What is a Securities Investment?

Loosely defined, a security in the world of finance is an instrument representing financial value. Securities can be categorized as debt, equity or derivative securities and can be represented through a certificate or non-certificated book entry form. These certificates entitle the holder to rights under the security and can include shares of stock, mutual funds or bonds.

Investing in Securities

Debt securities, or bonds, refer to a type of loan in which the investor lends an institution money in return for the payment of at certain intervals. Bonds can be issued by credit institutions, government agencies and public authorities with the initial lending amount agreed to be repaid at a later date. Bonds are a reliable securities investment because they generate a fixed form of income through interest. Equities refer to the amount of ownership you buy in a company and can be purchased in the form of stock and dividends. Derivative contract securities derive their value from direct securities in the form of futures, swaps, options and index options.

There are two types of markets to consider when investing in securities: primary and secondary. In the primary market, the money for securities is received from investors in a public offering transaction, such as offering stock to the public. In the secondary market, the securities are assets held by one investor selling them to another investor. The secondary market must exist for the primary market to thrive because holders of securities are able to sell them for cash in the secondary market to other investors. For this reason, investing in securities oftentimes comes with organized exchanges to perpetuate both markets.

If you’re interested in investing in securities, it is worthwhile to check out the latest news and trends surrounding the form of securities you have invested in. InvestorPlace offers the latest news on securities and trends, as well as expert perspectives on the market today. Check out what our industry leaders have to say about securities investment by looking through InvestorPlace today! 

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With the holidays looming, taxes probably rank among the bottom of items you are eager to think about, especially if you are a retiree. They won’t be due until April, right?

Sure, but that April 15, 2015, tax bill relates to income received during 2014, and there are only a few weeks left to make adjustments to this year’s numbers. Here are some tips aimed at retirees who want to trim their tax bill:

• Harvest your losses. Look over your non-retirement accounts for any investments that lost money during the year. You can make those losses work for you by selling the investments and writing off the losses against your gains. (Be aware of the “wash-sale” rule that prevents you from writing off losses if you make essentially the same investment within 30 days of the sale.)

• Defer any income. If you are selling a business, land or other substantial asset, consider spreading your payments over several years. Taking a lump-sum payment will skyrocket your income.

• Be more charitable. Give more to your favorite charities and take the deduction. Beyond that, you can start a donor-advised fund, which opens opportunities for additional tax-saving strategies, and you can donate appreciated securities, which allows you to deduct the market value of the asset without paying taxes on your gains.

• Limit your income. If you are in the 10 percent to 15 percent tax bracket, you currently pay no federal income tax on long-term capital gains — as long as your taxable income doesn’t exceed $36,900 for singles and $73,800 for joint filers.

One way to remain within the lower brackets is to limit your IRA withdrawals to the required minimum distributions. If you need more income to pay the bills, you can withdraw money from taxable accounts and sell securities. These strategies can be complex, so your financial advisor should do the planning.

• Give to loved ones. You can give up to $14,000 a year to as many people as you want without triggering federal gift and estate taxes (double it to $28,000 by giving from both yourself and your spouse). Any amount above $14,000 per person per year may eventually be subjected to gift taxes, but only once your lifetime total giving exceeds $5.34 million (for 2015). If you give more than $14,000 in one year to one person you have to fill out IRS Form 709, but this is just a formality until your giving exceeds the $5.34 million lifetime exclusion amount. For all of the above discussions, it’s always a good idea to have financial adviser involvement.

Eric Tashlein is a Certified Financial Planner™ and Principal of Connecticut Capital Management Group, LLC, 67 Cherry St. in Milford. He can be reached at 203-877-1520 or through www.connecticutcapital.com. This is for informational purposes only and should not be construed as personalized investment advice or legal/tax advice. Please consult your advisor/attorney/tax advisor. Registered Representative, Securities offered through Cambridge Investment Research, Inc., a Broker/Dealer, Member FINRA/SIPC. Investment Advisor Representative, Cambridge Investment Research Advisors, Inc., A Registered Investment Advisor. Cambridge Investment Research Inc., and Connecticut Capital Management Group LLC are not affiliated.

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Let’s imagine you know what to expect when buying a home a home for the first time, but did you know that it is the little things that can make all the difference in terms of your long-term happiness with your decision? Below are our top 10 tips for making your buying experience as profitable, stress-free, and enjoyable in the long-term as possible.

-  Research Thoroughly Before You Begin Physically Looking

As an agent, I see it all the time, a buyer–or buyers–want to jump into my car with me immediately and begin feverishly seeing dozens of condos on a Saturday afternoon.

Why is this bad? Easy–the clients and I waste 5 hours running around like chickens with our heads cut off and the entire process–after 2-3 weekends of this–quickly becomes disorganized and stressful. This is the exact opposite of how the process should go!

Instead, take time to do your homework before you even involve an agent and begin seeing homes. Start with online sites like Zillow, Trulia, or Redfin and check into different neighborhoods, price points, etc. so that by the time you do actually want to physically see properties and get more serious, you have a very well-defined idea of what you’re actually looking to buy. Also consider attending a few open houses on your own–just be sure to let them know you’re working with an agent if you’ve already chosen one.

-  Location, Location, Location

This is the most famous saying in our industry when it comes to the three things that most effect buyer’s purchasing decisions.

It’s wonderful that you can buy a 3,000 sq. ft. single family home for a very low price if you go out 7 miles due west of Downtown Chicago, but if no one will come and hang out with you, what was the point?

Location is such a crucial piece of the home buying puzzle because it will have the greatest effect on your overall lifestyle.

Do you love getting up early and walking a block to your yoga class and then having a nice protein shake from the juice bar across the street on your way back? If you do, then think long and hard before you decide to give up your ideal location for a few more interior square feet or some shiny new stainless steel appliances.

- Don’t Forget to Account for the Extra Small Costs

When buyers are setting up their budgets, they always remember to account for things like mortgage, tax, and insurance payments, as well as any association dues (for condos or communities with common amenities). They also remember to budget for utilities like gas, cable, and electric and most even remember things like landscaping maintenance and routine maintenance.

What most people forget about are the little extras which, when you add them up, can become not so little. A prime example- using the tip above about location- let’s say you decide to move 4 blocks farther from your ideal location which isn’t so far- no big deal, right? Maybe not…

Let’s say you’re not much of a walker or are always in a rush–that 2-minute walk for $0 just turned into a $6 cab ride.

Another simple example is a buyer who moves from a more affordable area to a more expensive one. Everyone accounts for the extra rent or mortgage they will pay, but few remember to account for the fact that there are no more $7/plate restaurants out your front door and that $35/plate restaurants have replaced them. Now you’re faced with spending hundreds of dollars more per month to feed yourself or spending money on cabs to get to more affordable options.

Always remember to really take the time to think about your overall budget and account for every penny that your new home will cost on a monthly basis, but also the ancillary income you will need to spend to conveniently live in that location.

-  Scope Out the Area on Your Own for a Different Perspective

Going out with your Realtor on the weekend and seeing homes is a great start once you become more serious about your search, but if you really want to get a feel for the area you’re considering buying in, you need to do more.

Start by visiting the property and general area at 9am and 5pm so you can judge traffic volume, noise levels, and the general feel for the area. Then come back during the weekend and walk around during the middle of the day. Stop in a local restaurant and have a bite and talk to a couple small business owners in the area to get a feel for their thoughts on the neighborhood.

The trick here is to figure out the lifestyle afforded by the area you’re considering and taking the time to make sure that lifestyle will be a good fit once you’re moved in.

- Do Not Compromise on The Quality of the Professionals You Hire

We’ve all heard the saying “You get what you pay for” and this couldn’t be more true than in real estate.

I get it–your girlfriend’s sister’s mom is a Realtor and she’s going to be so so so upset if she doesn’t get the business. Unfortunately, if you let people pressure you into hiring people who aren’t capable of fully representing you, then you can run into problems.

All hiring decisions- attorney, lender, Realtor, home inspector–should be based on merit and made without regard to personal relationships. If you know just so happen to be friends with a phenomenal agent with a stellar reputation who works in the area you’re buying in, then that’s one thing, but to blindly give out business when your hard earned money and happiness at stake is foolhardy to say the least!

- Always Know Your Exit Strategies

A good businessperson always knows their exit strategy up front and you should be no exception when it comes time to buying property.

Do you have enough for a down payment so that if you needed to sell quicker than expected you could without writing a check? Can you rent the home for enough to cover your total monthly expenses as an alternative strategy if you can’t sell?

The bottom line is, you need to make a plan as if you’re going to be moving half way across the world 6-12 months after you buy. If your exit strategy is sound enough to account for that critical of a life change, you know you’ve done your job in this respect.

Buying a home doesn’t need to be intimidating, scary, or complicated- in fact it should be just the opposite- approachable, fun, and simple. Organization, planning, and careful consideration are the dominant themes for all the tips listed above and by utilizing these simple strategies you will exponentially increase the odds that your purchase will end up a success in every way.

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Investing, whether it is for your retirement or a big purchase, can be a satisfying endeavor for individuals looking to build up their finances. Whether you are interested in stocks, bonds, mutual funds, ETFs or any other investment vehicle, there are a few investment tips every successful investor should keep in mind. Here is what InvestorPlace recommends to experts and beginners alike.

Making Investing Profitable

One of the biggest ways people can help themselves succeed in their investments is by truly understanding what they are investing in. Too many people throw their money into stocks without having a basic understanding of what to expect from the market and what to watch for. Regardless of what you are investing in, you should understand the terminology, latest trends, and inner workings of things like stocks and mutual funds, because that is the only way you will be able to truly prepare yourself for successes and failures. Our financial tip to beginning investors: Take the time to research your investment or find a brokerage firm you can trust to take care of the research for you; either way, ensure that you are working with the right amount of knowledge and expertise to keep your money alive.

One of the essential stock trading tips today is to make sure that your expenses do not exceed your expected profit. It’s simple: If your gains exceed your expenses, you will profit; however, if your expenses are too high, whether due to unsound purchases or a broker’s high commission fees, then you could be losing more money than you are gaining.

Whether you interested in stock trading tips or investment tips, it pays to stay on top of the latest news and trends in the industry. Looking into the facts and figures put across by a reliable investment news source is one of the only ways to ensure that you are making the most of the opportunities available to you, as well as keeping tabs on the companies you are currently invested in. Any expert offering up a financial tip will tell you that you have to watch the latest figures like a hawk to see how companies are doing and whether or not another lucrative investment is coming your way. With this in mind, InvestorPlace offers a one-stop shop for the latest news and trends offered from an expert perspective. Check out InvestorPlace today to see what we can tell you about your current investments!

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Here, law firm Brecher looks at the mistakes entrepreneurs typically make at the start of their experience.

Entrepreneurs are, by definition, driven and ambitious and usually have an excellent grasp of their industry, gained either through experience or thorough research. Despite this, many are surprisingly unsophisticated when it comes to identifying the legal pitfalls associated with starting and growing a new business. Shared horror stories reveal surprisingly common mistakes being repeated across the sectors.

1. Not choosing the right vehicle

Avoid the tendency to use a particular vehicle merely because someone else does. The structure of each business is unique to that business: while a limited company may be a popular option it can be tax inefficient, whereas LLPs are tax transparent but have other drawbacks like the offsetting of group losses. Make time for proper tax and structuring advice at the outset to avoid leaking profits later in.

2. Getting the equity structure wrong

At the outset of a new venture, an informal agreement as to who should be entitled to what may seem sufficient, but informal agreements are difficult (if not impossible) to evidence should there be a disagreement later down the line. Even without disagreement, deferring the formal allocation of equity until a later date can cause a plethora of issues, including the trigger of tax and causes nervousness among funders. Discuss and resolve at the outset who owns what, and make sure that structure is formally documented to avoid confusion and disputes.

3. Buying an off-the-shelf constitution

Adopting pro-forma articles, or doing away with an LLP agreement, may seem a great cost saving in the short term, but can leave you exposed later down the line. Take the time to put in place appropriate mechanisms and protections to make sure you have adequate control over the equity and management of the new venture. If confidentiality is a concern (eg in terms of sensitive profit shares, control issues or exit rights) shareholder agreements are a useful tool as they do not appear on a public register.

4. Not considering all the finance options

Contrary to popular belief, finance is still freely available, but it remains a lender’s market and investment of any form undoubtedly comes at a cost. While institutional lenders remain risk averse, the secondary lending market has seen huge growth over recent years, and many providers are now willing to consider spreading their investment between traditional loan and equity. The options are endless, complex and come at a cost, so make sure you understand the small print before committing.

5. Not getting the right professional advice

Getting the right advisers on board at the outset can be a huge competitive advantage. As well as giving structuring advice on set up, the right team can add real value not just in pre-empting issues but also in proactively advising on how to resolve them. Professionals used to acting in this area will be an excellent sounding block as to what works and what doesn’t, and their ability to make introductions and open doors should not be underestimated. Where a business has no track record, entrepreneurs are often judged on the quality of their professional team so take time to shop around and find the right team for you.

6. Not protecting your crown jewels

It is surprising how often this ‘basic’ is overlooked, but the value of the business will be depend on the value of its assets. So protect them. If the business is reliant on intellectual property rights, register them. If it is contract based, document those contracts. If the information is reliant on information, make sure it is not released without robust non-disclosure agreements being put in place, and if it is dependent on key employees or consultants, ring fence their terms of employment with suitable non-complete obligations. Without these, the faster the business grows, the faster its inherent value will be eroded.

7. Using the wrong incentives

Don’t give away the equity too early or too lightly. Shareholders, however small a stake, acquire additional protections at law, and (if not structured correctly) can cause a real headache in terms of administration and decision making. If you do give away equity, consider creating a new class of share with limited voting rights, and consider ‘good leaver/bad leaver’ provisions that oblige an existing shareholder to sell his shares when he leaves, with the price he receives varying depending on the circumstances of exit. As an alternative to allotting shares immediately, why not grant options the exercise of which is dependent on performance related targets. Phantom share schemes can be a useful alternative, as they reward an employee by tracking the increase in value of the business without diluting the equity. There are a large number of alternatives, many of which have tax consequences, so take proper advice to make the most of these and avoid making a costly mistake.

8. Having unrealistic objectives

It is always tempting to present rosy figures to potential investors, but don’t promise more than you can achieve. Excessively optimistic statements can erode trust and credibility, and making a statement you know you can’t deliver is fraud. Investors can (and do) sue on that basis.

9. Getting lost in the here and now

Getting that first development, or that first contract, underway is critical and can be all consuming, but it mustn’t allow you to take your eye off the pipeline three, six or nine months down the line. If you don’t have resources, and cash flow, in place to fulfil the commitment, the business will fail. Run conservative projections, and keep an immaculate trail of outgoings at all times. If finance isn’t your forte then don’t be too proud to bring in someone with suitable expertise who can help you keep up to date and pre-empt issues before they arise.

10. Leaving the legals to the last minute

It’s really tempting when finance is tight to see lawyers’ fees as an unnecessary cost to be deferred. That view can often be short-sighted, as issues that would have taken an hour to address at the outset can take several days to unpick later on. Lawyers don’t have to cost the earth, and finding the right adviser at the outset will pay dividends in the long run.

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The rise of social media platforms like LinkedIn and Twitter has been unprecedented over the last couple of years. LinkedIn now has some 313 million users and in Q2 2014 its revenues rose by 47 per cent to USD534m reported the Wall Street Journal on 31 July 2014.

McKinsey estimates that there is a GBP772bn opportunity for business to use social media.

All of us use social media in one form or another but when it comes to applying it to the workplace, the asset management industry has remained largely apathetic. This would appear to stem from a fear of falling foul of compliance in what has become a tightly regulated market.

One of the pillars of any asset manager’s marketing strategy today should include social media but it’s important to understand the potential roadblocks. This prompted SEI recently to publish a brief on the subject entitled “Stepping in to Social Media”, in which eight tips and considerations are presented for investment managers.

“I think it’s true to say that all asset managers have been reluctant to get into social media. From a compliance perspective, there’s a lot less control over the way information is broadcast and who you, as a firm, are communicating with,” says Lori White (pictured), Marketing Regulation Counsel, SEI. “The reluctance has largely been from compliance officers as they look to get comfortable complying with existing regulation.”

The Financial Industry Regulatory Authority, Inc. (FINRA) published more substantial guidance recently and the Financial Conduct Authority (FCA) in August this year established the Social Media Charter in light of the fact that 71 per cent of employees at financial firms had breached their firms’ social media policies.

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Occasionally I see financial products spring from the dead to devour investor dollars. One such product is called a “structured note.”

I first wrote about these vehicles more than three years ago for AARP Magazine, The New York Times, Reuters and Morningstar.com. Here’s the warning the SEC and FINRA issued after I wrote the pieces.

Structured notes are like bonds, only linked to derivatives. Brokers sell them to mostly older, yield-hungry investors. They are dangerous because they are almost universally backed by the credit of a bank — they are not federally insured — and promise a healthy yield during low-yield times.

I don’t recommend these products because of the risks and costs. They can certainly lose money and reap huge commissions for the brokers selling them. Many of them are labeled “principal protected.”

No one quite knows how these notes will perform in a prolonged bear market, but we have a clue. Lehman Brothers sold billions of them prior to the 2008 crash and investors got their shirts handed to them.

UBS, the Swiss bank and one of the biggest brokers of the Lehman products, agreed to pay investors $120 million to settle a lawsuit over the Lehman notes last year. UBS spokeswoman Megan Stinson told Reuters the Swiss bank was “pleased with the settlement, saying it avoided the cost and uncertainty of litigation, and had set aside reserves to cover it.” The bank did not admit wrongdoing in agreeing to settle.

As stock-market volatility soared in the past month, though, brokers have seized the opportunity to sell even more structured products. The Wall Street Journal’s Jason Zweig was on top of the sales surge:

“Over the two weeks that ended October 10, 343 structured notes totaling $2.17 billion were issued by various investment banks. That’s more than three times the amount of deals issued over the same time last year,” reported Zweig, who cited research by Exceed Investments in his report.

“These short-term bonds are typically structured to limit or eliminate your exposure to losses while giving you a stake in potential gains, making them especially alluring in weeks like the one we just had, when stocks were glowing red,” Zweig reported. “But whether you should buy them depends on the exact terms of each note-and on whether you can trust your advisor when he says he understands them.”

Jacob Zamansky, a New York-based lawyer who also represents individual investors, also has this warning:

"While some deals work the way they are designed, other structured notes have caused thousands of investors harm, all the while drawing the scrutiny of securities fraud attorneys. UBS (NYSE:UBS) and other brokerages sold structured notes in 2008, and many of those deals were issued by the now defunct Lehman Brothers. After Lehman filed for bankruptcy, the structured notes were worthless. The spate of lawsuits by customers and regulatory actions that followed underscored the complex and opaque nature of these critters and how investors were misled by their advisors.

Should the structured note sales boom continue, it is essential that brokers and investment banks make full and clear risk disclosure to investors. We are not predicting a Lehman-like collapse that would create panic and havoc in the broad market and also wipe out a swath of structured note holders, however, each deal is complex and laden with risk. Stay away if you don’t understand the devastating losses structured notes could create in your retirement savings.”

In short, structured notes are complex investments. Brokers selling them may not fully understand how they will perform under adverse market conditions, so avoid them.

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