A fishy cold call from Komatsu Global...

Ever heard of the stock broker Komatsu Global? Me neither, until recently. Komatsu Global called me around a week ago claiming they have a great deal going on right now  involving GE stocks, which they expect would rise with 70%. The news that will drive up the price will be released within 90 days according to the conversation. Komatsu Global had already secured a number of stock shares a while back so if I would invest through them I would get another 7% discount due to today’s stock price being higher than when they bought the shares.

They sent some information about themselves and their “Wealth management” concept and then kept calling me three times a day for a follow-up conversation, because they had “breaking news” of the GE stock. Of course they wanted to create a sense of urgency and a “once in a lifetime” deal feeling in order to secure my investment. “An investment of only 50 000 USD” they said. When I told them that I didn’t have that kind of money it was sufficient to invest 5 000 USD. This fancy Senior Portfolio Manager was a smooth-talking guy trying to convince me about this steal. He kept calling even though I had responded in an email to him that I wasn’t interested in receiving further calls. I explained that I was skeptical since I had never heard about Komatsu Global even though he said they had been in business since 2001 and had a really good reputation among their current investors. When I told him that I would see how things develop for the GE stock based on his advice he got really pushy, angry and hung up on me.

I checked the trustworthiness of their homepage (http://www.komatsuglobal.com) through Scamadviser, http://www.scamadviser.com/is-komatsuglobal.com-safe.html, their homepage is only three months old, hosted from the USA (even though they claim to operate from Japan…), and the owner of the homepage is hidden… Sounds strange for a company that has been in business since 2001 to only have a website that is three months old J

Also, I found this thread: http://whocallsme.com/Phone-Number.aspx/81345700470

So watch out for Komatsu Global!

/Chris

Is owning a second house really a good investment?

 

The picture above shows my parent’s beautiful summerhouse with a 10 minute walk to the ocean – a great investment?

What you are about to read now is kind of a contradiction to what I have written before about investing in property. I would like to challenge your mind and the common “universal truth” that investing in property is a good thing…

My family has had a summer house in a popular summer vacation resort for many years: Last year my mom told me what a great investment it has been. She mentioned that she and dad bought it for 12 000 USD in 1975 when I was one year old and my sister was three years old. And now the house is worth about 540 000 USD. It sounds like a great investment, doesn’t it? At least at a first glance…

Let’s look at this a bit more. When mom and dad bought the house they had to give it a thorough “facelift” as the house was in bad condition, and they also built on to the house. So they actually invested around 43 000 USD initially, including both the initial house purchase and renovation. But it still sounds like a great investment, right?

And in year 2003 they built on to the house a second time, this time to a cost of 77 000 USD. So they have actually invested 120 000 USD - and now the value is 540 000 USD. So, do you have any idea how much the value increase of the house has been per year since they bought the house? About 6%! Not too bad, but I must say that I got a bit disappointed when I calculated this figure as I thought it would turn out to be even higher ROI considering that 540 000 USD is so much money! L

Figure above: calculation of the ROI of the house investment

However, this is not the whole truth. During the years there has also been running costs such as maintenance and repairs, as well as electricity, insurance, water, etc. If we would take this into account (with the assumption that the running costs year 2014 are estimated to 1% of the yearly house price) we would have paid in total about 71 000 USD during the 39 years we have had the house, bringing down the ROI per year to around 5,5%.

Figure above: calculation of ROI also considering running costs. The housing costs of 70 669 USD decreased our calculated annual rate of return further to 5,45% (sorry about the small figures in the table :-) )

Does this house still sound like a good investment? Well, not really to me. But it of course depends on how you would have used your money otherwise and what returns you are looking for. I am looking for higher returns than 5,5% per year. But the house has been a safe investment, so for being a low risk investment 5,5% is quite good. Also, we shouldn’t forget how much fun we have had in the summer house. So from that perspective it actually has been a great investment!

As a conclusion, in order to get a really good return on your summer house/ 2nd house you should try to rent it out to increase the house payoff. I was in Hawaii (Big Island) earlier this year and got interested in buying an apartment there for rental purposes and for own usage. Hawaii is an excellent location for a rental property with good weather all year long, making the rental period long. And it has beautiful beaches and exciting landscapes and a strong, consistent rental demand from mainly the US and Japan. There are a lot of vacation rentals in Hawaii and I found one that seemed great at the first sight; a smaller condo (1 bedroom) in good shape right by the beach and quite central - and according to the prospect it had a track record for being a successful rental property. And indeed, it would give me a gross rental income of roughly 11%. Not bad. But there was a lot of overhead cost related to this, such as property management, repairs, electricity, which took down the ROI to around 5%. Not that good compared to the first calculated ROI of 11%. But on the other hand, I also would gain from the capital appreciation of the apartment.

Again, here is a good learning that reinforces what I mentioned earlier –things you don’t think really about (i.e. electricity, maintenance, etc.) actually add up quite a bit and actually cost a lot of money, bringing your potential net ROI down! Have this in mind when you look into vacation rental properties!

 

/Chris

African trees – a socially responsible investment with Better Globe

 

 

 

 

 

 

 

I have a nephew that was born recently. He is a handsome young man, named John after my grandfather, and I have been looking for a gift worthy his cute smile and great name. I gave his brother an investment in a stock fund a few years ago after a suggestion from my sister, but the fund hasn't increased very much. So for John I decided to give him an alternative investment - an investment in African trees! Again, this is one of those investments with a long investment horizon but I figured if someone can wait for the money, it is a newborn!

I invested with Better Globe (www.betterglobe.com), a company that started year 2006 and operates mainly in Kenya. The business and investment idea is to plant trees in Africa and sell them to companies and private investors. The company market their product as “prosperity with purpose”, hinting that it is not only trees that the investor invests in, but also in the future of Africa. And Africa definitely needs help; every day 30,000 children die from a combination of disease-infested water and malnutrition, and only 57 percent of African children are enrolled in primary education - one in three of those does not complete school. The list can be made long for all the help Africa is in need of.

Therefore Better Globe combines an investment with help to Africa by offering gift- and donation tree packages for a low cost. In the gift package for only 17 Euro (about 23 USD), you get:

·         Two Better Globe trees to the gift receiver with a profitable return

·         500 liters of water for locals

·         1.5 Euros for school building

·         1.5 Euros for microfinance operations

The planted trees of Better Globe are a mix of acacia senegal (gum arabic) and mukau (tropical hardwood). Acacia Senegal has a wide usage and is used among others in Coca-cola, food and candy. The mukau tree can get 20 meters high and is very suitable for construction purposes and furniture.

 

So what’s in it for John?

Better Globe manages the trees on the owner’s behalf for 20 years until it is ready to be harvested. From year five to year 20 you will get a yearly 15% return on your invested money (paid out every 5^th year). So if you buy a donation package for 17 Euro you will in 20 years receive 191 Euro. Sounds pretty good to me. But does it work? Well, we’ll see in five years when the first payment is due. I do have my hopes up. There is a blogger, Jan Bolmeson, that claims that he has received his first payment and he seems trustworthy (see http://www.rikatillsammans.se/om-rikatillsammans for more information). He is actually also a representative for Better Globe so he might be a bit biased but I have read quite a lot about him and he seems a person I can rely on.

Being a Better Globe representative, an ambassador, is a nice perk for anyone who wants to become a part of this organization – and there is some money in it for the ambassadors as well…

 

 

 

 

 

 

 

 

 

 

 

 

If you liked this post, please click on “like” on the red Google+ sign (“g+1”) on the top of this page, thanks! 

 

/Chris

 

A financial trading online course – the perfect Christmas gift!

Last Christmas while friends and family got Christmas gifts filled with chocolate and fun stuff I received my “candy” - a course in financial trading! This course will hopefully boost my trading so I can buy luxury Christmas gifts for my family in the future J

The trading course was an English online web-held seminar, consisting of ten live evening seminars during four weeks. Some subjects covered by the trading course were:

·         Market Analysis Methodologies

·         Candlesticks and technical analysis

·         Risk management

·         Walkthrough of free trading software with demo account

This course was provided by the company Academy of Financial Trading (http://www.academyft.com), an award winning online training company focusing on web-seminars to teach how to trade financial instruments. They have trained over 35 000 people worldwide and was voted “The best online trading educator 2013”.

 

 

 

 

 

The course content was very interesting and teachers were good at explaining. Even if I have traded quite a bit before I did have some good take-aways from the course (it was a trading foundation course). There were some really nice features built into the course model:

·         A small quiz was provided at the end of each week so participants could check if they were “on track” with their learning curve

·         Each seminar was recorded so participants could see it later in case they missed any seminars or just wanted to have a recap

·         Fully interactive Q & A sessions after each seminar where participants could pose questions

Also, a final exam with certification was available. I got the score “excellent” so I have decided to take on the advanced course, “Ultimate Traders Programme”. This course will also be held through web seminars and I will during this course learn how to master their trading tool which will help me to take winning positions (hopefully…).

So stay tuned and subscribe at the top right on my blog if you want to know how much I will be able to make using their software!

And if you liked this post, please click on “like” on the red Google+ sign (“g+1”) on the top of this page, thanks!

/Chris

Carbon credit investment with IRE (Industry RE)…a fascinating scam…???

 

 

 

 

 

Happy New Year! In this first post of the year you will read about a hot investment topic – carbon credits! I must admit that this kind of investment is difficult to explain so I believe the best thing for you is to google it on Wikipedia.com for a short introduction. After reading wikipedia you would probably realize that this kind of investment is difficult to get a grip on and there is a lot of information out there, and many different investment schemes. I chose to go with the English investment broker Emerald Knight Consultants, who is “specialising in Socially Responsible & Sustainable Investments”. At the time, Emerald Knight Consultants was promoting a carbon credit investment from a company called Industry RE (www.industryRE.com) which had the mission “To aid in the creation of a profitable and sustainable future where our ecosystems, population, businesses and financial systems work together in harmony”.

 

 

 

              

 

Industry RE defined a carbon credit as a “unit earned by someone who has implemented a project according to international standards that generates a reduction, removal, storage or avoidance in greenhouse gas emissions than would otherwise have occurred (for example a windfarm)”. In this case I bought Voluntary Emission Reduction Carbon Credits (VERs). According to Wikipedia.com, VERs are usually created by projects which have been verified outside of the Kyoto Protocol. One VER is equivalent to 1 tonne of CO2e emissions. Through these schemes, industries and individuals voluntarily compensate for their emissions or provide an additional contribution to mitigating climate change. VERs may be developed and calculated in compliance with one of several VER standards. These standards set rules defining how emission reductions are measured. Standards provide assurance for buyers of VERs. At a minimum, all VERs should be verified by an independent third party.

 

The opportunity was to buy VERs over one year and receive 30% ROI. It sounded great! The account manager at Emerald Knight Consultants said over the phone “the returns from the last batch is being paid out as we speak”. A “proven” investment, even better! So I bought for the smallest amount possible as I didn’t know much about this type of investment and I wanted to be a bit cautious.

 

So what happened with this high-return investment?

 

After one year of eager waiting I got the information that the payout of my initial investment and the 30% profit was delayed. I waited one month…. two months… three months… And I received one excuse after the other for the delay: Industry RE had moved its headquarters to Dubai so the bank transfer didn’t work properly, the bank had been overtaken by another bank so no transfers worked, etc. It was impossible to get a hold of Industry RE and Emerald Knights Consultants were not helpful either. I felt a bit like I was David fighting Goliath. J

 

 

 

 

 

 

 

 

 

One day I happened upon a link on the Internet that referred to a group of over 200 Industry RE investors that were in the same situation as me – delayed returns with elusive excuses. The idea behind the group was that “many investors are together stronger than one single investor”, that we could share information received about the investment, and apply pressure on Industry RE and Emerald Knights Consultants to deliver according to contract. A while ago all investors received a letter that many of us had anticipated – Industry RE was bankrupt. Where the money went is still a mystery, and the CEO seems to have disappeared into thin air. There are many theories circulating within the group of investors about what has happened, but one thing is clear: Industry RE is in liquidation and has been taken over by liquidators. There is basically a snowball’s chance in hell that I will get some of my invested money back. Thank you Industry RE, well done. And special thanks to Emerald Knights Consultants for a high-quality Due Diligence. Aaaaaaaaaaaaaarrrrrrrrrrrrrrgggggggghhhhhh!!!!

 

Many in the investors group have also invested in GFI Forestry through Emerald Knight Consultants, which also is experiencing delayed returns which were expected in January 2013…. Hopefully we will have more luck chasing this payment.

 

 

 

 

 

 

 

 

 

 

 

Here is to hoping that you, valued reader, will have more prosperous investments during the new year than I had in 2013!

 

I hope also to post some more profitable (?) investments that I have conducted recently. So stay tuned and subscribe to my blog if you haven’t already done so!

 

Until then, invest safely J

/Chris

 

 

  

Land development in Russia – a disappointment

2010 was a year when most investors and investment companies looked ahead. The financial crisis lied behind us and there were a number of investment opportunities with attractive valuations. One investment area that seemed promising at the time was land investment in Russia. The Russian population had very little housing debt, land cost was low, and there was a huge surge in demand for housing.

The company “Jibréus & Ölvestad Alternativa Investeringar” (www.alternativainvesteringar.se) is a Swedish company focusing on marketing and selling alternative investments. In this case Alternativa Investeringar was the investment broker for “Realfond Ryssland”, a newly founded company (fund) with the aim to seize the attractive land investment opportunities in Russia.

 

The business idea was simple: to buy large plot of lands in attractive areas near large Russian cities such as Moscow, divide them into smaller pieces and create roads and electricity to the property borders to prepare them for building houses, and finally sell them off with a high profit. The investment period would be three years and the investment would be a closed fund during the period. One of the company’s current board members (I believe he started as the CEO of the company) had done similar business before in Russia and claimed that 25% yearly returns would be achievable. It sounds good, doesn’t it? I believed him, and so did others. My wife and I invested with this company with high expectations - 25% per year would almost double our money in three years!

So how did it go…?

Well, now a few years down the road we have the results. 25% per year became roughly 1,5% per year… (I bought the fund shares for 115 SEK and now three years later it is worth 120 SEK).

Apparently, the reason why this investment hasn’t developed as planned is that the company is facing a lot of competition which they hadn’t foreseen (the Due Diligence seems to have been missing when they did their analysis… and maybe we should have done one as well J). And this has led to another problem, not only is the return extremely low compared to what was promised (or “predicted” as they say – not promised), now the company has problems liquidating the fund without making a bad deal with the purchased land. So the solution offered to all investors is to convert the shares in the investment fund into a property developing company called Norrpada (www.norrpada.se). Norrpada would bring a value-adding component to the investors and the investment fund by building houses on the invested land. Thereby the land would be easier to sell and it would also increase the returns on the investment. The company Norrpada aims to go public in 2014 which would create a possible exit strategy for the investors in Realfond Ryssland. But suddenly having stocks in a public traded company creates the risk that the share price might drop if the company’s plan doesn’t live up to expectations, and of course we have the psychology factor on the market... However, this seems to be the only viable option for us investors in Realfond Ryssland because it would be extremely difficult to realize our invested money if we stay in the investment fund. So, let’s hope that Norrpada is the path to success this time… I will update you how this adventure goes...

 

Teak investment Belem Sky in Brazil with Emerald Knight Consultants and Global Forestry Investments (GFI)

 

 

 

 

 

 

 

 

Brazil is a popular country for alternative investments. It has a politically stable environment and a fairly strong and growing economy. It is one of the top ten largest economies in the world, and one of the famous BRIC-countries with a relatively high GDP-growth.

This investment (which I made in year 2012) is in a teak plantation in Brazil. The investment broker I used was Emerald Knight Consultants, a British company specializing in providing sustainable and ethical investments with high returns. The company is only marketing investment products and the contract is signed directly with the product provider. In this case, the product provider is Global Forestry Investments (GFI), a timberland investment company focusing on sustainable forestry investments. GFI also has a long term goal to help the local community in Brazil by working together with the local government and plans to build a school for the locals. GFI has offices in Brazil, UK and Dubai.

The teak plantation is located in Belem, in the region Para north east of Brazil, and the investment project is named Belem Sky plantation. I have purchased 0.1 hectares where around 100 trees are grown, managed by GFI with partners during the investment period. The trees are already eight years old and the plan is to do the final harvest in 15-18 years. There is an option to resell the trees after three years to GFI with a capital uplift of five percent. During the investment period there will be thinning of trees (selective removing trees to improve growth rate of remaining trees) around four times, which will provide extra dividends the year after the thinning since the removed trees can be sold. The expected average return is 10% per year over the investment period.
 

 

The figure above shows the Belem area by Google maps, marked with an “A”

A few years ago I invested in another teak project, in Panama. So why do another one? Well, there are two main reasons. Firstly, if I invested in this teak project through Emerald Knights, I would get access to another more lucrative investment (more about this investment in a later blog posting). Secondly, timber has historically been a very safe investment class with good returns. The teak price has increased steadily over the past 20 years and has a broad usage within both industry and private consumer industry. Also, teak is resistant against fungus, insects, fire and challenging weather conditions, making it a sturdy timber class.

 

The photo above illustrates how timber has shown attractive returns over the years in comparison to other investment classes (figure from Emerald Knight Belem Sky investment prospect)

It all sounds pretty good but how has this investment performed this far?

I was initially excited about this investment - pretty good returns and investing in something that brings something good to the locals in Brazil. The returns from the thinning process 2012 (around 10% of initial investment) were going to be paid out in January this year. Unfortunately this didn't happen and there was no communication about it from GFI until March when I emailed them and asked for the returns... The reason was apparently that it had been severe weather in the Belem region with heavy rainfalls that had delayed the thinning process. It seemed to be a fair explanation and I would have been ok with this little hiccup in the investment process but the payment delay continued. And continued... I still haven't received the promised payment and now it is eight month delayed! GFI has come up with more reasons for the delay but all is perceived as quite unprofessional to me. Emerald Knight has recently established a specific email-address for questions related to this issue so there seems to be quite a few investors experiencing the same problem... Maybe it is the first time GFI has this kind of project and I and the others investors waiting for money are “guinea pigs”? I hope not, but it sure seems that way. GFI has promised a compensation for the delay but I will believe it the day I see the money. My wife is quite pissed at me since I invested our common money and she is nagging me about it every other day – so I really hope I will see that money soon, especially since she doesn’t want to discuss new investments until I retrieve the funds!

 

Investment summary

 

I will update if and when I receive my funds, so stay tuned and subscribe to my blog (at the top right on my blog) - don’t miss out on more interesting stories!