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Monday, January 11, 2010

Ask Your Advisor About Your Portfolio's Return On Investment

By Samantha Preston

Return on investment (ROI) is a term you hear frequently, usually in relation to business and finance. The goal is to maximize return on the money you invest. Return on investment is a popular metric because it is versatile and simple to use. If an investment does not have a positive ROI or if there are alternative investment opportunities with a higher ROI, the investment should not be undertaken. Return on investment is used in our situation to describe the monetary gain made by investing in some type of Charlotte investment property. There are a variety of properties that can be used to gain a reasonable return on investment.

When you invest in a property, you get rental income as the money you realize on the property and in that sense ROI is somewhat different than plain profit.

Investors would like to get the best rate possible so as to increase the possibility of generating a positive ROI. When conditions are right and a lucrative property is on the market, there are so many people and investors who bid for it competitively. This means that getting the right kind of Charlotte investment property that you need is not a walk in the park. The reason is that the number of suitable properties for investment is generally far lower than the demand.

The global property investment market is in the throes of a crisis due to the real estate crisis that took place recently. Although the number of available properties has gone up, this also increases the uncertainty and the level of difficulty in getting suitable property for investing.

When looking at investing in property, it is always better to have an accountant, a legal practitioner and a financial planner at hand. This is because dealing in property could entail tax as well as legal implications. When looking to buy property, it always make sense to quote a lower price than what they expect to pay, as conversely, sellers try to bid more than what they hope to get.

Return on a secure investment can be determined, but to do so, one must get the big picture and then drill down to the minutest detail. Remember, owning property will usually involve investing a large chunk of money, so best to check everything up front to avoid problems in the future. A simple example of ROI is say we invest 100 dollars in stock and we would be happy with a 15% ROI in the following year we would have $115, meaning the ROI was $15.

If you want to calculate the payback period of the deal, you will have to look at the costs which when divided by the monthly benefits which returns the payback period. ROI calculation also means that you take into account the ROI percentage, payback period and the cost benefit ratio.

Capital gains taxes become lower, if you hold an investment for more than one year. So if you are in the 35% tax bracket, you pay the same percentage tax on an investment, if you hold it less than a year, but if you hold it for more than a year, your capital gains tax is only 15%. Capital recovery horizon is the time that a project will need to generate enough benefits to recover the original investment. This is an often forgot cost in calculating the ROI of Charlotte investment property, so attention to detail must be maintained even until the property is sold. - 23204

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