Investment strategies – Just another WordPress site Wed, 02 Mar 2016 16:34:37 +0000 en-US hourly 1 Dealing with foreign exchange risk Sun, 03 Mar 2013 21:25:53 +0000 Also referred to as currency risk, foreign exchange risk refers to the probability of a business’ value depreciating due to the change in values of currency. Businesses that deal with export and imports are the ones mainly affected by value changes of currencies. Foreign exchange risk can also be referred to the risk a business has to deal with, closing a long or short position in another currency at a loss.

foreign exchange notes

Foreign exchange is, arguably, the largest market in the world.

Foreign exchange is, arguably, the largest market in the world. This market has a daily turnover of almost a trillion pounds. Therefore, any business that depends on two or more currency types, are likely to lose a lot of money when one of the currency depreciates. The currency exchange rates are affected by a number of things. Demand and supply of different currency types are the most influential factors of the rate of exchange. Politics can also greatly influence the foreign exchange rates.

Translation foreign exchange risk affects numerous businesses. Businesses that have assets abroad, and the base currency of the foreign country shifts unfavourably, will lose a lot of money. Yes, even if a firm is not ready to crystalise the asset in the short-run, such an unfavourable currency shift affects their overall net-worth. A business dealing with this kind of foreign exchange risk can do little about it. However, if the firm’s financial experts predict a large unfavourable currency rate shift, liquifying the asset as soon as possible is advisable.

Settlement risk is another foreign exchange risk. Firms that directly engage in selling and buying of currencies are most likely to be affected by this type of risk. A trading firm, or individual, must, therefore, be ready to deal with losses if their broker failed to honour their part of the deal. The bank you made a currency transaction with might also go bankrupt. Businesses can avoid dealing with this kind of foreign exchange risk by only dealing with credible banks, and brokers. Moreover, seeking expert advice is very important.

The IXE Financial Group is one of the best firms you can count on for advice. The Facebook presence of IXE Financial Group makes it easier to contact them!

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Bonds: What are they? Fri, 01 Mar 2013 13:35:59 +0000 What are Bonds? Simply put, they’re a loan that you give out to businesses or governments, that come with a promise that you’ll receive your initial money back in addition to any interest you might have earned. Governments and big businesses are always needing money to fund new projects and developments, and selling out bonds is one of the ways they can do this. In the investment world, bonds are considered to be one of the safest forms of investment. Unlike shares or stocks, bonds come with a guarantee; there is still risk to be had if you’re not buying bonds from a company/government with a proven track record.

USSR treasury bond (1982)

USSR treasury bond (1982)

These types of investment can be plotted into two different categories: government and corporate. Government bonds are considered to be less risky than corporate bonds; as it’s much more likely for a single company to default on it’s debts rather than an entire government. That being said, you should never assume that bonds come with a risk-free tag! It is fully possible for a government or a local establishment to delay or even default on all of their loans, which would render your investment worthless.

With great risk, comes great reward. Corporations are profit-driven machines that will do almost anything to generate some extra income. As a result of this, the interest rates from corporate bonds will typically be much higher than investing in a government alternative. Every company has a credit rating/history; such ratings will affect the risk and reward of each investment opportunity.

For those looking to invest their money in a moderately low-risk solution, then I recommend bonds as a brilliant way to earn some extra money. I also urge you to approach all kinds of investing with caution. There will be companies, and sometimes even local governments, that will try and convince you into a loan-investment which is less than secure.

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Asset Allocation Thu, 10 Jan 2013 07:29:47 +0000 Asset allocation is a popular investment strategy that helps in balancing the return ratio and risks through diversification of resources. As an investor, this system helps in dividing your assets in various categories such as stocks, cash, bonds and real estate as a way of minimising the possible risks. This form of investment is popular in the modern generation, especially due to the unpredictable economy characterised by price fluctuations, insecurity, natural disasters and other associated risks.

Advantages of asset allocation

Since the investment has been diversified, the risks are minimised. The investor will still have a stable portfolio even if one of the investments is affected by any type of risk. This also helps in reducing the losses since not all investments will be affected when one of them fails to perform well in the market.

Asset allocation normally comes with great retirement benefits. It is a safe way of retiring because you have a stable investment that does not rely on one source. This gives you a chance to retire in peace, since you are assured of a stable financial future even when you are not actively involved in managing your portfolio.

word could based on asset allocation

Asset allocation normally helps in providing more investment opportunities thus increasing your profits.

Asset allocation normally helps in providing more investment opportunities thus increasing your profits. Some investors focus on one source of income such as the stock market and this automatically locks out other profitable investments that are yet to be explored. Asset allocation gives you a broader view of the market, therefore making it easier for you to select the most profitable investments.

Disadvantages of asset allocation

Even though asset allocation is known for its numerous benefits for investors, it normally comes with some disadvantages. The greatest disadvantage of asset allocation is the fact that you will need someone else to manage your portfolio, thus losing your attention. This is very risky because in case of poor management or other irregularities, you may notice it only when it is too late.

Asset allocation also comes with an average profit compared to collective investment. The average profit normally comes as a result of variations in terms of performance of the various investments. For example, if the stock market is profitable at the moment, the real estate sector might not guarantee the same results. For more information about asset management solutions, you should always feel free to visit The IXE Financial Group Facebook fanpage.

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Why Invest In Gold? Wed, 14 Mar 2012 10:02:46 +0000 Investing in gold is a good idea if you are looking for a stable investment for the future. The prices tend to do nothing but go up over time. This is due to many unique factors that make this precious resource a different investment than other commodities. Here are some good reasons why you should look into this an investment opportunity.

Why Should I Make This Type Of Investment

Gold Investment

Gold Investment

Making an investment in gold is a good move for several reasons. First, the prices are stable because it is a tangible asset. It isn’t like paper money where more can be printed on whim. This scarcity is what provides its value.

Why Is Gold So Expensive

The prices are so high because of basic supply and demand. Gold is one of the rarest elements on the face of the Earth. It is probably the best reason why humans have coveted it since the beginning of civilization. This lack of supply is what drives prices up for what amount of the element is available. It also explains why gold prices are always so high even when other investments may not be doing so well.

Keep It For Long-Term Wealth Building

Precious commodities such as gold will never lose its value. The best investment strategy is to keep it for as long as you possibly can. Fortunately, gold is also easy to sell if you feel like you need to liquidate it right away. All you have to do is take it to a bank, pawn shop or anyplace else that will trade it for cash.

Gold is a great investment if you can afford to pay for it. Humans have valued it ever since the beginning of time. It is something that will keep its value no matter what the economy looks like. Protect your wealth by devoting a portion of your investment portfolio in gold.

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