Archive for the 'investing' Category
by Jim Giaquinto
The five best performing stocks on the Zacks #1 Rank List last week were: Genco Shipping & Trading Ltd. (GNK), Knoll, Inc. (KNL), Mariner Energy, Inc. (ME), Green Mountain Coffee Roasters, Inc. (GMCR) and Parker Drilling Company (PKD).
Genco Shipping & Trading Ltd. (GNK) was a top-performing Zacks #1 Rank company last week as shares gained more than 10.7%. Earnings estimates for this year are up 3% in the past month, and analysts currently expect 2009 EPS to grow approximately 37% from 2008. Meanwhile, GNK has beaten Wall Street’s quarterly earnings expectations for 4 consecutive quarters with an average surprise of 14.6%.
Favorable contracts and profit-sharing agreements led to a strong second-quarter performance for GNK, which it reported on Jul 30. Earnings per share of $1.95 beat the consensus of $1.72 by almost 13.4%. Revenues jumped 184% from last year to $104.6 million, thanks to the operation of a larger fleet and the renewal of time charters at higher rates. The average daily time charter equivalent (TCE) surged 95% in the quarter. GNK currently has about 94% of its fleet’s available days secured on contracts for the rest of the year, and 60% for 2009.
Knoll, Inc. (KNL) - a Zacks #1 Rank Top Performer last week with a gain of 10.4% - announced on Thursday that its Board declared a quarterly cash dividend of 12 cents per share, payable Sep 30 to stockholders of record on Sep 15. Over the past month, earnings estimates for this year and next have advanced 10.5% and 5.5%, respectively.
KNL’s second quarter, which was announced in mid-July, continued its streak of meeting or beating Wall Street’s quarterly earnings estimates. Adjusted earnings per share of 49 cents topped the consensus by 22.5%, setting up an average surprise of 11.2% over the past 4 quarters. The earnings result was also more than 32% better than the year-earlier total of 37 cents. Net sales advanced 7.5% to $292.5 million. KNL attributed results to its diversification strategy
Mariner Energy, Inc. (ME), an independent oil & gas exploration, development and production company, gained 8.5% last week. Earnings estimates for this year have increased 18.6% over the past 2 months, including a rise of 3.4% in 7 days.
For its second quarter, which was announced Aug 7, ME reported earnings per share of $1.39 on total revenues of $429.5 million. The earnings result surpassed the consensus by 19.8% and also significantly improved upon the year-earlier performance of 38 cents. Total revenues advanced approximately 102% from $213.1 million a year earlier. Furthermore, production advanced 48%. The company credited its second-quarter results to production growth, costs control efforts, and drilling success in all areas. It expects another strong year in 2009.
Green Mountain Coffee Roasters, Inc. (GMCR) made the Zacks #1 Rank Top Performers List last week with a gain of 7.5%. Late July saw the fiscal third-quarter report for this specialty coffee company, which included earnings per share of 25 cents and net sales of $118.1 million. GMCR beat the consensus EPS estimate by more than 19%, and also marked a solid year-over-year improvement from 15 cents. In addition, net sales increased 43.3%. Other highlights in the quarter included a 61% increase in Keurig brewers shipped, and a 49% advance in K-Cup portion packs shipped.
GMCR was featured as an Aggressive Growth Stock of the Day at Zacks.com on Aug 15. Earnings estimates for this fiscal year, ending September 2008, are up 5.2% in the past month. Analysts currently expect next fiscal year’s EPS to improve approximately 54% from this fiscal year’s.
Shares of Parker Drilling Company (PKD) gained 7.35% last week. Earnings estimates for this year are up 3.8% in 2 months and 1.2% in 7 days. Analysts also currently expect next year’s earnings per share to improve about 23% over this year. On the same day as its second-quarter report, PKD announced a new contract to design the drilling package for the Sakhalin-1 Arkutun-Dagi offshore platform in Russia.
For its second quarter, the oil drilling contractor reported that revenues jumped 44% to $216.7 million from $150.3 million year over year. Meanwhile, earnings per share of 20 cents came in-line with the consensus. According to the company, results were driven by gains in its targeted growth areas of international drilling, drilling and production rental tools, and project management services.
James Giaquinto is an Editor at Zacks Investment Research. For more information please visit http://www.zacks.com
Article Source: Top Performing Stocks for the Week Ended Aug 15
by Charles Rotblut
Last week, I discussed whether we are seeing the start of a recovery or just a bear market rally.
It’s still too early to say if a bottom has been firmly established. However, if we look out over 12 months, U.S. equities seem like they could be the best game in town.
There are several reasons why.
Relative valuation - The S&P 500 currently trades with an earnings yield of about 7%. Conversely, 10-year treasury bonds are yielding about 3.85%. This suggests stocks are more attractive on a valuation basis than long-term treasuries.
Diminished downside risk - During the period of Oct 2007 to July 2008, the Dow fell by about 23%. Such a decline is close to what typical bear markets look like. (Research by Jack Schannep, of TheDowTheory.com, finds that 80% of bear markets have declines of 24% or more.) Although the ongoing credit and economic conditions might cause some more weakness over the short-term, most of the damage has likely already occurred.
Lack of attractive alternatives - The next move by the Fed will be to raise rates, which is bearish for long-term treasuries. The Japanese and European Union economies contracted in the second quarter. Eastern Europe has to contend with a militarily aggressive Russia and Brazil is losing favor because of falling commodities prices. If the U.S. is closer to a recovery than other major economies, than domestic equities should outperform their international peers.
Keep in mind that I’m talking about relative returns. My expectation is that the U.S. markets will remain choppy over the next few months. This said, the outlook for the next 12-18 months does appear brighter, especially since stocks have a tendency to rebound before the economy does.
As I said last week, when the market finally does make a successful recovery, there won’t be much foreshadowing.
Market Overview
The upward move that started in mid-July remains in place.
Tech stocks have made a nice move lately, but do look a bit overbought.
Dow theorists look to the Dow transports as an indicator for where the market is headed. I don’t follow Dow Theory, but I do occasionally look at the chart of the ETF that tracks the Dow Transports to see what it’s doing.
The two-year chart shows the trends better than the one-year chart, but the transports are not providing a clear signal for market direction.
Focus List Updates
CF Industries (CF) is continuing its volatile ways. The odd thing is that the stock’s forward P/E multiple has actually declined throughout the year. All signs point to continued strong demand for fertilizer and earnings estimates continue to be revised upwards, so we’re keeping the stock in the portfolio. But, I do expect more price swings in the stock.
Columbus McKinnion (CMCO) was added to the Focus List. The company manufactures hoists, cranes, conveyors and related products. It was one of many industrial product companies to report good second-quarter results and raise guidance. Plus, it has a low valuation.
Petrobras (PBR) was sold from both the Focus List and the Timely Buys List this week. We expected some near-term weakness, but overall weakness in Brazilian stocks combined with falling oil prices caused a dramatic drop. I continue to like the company’s prospects, but our timing was clearly wrong on PBR.
Our policy is to remove a stock from the Timely Buys List during the middle of the week if the stock is also being sold from the Focus List. This is what happened with PBR this week.
Charles Rotblut is the Vice President of Web Content for Zacks Investment Research and the Senior Market Analyst for Zacks.com. He oversees the editorial staff, manages the market-beating Focus List, Timely Buys and Top 10 portfolios, and plays an instrumental role in the development of new products. For more information, visit http://www.zacks.com
Article Source: The Bull Case For U.S. Stocks
by Brian Garvin & Jeff West
Let’s face it, even during troubled times in this current economic environment, gold always seems like a good investment. You kind of get the same feel from the Guide to Private Gold Investing
Is Gold a Good Investment?
Excuse me, but it’s a little concerning when people think they can just sit down on the sofa, watch TV, and get rich. We realize that you can in the end, but at the inception, you have to work and according to the Guide to Private Gold Investing Gold Investments sales site, this is no different. The great news is, he says you won’t need to do a plethora of work, but enough to get the ball in motion before you can sit down back on your favorite recliner and experience life.
How long does it take to make a lot of additional green backs with Gold As An Investment and assuming you’re dealing with the Best Gold Investment Online? We aren’t sure, but as we continue to drill farther down the Easy Gold Investment sales page, we have a feeling he’s going to share that with us soon. The main thing is that these Online Gold Investment Tactics have been taken through their paces, tested, and tested some more. So it’s not some nutty idea that wasn’t thought out that someone came up with one day and made a decision to turn it into a digital product to make green backs from it whether the product worked or not. According to the data we discovered, it works to a “T”.
Doctrine You’ll Receive With the Guide to Private Gold Investing Course
Well, about half way down the page you’ll find a series of benefits that will come with this informational product. They first talk about all the advantages of investing in gold as opposed to other avenues you see everyday. From there they talk about giving you specific instructions on how to invest in this no matter what skill level you are, meaning if this is your first time around then it will still work.
Assessing adverse risk is at anytime a serious concern when investing, and according to the Manuals On Gold as an Investment they show you how to make sure your Investment in Gold pays off for you, along with managing your business portfolio, and basically recognizing everything about the industry itself. Very likely their most renowned point is that you can go from beginner to expert in a matter of hours just from reading over all the data that the Guide to Private Gold Investing System has to offer.
Our Overall Analysis
Once you get to the point where they illustrate everything that is delivered with the course, you’ll soon appreciate this system is jam packed with good, useful real-time data. While they just point out to you twenty various dynamics, they claim there is much more to this system. We discovered that it was nice to see a sales page that deals with questions and answers. Basically helping you overcome challenges that you would be speculating about after you made the purchase. This eliminates lots of initial buyer fear and apprehension.
We can’t tell you if the Private Gold Investing Gold Investments Home Study Course will work for you. That depends solely on your goals, ambitions and if you have a true desire to learn about and participate in this thriving industry. There’s practically no learning curve, so the question boils down to if you think this could be what you want. Gold is less risky than silver according to the author. We also know from personal experience people we’ve talked to who swear by this as a solid vehicle for long-term success. Whatever your decision, go in good hands and we wish you the very best of luck in the future.
Make Investment Review Kings Brian “The Lion” Garvin & Jeffrey David West show you more with relation to Private Gold Investing this very second. You can at anytime visit our website as we have a plethora of means to help you find what you command, with no obligation.
Article Source: Learn About the Different Private Gold Investing Features
by Charles Rotblut
Dow components Hewlett-Packard (HPQ) and Home Depot (HD) headline the last official week of second-quarter earnings season. Joining them will be S&P 500 members Gap (GPS), Lowe’s (LOW), Limited (LTD) and Target (TGT).
Overall, we have confirmed reports from 106 companies, 13 of which are in the S&P 500. Retailers will again be prominent, with 40 listed to release results.
There is not much on the economic calendar, though we will get inflation numbers on Tuesday. Key data will include:
• Tuesday: July producer prices (PPI), July housing starts, July building permits
• Wednesday: Weekly crude inventories
• Thursday: July Leading Indicators, August Phili Fed survey, weekly initial jobless claims
• The Kansas City Fed will hold its economic symposium at Jackson Hole, WY. Fed Chairman Fed Ben Bernanke will speak about financial stability on Friday.
• Volume could be modest through Labor Day as traders try to get in late summer vacations. Late August can be tricky for the markets, so be prudent. Oil remains a wildcard and it is hurricane season.
• Companies That Could Issue Positive Earnings Surprises during the Week of Aug 18 - 22
• Aeropostale (ARO) enjoyed a 13% increase in August same-stores sales, at a time when many other retailers were struggling. The strong performance led the teen apparel chain to raise its second-quarter EPS guidance by 5 cents to between 30 and 31 cents per share. Brokerage analysts believe the company will report 31 cents per share. ARO has surprised to the upside for 3 consecutive quarters, so current projections may prove to be conservative. Aeropostale is scheduled to report on Thursday, Aug 21, after the close of trading.
• Discount retailer Ross Stores (ROST) credited bargain-hunting consumers, the stimulus checks and favorable weather for driving July same-store sales 4% higher. Given last month’s good performance, the company believes quarterly profits will total between 53 and 54 cents per share, a slight increase over previous guidance. Revisions by 5 brokerage analysts pushed the consensus earnings estimate 2 cents higher to 54 cents per share. ROST has topped expectations for 3 consecutive quarters. Ross Stores is scheduled to report on Wednesday, Aug 20, before the start of trading.
• Companies That Could Issue Negative Earnings Surprises during the Week of Aug 18 - 22
• Trends were not favorable for Saks (SKS), which experienced a 5.3% drop in August same-store sales. The company observed that business trends worsened as the second quarter progressed and, as a result, brokerage analysts have been steadily lowering their projections. The second-quarter consensus estimate calls for a loss of 18 cents per share, reflecting cuts from a majority of the 7 covering analysts. SKS missed expectations last quarter by a margin of 4 cents per share. Saks is scheduled to report on Tuesday, Aug 19, before the start of trading.
Charles Rotblut is the Vice President of Web Content for Zacks Investment Research and the Senior Market Analyst for Zacks.com. He oversees the editorial staff, manages the market-beating Focus List, Timely Buys and Top 10 portfolios, and plays an instrumental role in the development of new products. For more information, visit http://www.zacks.com
Article Source: Earnings Preview for Aug 18 - 22
by eliteeservicesfx
FX is extremely sensitive to politics, because a shift in a domestic political system can be directly connected to a currency’s value. For example, the Chinese government announcement that the Yuan would float, albeit a ‘soft peg’ to the USD, shattered the relationship between a previously pegged Yuan and the USD. Many watching the situation in Georgia are unaware how this impacts them, and how it impacts FX. Also, this war, like many wars, is an information war, and the media spin leaves viewers with a less than accurate picture of reality.
The strength of the Euro over the past 5 years has been in part, not European strength as much as American weakness. A combination of economic factors in the US has made investors fear the USD and purchase non-USD based assets in Euros and other foreign currencies. Also, the Fed has been lowering US interest rates to a finally negative real interest rate.
The recent strength in the USD is not USD strength per se, but Euro weakness. The fear is that Europe will be involved in a war with Russia, and energy will be involved. Russia supplies 25% of the EU’s energy needs and over 50% to many Eastern European states , and the EU is Russia’s largest trading partner, totaling $285 Billion .
Immediately after the 4% drop in the Euro in 2 days, Bank of America issued a warning to its’ customers summarizing the situation that, although the USD is showing signs of recovery, a war in Europe does not solve the fundamentally flawed US economy, and they expect further USD weakness .
Russia’s involvement in Europe is not only energy. The US has planned military bases in many eastern-bloc countries, one of which has been signed during the crisis in Georgia .
One problem with Europeans is they cannot agree. This is what makes Europe charming and culture-rich but politically complex. USA is a ‘melting-pot’ which has become a mono-culture based on corporatism, while American’s argue their thinking lies in the same direction. Since the US Civil war, US mono-culture has solidified the mainstream in a view that always agrees on some tenets, this is not the case in Europe. Entry into the EU and the Euro passed referendum in many EU states by thin margins, there are those who would like to revert back to national currencies.
One main difference between the Euro and other currencies: the Euro does not have a government behind it. Individual EU states retain their sovereignty, and those states central banks have essentially no power to influence the Euro directly, except for lobbying the ECB. So the Euro is a designer currency hanging on a thin margin, which could be toppled by a severe energy crisis should the situation with Russia escalate. US involvement in Eastern European countries will only increase the chances of Russia’s will to turn off the lights.
Russia has already quietly begun selling oil in Rubles , and announced the Ruble is fully convertible (since 2006) . While by itself these actions are not market-shattering, combined with the potential conflict in Georgia, and Russia’s aggressive policy to capitalize on their vast wealth in natural resources, a situation is brewing in Europe which can be potentially explosive. Any turmoil can be seen as bad for the Euro, regardless of the actual damage done. The disadvantage of Europe is it’s history: Europe has been involved in wars and currency devaluations. As poor as the US economic numbers are, the US is involved in foreign wars at its leisure, there is no compelling reason the US should be involved in any war.
Russia can also affect emerging markets which it may be forced to trade with, such as India, China, and Brazil. Russian oil could help a growing Chinese economy and decrease Russia’s dependence on European customers. In a complex environment a static forecast is not possible, but it is clear any instability or even the perception of instability close to Europe will be negative for the Euro. Elite E Services believes the next bubble to pop will be the Euro bubble.
Long term, this is a buying opportunity for hard commodities such as Wheat, Swiss Francs, Oil, and Gold. Whatever happens in this war, the supply side in the Oil market is controlled by unfriendly countries such as Venezuela and Iran. If Russia is now added to the list of unfriendly countries, we can expect Oil to increase long term, as Russia will use this as a bargaining chip in any negotiations.
This move has been excellent for CTA’s trading momentum and trend-based strategies. For short term gains in the FX or Commodities markets, investors can seek CTA’s with established track records or automated trading systems, which are performing very well in environments like this. In fact, desynchronized markets are ideal for systems that monitor and analyze discreet price data vs. fundamentals.
Elite E Services is a registered CTA with the CFTC and NFA Member (#373609). eliteeservices.net
Article Source: EES - What Russian war means for the Euro
by Mike Vodicka
In spite of the recent selloff in the energy sector, most of these stocks are still trading with big gains on the year.
This stands in sharp contrast to stocks from the financial sector, which have suffered steep losses as big banks have been forced to liquidate assets and raise capital to support their balance sheets.
Because these two groups of stocks have functioned as polar opposites during this stretch, it has provoked many conversations about which is currently the more attractive investment destination; high-flying energy stocks or beaten down financial stocks.
Its All About Earnings
When you take a look at the earnings picture, this argument becomes very one-sided.
Crude prices have recently dipped lower, but they are still very high when compared to historical norms, and this will translate into big earnings for energy companies. We can see this dynamic expressed through analyst estimates.
Encore acquisition Co. (EAC) shares are still trading up sharply on the year in spite of the stocks recent sell off, but estimates have risen in tandem with the stock price, with the current-year estimate advancing to $5.07 per share per share from $3.63 per share 90 days ago. This kind of earnings power provides plenty of fundamental strength for more share appreciation.
The earnings picture on the financial side looks very different. Wachovia Bank Corp.’s (WB) share price is trading at half of its 2008 high, causing many investors to proclaim the stock is “cheap.” But the company just posted a steep loss in its most recent quarter, and analysts are projecting sustained earnings weakness. The current-year estimate is now projecting a loss of $2.15 per share, down from a gain of $1.60 per share, 60 days ago.
Two More Stocks
On that note, lets take a look at two more stocks, one from the energy sector and one from the financial sector.
Apache Corp. (APA) shares are also trading much higher on the year, in spite of the stock’s recent sell off. But once again, this stock has advanced with analyst estimates. The current-year estimate stands at $15.53 per share, up from $13.01 90 days ago. At these levels, this stock looks like a huge bargain, carrying a forward P/E multiple of just 6.8X, a steep discount to the overall market.
Fannie Mae (FNM) shares are trading at just a fraction of the stocks 52-week high after the company was rocked by liquidity issues. These lower prices have generated plenty of interest from investors, but the company’s earning capacities have been severely damaged. The current-year estimate is projecting a loss of $6.01 per share, a steep increase from a loss of $2.02 per share 90 days ago.
Conclusion
Earnings are the most important factor driving share price appreciation. Earnings enable an investor to frame a company’s stock price within the context of actual financial production. Stock prices will always swing wildly, but this in and of itself carries little value. By creating investment strategies that rely upon actual and projected earnings, investors are aligning themselves with companies that have the fundamental strength required to produce long-term gains.
Michael Vodicka is an Editor at Zacks Investment Research for more information please visit http://www.zacks.com
Article Source: Energy Stocks vs. Financial Stocks
by Kewal Wason
Knowing ways to save money, is a primary concern for many people and their families. Learning to save money is not about buying software or books. It is not about taking economics or finance courses. Saving money is a new way of thinking. If you have a problem saving money then you might need to adjust the way you think about money.
Understanding the main reason behind your monetary problems can help you greatly with the first basic way to save money - Think Before You Spend. This rule is all about weighing needs against desires and avoiding thoughtless purchases. Often, emotional purchases fall into this category. Before spending money think about why you are buying said item — do you actually need it? Even if you still feel out of control of your spending the mere act of thinking about it will eventually lead to increased control. You know what they say, “To change the way you act, first change the way you think!” Thinking about your spending is the first step in many strategies to save money.
Another rule in this list of ways to save money is simple—Keep Track Of Your Money. Credit cards are a wonderful convenience, as are checkbooks and debit cards, but the problem is that unless you are handing over cold hard cash it is really easy to ignore where your funds are going and very difficult to keep track of how much you have left. You should never be shocked by your credit card bill and you should not be caught off guard by your bank balance. You may not have it down to the penny, but you should have a pretty good idea of how much money you have on hand. If you find yourself constantly surprised by an expensive credit card bill, it is time to start keeping track of your money. Merely writing down what you spend money on can help immensely and balancing your checkbook on a monthly basis is a good place to start. Or, if the idea of balancing a checkbook overwhelms you, why not try carrying a small piece of paper around and writing down everything you spend money on. This is small enough to fit in a wallet or purse but will remind you on a daily basis to remain aware of your spending.
Finally, the most vital of our save money strategies —Earn It Before You Burn It. This means that whether you are shopping for necessities or luxuries you make out that you have the money to pay the bill. Perhaps you prefer to use plastic for ease or rewards, but before you hand over that card to the clerk you better be sure that you have the funds to pay the bill when it comes due. Once you start carrying balances and paying interest on your credit cards then you are destroying your ability to save money. It is a simple rule — don’t spend money you don’t have.
If you follow these three basic ways to save money then you will be ahead of the game. Think before you spend, keep track of your money, and earn it before you burn it are the best strategies to save money.
Kewal Wason is an independent advisor. You can find information on save money strategies, how to set up a SEP IRA, mutual funds online investing, drip investing
Article Source: How To Save Money: Three Basic Ways To Save Money
by Liorab
Bulgaria is one of the important countries of European Union. Republic of Bulgaria is surrounded by Romania to the North, Serbia and the Republic of Macedonia to the west, Greece and Turkey to the south, and The Black Sea defining the extent of the country to the east.
The country is blessed with natural diversity increasing its attraction and charm from tourism point of view. Snow-capped peaks and landscapes of Alpine range of mountains, mild and sunny Black Sea coast along with typical continental Danubian Plains are the notable features of geographical diversity. As added attractions, Bulgaria has several rivers flowing all around the country as well as several small, medium and large lakes providing excellent aquatic beauty.
Due to natural beauty, several places have become popular as tourist hotspots. Investing
Bulgaria is attracting tourists from European and American middle class segment. Therefore, investment in middle class travel and tourism amenities is gaining momentum. Real Estate firms and investors are investing large sum of money in building several regular resorts, golf resorts, beach resorts, mountain resorts and multi specialty resorts to attract maximum possible visitors and to flaunt their investment. Not only investment and real estate companies are coming towards Bulgaria for investment, but also individuals are taking a leap forward to invest
Your investing in Bulgaria can provide you attractive returns within no time. Not only, you can earn a regular amount from your residential or commercial property bought in Bulgaria, but also you can have your own roof while you plan to spend your next summer holidays in Bulgaria. At the end of your decision of investing in Bulgaria, you will feel proud on your wise decision.
Investing in Bulgaria is an exciting prospect. Our site enlists all investment opportunities in Bulgaria, including real estate property and apartments, If you are interested in investing in Bulgaria, check for the best opportunity at Investing in Bulgaria
Article Source: Prospects of Investments in Bulgaria
by Roger Winston
It is not often that pensions are described as ’sexy’ but SIPPs (self-invested personal pensions)are apparently just that. These DIY pensions that offer a wide range of investment options and the opportunity for investors to manage their own money have soared in popularity since they took off two years ago. That was largely due to the biggest shake-up of the pensions system since Lloyd George introduced the old age pension in 1908.
But while they might be seen by some as the ‘Rolls-Royces’ of pension savings, others fear they are the next big financial services mis-selling scandal in the making. They are not for everyone. Far from it: in fact many people would be better off with a traditional pension arrangement.
More than a quarter of a million people have taken out a SIPP since ‘A-Day’ ushered in an era of unprecedented flexibility in pension saving. The new rules, introduced on April 6, 2006, scrapped restrictions on how much savers could stash in their pension fund: from then, people could save up to 100 per cent of annual earnings, subject to a current cap of £235,000.
It became easier to take pension fund benefits, and the reforms also meant that, for the first time, people in company pension schemes could set up their own personal pension arrangements too. And, despite ministers performing a U-turn on allowing residential property to be held in pension funds — the most-trumpeted benefit of SIPPs prior to the introduction of the new regulations — their take-up has rocketed. SIPP sales rose almost 53 per cent to £1.16 billion in the 2007/08 tax year compared to the preceding 12 months, according to data from Hargreaves Lansdown.
“SIPPs are booming.” says Tom McPhail, head of pensions research at the independent financial services provider. “The drivers for growth are manifold: the A-Day rules allow really substantial investment contributions; the development of technology, such as online access to investment fund supermarkets, has boosted the self investment market; and competition has drive SIPP administration costs down”. “At the same time, investors have become disenchanted with investment restrictions on other types of pension product and employers are beginning to appreciate that group SIPPs allow staff who have participated in maturing employee share schemes to continue to hold their shares in a tax-efficient environment.”
The past year, well-known companies such as Kingfisher (owner of B&Q), GlaxoSmithKline and Stagecoach have added group SIPPs to their benefits packages. The rise in demand shows no signs of abating. SIPPs will become increasingly prevalent as a retirement saving and income product in years to come, according to independent financial research company Defaqto.
Matt Ward, principal consultant for pensions and wealth management and author of its recent report ‘SIPPS in the UK 2008 — The Personal Pension of the Future’ says: “Since their launch in 1990, SIPPs have blossomed from a niche to a mainstream pension proposition and the attention now paid to their importance by numerous financial services institutions in the UK will ensure their market longevity.”
Like other pension products, tax relief is given on the way in, meaning it costs basic-rate taxpayers just £8,000 and higher-rate taxpayers £6,000 to invest
‘Supermarket’ SIPPs, the most basic form, typically only allow investment in unit trusts and shares, but are generally low-cost. Hargreaves Lansdown’s Vantage SIPP and similar products from Alliance Trust and Killik & Co allow savers to set up and run a SIPP for free, other than fund charges.
A string of insurers also offer SIPPs, largely sold through intermediaries. Herein, however, lies the root of warnings over the potential for SIPP mis-selling. Independent financial advisers (IFAs) attract high levels of commission when consolidating pension arrangements into life office SIPPs. And, last year, the Financial Services Authority warned IFAs against recommending SIPPs — which tend to be more expensive than traditional pension products — where personal pensions were more appropriate.
SIPPs are fairly unusual among financial products in that the initial and annual management fees are usually a set number of pounds, rather than a percentage of the total fund invested. Initial fees are generally a few hundred pounds, while annual charges come in at an average £500 or so. Investment charges, generally the only charge on traditional pension products, also tend to be higher at around two per cent of the sum invested compared to 1.5 per cent or less on funds held in stakeholder pensions.
“There’s a bandwagon effect going on.” Malcolm Cuthbert, managing director of financial planning at independent financial services firm Killik & Co, said. “In the same way that people got into the tech boom, they’re now getting into SIPPs, and sometimes individuals are going from a life company personal pension to a life company hybrid SIPP, and are paying more for effectively the same investments.” Figures from Standard Life, the biggest player in the sector, show that almost 35 per cent of money invested in its SIPP (£2.78 billion out of a total £8.1 billion) was held in its own funds as of end-March.
‘Full’ SIPPs, meanwhile — offered by smaller specialist firms such as James Hay, Pointon York Sipp Solutions, Suffolk Life and AJ Bell, as well as Standard Life — give the run of the entire market. These are, again, more expensive than other types of SIPP, but can prove particularly suitable for small business owners. Up to 50 per cent of the value of assets held in the SIPP can be borrowed to buy the property, and rental income is paid gross into the fund.
The same borrowing limits apply to Axa’s recent move to allow its SIPP investors to invest in hotel rooms through specialist investment company GuestInvest. Investors can buy a hotel room on a 999-year lease and receive 50 per cent of the income on lettings throughout the year. They will also benefit from any capital appreciation on resale and the investment offers a guaranteed minimum six per cent return for the first year.
This greater flexibility clearly offered by SIPPs also extends to options at retirement: SIPPs allow people to keep their pension invested, while taking 25 per cent as tax-free cash at retirement and drawing an income.
By Roger Winston, SIPP and commercial property investment expert.
Article Source: Why Sipp Are Becoming A Popular Investment
by Isabel Reyes
Investing
Do you have life insurance? Is your family protected financially in the case of your passing? If you are on the horn about whether to invest
Do you have the need to be an entrepreneur? There are many people out there who dream of creating their own business. These dreams can be a reality if you choose the right business platform. Many businesses are created solely online and run from the comfort of the home. These businesses require very little start up money and leave the investor to see the gains on the back end. The key to investing in a business is to either invest full tilt and give all of your time to the business, or create a partnership with someone who will run the business with your startup capital.
The different ways of investing your money will inevitably be the key to your success. Many people believe they need a financial advisor to see gains from the money they have to invest. That is not entirely true. With the rise and fall of the market, sometimes it is the different ways of investing money that you may never have thought of that will make you the most profit in the end without paying someone else to handle your money.
Learn ethical investing strategies, make money and reduce the risk while investing. Grab your free PDF report called How To Start An Investment Club and receive regular trading tips: http://www.basicinvestingideas.com/
Article Source: The Many Different Ways of Investing Money
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