Invest in Oil and Gas Opportunities
By Suzanne Bender

Investing in oil and gas opportunities being offered by the best oil and gas companies is a sure way to beat the stock market these days. It has to be done correctly and only with the very best companies. Companies that you choose to invest in must be successful and knowledgeable of the risks that go along with drilling for oil and gas. They must know how to handle and manage these risks, have best technology, hire the best contractors and drilling companies, and be able to perform well in all market conditions. By investing with consistently well performing companies, you minimize your risk.

There are many areas of concern when investing with oil and gas companies. Beware of quick estimates of cash flow distributions from newly drilled wells. At least 90 days are needed to begin to receive income from new development activities. New wells require fine-tuning and purchase contracts need to be negotiated, especially when drilling deep onshore or offshore wells that have large commercial reserves. The process usually takes between 6-12 months for cash flow to really begin. Big companies want to establish long-term cash flow and not shallow wells with short-lived production, something to keep in mind when considering investments. Successful companies do not entertain wells with rapidly depleting reservoirs, they want to maintain revenue stream for a longer period of time.

Another area of concern is to be sure that the tax write-offs are legitimate and properly listed in their yearly K-1 reports. These reports are prepared by the development companies and sent to the IRS yearly. That way, you can get all of the tax benefits available from the investment to lower your taxable income from all the sources. A combination of these areas: cash flow from oil and gas revenue distribution, your return on investment, taking advantage of your legal tax benefits, and trusting the companies you are investing with are essential to the success of your oil and gas investment.

This requires a level of sophistication, only possessed by top individuals in the business. If you decide to invest in this arena, do not attempt to do it without professional guidance.

Looking for more investing strategies and tips? Visit us at Global Mutual Funds – Australia’s pre-eminent provider of global investment product alternatives and solutions. Find out what you need to know about equities, options trading, and how exchange traded funds can help build your long term wealth.

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Investing Advice – The Benefits of ETFs
By Suzanne Bender

When someone is seeking investment advice, the subject of exchange-traded funds (ETFs) often arises since they are becoming a popular investment vehicle. ETFs are a great way for someone with a small amount to invest to get a decent investment. In order to use this type of investment to your advantage, you have to understand how they work.

You are probably familiar with mutual funds because they are more common. Mutual funds and ETFs are similar in some respects. Like a mutual, an EFT holds multiple investments within it. Unlike these funds, ETFs are traded through an exchange, like NYSE, and are not purchased from an issuing company. Other differences are the redemption structure and the tax efficiency.

ETFs have some distinct benefits that mutual funds do not have. Here are five of benefits:

1 – ETFs are an attractive investment because of intraday pricing. This means they are traded on an active stock exchange so the sales are immediate and not based on the price at the close of trading. Essentially

this means you could purchase ETFs at a reduced price or get a premium when selling them.

2 – Tax efficiency makes ETFs much more attractive than mutual funds. When a fund is sold, there is typically a capital gains distribution. When you sell an ETF, there are no gains to be distributed. However if a major component of the ETF is changed, it may trigger a distribution of gains.

3 – Exchange-traded funds are beneficial because they have much lower fees than mutual funds. Since an ETF is a no-load fund, you do not pay redemption fees when you decide to liquidate it. They also tend to have much lower annual fees. Although rare, on occasion the fee can be higher.

4 – Unlike many mutual funds, exchange-traded funds do not require a minimum investment. With a fund, you often have to invest at least $2,500 dollars. Since this is not true of ETFs, they are great to diversify your investments.

5 – Another major benefit of exchange-traded funds is their liquidity. That means you are able to keep your portfolio balanced by using your ETFs for the liquid component. You can even set a limit just as you would with stocks, which makes for more flexible trading that you could never get with a mutual. Remember to check your ETF, because they do not have all this liquidity.

Although the points laid out are benefits, they can quickly become liabilities. So remember to be careful when buying and selling ETFs. They are a great way to diversifying a smaller investment but do require you to ensure they are managed well.

Looking for more wealth building strategies and tips? Visit us at Global Mutual Funds – Australia’s pre-eminent provider of global investment product alternatives and solutions. Find out what you need to know about equities, options trading, and how exchange traded funds (EFT’s) can help build your long term wealth.

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Entering the property market, no matter how many times you’ve done it, is usually a stressful experience. Not only are you making the biggest financial commitment of your life, you are also locking yourself into a potentially restricted lifestyle for many years to come.

Some people find the experience too overwhelming and opt out of home ownership altogether. The main cause of anxiety relates to money – what else? The two main reasons as to why the home loan you initially signed up with has now become unaffordable is because of rising interest ratesand loss of employment income.

Contrary to what the lenders preach, the home loan market is not that easy to navigate. To many people it seems like they’re just going round in circles. Of course some offer cheaper rates than others but basically the products are all very similar. This is because the underlying philosophy is exactly the same in each of the competing home loan products. They all have trailing commissions built into the interest rates. So regardless of which product you end up with you can’t turn off these trailing commissions. Whether your interest rates are fixed or variable, you still end up paying trailing commissions for the entire duration of the loan.

In plain English, part of the interest which you pay every month on your home loan doesn’t have anything to do with your actual home loan. It goes directly to the broker or institution, whichspent a couple of minutes shuffling papers around before submitting your application to the actual lender. For their small administrative role, they are entitled to receive ongoing monthly payments for the duration of the loan.

The same principal also applies to other financial products such as life insurance, managed funds, margin loans, unit trusts, superannuation and pension funds, to name just a few.

Once you realise what’s been going on all these years you tend to get somewhat frustrated that you have no control over your money in these situations.

The lenders offer commissions as an incentive to their brokers and lending institutions. Lending Institutions are the big banks. It’s hard to imagine that the big banks actually pay themselves commission for giving you a home loan. But they probably need the incentive too!

Brokers are affiliated with certain lenders and, as a result, will only offer you a limited range of products. (Which are basically all the same only presented differently to look as if they are totally original). In effect, the broker/lending institution is not there to find the best product for you. Their goal is to secure you a loan that maximizes their rewards.

An average home loan of $200,000, for example, at 7% interest will cost the borrower $14,000 p.a. The borrower may not be aware that $700 of this amount goes to the broker/lending institution every year for no other reason than being responsible for submitting the initial loan application form.

Most borrowers would prefer to use this $700 to reduce their interest repayment. By reducing the interest rate the borrower can afford to pay off more of the principal and thereby pay off the home loan years earlier. But, for obvious reasons this is not what the brokers and lending institutions want. They want the borrower to remain in the dark about the underlying commissions in the home loan product and, continue paying out the loan for as long as possible.

Imagine the reaction you would get if you asked your broker or lending institution why they don’t charge a one-off fee for an average run-of-the-mill home loan. Or, if you asked the big lending institution why they don’t offer points and rewards on their credit cards that go towards reducing the home loan interest repayments. They would probably start feeling a bit uncomfortable.

Fortunately, things are beginning to change and the momentum is starting to pick up. Thanks largely to the Internet, people are discovering for themselves that there are other options available. Options that give them the ability to turn off the underlying commissions and take control of their home loan.

By searching the Internet for alternative financial products, borrowers have discovered that there are registered legitimate companies out there that retrieve 100% of the underlying commissions and credit it back to your interest payments.

These companies actually aggregate and convert commissions to reward credits. The reward credits are then used to make payments to your home loan lender, resulting in a reduced interest payment on your home loan.Financial products such as these are very simple and straightforward. You can fill out an application form online and within 4 weeks gain back control of your money.

There are many innovative money saving financial products available on the Internet. But, you have to be prepared to search for them yourself. You will soon realise that this doesn’t apply exclusively to the home loan market. As mentioned previously, it also applies to all other financial products that have underlying commissions. Start asking yourself how much more could you save if you could retrieve the commissions you are paying on your life insurance, superannuation, managed fund, margin loan, unit trust etc.

It’s your money, it’s your choice, and it should be under your control.

4 Deadly Reasons Why Beginners Fail in the Stock Market
By Suzanne Bender

Too many inexperienced investors end up losing money when they enter the stock market because they make some very basic mistakes. If you are considering putting some money into stocks then there are four things that you should learn to avoid.

Firstly, many people decide to buy without knowing how to choose which stock to invest in. They often rely on tips from friends or something they have heard on the internet. This is rarely going to lead to good profits. The only people who have the sort of technology and expertise to make reasonably good predictions about stock prices are professional traders. As a beginner you are not going to be able to compete with them, but you will do better if you avoid jumping on the bandwagon based on advice from unreliable sources.

Once you have bought your stocks you will see them rise or fall. Whichever way your investment goes you can end up making a serious mistake. The second and third mistakes that beginners commonly make are not knowing when to give up on a stock that is losing them money, and not knowing when to get out of a stock that has been rising. Timing is everything. When a stock is going down many beginners leave it too late to get out of the trade. They let their stocks drop so low that they cannot afford to sell up, because they feel sure that things are about to get better. Others end up leaving their money in a stock that has been going up; confident that it is a safe bet, but end up seeing their profits disappear when the price suddenly crashes. Taking expert advice on when to sell is the best way to avoid these errors.

The fourth mistake is in selecting a range of stocks to build a sensible portfolio. It is not beneficial if every time one of your stocks goes up another one is losing you the same amount of money. Your portfolio should be carefully chosen, with stocks that complement each other. You should consider how well each of your different investments work with each other, and not just think about each stock individually. Some stocks will almost always move in the same direction, while others always seem to be going different ways. Some stocks are very stable and rarely experience much movement, while others are always shooting up and down. Some stocks shadow the market, while others appear to move independently of it.

The only way you can improve your chances is to support your lack of experience with he advice of a more experienced, reputable advisor. The large number of factors needing to be considered before buying a particular stock, or building a portfolio, can only be adequately understood with considerable effort and full time dedication. Likewise, knowing when to sell is a skill requiring experience to time it well. Overall, your best investment will be the time you take to choose your investment and/or stock advisor. Let the experts do what they do best.

Looking for more wealth building strategies and tips? Visit us at Global Mutual Funds – Australia’s pre-eminent provider of global investment product alternatives and solutions. Find out what you need to know about equities, options trading, and how exchange traded funds can help build your long term wealth.

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January 2010: This week marks the launch of Australia’s newest commission rebate

service that gives consumers an easy, cost-effective way of recouping the money they pay as

fees on a raft of financial products.

MyMoney Australia (www.mymoney.com.au) is a major consumer innovation that offers

anyone with superannuation, life insurance or managed funds the ability to receive cash

refunds on the fees they are charged by fund managers and insurance companies. (These fees

are known as trailing and renewal commissions and are paid to advisers and intermediaries.)

MyMoney is not only completely web-based and user-friendly, it is also the only service in

Australia that makes monthly direct payments into clients’ bank accounts.

In a few simple steps, and without having to make any changes to their existing financial

products, any consumer with financial products can start to receive regular cash refunds of

fees they are probably unaware they can access.

How does it work? Put simply, MyMoney gives consumers control over their commission

payments that they did not have before.

“Generally, you cannot turn off these commission payments, but you can say where they

should go, as long as they go to a holder of an Australian Financial Services licence,” the

Joint Sales & Marketing Director of MyMoney Australia, Graham Burnard, said.

“When you simply change your servicing adviser to MyMoney, we collect these

commissions and pay them back to you, direct to your bank account. Everything else about

your investments remains the same,” he said.

Some of the key features of MyMoney that make it so attractive are:

• No joining fee

• No minimum annual fee

• Fee automatically comes out of commission rebates

• Maximum annual fee of $240 per family account

Online registration is quick, easy and free, and MyMoney has kept to an absolute minimum

the amount of paperwork investors need to complete in order to activate their account.

1:00 PM Friday Nov 13, 2009

I don’t mean to bang on about adviser commissions all the time but it has became the topic du jour, again.

In the seething wake created by the Consumer magazine ‘mystery shop’ of the financial advisory industry a number of commentators have popped their heads up calling for a ban on adviser commissions.

Retirement Commissioner, Diana Crossan, for example, has endorsed a ‘no commission’ world.

Financial journalist, Mary Holm, has also announced  her intention to compile a list of ‘independent’ fee-for-service advisers.

Holm, at least, added the sensible caveat: “It’s important to note that being independent doesn’t mean being good.”

But both see commissions (we’re talking on investment products here, insurance products have been left out of the argument for the time-being) as the single evil influence behind poor advice.

Commissions certainly have the potential to distort advice – a fund manager recently told me the first question asked of him by an executive of the now-defunct Northplan advisory group was “What’s your trail [commission]?”. But it’s simplistic to expect a ritualistic banning of commissions will purify the financial services industry.

Nonetheless, I think it will happen.

The NZ government and regulators are awaiting the publication of an Australian government report, the Ripoll report, before determining its policy on adviser commissions. The Ripoll report, due for publication on November 23, is widely expected to recommend a ban on commissions. New Zealand regulators are committed to trans-Tasman ‘harmonisation’ and will most likely follow the Aussie lead.

But the Australian entrepreneurs are already adapting to a commission-less world. This fascinating little business  called MyMoney offers to take the sting out of commissions by allowing investors to redirect commission payments (many of which can’t simply be stopped) to its business, which in turn passes the cash on to the investors who can then use it to pay their adviser a ‘fee for advice’.

All this at “no cost to you”, except the $240 fee MyMoney deducts from the commissions it receives, which would have previously been paid to an adviser.

This might be great for ‘transparency’ but if all that banning commissions achieves is a complex renaming process while consumers pay more for advice then little will have been achieved.

David Chaplin