Sharia-Compliant Fund Providing Extremely Low Risk Investments and Consistent Annual Double Digit returns for 10 – 20 – 30 Years!

Cabal Capital Management, LLC announces the launch of the Legacy Fund which provides special alternative investment opportunities into extremely low risk, and very high financial return Advanced High Income Generation Projects through direct investments.

This fund which is not a private equity fund and is Sharia-Compliant is unlike all other investment pool funds, hedge funds, etc. that exist today by offering investments that are focused on both strategic and tactical investment opportunities into Highly Advanced Income Generating Project(s) producing crucial and vital, very high demand commercially valued product(s) that are being sold directly into the largest “Major” Consumer Universal Demand Markets in the world.  These investments allow risk adverse accredited investors the ability to participate in the revenues generated from these projects which allows for and achieves both capital growth and preservation, while providing the investor an extremely low risk opportunity with the benefit of dependable and sustainable alpha generation and the long term growth from these projects.  These fully integrated projects have been designed to last 40 to 50 years or longer for their life cycles regardless of the global financial and credit markets.

Our fund is well positioned to effectively tap into these markets to the benefits of our investors.  The growth dynamics of the United States and Western Europe is based upon local, regional and domestic consumption of all the products these projects produce.  This fund is targeting routine and consistent annual double digit returns (15 – 21%) to investors un-correlated to all securities, commodities, currencies and the credit markets themselves since there will not be any exposure to these markets.  All project investments within this special investment vehicle have been specifically developed and designed to perform across various business cycles regardless of global economic conditions to include recessionary and depressionary environments as well.

The current global credit crisis, current stock market contractions and wild swings in the commodities markets does not and will not impact our ability to produce consistent annual double digit returns now or in the future for our investors since we will never have, need or rely on the credit markets to establish margin accounts or leveraged positions which most all hedge fund type investment vehicles require to operate.  We do not require nor will we ever utilize prime services which the large investment banks provide (Bear Stearns, Lehman Brothers, Merrill Lynch, etc.). We do not rely on the stock, commodity or currency exchanges to generate income since we can not control any of the events occurring in those exchanges for our investors, thus we are totally un-correlated to all securities, commodities, currencies and credit markets. 

In the case of Deflationary and Inflationary Markets, they will have no real effect on these projects and the products they produce.  Coincidentally inflation will only increase the value of the products coming out of the projects. Deflationary markets will have very minimal impact on the products produced within these projects since these products are and always will be vital for any country to maintain a stable economy, thus they will always be in very high demand through out the world regardless of the global economic conditions. 

Risk issues are always addressed through risk management and the review procedures for each and every investment made.  Unlike most projects which have been developed, planned and master planned, every assumption for each project invested in has been tested, validated, verified and proven or it’s not incorporated into these project(s).  Each and every project is also backed up by a detailed Input / Output Financial Cash Model which is a detailed Program / Project Financial Blueprint that shows the quarterly inter-relationships of investments, operational production revenues, operational expenses at all levels, taxes, imposts and fees, special circumstances events, and financial obligations during the life of the Program / Project.

Since energy production and consumption is the key element to any industrialized country, and with energy consumption increasing globally at an annual rate of 5 – 6 %, energy is and always will be vital to both the U.S. and Western European Economies. Allocating to Energy and Bio-Fuels production are two major key areas of involvement and investments within our seven pronged program investment strategies approach, which consists of the following options available to us:  Energy:  Oil & Gas (Example Project to follow), Bio Fuels:  Algae Based Bio-Diesel and Jatropha Curcas {plant} direct fuel source.  Algae Based Bio-Diesel is a direct fuel source currently available and ready for full scale production and delivery {This is Direct Fuel Source and is not a blend for gasoline or other fuel sources!} Algae Based Bio-Diesel Fuel production utilizes proprietary photo enhanced, micro nutrient enhanced, continuous flow, automated, sensor quality controlled, bio-chemical industrial processes and then are pressed, centrifuged, oils separated from water, water treated, cooked, cracked and treated all within a 12 hour cycle (Start to Finish) to complete one batch made ready for use in any diesel engine.  Initially 270 Million Gallons per quarter to several Billion Gallons of bio-diesel per quarter will be produced depending upon the initial size of a project program.  This Algae Based Bio-Diesel Fuel source has a Cetane Rating of 105 -117 compared to 80 – 85 Cetane Rating for #1 diesel fuel currently produced by all the major oil companies, which provides more power, better millage and performance while emitting 60 – 70% less emissions across the board vs. normal standard crude oil based diesel fuels. This Algae Based Bio-Diesel product emits no sulfur and or nitrogen into the atmosphere, Alternative Energy:  Solar / Concentrated Solar Thermal Power Production, Wind and Electric Fuel Cell Systems, Natural Resources:  Gold, Platinum and other Precious Metals Groups and Diamond Mining: Refining, Assaying, Separation using advanced physical technologies and Bullion production of Gold and Platinum as well as Processing, Cutting, Valuation Appraisals of Diamonds and other Precious Stones, Water:  Proprietary Water Science / Technology to Produce Fresh Drinking Water to meet Agricultural, Industrial and Human Public Health needs in critically water short areas through Water production, bottling facilities and distribution.  This can be accomplished with any available water supply {in ground water tables, above and below ground reservoirs with a high saline content normally not recommended for human consumption}, Sea Waters & Brackish Waters anywhere Globally, Hydroponics:  Food Production: Fish Shrimp, Prawns, Fruits Vegetables utilizing USDA inspectors to garner Grade A Choice Status to include direct marketing into Major U.S.A. and International Consumer Demand Markets, and Special Opportunities: Aviation Fuels: JP-1 to JP-12 for Commercial and Military Applications from Algae Based Direct Fuel Sources as well as Advanced Hyper-Speed Information Technologies and other Advanced High Income Generation Project Opportunities as they become available.

It should be noted that traditional large project investments consist normally of only one income generation production element and typically requires three years at the earliest before the investors see any type of modest return on their investment.  Our projects produce immediate results in the first year due to their very nature and global demand.  These Exclusive World Class Projects which are available to us for investments have no less than 2, but normally include 5 or more Major Integrated Income Production Elements within each project.  It should also be noted that each income producing element within these projects are so strong that they could stand on their own and support the entire project, which is why many of these elements are developed together to form an Advanced Integrated Income Generation Project depending upon the requirements and location of the program.

All of the projects that this special opportunity fund invests in involve Proprietary Advanced Technologies and Advanced Physical Science / Processes (not known to the great majority of Asset Manager Companies Staffs).   Other types of investment pool managers, hedge funds, etc. do not know or even have access to these world class development engineering people and the technologies assets and projects that they develop, implement and manage.  Currently we have in excess of $10 Billion Dollars worth of Advanced High Income Generation Projects available to us for investments.

These projects are developed, implemented and managed by Highly Reliable, Senior Internationally Experienced Technical Managers, Senior Science Managers and Senior Logistics / Project Security Management Staff.  There are in excess of 300 Top Level Executive Technical Managers with over 30 years of Experience in each of their perspective Development Sectors available for all projects that our fund invests in.  These projects are designed to insure extreme depth of expertise and experience management which is available to any project at any and every stage of the project program, regardless of location of the project anywhere globally.

We understand that most  Investors, Sovereign Wealth Funds, Major International Banks, Hedge Funds, Fund of Funds, Private Equity Funds and others do not have the technical resources, capability, background and or understanding to evaluate, determine and differentiate between good and bad Large Advanced High Income Generation Projects, Project Developers, Project Implementation Capability and Management of Highly Integrated Multiple Income Steam Revenue Generation Projects. 

This is the strength of the Asset Manager and where he excels; during the past several years  he has been mentored, tutored and trained by some of the oldest and most highly respected, responsible, highly sought after and experienced Development Engineers who have planned, master planned, developed, managed, evaluated and trouble shot Economic Development Projects, Strong Multiple Stream Income Generation Projects, conducted Nation Building and Humanitarian Projects in over 65 countries during the past 40 years.  The training he has received allows him to thoroughly review, comprehend and evaluate Project Development, Project Implementation, Logistics, Security and Management of these projects as well as the risk management associated with each potential investment.  This process has provided him with the understanding, knowledge and insights of Project Development, Implementation, Logistics Operations and Infrastructure development of large income generation projects to determine unequivocally, which Highly Advanced Income Production Projects are viable and which ones are questionable investments at best.

Another Special Note of consideration is that each investment will bring with it potential tax advantages not typically found with other types of investments.  Depending on where the project(s) are located and how the project are legally structured and set up (Development Corporations, Development Authorities, etc. which are authorized by local, state or federal governments) could result in tremendous tax advantages, which each investors tax advisor will need to qualify and determine the best approach for each investors own tax liabilities depending upon their current tax status, situation and strategies.

The results of this Special Investment Vehicle fund are highly advantageous investment opportunities that by far exceed the majority of investment opportunities available to investors from a financial return as well as extremely low risk standpoint by investing in Outstanding Advanced High Income Generation Projects carried out by highly reliable and responsible individuals and organizations.

Face to face meetings are welcomed and encouraged in order to qualify, verify and validate these investment opportunities which stem from the Americana way of project development and implementation with the application of Science, Engineering, Logistics, Security and Management which dates back to over 200 Years during the American Expansion of the United States of America.  Never before in the history of mankind has the shear number and sizes of these Consumer Universal Demand Markets been in place and more importantly, primed and ready to handle and accept these vital, crucial and very high demand, commercially valued products coming from these projects.

Headquartered in San Antonio, Texas, Cabal Capital Management, L.L.C. is managed by Kent Sullivan:  www.cabalcapitalmanagement.com

** Fully Integrated Dual Element – Oil & Gas / Real Example Project **

This Oil & Gas production program is headed up by a Top Level Senior International Consultant who is an Oil and Gas Industry Executive which has been involved in the Oil & Gas Industry over the past 50 years.  This Oil & Gas Executive is the Systems Developer, Scientist, Equipment Designer and Engineer who is recognized as an expert in his field by the U.S. Department of Energy who also has called him upon him frequently in the past to trouble shoot particular Oil and Gas fields as a technical advisor and as a trouble shooter to rectify any and all problems associated with troubled oil and gas production fields.

This Top Senior International Consultant has a proprietary and proven 12 step methodology for siting, drilling, completing and production techniques for all wells.  He has a historical commercial success rate of 92% for bringing in all of his wells sited, drilled, completed and producing which also has a normal life span of 15 to 20 plus year’s worth of production.

This Advanced High Income Generation Oil and Gas project is comprised of the following:  A Top Down Electric Air Hammer System which is highly sensorized with Professional Engineers and Scientists managing all operational positions.  These auto sensor rigs provide detailed information by satellite to a centralized operations and training center where all decisions are made by people with 45 – 50 years of successful completion and production experience.

Each oil and gas well completed will be drilled in both soft and hard rock beds and will vary in depths from 3,000 feet to over 13,000 feet.  All wells in this program will be completed initially in the state of Texas, in the United States of America.

Typical production wells will produce 60 barrels of oil per day to 500 – 600 barrels of oil per day and the gas wells will produce in a typical range of 2 million cubic feet of natural gas per day to in excess of 20 million cubic feet of natural gas per day. The total net operating investment will be returned within 4 months of production for each well.

Multiple producing formations will be completed and isolated with proprietary tools and instruments which will be operated simultaneously through out the life of the wells.  The typical life of these well are 15 – 20 years because of the 12 different proprietary methods used for siting, drilling, completion and production techniques, tools, proprietary materials and instruments used on each and every well which prevents formation damage and increases the life cycle of each well to maximize the highest production obtainable.

This program consists of hundreds of oil and gas wells sited, drilled, completed and in production within a 1 – 2 year period.  These wells will be sited, drilled and completed in historically very well known and documented oil and gas producing formations within the state of Texas, in the United States of America.

Investors will receive an estimated 15 – 21% annual return per year on their investment, with payments coming at the end of each year from this program.  The threshold investment will be an aggregate amount of $400 hundred million dollars which is what the minimum program investment calls for.  A $10 Million dollar minimum investment is the entry point for this program, with all others being on a case by case basis.

Estimated program revenues are based on $60 dollars a barrel and $6.5 dollars per thousand cubic foot of natural gas.  Over the last year crude oil (West Texas Intermediate) has sold as low as $50 dollars a barrel up to as much as $147 dollars a barrel.  Over the past year natural gas has sold from $5.5 dollars a thousand cubic foot to $11.3 dollars per thousand cubic foot.

Example Oil & Gas Well Profile:  One well; properly sited, drilled, completed and producing will conservatively produce 100 barrels of oil per day and 4 million cubic foot of natural gas per day.  This provides the overall program (100 barrels x $60 per barrel = $6,000) $6,000 dollars per day of revenue.  Each 4,000 cubic foot of natural gas (4,000 x $6.5 per thousand cubic foot = $26,000) $26,000 dollars per day of revenue.  Total revenue for this example is estimated at $32,000 dollars per day of program revenue for this example.

** All wells in this program will not produce the same **

Each month this represents a program return of (30 days x $32,000 = $960,000) $960,000 dollars of revenue coming from this one (1) example well.  The investment program we are offering involve several hundreds of program wells being sited, drilled, completed and operating within a 1 to 2 year period.

Remember, this is only two elements of a fully integrated Advanced High Income Generation Project which will involve in most cases several other elements (normally 5 or more) to generate very substantial amounts of revenues over the course of the project life.  With the combination of several other Advanced High Income Generation Elements within one project, this will enhance the financial returns and revenues of the program itself, and thus will also greatly reduce and virtually eliminate any associated risk due to the diversification of the different Major Income Generation elements within each project.

Once again, the result of this Special Investment Vehicle fund are highly advantageous investment opportunities that by far exceed the majority of investment opportunities from a financial return and an extremely low risk standpoint by investing in Outstanding Advanced High Income Generation Projects.

Headquartered in San Antonio, Texas, Cabal Capital Management, L.L.C. is managed by Kent Sullivan: www.cabalcapitalmanagement.com

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INTRODUCTION

One of the outstanding features of globalization in the financial services industry is the increased access provided to non-local investors in several major stock markets of the world. Increasingly, stock markets from emerging markets permit institutional investors to trade in their domestic markets. Indian stock market opened to Foreign Institutional Investors in 14th September 1992, initially with lot of restrictions. The regulation on them are liberalized and minimized now, since 1993 has received a considerable amount of portfolio investment from foreigners in the form if FIIs investment in equities. This has become a turning point of India stock market. The government of India announced the policy of the government to permit the FII investment in India capital market. According to the SEBI modified the regulation on 14-11-1995. In order to make investment in India equity market they wanted to register with Security Exchange Board of India as foreign institutional investors. It is possible for foreigners to trade in India securities without registering as Foreign Institutional investors, but such cases require approval from Reserve Bank of India or the Foreign Institutional Promotion Board. They are generally concentrated in secondary market.

Domestic market alone not able to meet the growing capital requirement of the country and financing from mutilated institution has lost primary in the emerging in the global order .Besides aimed primarily at ensuring non-debt creating capital inflows at a time of extreme balance of payment crisis. It was to tie over the balance of payment crisis in the early 1990s

Portfolio flows often referred to as ‘hot- money’ are notoriously volatile capital flows. They have also responsible for spreading financial crisis causing contagion in international market. Evan though, the FIIs have been plying a key role in the financial markets since their entry into this country. The explosive portfolio flow by FII brings with them great advantages as they are engine of growth, lowering cost of capital in many emerging market. This opening up of capital markets in emerging market countries has been perceived as beneficial by some researchers while others are concerned about possible adverse consequences.

Clark and Berko (1997) emphasize the beneficial effects of allowing foreigners to trade in stock markets and outline the “base-broadening” hypothesis. The perceived advantages of base-broadening arise from an increase in the investor base and the consequent reduction in risk premium due to risk sharing. Other researchers and policy makers are more concerned about the attendant risks associated with the trading activities of foreign investors. They are particularly concerned about the herding behavior of foreign institutions and the potential destabilization of emerging stock markets.

This study addresses these issues in the context of foreign institutional investors’ (FII) trading activities in a big emerging market – India. India liberalized its financial markets and allowed FIIs to participate in their domestic markets in 1992. Ostensibly, this opening up resulted in a number of positive effects. First, the stock exchanges were forced to improve the quality of their trading and settlement procedures in accordance with the best practices of the world. Second, the information environment in India improved with the advent of major international financial institutional investors in India. On the negative side we need to consider potential destabilization as a result of the trading activity of foreign institutional investors. This is especially important in an emerging country that has embarked upon reforms to open up its market.

OBJECTIVES The objectives of this study were as follows;

(1) To study the role of FII investment in the Indian stock market, ( 2 ) To examine the causal relationship between net FII investment and BSE sensex using granger causality test (3) To examine the causal relationship between net FII investment and NSE sensex using granger causality test (4 )To examine whether FIIs were a channel of global disturbance into the Indian stock market.

TOOLS: Study was carried out with the help of unit root test, co integration test, causal regression and F statistics for FII investment and index from BSE and NSE

LETERATURE REVIEWS

Gayathri Devi .R in 2003, she conducted study on “Causal Relationship between FIIs and Stock Market: A critical study”. It revealed that there was long run relationship between net FII investment and sensex, FII investment did not respond the short-run changes or technical-position of the market and they were more driven by fundamentals, and FII investments did granger cause India stock market. “Selen Serisoy Guerin” in 2006, conducted study on “The Role of Geography in Financial and Economic Integration: A comparative Analysis of foreign direct investment, Trade and Portfolio Investment Flows”.. It found support for the argument that most FDI among Industrial countries were horizontal, whereas most FDI investment in developing countries was vertical and our results indicated that portfolio investment flows compared to FDI, were highly sensitive to change in GDP per capita, this implied that if there was a negative output stock, portfolio investment flows would be more volatile than FDI. A.Julia Priya, D. Lazar and Joseph Jeyapual in 2005, they conducted study on “Role of Foreign Institutional Investors on stock market development in India”, Results revealed that sensex, market capitalization of NSE, Turnover of BSE and NIFTY without market capitalizations were influenced by Foreign Institutional Investors“Suchismita Bose and Dipankor coondoo” in 2004, they conducted study on “The Impact of FII Regulation in India”,. These results strongly suggested The liberalization policies had the desired expansionary effect and had either increased the mean level of FII inflows and/or the sensitivity of these flows to a change in BSE returns and /or the Parthapratim pal in 2004 conducted study entitled as “Recent volatility in stock markets in India and foreign institutional investors. Findings of this study indicated that Foreign institutional investors had emerged as the most dominant investor group in the domestic stock market in India. Particularly, in the companies that constitute the Bombay stock market sensitivity index, their level of control was very highinertia of these flows.

“sandhya Ananthanaryanan, Chandrasekhar krishnamurthi and Nilajan Sen in 2003 conducted study as “Foreign institutional Investors and Security Returns: Evidence from Indian Stock Exchanges”, It found strong evidence consistent with the base-broadening hypothesis.It did not find compelling confirmation regarding momentum or contrarian strategies being employed by FIIs.It supported price pressure hypothesis.

It did not find any substantiation to the claim that foreigner’ destabilize the market. J.S. Pasricha and Umesh.C.Singh in 2001, tried to analyze the impact of FIIs investment on Indian capital market. Their study revealed that FII are here to stay and have become the integral part of Indian capital market. Their entry has led to greater institutionalization of the market. They have brought transparency in the market operations.S.S.S. Kumar in 2001, attempted in his study to find the effect of FIIs on the Indian stock market. The inference analysis of the paper suggests that FII investments are more driven by market fundamentals rather than by short term changers or technical position of the market. As per K. Seethapathi and V. Subbulakshmi study entitled “Foreign investment: Need for focus”, They concluded that, the flows have to pick up. The political will is to be demonstrated by the government. In addition, the regulators have to identify the reasons for failure in converting approvals into actual investments and those issues are to be addressed immediately. E. Han Kim and Vijay Singal in 1997, they conducted study entitled “Are open market Good for Foreign Investors and Emerging Nations?”, Conclusion revealed as. Integrating the emerging stock markets into world markets has had benefits, and will continue to have benefits for both global investor and host countries. The end result of integrated markets a better allocation of resources, improved productivity of capital, and a higher standard of living.

THEORETICAL REVIEW

Between late 1990 and the middle of 1991, the economy faced severe balance of payment difficulties, coming close to defaulting on its external payment obligations in January and June of 1991. In January 1991, the Government negotiated with the International Monetary Fund (IMF) for loans. What followed was the implementation of the conventional IMF-World Bank prescription of short-term ‘stabilization’, consisting of devaluation, temporary import compression, fiscal and monetary compression with a rise in interest rates, followed by more long-term ‘structural adjustment’ measures, seeking to restructure the domestic economy.

The New Economic Policy was an outcome of implementation of the ‘structural adjustment’ program. The ‘economic reforms’ or ‘economic liberalization’ program, which began to be implemented with the announcement of the New Economic Policy (NEP), included wide-ranging changes in industrial policy, trade policy and foreign investment policy, a redefinition of the role of the public sector in the economy and redesigning the architecture of the domestic financial system. By narrowing down the topic, first it concentrates on capital account liberalization.

CAPITAL ACCOUNT LIBERALIZATION

The process of capital account liberalization in India needs to be situated in its wider context, for it was shaped by the reality in the national context and the conjuncture in the international context. In response to the external debt crisis, which surfaced in 1991, the government set in motion a process of stabilization, adjustment and reform. Economic liberalization and structural reforms sought to increase the degree of openness of the economy through trade flows, investment flows, technology flows and capital flows. The process began the introduction of convertibility on trade as quantitative restrictions on imports, except for with consumer goods were dismantled and tariff levels were reduced. It was combined with a liberalization of the regimes for foreign investment and foreign technology. And restrictions on international economic transactions, including capital movements, were progressively reduced. This process was also influenced by the gathering momentum of globalization which was associated with increasing economic openness in trade flows, investment flows and financial flows.

The approach to capital account liberalization in India was much more cautious. What was liberalized was specified. Everything else remained restricted or prohibited. The contours of liberalization of the capital account were, in large part, shaped by the salutary lessons of the external debt crisis which surfaced in early 1991 and brought India close to default in meetings its international obligations. The balance of payments situation, then, was almost unmanageable.

The vulnerability was accentuated by two factors: it became exceedingly difficult to roll-over short-term debt in international capital markets and there was capital flight in the form of withdrawals from deposits held by non-resident Indians. This experience dictated the parameters of capital account liberalization8. It prompted strict regulation of external commercial borrowing especially short-term debt. It led to a systematic effort to discourage volatile capital flows associated with repatriable non-resident deposits. Most important, perhaps, it was responsible for the change in emphasis and the shift in preference from debt creating capital flows to non-debt creating capital flows. To some extent, the liberalization that was introduced was also influenced by the perceived needs of the economy: financing the current account deficit, mobilizing resources for investment and attracting international firms. But capital account convertibility remained, fortunately, in the realm of rhetoric. The Mexican crisis in late 1994 was, ironically enough, a blessing in disguise for India. It was not just an early warning signal. It dampened the enthusiasm of those who advocated capital account liberalization with a big bang. It lent support to those who questioned the wisdom of capital account convertibility that would have been premature in every sense. The contours of capital account liberalization in India were determined by these factors.

In sketching these contours, it is necessary to distinguish between different forms of private capital inflows and outflows, as there are important differences between these categories in the nature and the degree of liberalization. A complete description would mean too much of a digression. For our purpose, it would suffice to consider the contours of liberalization in the following categories of capital account transactions:

• Direct investment,

• Portfolio investment, and

• Non-resident deposits.

Foreign Direct Investment

It is defined as a long-term investment by a foreign direct investor in an enterprise resident in an economy other than that in which the foreign direct investor is based. The FDI relationship consists of a parent enterprise and a foreign affiliate which together form a transnational corporation (TNC). In order to qualify as FDI the investment must afford the parent enterprise control over its foreign affiliate.

The liberalization of the policy regime for direct foreign investment began in July 1991 with two major decisions. First, direct foreign investment with up to 51 per cent equity was to receive automatic approval in selected high priority industries subject only to a registration procedure with the Reserve Bank of India. Second, a Foreign Investment Promotion Board was constituted to consider all other proposals for direct foreign investment where approval was not constrained by pre-determined parameters and procedures. In effect, this created a dual route for inflows of direct foreign investment. The approval was automatic, within the specific parameters, from the Reserve Bank of India, while all other inflows were subject to approval through the Foreign Investment Promotion Board. The access through the automatic route has been progressively enlarged over time. Needless to add, outflows associated with direct foreign investment are not subject to any restrictions, but this was so even in the era of capital controls.

Foreign Portfolio Investment (FPI)

Portfolio investment represents passive holdings of securities such as foreign stocks, bonds, or other financial assets, none of which entails active management or control of the securities’ issuer by the investor; where such control exists, it is known as foreign direct investment.

The liberalization of the policy regime was extended to portfolio investment in September1992. To begin with, foreign institutional investors such as pension funds or mutual funds were allowed to invest in the domestic capital market subject simply to registration with the Securities and Exchange Board of India. Guidelines issued by the Reserve Bank of India permitted such foreign institutional investors to invest in the secondary market for equity subject to a ceiling of 5per cent (subsequently raised to 10 per cent) for individual foreign institutional investors in a single Indian firm with an overall limit at 24 per cent of equity (later relaxed to 30 per cent of equity at the option of the firm) for total foreign institutional investment in a single Indian firm. Foreign portfolio investment further classified into

1. FIIs

2. ADR/GDR, and

3. Offshore funds.

Foreign institutional investors (FIIs)

One who propose to invest their proprietary funds or on behalf of “broad based” funds or of foreign corporates and individuals and belong to any of the under given categories can be registered for FII.

• Pension Funds

• Mutual Funds

• Investment Trust

• Insurance or reinsurance companies

• Endowment Funds

• University Funds

• Foundations or Charitable Trusts or Charitable Societies who propose to invest on their own behalf, and

• Asset Management Companies

• Nominee Companies

• Institutional Portfolio Managers

• Trustees

• Power of Attorney Holders

• Bank

Access was provided to foreign institutional investors in the secondary market for debt. Soon thereafter, foreign institutional investors were also allowed investment or placement in the primary market, subject to approval from the Reserve Bank of India, with a maximum limit of 15per cent of the new issue. It was some time before foreign institutional investors were permitted investment in government securities in the primary and secondary markets. This came in 1996-97 and was subject to the ceiling for external commercial borrowing. Subsequently, in 1998-99, foreign institutional investors were also permitted to invest in treasury-bills. There is no reserve requirements stipulated for, or taxes imposed on, these capital inflows. It also needs to be said that foreign institutional investors are allowed to repatriate the principal, the capital gains, the dividends, the interest and any other receipt from the sale of such financial assets, without any restriction, at the market exchange rate. The income tax rate for dividends on such portfolio investment for foreign institutional investors is 20 per cent, which is much lower than the corporate income tax rate for domestic or foreign firms. But foreign institutional investors are subject to a higher short-term capital gains tax at 30 per cent compared with 20 per cent for domestic investors, while the long-term capital gains tax is the same at 10 per cent. Sales of such financial assets for the purpose of repatriation are absolutely unrestricted, provided the sales are through stock exchanges. However, disinvestment through any other route, or in any other form, requires approval from the Reserve Bank of India.

Global Depositary Receipt:

Global Depositary Receipt A negotiable certificate held in the bank of one country representing a specific number of shares of a stock traded on an exchange of another country. American Depositary Receipts make it easier for individuals to invest in foreign companies, due to the widespread availability of price information, lower transaction costs, and timely dividend distributions. Also called European Depositary Receipt.

The option of portfolio investment was also made available to domestic corporate entities from September 1992. Indian firms were allowed access to international capital markets through global depository receipts or Euro convertible bonds which converted debt into equity after stipulated period. This access, however, was not automatic. Individual applications, drawn up inconformity with the general guidelines of the government, were subject to approval. This process remains unchanged.

Offshore Funds:

An offshore fund is a collective investment scheme domiciled in an Offshore Financial Centre, for example British Virgin Islands, Luxembourg, Cayman Islands or Dublin.

Similar facilities for portfolio investment were subsequently extended to Offshore funds, non-resident Indians (as individuals) and overseas corporate bodies, only for investment in shares or debentures through stock exchanges, on the same terms as foreign institutional investors, but subject to a ceiling of 5 per cent for individual non-resident Indians or overseas corporate bodies in a single Indian firm.

Among the various components of portfolio investment, FII comprises the bulk of portfolio inflows. The main objective of foreign institutional investors is to minimize risk and maximize returns by diversifying their portfolios internationally. Major determinants of investment decisions of FII are country and region specific.

Portfolio flows often referred to as ‘hot- money’ are notoriously volatile capital flows. They have also responsible for spreading financial crisis causing contagion in international market. Evan though, the FIIs have been plying a key role in the financial markets since their entry into this country. The explosive portfolio flow by FII brings with them great advantages as they are engine of growth, lowering cost of capital in many emerging market. This opening up of capital markets in emerging market countries has been perceived as beneficial by some while others are concerned about possible adverse consequences.

Among the most active FIIs are Morgan Stanely Asset Management, jardine Fleming, Capital International, J. Henery schorder, templeton, Warburg Pinkers, Internatioanl Alliance and Quantum fund.

Foreign Institutional Investors in India

India opened her doors to foreign institutional investors in September, 1992. This event represents a landmark event since it resulted in effectively globalizing its financial services industry. Initially, pension funds, mutual finds, investment trusts, Asset Management Companies, nominee companies and incorporated/institutional portfolio managers were permitted to invest directly in the Indian stock markets. Beginning 1996-97, the group was expanded to include registered university funds, endowment, foundations, charitable trusts and charitable. Since then, FII flows which form a part of foreign portfolio investments have been steadily growing in importance in India. Other than in the year 1998, the net flows have been positive. The nuclear tests and East Asian crisis did slow down the flows but as stated by Gordan and Gupta (2003), their effects were short lived. That the percentage of total net turnover of BSE, the share of average of FII sales and purchases increased from 2.6 percent in 1998 to 5.5 percent in 2002. The cumulative net FII investment in India as on August 2003 is approximately $17400 million. As of August 2003 net FII investment was 9 percent of the BSE market capitalization which is small compared to the size of the market. However, in the words of Banaji (2002), it is not the market capitalization that matters but what is important is the level of the free float, that is, the shares that are actually publicly available for trading. With floating stock in the Indian market being less than 25 percent, about 35 percent of the free float available has been bagged by FIIs – despite the fact that they invest in just a few highly liquid stocks.

Though India receives hardly 1 percent of the FII investments in emerging markets, the portfolio flows to India have been less volatile when compared with that of many other emerging markets (Gordan and Gupta, 2003). FIIs by adopting a bottom-up approach seem to invest in top-quality, high growth, large cap stocks (Gordan and Gupta, 2003). Sytse et al. (2003) provide empirical evidence that foreign institutional investors in India, invest in large, liquid companies which enable them to exit their positions quickly at relatively lower cost and also that the foreign institutional owners have a larger impact than foreign corporate owners when performance is measured using stock market valuation criterion.

India is one of the fastest growing economies in South Asia, promising a growth of over 9 percent, second only to China, it would not be a surprise to see increased FII flows to India in the future. FIIs are now looking at the economy as a whole, with the macro-economic factors also playing their role in attracting foreign investors. Factors like a strong currency, key reforms in the banking, power and telecommunications sector, increased consumer spending and stable policies are expected to play a major role in attracting FIIs to India. The Securities Exchange Board of India (SEBI) along with the Institute of Chartered Accountants of India (ICAI) jointly monitor the markets and announces the regulatory measures thus making the Indian companies more transparent and more disciplined.

According to the April 2005 report on corporate governance by CLSA Emerging Markets, India ranks fourth with a score of 55.6 percent. Banaji (2000) emphasizes that the capital market reforms like improved market transparency, automation, dematerialization and regulations on reporting and disclosure standards were initiated because of the presence of the FIIs. But FII flows can be considered both as the cause and the effect of capital market reforms. The market reforms were initiated because of the presence of FIIs and this in turn has lead to increased flows.

The Government of India gave preferential treatment to FIIs till 1999-2000 by subjecting their long term capital gains to lower tax rate of 10 percent while the domestic investors had to pay higher long-term capital gains tax. The Indo-Mauritius Double Taxation Avoidance Convention 2000 (DTAC), exempts Mauritius-based entities from paying capital gains tax in India – including tax on income arising from the sale of shares. This gives an incentive for foreign investors to invest in Indian markets taking the Mauritius route. Consequently, we now see investments coming from Mauritius while there were none before 2000.

The country wise distribution of the FIIs registered in India, with majority of them coming from USA and UK. Chakrabarti (2002) and Rao et al. (1999) point out the fact that due to existing inter-linkages, the source of the FII investment might not be the country from where the institution operates. Nevertheless, the figure gives us an idea of the country wise distribution of the FIIs in India. So as to encourage long term investments in the Indian market, Budget 2003 proposed that investors who buy stocks of listed companies from March 1, 2003 be exempt from paying tax on the gains they make on their investments, provided they hold them for more than one year. With so much to benefit from, the FII investment in India is likely to increase in the future.

Regulation on FII

Investment by FII was jointly regulated by Securities and Exchange Board of India (SEBI) through the SEBI (Foreign Institutional Investors) Regulations, 1995 and by the Reserve Bank of India through Regulation 5(2) of the Foreign Exchange Management Act (FEMA), 1999. The promulgation of legislation pertaining to foreign investment by SEBI in 1995 market a watershed for FII flows to India; this led to a significant increase in the level of FII equity inflows in the pre-Asian crisis period. The SEBI FII Regulations and RBI policies are amended and modified from time to time in response to the gradual maturing of the Indian financial market and changes taking place in the global economic scenario.

In order to trade in India equity market, foreign corporation need to register with SEBI as Foreign Institutional Investors. Without registration they can invest, but cases require the approval from RBI. They are generally concentrated in secondary market. FII are allowed to invest in

a) Securities in primary and secondary market including shares, debentures and warrant of companies, unlisted, listed or to be the listed in India.

b) Units of mutual funds

c) Dated government securities

d) Derivative traded in a recognized stock market and

e) Commercial papers

FII can invest their own funds as well as invest on behalf of their over seas clients registered as such with SEBI. These client accounts that the FII manages are known as ’sub accounts’. FII sub accounts include those foreign corporate, foreign individual, institution funds or portfolio established or incorporated out side India.

FII may issue deal in or hold off share derivative instrument such as participatory notes (PN). The entities that can subscribe to the PN are : a) Any entity incorporated in a jurisdiction that requires filing of constitutional or other documents with a registrar of companies or comparable regulatory agency or body under the applicable companies legislation in that jurisdiction; b) Any entity that is regulated, authorized or supervised by a central bank, such as the Bank of England, or any other similar body provided that the entity must not only be authorized but also be regulated by the aforesaid regulatory bodies; c) Any entity that is regulated, authorized or supervised by a securities or futures commission, such as the Financial Services Authority or other securities or futures authority or commission in any country , state or territory ; d) Any entity that is a member of securities or futures exchanges such as the New York Stock Exchange or other self-regulatory securities or futures authority or commission within any country, state or territory provided that the aforesaid mentioned organizations which are in the nature of self- regulatory organizations are ultimately accountable to the respective securities financial market regulators.

Investment limit

As per the September 1992 policy permitted foreign institutional investment registered FII could individually invest in a maximum of 5% of a company’s issued capital and all FIIs together up to a maximum of 24%. From November 1996 are allowed to make 10 percentage investment in debt securities subject to the specific approval from SEBI as a separate category of FIIs or sub accounts as 100% debt fund investment such investment were of occurs subjected to the fund specific ceiling prescribed by SEBI and had to be within overall ceiling US 1.5 $. The investment was however, restricted to the debt instrument of companies listed or to be listed on the stock exchanges. In 1997, the aggregate limit on investment by FIIs was allowed to be raised from 24% to 30% by then board of directors of individual companies by passing a resolution in their meeting and by special resolution to that effect in the company’s Board meeting. In June 1998 the 5% individual limit was raised to 10%.In March 2000, the ceiling on aggregate FII portfolio investment increased to 49%.This was subsequently raised to 49%, on March 8 2001, Finance minister announced February 28 2002 that foreign institutional investors can invest in accompany under the portfolio investment rout beyond 24% of the paid up capital of the company with the approval of the general body of the share holders by a special resolution.

Benefits and costs of FII investments

The terms of reference asking the Expert Group to consider how FII inflows can be

encouraged and examine the adequacy of the existing regulatory framework to adequately address the concern for reducing vulnerability to the flow of speculative capital do not include an examination of the desirability of encouraging FII inflows. Yet, for motivating the consideration of the policy options, it is useful to briefly summarize the benefits and costs for India of having FII investment. Given the Group’s mandate of encouraging FII flows, the available arguments that mitigate the costs have also been included under the relevant points.

Benefits

Reduced cost of equity capital

FII inflows augment the sources of funds in the Indian capital markets. In a commonsense way, the impact of FIIs upon the cost of equity capital may be visualized by asking what stock prices would be if there were no FIIs operating in India. FII investment reduces the required rate of return for equity, enhances stock prices, and fosters investment by Indian firms in the country.

Imparting stability to India’s Balance of Payments

For promoting growth in a developing country such as India, there is need to augment domestic investment, over and beyond domestic saving, through capital flows. The excess of domestic investment over domestic savings result in a current account deficit and this deficit is financed by capital flows in the balance of payments. Prior to 1991, debt flows and official development assistance dominated these capital flows. This mechanism of funding the current account deficit is widely believed to have played a role in the emergence of balance of payments difficulties in 1981 and 1991. Portfolio flows in the equity markets, and FDI, as opposed to debt-creating flows, are important as safer and more sustainable mechanisms for funding the current account deficit.

Knowledge flows

The activities of international institutional investors help strengthen Indian finance. FIIs advocate modern ideas in market design, promote innovation, development of sophisticated products such as financial derivatives, enhance competition in financial intermediation, and lead to spillovers of human capital by exposing Indian participants to modern financial techniques, and international best practices and systems.

Strengthening corporate governance

Domestic institutional and individual investors, used as they are to the ongoing practices of Indian corporates, often accept such practices, even when these do not measure up to the international benchmarks of best practices. FIIs, with their vast experience with modern corporate governance practices, are less tolerant of malpractice by corporate managers and owners (dominant shareholder). FII participation in domestic capital markets often lead to vigorous advocacy of sound corporate governance practices, improved efficiency and better shareholder value.

Improvements to market efficiency

A significant presence of FIIs in India can improve market efficiency through two channels. First, when adverse macroeconomic news, such as a bad monsoon, unsettles many domestic investors, it may be easier for a globally diversified portfolio manager to be more dispassionate about India’s prospects, and engage in stabilsing trades. Second, at the level of individual stocks and industries, FIIs may act as a channel through which knowledge and ideas about valuation of a firm or an industry can more rapidly propagate into India. For example, foreign investors were rapidly able to assess the potential of firms like Infosys, which are primarily export-oriented, applying valuation principles that prevailed outside India for software services companies.

Costs

Herding and positive feedback trading

There are concerns that foreign investors are chronically ill-informed about India, and this lack of sound information may generate herding (a large number of FIIs buying or selling together) and positive feedback trading (buying after positive returns, selling after negative returns). These kinds of behavior can exacerbate volatility, and push prices away from fair values. FIIs’ behavior in India, however, so far does not exhibit these patterns. Generally, contrary to ‘herding’, FIIs are seen to be involved in very large buying and selling at the same time. Gordon and Gupta (2003) find evidence against positive-feedback trading with FIIs buying after negative returns and vice versa.

BoP vulnerability

There are concerns that in an extreme event, there can be a massive flight of foreign capital out of India, triggering difficulties in the balance of payments front. India’s experience with FIIs so far, however, suggests that across episodes like the Pokhran blasts, or the 2001stock market scandal, no capital flight has taken place. A billion or more of US dollars of portfolio capital has never left India within the period of one month. When juxtaposed with India’s enormous current account and capital account flows, this suggests that there is little evidence of vulnerability so far.

Possibility of taking over companies

While FIIs are normally seen as pure portfolio investors, without interest in control, portfolio investors can occasionally behave like FDI investors, and seek control of companies that they have a substantial shareholding in. Such outcomes, however, may not be inconsistent with India’s quest for greater FDI. Furthermore, SEBI’s takeover code is in place, and has functioned fairly well, ensuring that all investors benefit equally in the event of a takeover.

Complexities of monetary management

A policymaker trying to design the ideal financial system has three objectives. The policy maker wants continuing national sovereignty in the pursuit of interest rate, inflation and exchange rate objectives; financial markets that are regulated, supervised and cushioned; and the benefits of global capital markets. Unfortunately, these three goals are incompatible. They form the “impossible trinity.” India’s openness to portfolio flows and FDI has effectively made the country’s capital account convertible for foreign institutions and investors. The problems of monetary management in general, and maintaining a tight exchange rate regime, reasonable interest rates and moderate inflation at the same time in particular, have come to the fore in recent times. The problem showed up in terms of very large foreign exchange reserve inflows requiring considerable sterilization operations by the RBI to maintain stable macroeconomic conditions. The Government had to introduce a Market Stabilization Scheme (MSS) from April1, 2004.

With the foreign exchange invested in highly liquid and safe foreign assets with low rates of return, and payment of a higher rate of interest on the treasury bills issued under MSS,

sterilization involves a cost. With a rapid rise in foreign exchange reserves and the need for having an MSS-based sterilization involving costs, questions have been raised about the desirability of encouraging more foreign exchange inflows in general and FII inflows in particular. While there is indeed the issue of timing the policy of encouragement appropriately to avoid the pitfalls of throwing the baby with the bath water, there can not be a turnaround from the avowed policy of gradual liberalization, including the cap ital account. All modern market economies have evolved policies to reconcile prudent monetary management with the benefits of a liberal capital account. There is no scope for any diffidence in India also moving in the same direction.

CONCLUSION

The liberalization policies had the desired expansionary effect and had either increased the mean level of FII inflows and/or the sensitivity of these flows to a change in BSE returns and /or the inertia of these flows. On the other hand, the restrictive measures aimed at achieving greater control over FII flows also did not show any significant negative impact on the net inflows, it had found that these policies mostly render FII investment sensitive to the domestic market returns and raise the inertia of the FII flows.

Foreign institutional investors had emerged as the most dominant investor group in the domestic stock market in India. Particularly, in the companies that constitute the Bombay stock market sensitivity index, their level of control was very high. Data on shareholding pattern showed that the FIIs were currently the most dominant non-promoter shareholder in most of the sensex companies and they also controlled more tradable shares of sensex companies than any other investor groups .The sensex, market capitalization of NSE, Turnover of BSE and NIFTY without market capitalizations were influenced by Foreign Institutional Investors. FIIs investment was not across the shares listed in the stock exchange but instead it was very concentrated on the top few company’s shares. Though there was a role by FII on Indian stock market. It was to be taken very cautiously because their influences were on the very few shares in the stock market, which influenced the indicator included in the study but which might not help the Indian economy to grow

The influence of FIIs on the movement of sensex became apparent after general election in India, during this period sensex experienced its worst single-day decline in its history and in the three month period between April to June 2004, it declined by about 17 percent. Moreover, this study also showed that even sharp changes in sensex did not necessarily indicted a significant alteration of actual shareholding pattern of different investor groups even in sensex companies. The activities of foreign institutional investors in emerging economies following the opening-up of the capital account were not simply positive for these countries but could also exert adverse effects. The reasons were derived from asymmetric distributions of information between local and foreign investors and between fund holders and mangers. Foreign institutional investors could be assumed to have relatively little information on specific developments in emerging markets so that ‘diluted information’ and ‘illusive competition’ could result. Their influence on these markets was likely to worsen the relative position of local investors which leads to ‘unbalanced diversification’. Moreover, due to their incentives they were likely to amplify occurring imbalances or even trigger financial shocks leading to what they call ‘obscure risks’ and ‘booming contagion’. The was long run relationship between net FII investment and sensex, FII investment did not respond the short-run changes or technical-position of the market and they were more driven by fundamentals, and FII investments did granger cause India stock market. The FIIs investments are highly concentrate in terms of their market value in very small number of companies. There seemed to be a clear distinction in the FIIs shareholding in nifty and non-nifty companies. There was a wide gap between the actual investments by FIIs and the investments allowed as per the cap.The gap in their investments existed both in nifty and non-nifty companies

REFERENCES

1 “Parthapratim pal” in 2006, he conducted study on “Foreign Portfolio Investment, Stock market and Economic Development: A case study of India”,

2 “Selen Serisoy Guerin” in 2006, conducted study on “The Role of Geography in Financial and Economic Integration: A comparative Analysis of foreign direct investment, Trade and Portfolio Investment Flows”

3 Keneeth A. Froot and Tarun Ramadorai in 2005, they conducted study on “The information content of international portfolio flows”,

4 A.Julia Priya, D. Lazar and Joseph Jeyapual in 2005, they conducted study on “Role of Foreign Institutional Investors on stock market development in India”,

5 Keneeth A. Froot and Tarun Ramadorai in 2005, they conducted study on “Currency Returns, Intrinsic value, and Institutional-Investor flows”,

6 Megumi Suto and Masashi Toshino in 2005, they conducted a study entitled as “Behavioral Biases of Japanese Institutional Investors: fund management and corporate governance”

7 “Suchismita Bose and Dipankor coondoo” in 2004, they conducted study on “The Impact of FII Regulation in India”,

8 Lakshmi sharma in 2004, he studied, “A Gap Analysis of FIIs Investment-An estimation of FIIs investment Avenues in Indian Equity Market.

9 Parthapratim pal in 2004 conducted study entitled as “Recent volatility in stock markets in India and foreign institutional investors.

10 “Michael Frenkel and Lukas Menkhoff” in 2004, they conducted study on “Are Foreign Institutional Investor Good for Emerging Markets?”,

11 “Brian Bushee” in 2004, he conducted study on “Identifying and attracting the “right” investors: evidence on the behavior of Institutional investors”,

12 “Christophe faugere and Hany A. Shaby in 2003, they analyzed study on “Volatility and Institutional Investor holdings in a declining market: A study of NASDAQ during the year 2000”.

13 Gayathri Devi .R in 2003, she conducted study on “Causal Relationship between FIIs and Stock Market: A critical study”

14 “sandhya Ananthanaryanan, Chandrasekhar krishnamurthi and Nilajan Sen in 2003 conducted study as “Foreign institutional Investors and Security Returns: Evidence from Indian Stock Exchanges”,

15 Stuart L. Gillan and Laura T. Starks in 2003, they conducted study as “corporate Governance, corporate ownership, and the Role of Institutional Investors: A Global perspective”,

16 “Vihang Errunza” in 2001, he conducted study entitled as “foreign portfolio equity investments, financial liberalization and economic development

17 J.S. Pasricha and Umesh.C.Singh in 2001, tried to analyze the impact of FIIs investment on Indian capital market.

18 S.S.S. Kumar in 2001, attempted in his study to find the effect of FIIs on the Indian stock market.

19 “Rajesh chakrabarti” in 2000 conducted study on “FII Flows to India: Nature and Causes”

20 C.H. Rajeswar in 2000, he conducted study entitled “Foreign Institutional Investors – A new force of support and discipline”

21 As per K. Seethapathi and V. Subbulakshmi study entitled “Foreign investment: Need for focus”,

22 Ila Patnik and Deepa Vasudevan in 1998, their study entitled “foreign portfolio investment to India

23 “Rene M. Stulz” in 1999, he analyzed study on “international portfolio flows and security markets”.

24 Yung Chul Park and Chi-Young Song, they conducted study on “Institutional Investors, Trade linkage, Macroeconomic similarities and contagious Thai crisis

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Romania – famous for its beautiful palaces and castles, wonderful liquors and food, Dracula, dazzling women is a beautiful country located in central-eastern Europe. It is the 12th largest country in the Europe. The economy of Romania has shown potential growth in the past few years. Since 2000, Romania has shown a rhythmic growth of 4.5% raised by 8.3% in 2004.

The current economy statement in Romania is steadily increasing the levels of GDP and significantly high levels of Foreign Direct Investment (FDI). The economy investment grade has recently been upgraded by Fitch and P&S. Romania benefits from the rising FDI flows due to the privatization process, and the advantages of its big internal market

Romania is also having a great geographical location at the intersection of some great trade routes joining the Far East with the Western Europe. With population of more than 20 million people, Romania has a large domestic market. After having such great property investment opportunities, Romania is continuously attracting more and more foreign investors to invest in Romania. Stable and encouraging government of Romania is the other reason which is creating great investment opportunities in Romania. The Real estate market in Romania is growing at a rocket speed. Following are some best reasons for investing in Romania.

Reasons to Invest in Romanian Real Estate Property:

1. With strategic and visionary efforts by Romanian government, the economy is becoming stronger and stronger over the years. Romania is one of the fastest growing economies in Europe.

2. Falling inflation and increasing employment are two other boosters of rapidly growing economy. Inflation has dropped to 7.5% low in 2005 from 22% high in 2002. Unemployment rate also fell to 6.2% in 2006 with less than 3% in capital Bucharest which is far lower than the many other developed European economies. With under control inflation and falling unemployment rate Romania is confidently creating the strong property buying opportunities over the country.

3. Foreign investment in Romania is increasing drastically. From 2001 to 2005, foreign direct investment in Romania has reached over 5000 million euros and more 8000 million euros added in 2006. With 55% of FDI in capital city Bucharest, major companies from all over the world are coming to invest in Romania.

4. Along with capital city of Bucharest, other cities in Romania like Brasov, Transylvania, Craiova, Constanta and Iasi are also attracting investors. Transylvania is the Romania’s biggest tourist asset and the expected to attract more investment with immense number of investment opportunities. One more golden opportunity where investors want to invest is in Brasov, the most visited city of Romania. Having facility of international airport, Brasov is also linked with new motorway for fast transportation.

5. Report given by investment experts says that house prices in Romania are expected to increase by 4 times higher over the next 10 years. In past few years, property prices are already raised by 25%. Even such a great rise, property price in Romania are still 20-30% lower than the other eastern European countries.

6. After accession to the EU in 2007, the real estate market in Romania has been influenced dramatically. EU funding to Romania has been invested into the infrastructure development in road, hospitals, schools, bridges etc. EU funds will help to create more jobs and therefore potential customers seeking to buy/rent properties.

7. Low tax rates are the other main reason to invest in Romania. Romanian government has set up a flat rate of only 16% for corporation and income tax. Such low and fixed rate of tax is powering Romania to draw more foreign investors seeking for new business places.

Some other secondary factors are also responsible for great investment opportunities in Romania. Romania has great network of international airports with two in capital Bucharest. Developed and fully facilitate ports in Romania is also boosting its economy drastically. Romania has huge network of telecommunication systems equipped with modern telecommunication equipments. Also there are nearly 48 industrial parks.

As far as it looks, the boom is yet to come! Buying property in Romania will be great ROI in near future. So what are you waiting for? Invest now in Romania for your better future.

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The purpose of this article is to give a friendly whack upside the head to people who own rental property. You probably made a good investment when you first bought the property. But have you owned it too long?

Depending on how long you’ve held your property, it might not be a good investment anymore. I didn’t say not a good property; I said not a good investment. Read on to find a simple way to determine if your property is still measuring up. You may be in for a surprise!

First, let’s quickly review the four financial benefits of owning investment real estate:

CASH FLOW: After you pay all expenses and loan payments, cash flow is the money left over.

PRINCIPAL REDUCTION: The loan is paid down with money collected from tenants.

INCOME TAX SAVINGS: IRS rules allow property owners to take depreciation deductions, which shelter the cash flow and principal reduction. Any leftover depreciation creates a paper loss, which, in many cases, can be used to shelter other income — such as salary from your job.

APPRECIATION: Over time, the property increases in value.

These four benefits are powerful! You earn tax-sheltered cash flow, your tenants buy you the building, you get to tell the IRS you’re losing money, and all-the-while, the property goes up in value. What a country!

So why am I challenging you to reconsider whether your property is still a good investment? Simple! Your "return on equity" is probably low -and getting lower by the year!

Let me show you an example. Don’t get all tangled up in the numbers. Just concentrate on the big picture and how it applies to you.

Return on Equity Drops from 18 to 7 Percent

Assume you bought a rental house 16 years ago for $70,000. You invested $10,000 and bor¬rowed the rest. Your goal is to retire in another 15 years and use the rental house to provide retirement income. (A great plan!)

So, how good was your investment 16 years ago? Let’s total your benefits. Assume the cash flow, principal reduction and tax savings added up to $1,800 that first year. You were earning 18 per¬cent ($1,800 divided by $10,000) on your investment. Not bad. Plus the rental house was appreciating. You’re an investment genius!

Fast-forward 16 years to the present. Let’s assume the following: Your yearly cash flow has increased to $5,000 and the principal reduction is $2,000; a total of $7,000 —just from the first two benefits! In addition, let’s assume the net value of your rental house has appreciated over the years so it’s now worth $120,000 and your loan has been paid down to $40,000.

However, because you’ve owned the property so long, the depreciation deductions (assume they’re $3,000) are no longer enough to shelter the $7,000 of cash flow and principal reduction. That leaves $4,000 of unsheltered (taxable) income. Instead of saving tax, you have to pay tax. If you’re in a 35-percent bracket, (combined federal and state), you pay $1,400 tax.

So, your benefits from the rental house now look like this: $5,000 cash flow, plus $2,000 principal reduction, minus $1,400 tax paid. A total of $5,600.

It’s no wonder you consider yourself an investment genius if you measure the $5,600 against your original $10,000 investment: that’s a 56 percent return. But that’s where most people go wrong!

Your Original Investment Has Nothing to Do with Today’s Rate of Return!

Your investment is not the amount you originally invested years ago. You’ve got way more than $10,000 "tied up" today! Your investment is the amount you could get out of the property if you sold it today. That’s called your "net equity."

Over the past 16 years, your property has increased in value and your mortgage has been paid down. The current difference between the property’s net value (after selling expenses) and your mortgage balance is $80,000. In other words, if you sold the property today, you could walk away with $80,000.

However, if you keep the property, in effect you’re re-investing the $80,000 into the property. Now, how does your investment look?

Not so good. You’re earning $5,600 in benefits on an $80,000 investment — that’s only 7 percent! What if a REALTOR® called you up and said, "I’ve got a great real estate investment for you. You’ll earn a measly 7 percent." You’d hang up on them! Well, you already own it!

If you wouldn’t buy a property like that, why would you continue to own it?

What if you did this instead? Use your $80,000 equity as the down payment on a different property — one that produces 18 percent again? With that down payment you could probably afford a $400,000 rental property. Once you’ve owned that property for a few years, your equity will have grown again (and your rate of return has fallen), so you repeat the process.

The goal is to maintain the highest possible rate of return, which will make a huge difference in your future wealth.  You’ll maximize your wealth by wisely moving your equity form your currently property to another as soon as your rate of return would be greater in the next property. 

Just for fun, take out your calculator and figure how much money you’d have in 15 years if you leave the $80,000 invested at 7 percent.  Then calculate what $80,000 invested at 18 percent grows to in 15 years.  I could give you the answer, but you might not believe me – check for yourself….it’s gigantic! 

Three Ways to Move Your Equity

Here’s a key point. If you decide it’s time to "move your equity," be sure to explore all your options. There are three common ways to move equity.

SELL: You could sell your current property and buy another. The problem with selling is

you have to pay capital gains tax.

REFINANCE: You could refinance your cur¬ rent property and use the loan proceeds to buy

another property. The problem with refinancing is you’re probably not able to borrow the entire

$80,000 equity.

EXCHANGE: The third and best way to move your equity is to exchange. Exchanging

allows you to move your entire $80,000 net equity to another property without paying tax. It’s wealth building’s most powerful tool.

So, what does this all mean? Well, if you own rental property, congratulations. Your investment brilliance shines brightly. However, the longer you own that property your glow begins to fade. The wise thing to do is re-evaluate your property every year. In essence, make the decision to "re-buy" the property. As soon as the rate of return on your equity could be higher in another property, it’s time to take action.

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Andre zizi.

Bio:

Andre Zizi is a philosophy graduate and a philosopher, trained in the educational Psychology, with NLP Dip, teaching qualification, writer, mentor, philosophical counsellor, and independent neuroscience researcher. I can be contacted on 07999 579 135 and available to meet for informal chat, and drink in London.

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It was back in the early 70s when only half of the UK’s population owned a property. However, people came to realise that property investments tended to be fairly stable for extended periods of time, while other types of investments tended to lag behind in growth or fluctuate somewhat. Compared to stocks and shares, property investments provide a real and tangible asset and are considered very dependable.

With the value of land rising nearly tenfold in the last two decades, and the profits earned in the value of the housing market even more impressive, investing in property has become a more lucrative option. Now, property investment has become a far more conventional investment vehicle that’s easily accessible to investors with understanding and insight to recognize solid medium to long term investments.

However, despite all these positive aspects of investing in property, the road to being successful in this arena is littered with individuals who have committed investment mistakes and paid dearly for them. Thus, accomplishing your property investment goals necessitates that you fully equip yourself with the right arsenal of tools needed to help you survive the journey to successful property investment. There are many resources out there that can guide you in the right direction. One of them is the investment property seminar.

An investment property seminar is your portal to the world of the property market. It is where you gain knowledge on the ins and outs of property investments. Aside from educating you on the investor rules of thumb, property investment seminars aim to teach you how to: recognize the different types of investment property and identify which one suits you best, analyze property for cash flow, buy property to make money, buy with no money down, determine when it’s a good time to buy, and avoid mistakes other investors frequently make.

These seminars are often conducted by property investment managers, specialists and teachers who impart their knowledge to those who can benefit from it. Key people with extensive knowledge and broad experience in property investments are usually invited by these discussion groups to share their know-how and expertise that could help steer the property investor hopefuls on to the right track and keep them there.

If you are keen on moving up the property investment chain, then you should look into investment property seminars. Such colloquia typically attract prospective clients, property investment company managers, investors and other key people. These individuals, who themselves are looking to network and develop new business contracts, would be instrumental in the success of your endeavour.

Investing in property is almost certainly the largest financial decision and commitment you will likely take on. Because of the enormity of the decision, the need for you to get yourself fully prepped up should not be overlooked. With investment property seminar opportunities offered in the UK, investing with the correct strategy for your specific needs could soon become a reality.

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BREAKING ALL THE RULES!  Exclusive World Class Investments to Help Double Your Net Worth and to Establish Your Legacy!!

Cabal Capital Management, LLC announces the launch of the Legacy Fund which provides special alternative investment opportunities into extremely low risk, and very high financial return Advanced High Income Generation Projects through direct investments.

This fund which is not a private equity fund is unlike all other investment pool funds that exist today by offering investments that are focused on both strategic and tactical investment opportunities into Highly Advanced Income Generating Project(s) producing crucial and vital, very high demand commercially valued product(s) that are being sold directly into the largest “Major” Universal Demand Markets in the world.  These investments allow risk adverse accredited investors the ability to participate in the revenues generated from these projects which allows for and achieves both capital growth and preservation, while providing the investor an extremely low risk opportunity with the benefit of dependable and sustainable alpha generation and the long term growth from these projects.  These fully integrated projects have been designed to last 40 to 50 years or longer for their life cycles regardless of the global financial and credit markets.

Our fund is well positioned to effectively tap into these markets to the benefits of our investors.  The growth dynamics of the United States and Western Europe is based upon local, regional and domestic consumption of all the products these projects produce.  This fund is targeting routine and consistent annual double digit returns (15 – 21%) to investors un-correlated to all securities, commodities, currencies and the credit markets themselves since there will not be any exposure to these markets.  All project investments within this special investment vehicle have been specifically developed and designed to perform across various business cycles regardless of global economic conditions to include recessionary and depressionary environments as well.

The current global credit crisis, current stock market contractions and wild swings in the commodities markets does not and will not impact our ability to produce consistent annual double digit returns now or in the future for our investors since we will never have, need or rely on the credit markets to establish margin accounts or leveraged positions which most all hedge fund type investment vehicles require to operate.  We do not require nor will we ever utilize prime services which the large investment banks provide (Bear Stearns, Lehman Brothers, Merrill Lynch, etc.). We do not rely on the stock, commodity or currency exchanges to generate income since we can not control any of the events occurring in those exchanges for our investors, thus we are totally un-correlated to all securities, commodities, currencies and credit markets. 

In the case of Deflationary and or Inflationary Markets, they will have no real effect on these projects and the products they produce.  Coincidentally inflation will only increase the value of the products coming out of the projects. Deflationary markets will have very minimal impact on the products produced within these projects since these products are and always will be vital for any country to maintain a stable economy, thus they will always be in very high demand through out the world regardless of the global economic conditions. 

Risk issues are always addressed through risk management and the review procedures for each and every investment made.  Unlike most projects which have been developed, planned and master planned, every assumption for each project invested in has been tested, validated, verified and proven or it’s not incorporated into these project(s).  Each and every project is also backed up by a detailed Input / Output Financial Cash Model which is a detailed Program / Project Financial Blueprint that shows the quarterly inter-relationships of investments, operational production revenues, operational expenses at all levels, taxes, imposts and fees, special circumstances events, and financial obligations during the life of the Program / Project.

Since energy production and consumption is the key element to any industrialized country, and with energy consumption increasing globally at an annual rate of 5 – 6 %, energy is and always will be vital to both the U.S. and Western European Economies. Allocating to Energy and Bio-Fuels production are two major key areas of involvement and investments within our seven pronged program investment strategies approach, which consists of the following options available to us:  Energy:  Oil & Gas (Example Project to follow), Bio Fuels:  Algae Based Bio-Diesel and Jatropha Curcas {plant} direct fuel source.  Algae Based Bio-Diesel is a direct fuel source currently available and ready for full scale production and delivery {This is Direct Fuel Source and is not a blend for gasoline or other fuel sources!} Algae Based Bio-Diesel Fuel production utilizes proprietary photo enhanced, micro nutrient enhanced, continuous flow, automated, sensor quality controlled, bio-chemical industrial processes and then are pressed, centrifuged, oils separated from water, water treated, cooked, cracked and treated all within a 12 hour cycle (Start to Finish) to complete one batch made ready for use in any diesel engine.  Initially 270 Million Gallons per quarter to several Billion Gallons of bio-diesel per quarter will be produced depending upon the initial size of a project program.  This Algae Based Bio-Diesel Fuel source has a Cetane Rating of 105 -117 compared to 80 – 85 Cetane Rating for #1 diesel fuel currently produced by all the major oil companies, which provides more power, better millage and performance while emitting 60 – 70% less emissions across the board vs. normal standard crude oil based diesel fuels. Algae Based Bio-Diesel emits no sulfur and or nitrogen into the atmosphere, Alternative Energy:  Solar / Concentrated Solar Thermal Power Production, Wind and Electric Fuel Cell Systems, Natural Resources:  Gold, Platinum and other Precious Metals Groups and Diamond Mining: Refining, Assaying, Separation using advanced physical technologies and Bullion production of Gold and Platinum as well as Processing, Cutting, Valuation Appraisals of Diamonds and other Precious Stones, Water:  Proprietary Water Science / Technology to Produce Fresh Drinking Water to meet Agricultural, Industrial and Human Public Health needs in critically water short areas through Water production, bottling facilities and distribution.  This can be accomplished with any available water supply {in ground water tables, above and below ground reservoirs with a high saline content normally not recommended for human consumption}, Sea Waters & Brackish Waters anywhere Globally, Hydroponics:  Food Production: Fish Shrimp, Prawns, Fruits Vegetables utilizing USDA inspectors to garner Grade A Choice Status to include direct marketing into Major U.S.A. and International Consumer Demand Markets, and Special Opportunities: Aviation Fuels: JP-1 to JP-12 for Commercial and Military Applications from Algae Based Direct Fuel Sources as well as Advanced Hyper-Speed Information Technologies and other Advanced High Income Generation Project Opportunities as they become available.

It should be noted that traditional large project investments consist normally of only one income generation production element and typically requires three years at the earliest before the investors see any type of modest return on their investment.  Our projects produce immediate results in the first year due to their very nature and global demand.  These Exclusive World Class Projects which are available to us for investments have no less than 2, but normally include 5 or more Major Integrated Income Production Elements within each project.  It should also be noted that each income producing element within these projects are so strong that they could stand on their own and support the entire project, which is why many of these elements are developed together to form an Advanced Integrated Income Generation Project depending upon the requirements and location of the program.

All of the projects that this special opportunity fund invests in involve Proprietary Advanced Technologies and Advanced Physical Science / Processes (not known to the great majority of Asset Manager Companies Staffs).   Other types of investment pool managers, hedge funds, etc. do not know or even have access to these world class development engineering people and the technologies assets and projects that they develop, implement and manage.  Currently we have in excess of $10 Billion Dollars worth of Advanced High Income Generation Projects available to us for investments.

Another Special Note of consideration is that each investment will bring with it potential tax advantages not typically found with other types of investments.  Depending on where the project(s) are located and how the project are legally structured and set up (Development Corporations, Development Authorities, etc. which are authorized by local, state or federal governments) could result in tremendous tax advantages, which each investors tax advisor will need to qualify and determine the best approach for each investors own tax liabilities depending upon their current tax status, situation and strategies.

These projects are developed, implemented and managed by Highly Reliable, Senior Internationally Experienced Technical Managers, Senior Science Managers and Senior Logistics / Project Security Management Staffs, which have planned, developed, evaluated and trouble-shot economic development projects and strong income generation projects in over 65 countries during the past 40 years.

There are in excess of 300 Top Level Executive Technical Managers with over 30 years of Experience in each of their perspective Development Sectors available for all projects that our fund invests in.  These projects are designed to insure extreme depth of expertise and experience management which is available to any project at any and every stage of the project program, regardless of location of the project anywhere globally.

The results of this Special Investment Vehicle fund are highly advantageous investment opportunities that by far exceed the majority of investment opportunities available to investors from a financial return as well as extremely low risk standpoint by investing in Outstanding Advanced High Income Generation Projects carried out by highly reliable and responsible individuals and organizations.

Face to face meetings are welcomed and encouraged in order to quantify, qualify, verify and validate these investment opportunities which stem from the Americana way of project development and implementation with the application of Science, Engineering, Logistics, Security and Management which dates back to over 200 Years during the American Expansion of the United States of America.  Never before in the history of mankind has the shear number and sizes of these Universal Demand Markets through out the world been in place and more importantly, primed and ready to handle and accept these vital and crucial very high demand, commercially valued products coming from these projects;  Available for immediate investment. ** (dual element example project within a fully integrated project to follow)

Headquartered in San Antonio, Texas, Cabal Capital Management, L.L.C. is managed by Kent Sullivan:  www.cabalcapitalmanagement.com

** Fully Integrated Oil & Gas / Real Example Project:

This Oil & Gas production program is headed up by a Top Level Senior International Consultant which is an Oil and Gas Industry Executive who has been involved in the Oil & Gas Industry over the past 50 years.  This Oil & Gas Executive is the Systems Developer, Scientist, Equipment Designer and Engineer who is recognized as an expert in his field by the U.S. Department of Energy who also has called him upon him frequently in the past to trouble shoot particular Oil and Gas fields as a technical advisor and as a trouble shooter to rectify any and all problems associated with troubled oil and gas production fields.

This Top Senior International Consultant has a proprietary and proven 12 step methodology for siting, drilling, completing and production techniques for all wells.  He has a historical commercial success rate of 92% for bringing in all of his wells sited, drilled, completed and producing which also has a normal life span of 15 to 20 plus year’s worth of production.

This Advanced High Income Generation Oil and Gas project is comprised of the following: 

A Top Down Electric Air Hammer System which is highly sensorized with Professional Engineers and Scientists managing all operational positions.  These auto sensor rigs provide detailed information by satellite to a centralized operations and training center where all decisions are made by people with 45 – 50 years of successful completion and production experience.

Each oil and gas well completed will be drilled in both soft and hard rock beds and will vary in depths from 3,000 feet to over 13,000 feet.  All wells in this program will be completed initially in the state of Texas, in the United States of America.

Typical production wells will produce 60 barrels of oil per day to 500 – 600 barrels of oil per day and the gas wells will produce in a typical range of 2 million cubic feet of natural gas per day to in excess of 20 million cubic feet of natural gas per day. The total net operating investment will be returned within 4 months of production for each well.

Multiple producing formations will be completed and isolated with proprietary tools and instruments which will be operated simultaneously through out the life of the wells.  The typical life of these well are 15 – 20 years because of the 12 different proprietary methods used for siting, drilling, completion and production techniques, tools, proprietary materials and instruments used on each and every well which prevents formation damage and increases the life cycle of each well to maximize the highest production obtainable.

This program consists of hundreds of oil and gas wells sited, drilled, completed and in production within a 1 – 2 year period.  These wells will be sited, drilled and completed in historically very well known and documented oil and gas producing formations within the state of Texas, in the United States of America.

Investors will receive an estimated 15 – 21% annual return per year on their investment, with payments coming at the end of each year from this program.  The threshold investment will be an aggregate amount of $400 hundred million dollars which is what the minimum program investment calls for.

Estimated program revenues are based on $60 dollars a barrel and $6.5 dollars per thousand cubic foot of natural gas.  Over the last year crude oil (West Texas Intermediate) has sold as low as $50 dollars a barrel up to as much as $147 dollars a barrel.  Over the past year natural gas has sold from $5.5 dollars a thousand cubic foot to $11.3 dollars per thousand cubic foot.

Example Oil & Gas Well Profile:  One well; properly sited, drilled, completed and producing will conservatively produce 100 barrels of oil per day and 4 million cubic foot of natural gas per day.  This provides the overall program (100 barrels x $60 per barrel = $6,000) $6,000 dollars per day of revenue.  Each 4,000 cubic foot of natural gas (4,000 x $6.5 per thousand cubic foot = $26,000) $26,000 dollars per day of revenue.  Total revenue for this example is estimated at $32,000 dollars per day of program revenue for this example. 

** All wells in this program will not produce the same **

Each month this represents a program return of (30 days x $32,000 = $960,000) $960,000 dollars of revenue coming from this one (1) example well.  The investment program we are offering involve several hundreds of program wells being sited, drilled, completed and operating within a 1 to 2 year period.

Remember, this is only two elements of a fully integrated Advanced High Income Generation Project which will involve in most cases several other elements (normally 5 or more) to generate very substantial amounts of revenues over the course of the project life.  With the combination of several other Advanced High Income Generation Elements within one project, this will enhance the financial returns and revenues of the program itself, and thus will also greatly reduce and virtually eliminate any associated risk due to the diversification of the different Major Income Generation elements within each project.

Once again, the result of this Special Investment Vehicle fund are highly advantageous investment opportunities that by far exceed the majority of investment opportunities from a financial return and an extremely low risk standpoint by investing in Outstanding Advanced High Income Generation Projects.

Headquartered in San Antonio, Texas, Cabal Capital Management, L.L.C. is managed by Kent Sullivan: www.cabalcapitalmanagement.com

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Socially Responsible Investing for Idiots

Sí, Money! (http://simoney.us)
By Michael Grodsky

If I have to be an idiot, at the least I’m a green idiot. I believe in clean air, corporate responsibility, community activism, licorice, pizza and Thai food. And healthy living, freedom, and of course freedom raisins.

Shiny happy raisins

I love trees, sky, and ah, the OXYGEN! But I’m worried about the dismal state of health care, education funding, the ozone hole, the Medicare donut hole, and your little dog too! Did you know the North Pole is melting? That really scares me. Plus I need to cut down on my Chunky Monkey intake.

In everything I do, in every move I make, it seems that I’m part of the worldwide web of production and consumption. So I pertly place my recyclables in the blue bin, our family uses reusable grocery bags, and I vote. What more can a light-switch thumping, gasoline-pumping 21st century fox do?

C’mon, baby, light my SRI fire…

It was only a couple of years ago a friend remarked to me that real estate was the only investment that made any sense, as if his seat on the Ferris Wheel of investments, propelled by an invincible source, would forever be going up, up, UP! Instead, what happened was “up, up and away.”

The first Ferris wheel, from 1893 World Columbian Exposition in Chicago

The desire for a sure thing is hard to resist. Albert Einstein, succumbing to pressure to support the idea of a static universe, in his 1917 paper added an adjustment number called the “cosmological constant” to his equation for general relativity. In 1931 he publicly renounced this static cosmology and endorsed the Big Bang expanding universe model, ditching the cosmological constant and returning to his original equation. He later called his bowing to peer pressure the greatest blunder of his entire life. You can read about the adventure in author Simon Singh’s “Big Bang – The Origin of the Universe.”

Many philanthropic foundations have long drawn a wall between their socially conscious mission statements that drive grant making, and the investment holdings of their endowment. There is a truism that investing for social benefit results in lower returns. But just as scientific peer consensus eventually embraced the Big Bang theory, so has the thinking of philanthropic foundations changed. The reasons are twofold: A recognition that corporate responsibility and societal concerns are valid parts of investment decisions, (1) and a growing number of academic studies have demonstrated that socially responsible investment (SRI) mutual funds perform competitively with non-SRI funds over time. (2)

For example, according to University of Maastricht and Erasmus University Rotterdam economists in their prize-winning paper, “we find little evidence of significant differences in risk-adjusted returns between ethical and conventional funds for the 1990-2001 period.” (3)

Foundation investment choices seem to be increasingly guided by effect upon society as a whole, not just financial gain, according to a recent Los Angeles Times article. (4) Fresh thinking in the nation’s largest foundations may be driving the impetus ever faster: The $8.5-billion William and Flora Hewlett Foundation (Menlo Park), the $6.1-billion John D. and Catherine T. MacArthur Foundation (Chicago), the $7.8-billion W.K. Kellogg Foundation (Battle Creek, Michigan) all have made recent changes to improve the social effect of their investments. (5)

SRI assets are also growing faster than assets as a whole: according to the non-profit Social Investment Forum’s 2005 biennial report, SRI assets rose more than 258 percent from $639 billion in 1995 to $2.29 trillion in 2005. Over those ten years, SRI assets grew four percent faster than the entire universe of managed assets in the United States. (6)

Some have already been on the SRI track: the nation’s second largest foundation, the Ford Foundation, along with others such as the F.B. Herron Foundation, the Jessie Smith Noyes Foundation and the Nathan Cumings Foundation, have for a long time aligned their charitable and investment practices.

What is Socially Responsible Investing?
Socially Responsible Investing (SRI) is a broad-based approach to investing that now encompasses an estimated $2.3 trillion out of $24 trillion in the U.S. investment marketplace today. (7) The release of the United Nations Principles for Responsible Investment–subscribed to by some of the world’s largest institutional investors, asset managers, and related organizations representing over $9 trillion in assets as of mid- 2007–underscores the widespread acceptance of the principle that investors cannot, in the long run, achieve their goals by investing in corporations that externalize their costs onto society. (8)

How do I research SRI funds?
A good place to start is the Social Investment Forum (http://www.socialinvest.org). Look at the resource list at the end of this article too.

How do I start investing?
If you participate in an employer-sponsored retirement plan, there may be SRI funds already available to you. If you manage your own IRA or other plan, look into what’s available. But don’t just go adding a fund without considering the entire makeup of your portfolio.

The key to earning decent long-term returns and limiting overall risk is to have a proper asset allocation, meaning you don’t have all your eggs in one basket. For do-it-yourself-ers, check out the government’s website about asset allocation (http://tinyurl.com/2825hw), or purchase “All About Asset Allocation” by Richard A. Ferri ($13.57 at Amazon), a great introduction to the topic. Your personal financial advisor or company where you have your investment or retirement accounts can help.

How do I know which funds will produce the highest returns?
You don’t, you can’t, and you won’t, so just forget about it because past performance doesn’t predict future results. The day-to-day ups and downs of the market receive the media attention, but the daily, quarterly, or even yearly returns are largely irrelevant in constructing an individual’s portfolio whose objectives are long-range.  What you want to look for are funds that perform well over the long run within their particular sector, as compared to the appropriate benchmark indices. Various areas of the economy are always moving up and down and sideways, and so far no one has ever been able to know ahead of time what the pattern will be. Asset allocation, I’ll say again, may be the key to long-term success in building a financially secure future. Not panicking helps too!

What makes an SRI fund different?
If a prospective company is a fit according to a fund’s stated objectives, research is performed to determine whether or not it’s a good idea to buy stock at the current offering price. It boils down to the question “Within the guidelines of the stated objectives of the fund, will this purchase help to achieve the highest possible return for the fund’s shareholders?”

The three core socially responsible investing strategies are screening, shareholder advocacy, and community investing. Screening means a fund will include or exclude companies based upon criteria such as alcohol, tobacco, animal testing, and human rights, among others. These screens can be positive (e.g., including companies that treat employees well) or negative (e.g., excluding companies who do business with disturbed musicians).

Keep in mind that, as with all mutual funds, SRI funds have no guarantees of future return.

In any case, you’d better take this lad’s offering of raisins!

If you use electricity, drive a car, and participate in many other activities of daily living, in a very true sense you are already investing in the companies that allow and encourage your consumption. In other words, you are part of the “market” whether or not you actually own stocks or mutual funds. Socially responsible investing can be a way to make your dollars work toward something in which you believe, and support those companies you believe have a vision in line with your own.

Resources and suggested reading

1.    “The Mission in the Marketplace: How Responsible Investing Can Strengthen the Fiduciary Oversight of Foundation Endowments and Enhance Philanthropic Missions.” Social Investment Forum Foundation’s resource guide for foundations to manage risk and leverage their investment assets more fully with their core philanthropic purpose, while creating lasting value. http://tinyurl.com/35t49h
2.    “10 best” list of companies. Corporate Responsibility Officer magazine rates the citizenship disclosures, policies and performance of large-cap, public companies in the following industries: Auto & Vehicles, Paper, Technology Hardware, Technology Software, Transport, and Travel & Lodging industries, Chemical, Energy, Financial, Media and Utilities industries. http://www.thecro.com/node/580
3.    Social Science Research Network. http://www.ssrn.com/
4.    United Nations’ “The Principles for Responsible Investment.” An investor initiative in partnership with UNEP Finance Initiative and the UN Global Compact. http://www.unpri.org/
5.    The Social Investment Forum; national membership association dedicated to advancing the concept, practice, and growth of socially and environmentally responsible investing. http://www.socialinvest.org/
6.    Social Investment Forum’s 2005 biennial report. http://tinyurl.com/258794
7.    Sristudies.org, a resource for quantitative aspects of socially responsible investing. Includes an annotated bibliography of studies of socially responsible investing. A project of the Moskowitz Research Program, which is affiliated with the Center for Responsible Business at the Haas School of Business, University of California, Berkeley.
8.    Socially Responsible Mutual Fund Charts of Financial Performance. http://www.socialinvest.org/resources/mfpc/
9.    SocialFunds.com, an advertising-driven website with information on SRI mutual funds, community investments, corporate research, shareowner actions, and daily social investment news.
10.    “Handbook on Responsible Investment Across Asset Classes.” For asset allocation junkies, individuals and institutional investors the Boston College Center for Corporate Citizenship created this work. http://tinyurl.com/2ffqbu

Footnotes

1. The Maturing of Socially Responsible Investment: A Review of the Developing Link with Corporate Social Responsibility by Russell Sparkes and Christopher J. Cowton. Journal of Business Ethics, Volume 52, Number 1 / June, 2004.
2. SriStudies.org
3. International Evidence on Ethical Mutual Fund Performance and Investment Style, paper by Rob Bauer, Kees Koedijk, Rogér Otten. Limburg Institute of Financial Economics, November 2002. (socialinvest.org/resources/research)
4. Foundations align investments with their charitable goals by Charles Piller, Los Angeles Times, December 29, 2007. Section C, p 1.
5. Ibid.
6. 2005 Report on Socially Responsible Investing Trends in the United States. Social Investment Forum. (www.socialinvest.org)
7. Socially Responsible Investing Facts. Social Investment Forum. www.socialinvest.org
8. PRI Report On Progress 2007. PRI (Principles for Responsible Investment), United Nations. (www.unpri.org)

Image credits

Sun-Maid/George Bush composite image
•    First Sun-Maid packaging to feature a likeness of Lorraine Collett as the “Sun-Maid Girl,” 1916. Designer unknown, incorporates painting by Fanny Scafford. Public domain in the United States.
•    Photograph of Bush speaking. Brazil, November 6, 2005. Agência Brasil, a public Brazilian news agency, produced photograph. Published under the Creative Commons License Attribution 2.5 Brazil.

Fox/Morrison composite image
•    Foxes by Franz Marc, 1913. The Yorck Project: 10.000 Meisterwerke der Malerei. DVD-ROM, 2002. ISBN 3936122202. Distributed by DIRECTMEDIA Publishing GmbH. Public Domain.
•    Jim Morrison portrait, 2007, by Amadeu.taradell. Released by author into public domain.

Ferris Wheel/Superman composite image
•    The first Ferris wheel from the 1893 World Columbian Exposition in Chicago. The New York Times photo archive. Public Domain.
•    Screenshot of 1941 cartoon Superman. Fleischer Studios. This work is in the public domain because it was published in the United States between 1923 and 1963 with a copyright notice, and its copyright was not renewed.

Musician holding Valentine’s Day raisins composite image
•    Photo of musician Jeff Hawley, 2007.  Manager, Marketing Content Pro Audio and Combo Division, Yamaha Corporation of America. Courtesy of Mr. Hawley.
•    Photo, August 3, 2005 by Mazbln. Halberstadt, Klosterkirche St. Burchardi, Ort des John-Cage-Projektes “As slow as possible.” Permission is granted to copy, distribute and/or modify this document under the terms of the GNU Free Documentation License, Version 1.2 or any later version published by the Free Software Foundation.
•    Original painting of Lorraine Collett by Fanny Scafford, 1915, later used on Sun-Maid raisin packaging. Public domain in the United States.

This column is meant to provide general information, and should not be construed as providing investment, legal, or tax advice. There is no guarantee as to the accuracy or completeness of the information in this article. There are no guarantees of future return for any fund, nor an endorsement of any investment product. Mutual funds are sold by prospectus only. For complete information on mutual funds including sales charges and expenses, call your financial professional for a prospectus. Please read the prospectus carefully before investing. Links are provided herein as a courtesy, and no guarantees are made as to the accuracy of the content on the referenced websites.

Sí, Money! – Vol. 2, No. 1  February 2008 – http://simoney.us

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Investing Online is a popular topic currently, but online investments can easily swallow your head very fast in unpredictable market without knowing the other side of the coin.

There are many types of online investments that can surely prove significance to you but are there certain constraints. The popularity of online investment is rising & falling but it still has its importance. It can lead you to towards hell if implemented without right knowledge. You can brighten your financial future by investing online, but it is risky too.

If you are not confident enough about your thorough knowledge in online investment then you must start a Blog or a forum and you can also earn money from it by talking about the stock market indirectly without playing in the market. You can start collecting ideas and tips from reputed financial websites as well. In straight forward way, the advise is don’t make an debut in the market unless you are ready and confident enough to play the bad game.

Another idea: Gather the information, suggestions and ideas about online investment and then begin trading. You should be aware of some tips of stock market before investing. When you are risking your own money, you must understand the market and its tactics. Mutual Fund is a great online money investing idea with low risk and it has shown marvelous returns in the past. If you want to go for equity market that is enough risky, you should appoint a broker or relationship manager who can guide you and make your invested money worth.

The most important thing in online investment is you should do it because you enjoy, not because it is for maintaining component to your life. Investing in share market is always recommended as side business and not main business. There are also certain benefit of online investment, the major one is it can be done any time of any day.

When we talk about personal investment, the vast Internet activities have changed the scenario. Certain Investment clubs runs educational campaigns in-group and offers collaboration opportunities for personal investment. The current situation is you can comfortably place an order to buy or sell items by clicking from your personal computer at home. With the arrival of advanced technologies Online Investment is a great way for ordinary man to make a living from home. It is sad that many people are not aware of the fact that online investment is safe. The reason behind it is less number of people knows how to earn money smartly from it.

The bottom line is: there are numerous effective ways to make money by investing online, but the only thing needed is confidence, thorough knowledge and make sure to limit your focus to just one key area during online investment. It is rightly said don’t become “Jack of all trades, master of none”. There are many websites that give online investing ideas, hence do thorough research, focus your efforts on decided area and start smartly acting today.

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Kicking off the evaluation process is the toughest for us. Question after question kept popping up “Is the property market low enough?”, “Is this property worth considering?”, “Are the numbers the only criteria for investment?” What are we really looking for in real estate investing?? Quick bucks $$ or Regular income…

Bottom-line = Money!!!

Property Agents have tons of recommendations for YOU! How will you know whether they are good investment for you?

There are many factors that need to be considered in evaluating a real estate investment. For example, location, environment/neighborhood, facilities, financing options, rental income, etc. If all above works, it is time calling your agents and set up appointments. Happy Viewings!!!!

Actually it is not difficult and it does not need much of your time to know if a real estate investment is worth investing in the first place. All you need is crunching some numbers with your calculator, and Bingo! You can decide whether the property is worth investing.

Later in this article, we will show you how these numbers work in your prospective real estate investment by two real life cases in Johor Bahru, Malaysia.

Numbering GAME
Numbers, numbers and numbers.. How do you get them?

You may try calling a few property agents, check with banks on properties valuations and of course there is plenty of information on the Internet. Once you have these numbers you can determine if a real estate investment is worth spending your time for a viewing. “Seeing is Believing.” Check out the property to see the actual condition and the environment, whether it is to your liking once you get your numbers RIGHT! Once you get your numbers, you will see:

Incomes
One-time income – selling price
Regular income – rental price

Costs
One-time expenses (startup costs) – down payment, agent’s brokerage, legal fees, stamp duty, furnishing cost, etc.
Regular expenses (monthly costs) – monthly loan repayment, monthly maintenance fee, quit rent, property tax, etc.

See how they (numbers) work..
The basic requirement for a good real estate investment is that the income it generates must be more than its costs.

If the selling price of a real estate investment is more than its purchase price and startup costs, this investment generates capital gain.

If the rental income of a real estate investment is more than its monthly expenses, this investment generates cash flow.

If you are looking for capital gain, the gain or loss depends very much on the real estate market. Hoping to make money from capital gain on real estate is like buying a product and hoping the value of the product will go up with time. On a long term basis, real estate will be appreciating in value because of inflation, but the gain is not guaranteed.

On the other hand, a real estate investment that generates cash flow effectively put money into your pocket every month, while your equity in the real estate investment increases over time. This is the real estate investment that we are looking for – an investment worth investing.

Too good to be true?
With this recession time, you will ask yourself, “Is it the RIGHT time for me to start investing in real estate? Everything is so uncertain NOW.”

In Johor Bahru, you can find plenty of real estate investments worth investing at this juncture. We discovered most of these investments that generate substantial cash flow are mainly apartments or condominiums. You can read from our upcoming article to know why apartments or condominiums are better real estate investments in Johor Bahru. Here are two recent real life cases of real estate investments worth investing in Johor Bahru.

Case 1: We found a condominium in Larkin area of Johor Bahru in Octorber 2008 selling at $160,000 with existing tenant. Monthly rental income is $1400 while monthly maintenance cost is around $300 (maintenance fee plus sinking fund plus quit rent).

If we finance 90% of the purchase price to buy this condominium with interest rate 4.85% with a tenure of 30 years, monthly loan repayment is estimated to be $760. Thus, this condominium is generating a net cash flow of $340 every month, $4080 every year.

Total capital outlay for this investment is $24,000 for down payment including other startup costs like legal fee and brokerage.

Effectively this investment gives us a yearly cash-on-cash return of 18.5%. In other words, within 6 years we would be able to take back our capital $24,000! The best thing is we still own the condominium. It will keep putting money into our pocket every month. We also have the option to sell it away when the market is good.

Case 2: There is a 3-rooms apartment in Tampoi sold at $125,000 in Octorber 2008. Monthly maintenance cost is about $150. If we finance 90% of the purchase price with interest rate 4.85% with a tenure of 30 years, monthly loan repayment is estimated to be $600.

Expected rental income for a fully furnished apartment in the area is about $1200. With furnishing cost of $10,000, total capital required for this investment is around $27,000, while total monthly cost is $750.

The apartment is expected to generate a net cash flow of $450 every month, $5400 every year. Cash-on-cash return on this investment is 20% which we can expect to take back all the capital within 5 years.

Sound interesting right?
Of course, so far we are only talking about numbers. A good real estate investment does not rely on purely numbers. You still have to go and have a look at the building structures, study the location and neighborhood, and perform other checks before you make your decision. What we have discussed, however, can save you time and give you more ideas on the potential returns of a real estate investment before you tell your agent which real estate you want to view in the coming weekend.

Read more about real estate investment tips at http://reijb.com

We write regularly about real estate investment. Some of our featured articles include:

“How to estimate the value of a property?“

“Why apartment can be the best real estate investment?“

“How important is location to an investment real estate?“

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