General | Management Matters

What to Consider When Looking for an Offshore Investing Company?

When looking for offshore investing firms research it crucial. The more you know about the companies you are considering, the less you have to worry. The decision to invest is always a gamble and shouldn’t be taken lightly. Learn the law for the countries, because they are different around the world. It is best to choose a company that has an office in the US.

Next, gain as much knowledge as you can on the investment. Learn the investments potential and risk. This will ensure that there are no surprises when it comes to you money. Don’t invest in something that you know nothing about.

Other companies in different countries have their own laws when it comes to investing. Make sure you will be able to have access to your money. There have been numerous scams over the years involving offshore accounts. For this reason learn as much as you can before investing and make sure it is legitimate.

If you get involved with a scam it will be hard if not impossible to get any of your money back. International laws are much different than the US laws making it pretty much impossible to take legal action.

This should not turn people away from offshore accounts, because if you do your homework you will find reputable companies to invest. There are great companies overseas that you can trust with your money. A reputable company will work with you and make sure that you are satisfied with your investment. They will also make sure you have access to your accounts when you need them.

Investors consider offshore accounts to save them money. There are certain laws in place that saves the investor from certain taxes on their overseas accounts. There are different privacy laws to ensure your information is safe. This saves the investor in the long run, since the tax laws will protect their accounts.

Filed Under: General Tagged With: Investing

What are the Differences Between International and Domestic Markets?

Domestic marketing takes place within one’s own country, while international marketing takes place outside of one’s country. One of the major problems between domestic and international markets is the language barrier. The language barrier makes obtaining and interpreting research data difficult. Many words have different meaning in other countries.

It is truly amazing that one simple word can mean something different around the world. This is an example of how United States words are used in different countries and there meaning:

French fries are called chips in Britain
Soccer fields are called pitch in England
Porches are called gallery’s in the Caribbean and stoep in South Africa
Ghost or Monster’s are called duppy in the Caribbean, wendigo in Canada and taniwha in New Zealand
Bar’s are called a boozer in Australia, New Zealand and Britain there are also referred to as hotel’s in Australia and a pub in Britain
Soccer is called football for the rest of the world
Festival is called feis in Ireland
Police are called Mountie in Canada, bobby in Britain, Police wallah in South Africa and a loo in Britain
Barbecue is called a Barbie in Australia and braai in South Africa
Trucks are called lorry in Australia and Britain

Here are just a few more interesting examples of different countries:

A simple sign in a Bucharest hotel lobby: “The Lift is being fixed for the next day. During that time, we regret that you will be unbearable”.
In a Japanese information booklet concerning the use of a hotel’s air conditioner: “Cooles and Heates”: “If you want just condition of warmin your room, please control yourselves”.
At a Acapulco hotel: “The manager has personally passed all the water served here”.

These are very interesting facts about the differences in domestic and international markets. Make sure you understand the language, when investing your money in international markets.

Filed Under: General Tagged With: International market

The Gold Standard Revisited

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There are many strategies to guarantee global security and safety in a country’s currency. The United States was on the gold standard for many years. The US maintained a sufficient amount of gold to back-up the currency that was in print and also measured the stability of a currency based upon 1 Troy ounce of gold. The Gold Standard was put in place to stabilize a currency and it also allowed a global currency trading market to exist. For exchange rates could be pegged to a global commodity, gold. If a country had more gold they also had more liquidity and if they had less gold they were less liquid and able to borrow against their currency or print more notes.

The gold standard promoted price stability in the long-run because gold was a rare commodity and something that was known and valued on a global market. It is also something that can be stored and will not change with extreme hot or cold temperatures. But, in the short-run, the gold standard actually causes large swings in price and currency valuations.

At the end of WWI, the United Kingdom had extremely high inflation and they were unable to go back on the gold standard. In the 1920′s & 30′s the global gold standard collapsed. The United States and their trading partners established the Brenton Woods Agreement. It created the International Monetary Fund, Established standards for tariffs and GATT and set the first exchange rate system which pegged many International currencies to the US Dollar. The US Dollar was then pegged to $35/troy ounce. This was a huge advantage at the time for the United States since it owned over 60% of the world’s gold. Shortly thereafter, the Federal Reserve was established to watch over the United State’s monetary policies and currency rates. It has been speculated that the world would be better off back on the gold standard, but it would be difficult to implement.

Filed Under: General

Dollarization and Exchange Rate Agreements

There are several International Exchange Rate Agreements in place today. A country may choose any type of trade-rate system. But, they must be careful because the country’s currency value in the world economy can drastically change if they chose an exchange rate system that is not favored by the major economic powers of the world.

Dollarization is an example of an applied trade-rate system. In this system, the local economy accepts both the local and another widely used currency. For example, Argentina’s local currency was almost phased out in the late 1990s, at which time the US Dollar was then adopted as a second local currency accepted by most merchants. Europe also saw this dual currency situation during the Euro-Dollar transition. Many merchants began accepting their own local currency in addition to the Euro. There are also some countries that abandon their local currency completely in favor of another widely used instrument. This applied trade-rate system is called Dollarization. The problem with Dollarization is that the country that adopts another currency completely then gives up complete control of their monetary policy to the other nation. So, if a country accepts the US Dollar as their country’s only currency, they have no power or say on the US Fed’s interest rate changes or anything else to do with the US Dollar. The local economy of that country has staked its future on the US Dollar and the United State’s ability to hold down inflation and keep the currency’s value ratio high.

Some of the Exchange Rate Agreements in place include (from most restrictive to least restrictive) No Separate Legal Tender, A Currency Board, A Pegged Currency, A Pegged Currency with Bands or Watermarks, The Crawling Peg, A Managed Float and an Independent Float. It is up to each monetary policy board to decide which Exchange Rate Agreement makes sense for their currency holders and to maximize the value of the currency on the world market.

Filed Under: General Tagged With: Local currency

Seigniorage: The Art of Printing Money to Pay Debts

An important foreign and domestic currency concept to understand is something called Seigniorage. This directly impacts inflation because the country in question basically prints additional paper currency to cover government expenses. This is essentially a tax on all currency holders and local citizens of the country. The process of printing money is easy, but the governing bodies and monetary policies are quite complex. Countries have an inherent desire to keep inflation low and the purchasing power and overall value of their currency high. Countries that engage in Seigniorage typically do so by issuing bond or other financial instruments and pay them back with newly printed currency.

The aspects of Seignorage are quite problematic in areas that utilize a single currency across multiple countries. For instance, the European Union has a single currency and does not currently allow the additional printing of currency to offset bonds and other financial instruments. The reason for this is because the financial instruments are often developed by a particular country. If the European Union then decides to pay off those instruments with Euro Dollars, they are creating value for that particular country by offsetting an expense, but they are creating a liability for all of the other countries that utilize that currency.

Governments often tout the benefits of Seignorage to their constituants and currency holders. They often cite positive investments in both financial instruments and goods and services produced by that country. For instance, if the US issues debt that is paid back by printing additional currency, the holder of that currency will most likely buy US goods and services. While this is often a stated benefit, it is rarely realized and effective at increasing exports. What usually happens is that the country prints additional currency and then staves off inflation by reducing interest rates which triggers more borrowing and thus spending. So, in effect the benefits are masked by other movements of the financial monetary policy makers.

Filed Under: General Tagged With: Monetary policy

Gulf Cooperation Council “GCC” Faces Many Challenges Internally and in the World Economy

An Interesting global economic organization to understand is the formation of the Arab States of the Gulf or the GCC, Gulf Cooperation Council. The GCC was formed in the early 21st century to address and combine the common economic concerns of Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and the United Arab Emirates (UAE). The countries formed this economic council with several goals in mind.

The first goal of the GCC was to create full economic integration among member countries. This would create a stable macroeconomic environment making it easier for member countries to participate in the global economy. This would also help to create more stability within the Middle East and encourage more trading partners. The second goal of the GCC was to create a common currency among its members. They would establish a central monetary policy but continue to decentralize the fiscal policies of its members. This is different from the European Union members in that they have the EU as a centralized monetary and fiscal governing body. In the GCC’s plan, all member countries are independent countries each with their own checkbooks drawing from the same central bank.

The GCC faces many challenges in order to succeed. Their members primarily get their income from oil exports and with the unsettling global economy; oil prices have had massive swings. They also agreed in 2003 to peg their member country currencies to the US Dollar in preparation for a common currency. But, inflation has increased the cost of imports by as much as 15%, which really hurts the working class. The problem filters to other non GCC members like India and Pakistan because many of the working class in the GCC countries send their wages home to their families. The GCC has many more obstacles to face in order to be successful and become a player in the global economy; especially since the UAE and Oman have voted recently to abandon the common GCC currency goal.

Filed Under: General Tagged With: Gulf Cooperation Council

Investing Gold

Gold has been considered valuable since gold was discovered. Its property to resist rust and shine make it attractive to humans from the middle ages. It is without doubt the most traded currency throughout history. Kingdoms, human lives, horses, sheep, women, etc. were brought using this universal currency. Your paper dollars have no value when regionalism is taken out, but every one anywhere accepts currency in the form of Gold. It is by far the safest form of investment in the past and in the future too. When economy fluctuates like a tree in a windy day, safe investments are rare to come by. Every investor knows where to go at these times.

Every sane investor, rich or average will tell you there is no safer investment than gold. Its value fluctuates very slowly and even if the gold prices drop, they won’t drop to rock bottom. Only a few dollars in single digits are all that the value fluctuates. The best time to buy gold is when it is at its lowest. Hence if you have money now, the best time to buy gold would be a month back. Just kidding, you can buy gold any time, but you need to know the little risks involved with gold dealing. Although investment in gold gives back fewer returns, it will assure you investment. To obtain huge returns, you will have to invest in it and wait for one or two decade to pass by before the value increases. It is not he profits of gold that attract thousands of investors, it is the solid and certain return of the invested cash.

Investing in gold is fairly easy. You can order gold by sitting right at home or get gold bullion or coins from authorized gold sellers. You can also find many banks selling gold. Make sure you talk to your tax consultant before you make the investment.

Filed Under: General Tagged With: Coin, Investor

Investments In Renewable Energies

Renewable energy is the fastest growing energy source in the world. Investments in solar, wind, tide, organic waste and plastic waste are increasing at a rapid pace. With increasing oil prices and increasing demand for alternative power to fulfill the ever growing population, countries are heavily investing in renewable energy. Every year investments in renewable energy are seeing a double digit growth. Investing in an renewable power source is like investing in an oil well. It will keep generating money till the source of your power keeps going on, here the source of power is sun and the wind. There are numerous renewable energy technologies currently under development which require huge capital investments. These capital investments are important for every renewable energy development.

The surge in renewable energy development is much more than in developed countries like United States. Emerging economies like China, India and Brazil are the current hot spots of renewable energy development. Even in developed countries like United States and United Kingdom, there has been more than 25% increase in investments in renewable energy. Governments around the world are giving stimulus packages to firms developing renewable energy. The current Copenhagen summit has convinced emerging economies like China and Brazil to increase investments in reducing pollution emissions. The Chinese government has passed laws to make it compulsory for energy companies to invest in renewable energy sources. Figure wise, China is ahead of US in terms of investments in renewable energy to reduce its dependence on external sources of power. Countries such as China and India have raised their renewable energy expectations by 2015 and 2020 to exceedingly high levels. To reach these, the investments required both by the government and private are immense. This is a golden opportunity to jump on the pollution free bandwagon and assure investment returns for decades to come.

Filed Under: General Tagged With: Alternative energy, Energy, Renewable energy, Sustainable energy

International Investing: Risks and Rewards

: Image by Getty Images via @daylife

For the patient and informed investor international markets can be extraordinarily profitable. In Bangkok, 2003, the SETI 100 soared 117% (a number good enough to tempt any investor). Also, none of the ten biggest steel, electronics, or consumer appliance manufacturing companies are based in the United States. Clearly there is potential in foreign investing. However, before investing in a foreign market one must do a great deal of research into the way that market works (as not all of them operate the same way).

One thing that can make this necessary research harder is that not all governments require the same information to be given to investors that the United States does. Also, although emerging markets grow extremely quickly, when judged by percent return, the government of these countries is not always stable. There is always the potential for political or social unrest, which can put an investment at risk. The last major hurdle is currency. Currency fluctuations can increase or decrease one’s investment return so an international investor should always be aware of potential danger from that quarter.

All of that being said, there are ways to minimize these risks and still gain the diversity that investing internationally brings to a portfolio. American depositary receipts are international companies whose stocks are traded on the NASDAQ. These companies have financial reports that usually follow the US guidelines, which make research easier and lets the investor feel as secure as possible in his or her investment. Another good option is US Multinational companies. These American companies do most of their business over sea and therefore perform as if they were international stocks.

Finally, if one is prepared to do the required research, it is possible to purchase stocks in international markets if your brokerage offers that service. They would then contact a foreign “market maker” to set up a brokerage account, which would allow the investor to purchase the desired stocks.

Filed Under: General Tagged With: Business, Guides, Investing, Investor, NASDAQ, Stocks and Bonds, United States

Investing In Agriculture

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Agriculture is the most important source of food for all humans. Only because humans developed agricultural skills, did they stop their nomadic lives and started living in communities and villages. Agriculture has had a major change in the way humans lives and to create societies. People cannot eat paper currencies or gold bars to stay alive, they will have to ultimately trade these for food items grown by farmers. Hence agriculture is very important for the sustainability of human beings.

With increasing populations the demand for food is ever increasing. Human population is reaching the 8 Billion individuals mark but the amount of land is same as that it was 10 years ago. Hence it is assured that the cost of agricultural goods is going for an upward trend. The demand is doubling with each passing year. People are developing healthy eating habits and livestock is being raised at an alarming rate from food grown by agriculture. Apart from that, fuel is being made from plants to quell the increasingly insufficient demand for bio fuel crops. These farmlands also produce non edible commodities like rubber and cotton.

The amount of farmland to sufficiently overcome this requirement is slowly decreasing, making its tougher and tougher to fill the void being created. With the increasing population size, farmers require 140 hundred acres of land every single day to feed the thousands of people. On the other hand, the amount of land under agricultural production is decreasing with increasing size of cities; they are expanding into connecting farmlands. The best investment currently is to invest in farmlands that and avoid them from being converted into cities. These farms will give you unbelievable returns in a matter of few years. Other ways of investing in agriculture is by investing in agricultural research where geneticist are trying to find out plants that grow faster, on lesser resources and give more food.

Filed Under: General Tagged With: Agriculture, Agriculture and Forestry, Business, Environment, Food