate of return. Bear in mind this is an oversimplified example as in practice the factors could total over 100. The responses to these factors have a significant impact on the indicative value of the business and are all related to business risks.

Assumptions relied upon

Valuing a business is a complex science that requires an enormous amount of information gathering, due diligence and industry knowledge to give an accurate opinion of value. Due to the limited scope of any basic business valuation calculator the following assumptions or similar are usually made. These assumptions may or may not be accurate and will depend on the specifics of each business.

  1. The information provided by the business is materially correct;
  2. The past is a good indicator of future performance of the business;
  3. The economic, industry and geographic factors are stable;
  4. Key customers, suppliers and employees are supportive of the transaction;
  5. All related party transactions are at fair value except for those specifically identified in the adjustments;
  6. All inventory, plant, equipment, fittings and fixtures necessary for the operation of the business are included;
  7. All depreciation amounts are book entries only and no significant upgrades of assets are required in the near future; and
  8. All necessary intangibles and regulatory permits are transferable.

How to calculate goodwill

Goodwill is simply the difference between the value of the business and the values of the identifiable net tangible assets (excluding bank loans and other loans). Should the indicative value be greater than the net tangible assets you have that much goodwill but alternatively, should the indicative value be less than the net tangible assets of the business, then the business would have negative goodwill and the assets would hold the only salable value.

Get a complete 7-page valuation report in less than 15 minutes from the Free Business Valuation Calculator. A short instructional video on business valuations is included.

What Is Home Business Marketing and Why Is It Important?

Some people say if you are not doing home business marketing, then you do not really have an online home business.

If you own or want to own an online business, you understand the importance of home business marketing.

When I started marketing online, it was so hard to know what to do or who to trust for information. I bought courses from several “gurus”. Sometimes, it seems like gurus are more interested in selling you “stuff”, than really showing you how to market online. I wanted to know exactly what I had to do–step by step, but it seemed like some information was being left out, making it difficult to get the full story.

I learned the hard way that online marketing is not easy, but it can be simple.

Do you want to increase your revenues by using effective, online marketing strategies?

Let’s start by clarifying…

What is Home Business Marketing?

For most people, marketing simply means putting up a website. However, in today’s ever-changing marketplace, it is not enough to have a website. A business must engage in effective marketing online to get new customers and attain online marketing success over the Internet.

Just as a successful offline business has a marketing plan, a successful home based business has online marketing strategies that give them a step-by-step plan to accomplish specific goals.

Online business marketing strategies give you the “how” in achieving online home based business success.

First, online home business marketing is not:

–Mindlessly placing banner ads all over the Internet.
–Randomly buying cheap leads.
–Solely relying on free classified ads.

Effective internet marketing means having a marketing plan that employs proven and effective marketing techniques to yield real results for your online business. It requires establishing a budget and mastering specific online marketing skills to achieve your goals.

An online marketing strategy offers customized, step-by-step marketing solutions to attract targeted customers both globally and locally. Strategic, online marketing is as unique as each business is distinctive.

Home business marketing is like a game in that every game involves a “mindset” and a “skill set”. It is crucial that you have both for success.

“In marketing, as in sports, it is the mindset that separates you from your competition.” ~ Unknown

One key to home business marketing success is maintaining a positive mindset.

What is mindset?

Mindset is defined as a complex mental state involving feelings, beliefs, and values that makes us react in certain ways.

Yes, maintaining a positive mindset is easier said than done. Here are 4 ways to help you sustain a positive mindset for home business marketing success:

1. Surround yourself with positive, successful people. Having people around you who believe in you, inspire you, and want you to succeed, helps you keep self doubts under control. Getting encouragement from supportive friends and family can eliminate the doubts that can come up daily.

2. When you find yourself having negative emotions or thinking negative thoughts, do something to improve your mood, like listening to a favorite song or taking a walk. In this way, you can catch those negative thoughts and neutralize them.

3. Set your goals and then have faith in yourself. Don’t ever become desperate for your goals to come true. Desperation typically has an undesired effect. Have faith in yourself and your ability to attract your goals.

4. Keep a gratitude journal. Write down all of the wonderful things and people in your life that you are grateful for. That way the challenges you face will seem significantly less important and easier to handle. Also, a grateful mind has little room for skepticism and negativity. Remember…

“Success begins with you from the inside out.”

On your way to becoming a hugely successful marketer, you will encounter numerous disappointments, distractions and delays. You will question your motives and decisions, doubt yourself and want to quit many times. Like any endeavor, to become good at home business marketing, you have to commit to your success. To do this, you need to work on your mindset perhaps harder than you work on your business.

Then, of course, skill set is crucial to your success. It is important to develop your skill set to market your business effectively on the Internet.

With the right mindset, you can turn a negative situation into a positive one.

With the right mindset and the right skill set, you can be extremely successful at home business marketing!

Your success is within your reach and with the right attitude and skills you can accomplish anything.

Do you want to maintain the right mindset and develop your skill set for home business marketing success?
How would you like to learn internet marketing from experts, enabling you to stay current on the dynamic world of home business marketing.

Understanding the Essentials to Successful Marketing

Outbound Marketing

Outbound marketing is traditional marketing. It uses radio, television, magazines, flyers, newspapers, and true random phone book style cold calling. The goal of outbound marketing is to blast your message to thousands of customers and hope that your message sticks. You currently see conversion rates with this type of marketing that are less than 1% and often are far lower. This type of marketing has become more and more difficult the more saturated the field gets. To be honest people simply have too many messages and are finding ways to block out most outbound marketing. When was the last time you bought something from a flyer on your door? How often do you stop your car to write down the 1-800 number? Your customers are the same. They to use the DVR to avoid watching commercials, tune out during commercials on the radio, and throw the flyers in the trash. People want value, and they don’t want to be shouted at.

Inbound Marketing

Inbound marketing is marketing that focuses on drawing customers to you. Inbound marketing uses marketing tools such as Search Engine Optimization, Social Media Optimization (Facebook, Twitter, etc.), Email Marketing, Article Marketing, and Pay Per Click to draw in your customers. It is marketing that focuses on not shouting at everyone, but rather finding customers that are seeking your product or service and delivering value through content. The other extremely large advantage of inbound marketing is analytics. There are a host of services, many free, that will allow you to track almost any piece of data that you might want to know. You can see click through rates, conversion rates, how long your customers are looking at your material, even where on the page of your advertisements your customers look first.

Which one Should I Use?

Statistics have shown that this is the dawn of inbound marketing. Outbound marketing still has a very large market share but one that has been shrinking. Newspapers are going out of business, and traditional outbound marketing services are finding it more difficult to compete with good inbound marketing strategies.

Don’t get me wrong. I am not saying that outbound marketing can’t work. I am simply saying that for most applications inbound marketing will allow for better tracking, better customization, and better performance if done properly. I have spoken with a lot of business owners. Usually the ones that are using outbound marketing are not tracking how many people that see the ad actually buy the product at all. Many don’t even know how many people are seeing the advertisement. How can you possibly be successful?

Where does Inbound Marketing Usually Fail?

Obviously there could be a whole host of reasons that marketing can fail. Usually when inbound marketing fails it is due to one of three reasons.

The first is an unrealistic budget. Many businesses have the expectation that you can spend $200 per month and within three months you will be raking in thousands per month. This is just plain unrealistic.

The second reason is time and commitment. Inbound marketing can take 2 or 3 months to get off the ground. It takes time because you are not using a shotgun approach. You are building awareness, good content, and a customer base. The tradeoff is that if done properly as you build this customer base you are building a longer lasting and repeat customer.

The third reason is poor marketing. Inbound marketing is a bit of an art form. An inbound marketer must have a good understanding of your business, competition, and customer. They must also put in a lot of time to be successful. As inbound marketing is still not understood by most businesses it is easy to be swayed by the snake oil salesman. These phone operators often don’t understand anything about real marketing but are happy to use their buzz words to promise first page results on Google, guaranteed sales, and a whole host of promises they likely won’t be able to keep, or will keep but won’t produce you any real return on investment.

The Ultimate Newbie Internet Marketing Checklist

New internet marketers will certainly find the many bumps in the road. There are ways however, to avoid the many mistakes and you can take a lesson from those of us that have already been in your shoes. We all started at the beginning and you can use the following checklist to be sure you don’t make the same mistakes we made.

Three Must-Haves You Can’t Avoid

1. The Domain Name

So many new internet marketers try to avoid spending the small amount of money it takes to get their own domain name. Even if your first domain name never makes you a dime or you sell it a few months after starting it, you have to start with your own domain name. If you don’t own the domain name you are working with, you simply don’t own your business.

Sure, you can start with a free blog or website, but what happens when it starts making money? You can’t just transfer everything to your own domain name because the traffic is not pointing there. The total cost for your own domain name ranges from $2 a year to around $20 a year (assuming you purchase a new domain with no age to it yet). This is a very small price to pay for the full ownership of your website or blog.

2. Real Hosting

Another thing new internet marketers skip over because it cost money, is real hosting. Again, you can start with free hosting, but you simply cannot take it to the next level when your site starts making you money. This is one of the biggest mistakes the new internet marketer will make and it is not a good way to start your online business.

Free hosting gives you only a limited amount of space, usually requires you to work from a sub-domain name of their main domains, and most free companies display annoying ads on your site. If you want to see the true potential of your website idea it is important to get at least shared hosting when you start online.

3. A Plan

The final of the must-haves is a plan. Those new to internet marketing often forget to plan their marketing, budget, time, tasks, and most importantly, their goals. Without a plan, you will most likely fail. Start by doing the necessary research and put together a plan for at least the next few months before you start your online journey.

Three Road Blocks New Internet Marketers Stumble With

1. Taking Action

If you are new to internet marketing, you have probably already heard that you have to take action to be successful. This is a common sense mistake and many new internet marketers make this mistake more than any other does. If you don’t take action, you will never develop the online income you desire.

Even writing one article, building one backlinks, buying a domain name, or getting a hosting account is taking action. Start with the first small thing and work your way through all the small steps. Don’t believe those that say “don’t sweat the small stuff”. The small stuff is exactly what will help you achieve your larger goals.

2. Program Hopping

Many new internet marketers buy at least a couple different programs. These can range from guides meant to teach you a specific marketing method to what we all know as the get rich quick scheme. Some programs are very good for making money online, while others are simply garbage.

The roadblock however, is not choosing the wrong program or guide, but hopping from one to the next before you give even one a chance to worry for you. It is important to set up your plan with the right marketing methods and stick to it. If you don’t stick to your plan, you will never find out if it works or not.

3. Expecting too Much too Soon

Probably the one roadblock that is caused by other internet marketers for the new marketer more often than any other one is the fact that all new marketers have higher expectations than what is possible. Expecting to quit your job or make thousands, your first month is a roadblock that claims many new internet marketers every month.

Your expectations need be backed by patience. Most online marketers will not make much money at all until they have been at it for at least a few months. It takes time to build up traffic to a website or blog and you have to work with your plan for longer than just a week or two before you can expect to make money online.

Planning Properly for Patient Success

If you are trying to make money online with internet marketing, then you need to plan for success. The plan you put together has to be well researched and you have to take the “baby steps” to achieve success. There is an old question that has been asked by many, how do you eat an Elephant? The answer, one bite at a time.

This question is very powerful and shows us that if we take one small step at a time we can achieve our goals. If your goals include creating a full time income online, you must first build your website or blog, and then you have to create traffic to it. Only after you have a website and traffic can you possibly make money online.

Your first dollar is the hardest and having your first $100 day is not going to be easy either. However, the struggles you experience to learn the necessary lessons for internet marketing success will lead you to exactly what you are after, a full time online income.

All You Would Want To Know About Service Marketing

1.1 What is marketing?

According to the Chartered Institution of Marketing, “Marketing is the process that identifies, anticipates, and satisfies customer requirements profitably”. Broadly categorizing, a firm either markets goods or services. Services are intangible, perishable, variable, and inseparable. As the primary feature of a service is its intangibility, it should be marketed with proper planning. The growth of service sector industry has been increasing year by year. The government sector, hospitals, insurance and banking companies, law firms and the innumerable consultancies are all examples of service sector industry.

1.2 Classification of Offerings

A firm may offer any one or more of the following offerings in the market:

Pure Tangible Good – These are the core tangible products like books, furniture, soap, or toothpaste. No services are provided along with it.

Tangible Good along with services – These consists of tangible good and one or more services attached to it. There are many examples to this kind, like gadgets, laptops, cars, which also offer their intangible services like customer care, delivery, and repairs.

Hybrid – This kind of offering are characterized by equal proportion of goods and services. One such example are the restaurants where the food is the product and the hospitality and customer service forms the service and both are equally proportionate and important and are bundled together to form the overall product.

Service accompanying minor goods and services – The major portion of this kind of offering is the service and it is combined with small portions of the tangible product. A classic example of this is when a person buys the air ticket. The transportation is the service for which he paid the amount, but the flight transportation also includes food and other services which make the customer experience more enjoyable.

Pure Service – This entails only the service part and no goods are attached along with it. Such kind of offering is the spa or massage which is a pure service and no tangible offering is attached to it.

Having to market a product is an extremely different concept when compared to services marketing. The marketing strategies that are involved in marketing goods and services also vary to a considerable extent. Becoming a part of the market and having to popularize a business involves several different marketing strategies. These strategies should be carefully planned, effectively implemented, monitored, and then revisited to ensure that it fetches the desired outcome. Thereafter it can be decided whether the same strategies should be continued or does it need any amendment. A calculated risk is always better than an unorganized plan, which is why ‘planning’ is a vital step to marketing success.

2. Defining the Offering

There should be clear and distinct picture of what is being offered to the customers. It is thus important that the following questions needs to be atomically answered before beginning to roll the dice.

2.1 What to Offer

Before even trying to decide what service to offer to the customer it is imperative that the firm understands the customer needs and their behavior and for this, a market research definitely helps. The market research should be conducted not only in the prospective customer base but also in the competitor base.

Conducting research in the prospective customer base gives the firm an idea about the following:

• Customer needs and expectation – Questions which fall under this section is: What are the customer needs and what are his expectations? Are his needs being met? If there is a gap between the customer needs and his expectation, it has to be taken into consideration and the service that the firm will offer should fill that gap. If there is no gap still the service should be designed in way that it exceeds the customer expectations.

• Way to bundle the service – It helps in forming a complete service offering, helps in understanding how to project that service in the market and how to sell it.

After the market research has been conducted, the firm then decides what ‘ingredients’ should it put in the offering basket so that it only has a competitive edge over other similar offerings in the market but it also lures the prospects and engages the customers.

2.2 Whom to Offer

Markets are not homogenous and a firm cannot connect with all the customer segments at once. It is important to divide the population into discreet groups so as to acquire results. This also ensures that the required message reaches those that require the service. Hence it becomes vital to decide those segments in the market which can be served effectively by the firm. Deciding on the exact target segments solves many implications which are later raised due to improper plan. Depending on the segments thus decided, marketing, sales, and promotional plans are laid out. If the firm goes wrong in this phase, then all the efforts and resources which are thus involved in marketing and sales are wasted. There are certain questions which need to be answered at this stage:

• Who are the firm’s latent customers?

• How should the customer be divided?

• How many sub-groups do you divide them into?

• What makes these sub-groups differ?

To obtain information so as to differentiate the different sub-groups can be acquired in a number of different ways namely:

• Questionnaires

• Media advertising (Blog, Discussion forums etc)

• Sales analysis

• Face to face marketing

• Counter research

3. Promotional strategies for marketing services

3.1 Push and Pull Strategies

The strategies broadly fall under either push or pull category. Push marketing strategy is the process of taking the product to the customers, where as pull marketing strategy is the process of bringing the customers to the product.

Push Strategy: In this strategy, the firm which is offering the service requires to put the effort, so as to get customers. It can involve handing out pamphlet, brochures. Also, face to face introductions prove to be far more effective than any other form of marketing. In this form of marketing, most of the techniques are directed towards reaching out to the prospects and customers. After we apply the push strategy, the generation of profit is most definitely expected, provided sufficient effort has been pooled in.

Pull Strategy: This strategy basically involves the customers or clients actively seeking for the services. It can be made possible in a number of ways such as advertising. With the help of advertising, more people are likely to come across what the firm has to offer. Apart from that word of mouth also proves to be quite effective. Once people are aware of the services provided by the firm, the word tends to get out and further more people begin to talk about it. Providing discounts to the customer also encourages them to purchase the services that you are offering.

PUSH MARKETING

I. Increase the number of trade shows so as to encourage the customer demand.

II. Door-to-door consulting as well as face to face interactions to promote service.

III. Negotiations with other firms for tie ups

IV. Circulating the sales collaterals to prospects.

PULL MARKETING

I. Advertisements and other media support

II. Word of mouth publicity

III. Promoting customer relations

IV. Promotions of sales and discounts

Some of the promotional strategies which a service oriented firm can use are:

3.2 Customer Relationship: This is a very crucial element for firms in both the service and the good industry but it counts most importantly in the service firms. This has gained importance in the recent years. When we talk about providing service, the customer relation and experience plays a major role. Having a detailed customer acquisition and retention plan helps a lot to acquire new customers and to retain the existing. Customer loyalty programs are one such element under this domain which helps in the repeat business or retaining a loyal base of customers.

3.3 Branding: This is another most important element when it comes to services marketing. The first question that we must ask ourselves is what is our USP? (Unique selling preposition) In general, every business is one of a kind, but tends to differ in the many ways. It is worth examining everything that the firm has to offer and conclude what it is that is unique and different about the firm that other firms do not provide. The USP factor of any firm is their largest weapon and the more unique as well as productive it is the better will it market. It can play a major role in making your business a success, and it proves to be the central portion of your business as well.

Benefits of Branding:

• The USP adds value to your firm

• It persuades customers to opt for your firm rather than others

• Customer relation is improved and they are engaged to the firm

• It builds trust in the market and encourages other firm or vendors to collaborate

• The perception of quality is induced in other minds

3.3 Advertising: There are various forms of advertising and it is important that can be applied. The different forms of advertising are:

• Television

• Radio

• Newspapers

• Bulletin boards

• Business directory

• Magazines

3.4 Public Relations: Targeting a certain audience and sending out a message to the audience to influence them positively regarding the firm is what we call public relations. The audience with primarily consist of the potential customers of the firm as well as the shareholders. Also, it may involve communicating the message to masses ranging from government employees to consultancy agencies. This method of promotional marketing proves to be very effective if the method is applied in the right manner.

3.5 Direct Marketing: From the term ‘direct’ it is very clear that it involves direct contact with customer. The techniques that are involved may range from emailing, messaging to online ads. This form of promotional marketing is practices by business at various stages of success. Some of the different tools by which direct marketing is carried out are as follows.

Utilizing Smart Phones For Business Marketing

Ever experienced going back home just because you left your mobile phone?

Life has never been easier since the advent of mobile phones. This is not only true for handling personal matters but also for business transactions. Executives can receive calls even though they are not at their office; marketing professionals can contact prospects; and procurement can conveniently communicate with suppliers. These were just some of the convenience brought by mobile phones.

As time goes by, technology advances. This just means more and more features that can be utilized to boost marketing efforts for your UK business.

As of Q1 2011, 48% of mobile phones in the UK are smartphones and sales are increasing too at an insane pace. It is not long before the smartphones will not only dominate traditional mobile phones but even make them obsolete.

What does this trend mean to businesses in UK?

It is very clear that marketing directed towards smartphones would definitely reach and penetrate our target market. The next question would be, “How can this be done?”

Here are some of current features of mobile phones and corresponding advantages for business marketing.

Traditional Call and Text

Since almost everyone if not all brings their mobile phones wherever they go, then the best way to reach someone is through his / her mobile phone. Telemarketing and SMS marketing would definitely be useful to reach mobile phones.

You can pro-actively market your business by either cold calling prospects or calling sales leads from marketing companies specializing in lead generation. If you opt for cold calling, you would need a marketing list or marketing database for your target market. There are marketing companies which also offer these databases at low prices.

On the other hand, you might prefer calling leads that are already pre-qualified, interested to know more about your product or service, or interested to avail your products right away. Lead generation companies can help you with sales leads that would suit your ideal target market.

SMS marketing is one cost effective option that can be utilized even by small businesses. At a very minimal cost you can let your market know about the existence of your business, promotional offers that you have, and have continued trade from existing customers. You can either do this in-house or have it outsourced to a marketing company. Doing this in-house would still require you to have marketing lists, SMS marketing system, and a set of personnels that would pull everything together. Another option is to have it outsourced and just sit back while the hot leads roll in from the SMS marketing campaign.

Internet Connectivity

This is one significant revolution in mobile phones. Your target market can now access your site anywhere they are. Features that used to be confined on computers are now literally available at the fingertip. It’s just a click away from any smartphone. This just means that investing on Search Engine Optimization (SEO) and Email blast would now yield higher return of investment for the business.

In the a generation where almost everything could be found through search engines like Google, it is very important to have your business listed online and see to it that your website appears on top of your competitors’. This is where SEO comes in. With SEO, you could increase traffic to your website and therefore, making your presence known to those who are looking for your products or services.

On the other hand, why just wait for customers to look for you if you can initiate customer relation by regularly sending something through their email? With features nowadays which integrate email to smartphones, your emails would reach your target market faster and more effectively.

Generally speaking, one of the marketing strategies mentioned above can make a lot of difference for the growth and prosperity of your business but implementing them side-by-side would yield better results because their results reinforce each other.

There’s also two (2) ways on how you can implement them. You may choose to gather all necessary resources and implement them on your own or have them done by businesses specializing in marketing. There is no clear answer to which would be a better choice. This would depend on the expertise of your personnel (both on marketing and management), financial limitations, and available resources.

IRA Real Estate Investing When the Going Gets Tough

IRA real estate investments are booming in 2008 for soon to be retirees who are worried about their future retirement plans. With the economy looking wobbly, the stock market plunging and the big investment banks going under, with us bailing them out, some traditional forms of retirement investing are starting to look a little sick.

For these reasons IRA real estate investments are increasing. Increasing? Surely not. Along with an economic meltdown, a stock market collapse and all sorts of economic turmoil, isn’t the real estate market headed for oblivion as well? Who in their right mind would consider investing their IRA in real estate?

Surely in 2008 real estate is a one way trip to the poorhouse.

No, not quite. Have you ever heard the expression that there is opportunity in adversity? There is plenty of opportunity in real estate right now, if you know where.

But lets look at IRA real estate investing first. How can you invest your IRA in real estate? Is it allowed? Is it legal?

Traditionally the majority of the population invest their IRAs in investments that are promoted to them by their custodian. In fact some custodians limit allowable investments to their own. So, it’s estimated, over 90%, in fact around 96% of IRA funds are invested this way. Mutual funds, CDs and stocks, and so on.

No problem if the markets are pushing ever skyward, but quite a problem right now.

But what about IRA real estate investments? Yes it’s entirely allowed to invest your IRA in real estate through a self directed IRA. Although this is not widely recognised, IRA real estate investing is one of the best forms of wealth accumulation for retirement. Real estate is a traditional long term wealth accumulation model, and as such is in fact ideal for IRA investing.

If you’re not certain about the details of how to set yourself up for IRA real estate investing consult your CPA, that’s outside the scope of this article. However take my word for it, it’s quite legal, and many canny IRA investors are doing it right now, and have been for a long time. You may need to execute an IRA rollover into a self directed IRA, but the trouble is worth it.

And there’s powerful reasons to consider investing your IRA in real estate. Did you know, for example, that it’s estimated that 85% of all wealth in the US was created through real estate?

And that through your IRA you can secure up to 70% bank non-recourse financing to invest your IRA retirement funds in income producing real estate?

Its food for thought isn’t it?

Now back to the real estate market. After all there’s no point in IRA real estate investing if the value of your real estate investment is going down is there?

Although we all hear that the real estate investment market is dreadful this isn’t the whole story. PARTS of the real estate market are dreadful, but not ALL of it. It’s perfectly possible to find excellent opportunities for investing in the lower priced end of the market. Simple comfortable homes for the working class who live in those faceless suburbs in cities right across America. There are some fantastic IRA real estate investments available in the right place RIGHT NOW.

But if you’re looking to get out there and find them yourself then you may be in for a shock. It’s not something that is realistic for the individual IRA real estate investor. You need professional help.

Buy in the wrong place and you’ll probably get burnt, big time.

But right now there are some excellent opportunities available for securing a great real estate investment, no cash down, at under market value, with tenants supplied, rental guarantees and even a guarantee that you will double your current investment return.

All through a major US public corporation with a reputation for solid real estate investment returns, for both IRA real estate investing and ordinary credit investing in real estate.

Yes you can secure your retirement future through a good IRA real estate investment, or more than one. However it’s the time to leave it to those who really know what they’re doing in hard times, and you can relax and leave the hard work to someone else.

Why Invest in Property in South Africa

Trend towards Property Investment
Property investment in South Africa is simple as well as secure and can offer tremendous profits in respect to other forms of investment which often prove to be unstable and unrewarding. One of the many incentives that may sway an individual towards property investment is the well acknowledged fact that typically, every seven years, the value of a property doubles.

A great deal of investors realise that even though the stock market presents opportunities for large proceedings, it does not alleviate the hitches of its erratic and risky traits. Many investors are now becoming more inclined to choose property investment over other forms of investment as it’s proving to be a somewhat more stable option, offering far more rewards.

South African Property Investment

Aside from the extraordinary lifestyle and climate South Africa has to offer, there are an abundance of advantages from which property investors can benefit.

Investors will find opportunities for lucrative investment in numerous areas in South Africa. Commercial projects and present regeneration projects in places such as Muizenberg in the Western Cape are offering exceptional returns; investors from various countries are being drawn towards similar projects due to the tax breaks available.

Experienced investors are reaping the benefits of the real estate market in South Africa at present, with many potential opportunities in buy-to-let, pure investment and land options.

For Foreign Investors

On the African continent, South Africa has one of the strongest economies. Aside from this, today’s overseas investors realise that South Africa is a spectacular country with regard to standard of living and ambience alike.

In the past few years commercial property has enjoyed considerable growth and this seems to be a trend set to carry on with government motivation now in place. Arrays of opportunities present themselves for profitable returns from South African property, especially in particular areas.

The government is dedicated to creating a strong tourism industry in South Africa. This has become an increasingly important revenue sector and also forms a part of the government’s job-creation strategy. The country is popular with foreign visitors because of its favourable climate and amazing natural scenery.

Another perk of property investment in South Africa is that there is a shortage of property due to its political past; ultimately this factor has generated long-term growth prospects in the property market. There is also a relatively stable democracy and all kinds of investment are encouraged, with foreigners being prompted to invest in South African property as there are no restrictions on ownership.

The economy is growing and consequently focus is now on initialising a strong middle class economy, thus increasing demand for homes. Considerable taxation breaks are put forward for real estate developers and with the 2010 World Cup in South Africa, demand for rental properties is also on the rise.

The housing property market is displaying a stable growth and in metropolitan areas and the commercial property market is out shining many markets in Western countries.

Proven Perks of Property Investment

There is no other investment which permits an individual to make a purchase using other people’s money, this being the bank’s, and then pay the money back using the money of other people, this being the rental income from tenants.

When you buy property exclusively for investment purposes, any form of sentiment is eradicated from the purchase and the property can be seen strictly as an investment. If you own property, equity can be released against it as even though there is no guarantee your property’s value will increase annually; it is widely acknowledged that property in a satisfactory area, that is well maintained, will certainly increase in value.

Trend towards Property Investment

Property investment in South Africa is simple as well as secure and can offer tremendous profits in respect to other forms of investment which often prove to be unstable and unrewarding. One of the many incentives that may sway an individual towards property investment is the well acknowledged fact that typically, every seven years, the value of a property doubles.

A great deal of investors realise that even though the stock market presents opportunities for large proceedings, it does not alleviate the hitches of its erratic and risky traits. Many investors are now becoming more inclined to choose property investment over other forms of investment as it’s proving to be a somewhat more stable option, offering far more rewards.

South African Property Investment

Aside from the extraordinary lifestyle and climate South Africa has to offer, there are an abundance of advantages from which property investors can benefit.

Investors will find opportunities for lucrative investment in numerous areas in South Africa. Commercial projects and present regeneration projects in places such as Muizenberg in the Western Cape are offering exceptional returns; investors from various countries are being drawn towards similar projects due to the tax breaks available.

Experienced investors are reaping the benefits of the real estate market in South Africa at present, with many potential opportunities in buy-to-let, pure investment and land options.

For Foreign Investors

On the African continent, South Africa has one of the strongest economies. Aside from this, today’s overseas investors realise that South Africa is a spectacular country with regard to standard of living and ambience alike.

In the past few years commercial property has enjoyed considerable growth and this seems to be a trend set to carry on with government motivation now in place. Arrays of opportunities present themselves for profitable returns from South African property, especially in particular areas.

The government is dedicated to creating a strong tourism industry in South Africa. This has become an increasingly important revenue sector and also forms a part of the government’s job-creation strategy. The country is popular with foreign visitors because of its favourable climate and amazing natural scenery.

Another perk of property investment in South Africa is that there is a shortage of property due to its political past; ultimately this factor has generated long-term growth prospects in the property market. There is also a relatively stable democracy and all kinds of investment are encouraged, with foreigners being prompted to invest in South African property as there are no restrictions on ownership.

The economy is growing and consequently focus is now on initialising a strong middle class economy, thus increasing demand for homes. Considerable taxation breaks are put forward for real estate developers and with the 2010 World Cup in South Africa, demand for rental properties is also on the rise.

The housing property market is displaying a stable growth and in metropolitan areas and the commercial property market is out shining many markets in Western countries.

Proven Perks of Property Investment

There is no other investment which permits an individual to make a purchase using other people’s money, this being the bank’s, and then pay the money back using the money of other people, this being the rental income from tenants.

When you buy property exclusively for investment purposes, any form of sentiment is eradicated from the purchase and the property can be seen strictly as an investment. If you own property, equity can be released against it as even though there is no guarantee your property’s value will increase annually; it is widely acknowledged that property in a satisfactory area, that is well maintained, will certainly increase in value.

What Are Some Good Ways to Invest Money? – Plan Ahead For the Future

Today’s economy has every one of us wondering how we will take care of our families financially in the long term. Should we invest our money? What are some good ways to invest money? Here are some good ways to invest money:

1. Invest in stocks- today’s stock market can be very risky. Recently, the collapse of Wall Street has required a government bailout of $700 billion dollars. However, stocks can be lucrative if you invest in the right company. Stocks can have a very good return and you can invest as little or as much money as you want.

2. Collectibles- collecting trading cards, stamps, coins etc can allow you to build a very valuable collection. Antiques and collectibles can be a great investment if the collection is kept in mint condition.

3. Buy art-art can increase in value and can be a great investment. Always research the artist before making a purchase in order to make the best art investment choices.

4. Investing in real estate- this form of investment can be a great long-term investment. Real estate can increase in value over the years. You can also build equity in your real estate purchase. You can purchase commercial real estate and rent to a company or small business owner. You could also purchase a home, condominium, or apartment building and rent them out to tenants. If you find the right tenants and keep your property occupied with reliable and responsible tenants then you could make a decent profit every month.

5. Savings bonds- savings bonds can be a good investment. They mature over time and if you wait a while to cash them out, they can give you a decent return on your initial investment. Many parents give their children savings bonds in order to help them financially when they get older.

6. Annuities- these are contracts with life insurance companies, you give money to these companies and in return they invest your money and down the road you receive payments for the amount of money that has accrued over time. These can be risky because of the unstable economy but they can be a great long-term investment.

7. 401k plan- this is a good investment for your retirement years. You invest your own money into your 401k and your employer also contributes a percentage of money into your 401 k account. This is a great way to plan for your future. You can borrow from your 401k if necessary but there is a penalty for doing this and it is reported to the IRS.

What are some good ways to invest money? Any of these options would be a good way to invest money. When asking the question what some good ways to invest money are, you should think about what type of time line you are looking at. Do you want a long term or short term investment? How much money can you invest without impacting your finances? You should talk to a financial planner before investing in anything. Hopefully then, you will know the answer to the question, what are some good ways to invest money?

Individual Retirement Accounts Explained – Save and Invest For Your Retirement Tax Free

Individual Retirement Accounts. It’s enough to put you to sleep isn’t it? However there are very sound reasons for you to understand Iras, and to set one up for yourself. If you’re interested in a comfortable retirement you need to understand Individual Retirement Accounts.

What are Individual Retirement Accounts, why would you need one and which is the best one for you?

An Individual Retirement Account, or what is also known as an IRA, is an account that individuals may set up to plan and invest for their retirement. The IRA was enacted into legislation in 1974, however it was only in 1981 when significant changes were made to the tax status of IRAs that they became popular.

It is the tax status of Individual Retirement Accounts that make them extremely attractive to people who are seeking to invest for their retirement to ensure that they have a well funded comfortable retirement when they are no longer able to work and so can no longer earn an income.

In it’s wisdom the government recognized that it was extremely difficult to provide sufficient retirement benefits from the public purse so that all retirees could retire in comfort on a government pension. This was recognition of the fact that over time, as the population ages, the public purse would not be able to afford to pay full retirement pensions to everyone, so the government needed to come up with a plan to make individuals invest for their own retirement.

The way to do this was to offer people incentives to do so by way of tax advantages though their IRAs.

So when money is deposited into an Individual Retirement Account it is tax deductible, and all income made through investing the fund during it’s life is also tax free.

That doesn’t mean though, that money is never taxed on the way in or way out of an IRA. What the government does is to tax the money as it is taken out of the IRA, it is taxed as ordinary income.

One of the great barriers to successful investing is the requirement to pay tax each time income, or a capital gain, is made. Throughout an investors investing life it is necessary to realize funds along the way to pay tax. This seriously reduces the ability to earn high returns on moneys invested because capital is being taken out all the time to pay tax, and so there is less to invest along the way.

However if, though an IRA, it is possible to invest and reinvest all income and capital back without paying any more tax, that increases massively the potential returns that someone can make investing. Hence the reason why an IRA is so attractive to individuals. An IRA can take maximum advantage of the power of compounding.

An Individual Retirement Account is required by law to be held in trust by a “custodian” who is often, or usually a bank, broker or insurance company. There are various regulations governing what your IRA custodian can do with the money, some imposed by tax law and some imposed by the custodians rules as well.

Usually traditional IRA custodians have restrictive rules about what investments the IRA can be invested in, and the funds are usually directed to investments owned by the custodian. This may be good for the custodian, but not necessarily so good for the owner of the IRA, who may not be earning the best returns.

It is also quite possible to have a self directed IRA. This is still held by a trustee, or custodian, however has a much less restrictive range of rules about the types of investments that can be invested in. The owner of the self directed IRA, or what is also known as a self managed IRA, can direct the investments into a wider range of investments that should, over the life of the fund, make much better returns. Add to that the power of compounding and the difference between the returns on a traditional IRA held by a custodian who invests the funds into their own investments, and a self directed IRA invested by the owner, can be massive.

So as you can see there are powerful reasons why you need your own Individual Retirement Account, and there are also powerful reasons why you need it to be a self directed IRA. In particular the best reason is that the best investment for your IRA is in real estate. Over time real estate offers the most stable long term investment, both for an IRA and any other investment. Investing your Individual Retirement Account in real estate offers significant long term benefits, however so many people don’t do so, either because they don’t know that they should, or because the rules of investing their IRA funds don’t allow them to do so.

They need to rollover their funds into a self directed Individual Retirement Account and start making some solid decisions to invest their retirement funds in real estate.

Even in the current market there are some outstanding and extremely solid investments in real estate. One in particular offers no money down investing for both credit investors and IRA investors, with tenants supplied and high quality homes to invest in. Returns are guaranteed and it’s a turnkey investment in real estate from a solid US public company with significant experience in real estate investing.

So, despite the fact that learning about Individual Retirement Accounts might send you to sleep, there are very good reasons to start learning anyway. And if you’re setting one up make sure it’s a self managed IRA, and that you invest it in solid real estate investments amongst others.