Monday, June 4, 2007

Buying Land or Oil Field?

Stocks, UTs, Structured Deposits, Endowment Policies, Bonds, etc are some common investment instruments in the Financial Market that most of us engaged in to generate a higher returns for our assets.
Are you aware that there are some alternative investments that one can engage themselves with?

Quote you 2 examples:

Land-Banking ==> You might have heard of Warton International, UK Plot, etc. You are actually collectively buying a large plot of land in the country with many like-minded investors. When the land is sold to various developers with higher prices agreed by X% of investors, the returns are then shared among the investors. Over the past few years, some of those who had invested here had their returns doubled or even tripled.

Oil/Gas Mining ==> You might have heard of Oil-Pods. Instead of land, you invest in Oil Fields. You collectively buy into the oil field with other investors. Monthly proceeds from the sale of oil or gas extracted are shared amongst all investors according to the proportion owned. During times when the oil prices rise, you will get very good returns as the invested amount is based on a lower oil prices.

The returns are better than a Balanced Portfolio of Unit Trust or Endowment Plans. However, remember the phase “Higher Returns = Higher Risk”. Although the companies may provide some sort of guarantees, they are nevertheless not regulated according in Singapore. In event of liquidation or fraud, there is little our government can help.

My advice is: Its okay to invest part of your asset into such instrument, but put it under the speculative portfolio. If you are interested with properties or land, you can also invest into REITs or some property developers stocks. If you are keen with Oil and Resources, there are several Unit Trusts that deal with it. The returns are just as attractive, except that they don’t provide any guarantees. Never put all eggs into one basket.

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