Online Investing and the need for Change…

For online investing to be treated seriously as a viable option the companies involved need to demonstrate commitment to investors.

When online investment programmes first started they quickly gained a bad reputation as many of them were revealed as scams. This severely damaged the public view of these opportunities and that perception still exists.

I believe it is time for things to change. The global economic crisis has shown that even well respected financial institutions care little for their small investors with the result that interest rates on savings accounts are now derisory.

This is a golden opportunity for online investing companies to attract these disillusioned people but they must do it in a credible and honest way.

Is regulation the answer?

Nearly all online investments make it abundantly clear that their dealings fall outside any existing regulatory framework as they want to avoid members running to the authorities at the merest hint of a problem.

There are many horror stories where online investment companies have fallen foul of regulators (especially in the US) and the result has virtually always been losses for investors. So, I don’t believe online investing companies would currently welcome regulation under current legislation. Ultimately, this may be an aspiration as authorities learn and understand more about how these companies work.

Where to Start

So if formal regulation isn’t viable what alternatives exist? Some companies may argue that their industry is currently being regulated by the myriad of online monitoring sites as these demonstrate whether programmes are paying or not.

Personally I don’t believe this is the answer as monitoring sites can only work in a reactive way and are not that useful for predicting whether an opportunity is viable to start off with.

To my way of thinking there are two options to consider:

1. An independent group of investors could be set up to undertake due diligence on a programme that wishes to offer online investing services. They would need access to the company to be able to verify the claims that are being made on how funds are generated and the people involved
2. A self regulating body set up by the companies themselves which would define a code of practice that companies would need to adhere to if they wish to join. This should also include investor representatives as this is a key element of trust building

 Time for Change

For too long online investors have suffered poor service, patchy communication and untrustworthy programme administrators. As I look at some of the online programmes today I can see that things are changing but we are still not at a point where the ordinary investor would consider an online investment as a viable alternative to basic savings accounts for example.

Clearly there will always be greater risk involved in online investments but I don’t think programmes should hide behind that as an excuse for poor service. If the risks are explained fully and clearly, if programmes communicate often and honestly then I believe the industry would reap great rewards both in terms of their own reputations but also in the number of people that would trust them with their investments.

Isn’t it time online investors were offered a better and more reliable service… 

Is it realistic to start Online Investing with just $5?

If you are just beginning in online investing should you take advantage of a programme that offers a very low $5 initial deposit. Just to be clear here I am focusing on online investing programmes that are based on a passive investment approach i.e. you make an investment on the basis of the programme paying a fixed or variable rate of interest per day or week.

With such a low entry point are the online investments being realistic about their offer? Well in one sense I think you can say they are. As many people distrust these forms of investment, companies need to come up with ways to allow people to try what is on offer at little risk. One way to do this is to set the entry point low and assuming things perform as planned the investor would be persuaded and therefore happy to invest more. So as a marketing ploy this approach could be considered acceptable.

For the more cynical observer there could be a view that the programme is going out to attract as much cash as possible before heading off into the sunset. Personally I find this rather short sighted, of course some programmes do fail but as long as a potential investor does their homework it should be possible to root out the bad apples fairly easily before parting with funds.

More importantly perhaps is the practicality for beginners to realistically fund a programme with say a $5 investment. Unfortunately you can’t just walk into the nearest branch, put your $5 on the counter and walk out with a receipt. In practice there are a number of hurdles to jump before your investment can start earning.

Let’s take a closer look at just what sort of fees you could encounter. I can’t be precise here but the figures I’m presenting are typical and should be considered when investing in any online programme. I’ll use US$ for comparison purposes (I’m making the assumption that bank wires aren’t an option as they generally require quite a high level of investment to be used).

In most cases your funds would need to leave your account and go to an e-currency exchanger. There is generally a minimum fee attached to any transaction which is normally in the region of $25. If you are converting funds from another currency you will also be penalised on the exchange rate (this can be fairly significant).

As the funds go from the e-currency account to the payment processor there may also be a charge from the payment processor for receipt of the funds. You wouldn’t normally be charged any fee for making the investment to the online programme itself.

In summary you are therefore looking at a minimum of $25 and perhaps a maximum of $30 to $40 to get your investment started. Clearly for a $5 investment this doesn’t make a lot of sense.

So, as a beginner how much should you consider as a starting amount to invest? In reality I believe you have to consider $100 as an absolute minimum (excluding the charges discussed) and how long it would take to not only recoup your seed money but the associated charges as well.

The $5 option is more suitable for those who already have payment processor accounts and receive interest from their existing investments.

HCI25 site is notified as down for maintenance…

I’ve received some questions about the status of the HCI25 site as it has been down for several days.

From an email message that I saw (I didn’t receive it directly) Euclid, who heads up the support side of the company, has advised that the site is down for maintenance and should be back within 48 hours.

Please don’t panic even if it takes a little more than 48 hours as it is not always easy to estimate exactly how long these activities may take.

It is disappointing, but not surprising, that HCI25 didn’t put any warning on their site that this was planned but they have never been the best at communication. It is possible that the site went down for some other reason and they are taking the chance to do the maintenance now rather than restore the site and then have to take it down again soon.

These things happen in the world of online investing and the best thing to do is to give them time to resolve the problems, don’t always think the worse as you may be stressing yourself out for no good reason.

It’s also Thanksgiving in the USA so this may also delay the site coming back as people celebrate the holiday.

Sportarbs enrol 1,000 new members in less than 3 weeks…

I guess I’m not the only one who thinks that Sport Arbitrage is a good source of investment. When I joined Sportarbs just under three weeks ago they had nearly 6,500 members. This number has now soared to approaching 8,000 which is a very respectable growth rate.

Based in Dubai Sportarbs offer a managed arbitrage investment where you can profit from the work they do betting on sports, although I should point out that their betting involves placing wagers such that whatever the outcome of the event they will return a profit. Done properly and with sufficient knowledge, expertise and funds this is an excellent way to make money.

Another great benefit is that they trade seven days a week so you can increase your returns without having to worry about breaking off at weekends and this can accelerate your income markedly.

The return you receive will depend on the level of investment you make. As this is a relatively new offering I’ve taken the decision to be relatively cautious with my investment and the return is based on the daily earnings as posted on the website daily. If I’d wanted to invest more then the return would have included not only the daily return but also a percentage bonus based on the amount invested.

For investments below $10,000 the plan runs for 42 days and you have the option for partial or full compounding. As of today the returns over the previous 42 days has been 88.1% (this excludes any applicable bonus).

For those wanting to invest $10,000 or more and willing to leave the funds tied up for 210 days the rate of return is even more attractive starting at 6% per day.

Currently payments can be made by Liberty Reserve, Perfect Money and Global Digital Pay. Other payment processors are also being lined up.

My experience so far is very positive and their performance is very respectable so if like me you think that Sports Arbitrage has a lot to offer then Sportarbs is well worth investigating.

Innovative ideas to help you save your money…

I’ve always said that I’m not a great fan of high street banks as the rates they give for savers are pretty dismal. Having said that this means that any company who can come up with innovative ways to leverage any savings you do have should be looked at closely.

One such offering is SmartyPig, an account where you create specific goals to save for. This provides rigour and discipline to account holders. Add to this the potential to earn rewards for specific items and you have a worthwhile option on offer.

SmartyPig is not a bank itself but holds accounts at West Bank which is insured by FDIC. When you open a SmartyPig account you can then create saving goals and how much you want to save for each. Another feature that can help is the ability to allow others to contribute to your savings account. Don’t worry they won’t see your account details but will be able to contribute. There is also the ability to place a SmartyPig widget on your Facebook or MySpace page and this will allow anyone to make a contribution (but don’t hold your breath).

When you have enough in your account to buy what you are saving for you have three options, firstly the money can be transferred to your SmartyPig debit card, secondly it can be transferred to your checking account and finally you could place your funds on a retail card that offers up to a 12% cash boost.

As the brand develops the hope is that the company can forecast what members are saving for and if they know for example that there is say $30M being saved related to home improvements it will provide SmartyPig with leverage to approach home improvement retailers and negotiate a sizeable discount for members. 

This facility is available in the US and Canada and if you live in one of those two countries I’d recommend you take a close look to see if they could help you not only manage your money more efficiently but also increase your buying power with very little effort.

I’m not the only one that thinks this is a good idea, take a look in The New York Times as they are a supporter as well.

Why it’s important to have more than one payment processor account…

Back in the days when online investing was in its infancy newcomers found it difficult to understand just how you transferred funds from your bank account to a new investment programme. Normal methods weren’t feasible and e-currencies were a new concept that many found confusing.

As time has gone by knowledge and experience have made things clearer and now the majority of people are comfortable in using what are now more commonly known as online payment processors. These organisations act as an intermediary financial payment system helping you to deposit and withdraw funds.

As payment processors are virtual organisations opportunities were created for the less honest to profit by embezzling funds from their members. Even if criminal activities were not necessarily involved regulatory problems meant that some processors just couldn’t survive.

So, online investors not only have to deal with programmes that fail but they also have to be wary of the payment processors they use. Whilst things have progressed in the last few years and there is more transparency you will often see reports regarding payment processors and the problems they have to deal with.

Currently one of the most popular processors, Solid Trust Pay, has been subjected to a series of problem reports and it is not clear whether this is just an operational problem or whether there are more serious issues to resolve.

This example emphasises the need to open accounts with a number of payment processors as this will provide some mitigation if problems arise. However, it should not be forgotten that some programmes will only allow you to withdraw funds to the processor that you made the deposit with. If this is the case then you still have a potential problem. In an effort to address this problem some programmes are offering the ability to transfer funds internally from one processor to another. Assuming this doesn’t contravene any regulations then this option, if available, may be worth considering when selecting an investment.

There is little chance that the need for payment processors will ever disappear so it is important that you set things up correctly in the first instance and open a number of accounts that will provide a good degree of flexibility.

I have accounts with AlertPay, StrictPay, Liberty Reserve and Global Digitial Pay. So far I’ve not had any real problems with any of these companies and they do represent payment processors that are accepted by virtually all online programmes.

Does online investing take us for mugs or are we just risk takers?

Over the years that I’ve been investing online I’ve noticed that those who use vitriol to discourage others generally believe they are doing something for their benefit. They are quick to call any online investment a scam and warn everyone to steer clear.

Their arguments often centre around the belief that many of the returns offered online are impossible to achieve, hence untrustworthy. The question of course is what qualifies them to make statements like this and what, if any, notice we should take of them.

Of course everyone must come at this from a personal perspective and my own stimuls for being involved is as a reaction to the abysmal interest rates available from the major banks and financial institutions. It always seemed odd to me that the pittances you are offered to leave your money in a savings account earned such a poor return and I was convinced that more profitable ways must be available.

As I’ve learnt more about the field of online investing I’ve even more convinced that good returns are possible and accept that to achieve them you must be prepared to take more risks.

However trustworthy an online investment demonstrates themself to be there is always the potential for unforseen circumstances occurring that make it difficult for the online programme to function whether that is just for a short time or for ever.

Many investors who see the allure of higher interest rates don’t fully appreciate the sort of problems that can occur. This lack of awareness can create panic if something they are not expecting happens. If the programme Admin does not respond quickly the result could well be a fall off of confidence and ultimate demise of the programme.

I still see too many people using online investing as a source of funds for short to medium term bill paying and that is not what it is designed or sensible to use for. Yes, higher interest rates are possible but the returns are not necessarily ATM fodder. Investors need to plan things on a longer term basis and give the programmes time to use the funds in the most efficient manner.

At the time of writing there are several programmes that if they payout will provide large sums of money to their members for relatively small investments. These are especially targeted by sceptics and whilst I do understand why they may see them as scams it doesn’t give them the right to dictate to others whether to invest in them or not.

Online investors are adults who are never forced to partake in these types of investments and choose to do so of their own free will. To me that suggests they are risk takers rather than being duped by scamsters. Of course some of the programmes may fail and fund lost but that’s the risk we decide to take.

Warnings about the Madoff crisis weren’t rife before the collapse and many people lost their life savings to a so called respectable investment advisor. Personally I would never put all my investment funds in one place and perhaps the world of online investing has reinforced that maxim over the last few years.

I don’t consider myself a mug but I do know I’m taking calculated risks and am happy to do so.

“It’s comin’ on Christmas they’re cuttin’ down trees…”

“It’s comin’ on Christmas they’re cuttin’ down trees…”

The opening line of Joni Mitchell’s song River reproduced here conjures up for me the true feeling of the season. It’s not a typical Christmas song but for me it evokes the true Christmas spirit, a time to look forward to and to share in the earth’s bounty.

Of course it also means the giving and receiving of gifts and that’s what I’d like to concentrate on, at least the giving part.

When you find yourself stuck for ideas why not take a leaf out of Bob’s book and use online investing to help share the joy of Christmas. Bob has a dilemma. He is unsatisfied with giving the usual presents to his family so decides this year to be a little more creative and put a real smile on his family’s face.

Firstly there are the two kids, Jack who is 18 and Ann who is 22. Like his sister before him Jack has just started a three year course at university and he is full of the promise it holds and is actively participating in the social life as well. One thing he isn’t thinking about is the student loan that he receives to see him through his course. This will leave him with a sizeable debt when he graduates.

Ann, on the other hand has already graduated and with some careful budgeting and some part time work she has left University with a relatively manageable loan outstanding. The problem is the recession has severely curtailed any job opportunities and she is struggling to start the career in business that she was hoping to. This has prompted her to travel, so for the whole of next year she is off to follow the path taken by many others and see the world. When she returns hopefully the job market will be better. Then she might think about settling down and buying her first property.

So, how can Bob help? Looking at the investments he has he decides to invest $50 on behalf of each of them in a CashTanker account. This pays 2% a day and as the money won’t be needed straight away Bob opts for 100% compounding. The programme is due to close on December 25 2011 so assuming 220 business days a year and 440 days in total the return for each of his offspring would be over $300K. This should be more than enough to clear Jack’s student loan and also help Ann put a deposit down on a property, although secretly Bob hopes that Ann will just rent a property and use the funds to start her own business as they’ve discussed in the past (Bob’s wife, Judy is keener on the property purchase).

Bob and Judy have been married for 25 years and whilst Judy has not always had the faith in online investing that Bob has she suffers his ventures gladly hoping for a profitable outturn. Bob wants to thank Judy for all her support so decides that he will invest $50 in a Traded Endowment Policy with Imperia Invest. He knows these are available until 01 February 2010 and are scheduled to payout the $134,000 return in the middle of 2010. This would allow Judy to really spoil herself. With another $50 he decides to open an account at Sport Arbs. This has a variable return but is usually at least 2% a day minimum. As they trade 7 days a week the growth could be significant and will provide an nice nest egg for the future.

Lastly Bob has to think about his parents, Terry and Liz. They are both recently retired and whilst they have made reasonable allowance for their day to day living it’s unlikely their funds will provide them with a luxurious lifestyle. Bob appreciates all the sacrifices his parents have made over the years on his behalf and feels that he would like to provide enough funds to help them spoil themselves from time to time. Perhaps a meal at a top restaurant or the odd weekend away in a nice hotel. Looking at the opportunities available he feels that PTV Partner offer the ideal solution. He decides to invest $200 on behalf of his parents in their 40 day plan that pays 190% return. So, every 40 days they will receive $380. It will be easy for them to save up for the odd month or two so that they can easily afford those odd luxuries now and again.

As Bob sits back in his armchair he is pleased with his plans and knows that his family will definitely remember this Christmas for years to come.

Postscript: Of course we shouldn’t forget that any income received may be subject to tax so don’t forget that if you have similar plans to Bob. Take some advice from a good tax accountant.

Putting my money where my mouth is…

If I was a new reader to this blog I’d find it pretty difficult to work out exactly which programmes are being showcased given the amount of information to wade through. So, in an effort to streamline things somewhat I’ve created a new page.

If you click on Where my money is on the Navigation bar it will take you to a page that shows you where I invest most of my funds at the moment. As it would be a mammoth task to list all of the information about a specific programme I’ve made the decision to include information about the minimum deposit required and the corresponding returns as a minimum.

Most of the investments have varying deposit and return variations so you are encouraged to do your own research if more details are needed.

In the table you will find:

1. Name of programme – In most cases these are hyperlinked to the programme
2. Type of programme – It is not always possible to verify source of funds so please treat this information with care
3. Minimum deposit
4. Returns expected
5. Relevant comments
6. Predicted payout date where applicable – note that this is purely a personal assessment and may prove to be optimistic

So, that’s it you are now able to see in one place Where my money is and no you won’t find out how much I have in a specific programme, that is definitely private!

You may notice one or two programmes that I haven’t posted on yet. I’m still evaluating their performance and will report back in due course.

So what’s with all this Gold talk then…

There seem to be an awful lot of commentators with an opinion on just where the price of gold is heading. Recent increases have focused attention once again on this precious metal. Of course there are both bulls and bears putting forward what they think, only time will tell what the outcome will be.

Personally my Bullion Vault account is now looking very healthy and as a way of diversifying my investments this is currently a success. The question is will this upward climb continue or will the bottom drop out of this particular market?

Reading various reports I’d say the balance is in favour of a rise in the value especially over the long term. You can take your pick as to where the price will end up but I’ve seen figures ranging from $2,000 to $6,000 an ounce over the next 12 to 24 months.

I think it is clear that holding gold as part of your investment portfolio is a wise move and Bullion Vault is for me the most convenient and economical way to do it. You are able to fund your Bullion Vault account from your bank account so there is a quick and easy path for funding.

You can choose to hold your gold in London, Zurich or New York (or a combination) and you receive regular statements on your account. The security is first class and you are immediately notified if your account is accessed so that you know just what is going on.

Whether you decide to invest a portion of your funds in gold is a personal choice but overall I think that it is a wise move given the positive reports circulating at the moment.