Investment Portfolio

An investment portfolio refers to a pool of investment which may contain investments from different asset classes or different products from the same asset class. An investment portfolio is created to earn returns and the same time mitigates risks on a wider level.  A portfolio is diversified by dividing the total investment into different assets and investment products. The diversification of investment with a small amount is also possibility. The objective is achieved by making investments into mutual funds or investment units who pool the clients funds in a diversified portfolio and the profits and losses are distributed proportionally to all (Davis et al).

Shares are ownership in a public limited company that allows an investor to invest and receive dividends and capital gain if the company earns a profit or incur a loss if company incurs a loss as well. There are two processes to buy or sell the shares. The first process is called initial public offering when the shares are issued for the first time and can be bought directly from the company. The second process is buying shares through a broker. The second method is generally used. Franked dividends refer to eliminating the double tax liability from the investor and providing him relief on the amount of the tax on profit that company has already paid. In case of unfranked dividends no such relief is available to investor and he has to pay tax on the complete amount of the dividends. Ordinary shares are the most common form of shares and entitle a holder to claim on profit of the company after interest has been paid. The preference stock carries a fix amount of profit similar to interest and is paid prior to the ordinary shares (Geetha & Vimala).

Five tips of buying shares are as followed.

1- The investor should prefer blue chip companies for stable businesses and history of stable performance.

2- Investor should keep a long term perspective while buying shares.

3- Investor must not put all his investment into a single script rather he should diversify it.

4- Investor should properly research before making an investment.

5- Should regularly monitor his investments to have a view of the changing market dynamics.

Steps to buy a property in Australia

Assuming the property has a price of $500,000. The purchaser obtains 80% of the cost through mortgage and at a fixed interest of 5.5%.

The purchaser has to pay one of government fees. The first one is Transfer registration fee which is 138s$. The stamp duty which is expected be $17,990.00 of an owner occupied house in New South Wales.  In next step the owner has to pay for the One off home financing fees. These fees includes Mortgage registration, Loan establishment fee, rate lock fee, mortgage insurance arrangement fees, settlement attendance fee and Mortgage insurance. In the next step the investor has to pay the one-off property costs such as property valuation fees, research and property advice, building inspection report and conveyance fee for solicitor.

Positive gearing refers to the receiving of profit when rental income is accounted for after paying all the expenses such as mortgage payments. Similarly negative gearing refers to the paying an additional amount after paying all the rental income in expenses such as mortgage payments.

Crypto currency refers to the electronic form of currency which is not issued by a state government. I believe there is a bit coin bubble because movement in the price of the currency is not supported by any fundamental factors rather it is the bandwagon effect which has caused the price of the currency to rise to new levels. Furthermore, a bubble has already occurred and busted in Bitcoin when it went as high as $20000 and then fell to half of its price in nearly a month.  

Bibliography

Geetha, S. N., and K. Vimala. “Perception of household individual investors towards selected financial investment avenues (with reference to investors in Chennai city).” Procedia Economics and Finance 11 (2014): 360-374.

HA Davis, Mark, and Sébastien Lleo. Risk-Sensitive Investment Management. 2015.