Wednesday, March 20, 2024

Scott Tominaga Explores Real Estate Investment Trusts (REITs)

 

Exploring Real Estate Investment Trusts (REITs) with Scott Tominaga


A real estate investment trust (REIT) is a company structured to own, operate, or provide financing for income-producing real estate properties. These specialized entities, like mutual funds, allow a collective pool of investors to contribute capital, creating a diversified portfolio. According to Scott Tominaga, through this collective investment model, individuals gain the opportunity to receive dividends generated from real estate holdings without direct involvement in property management. REITs offer investors a way to benefit from the real estate market's potential returns while mitigating risks associated with property ownership, making them an attractive option for those seeking passive income streams and diversified real estate exposure in their investment portfolios.

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How do REITs work?
Congress established Real Estate Investment Trusts (REITs) in 1960, enabling everyday investors to access commercial real estate portfolios previously limited to affluent individuals. REITs include a variety of properties such as apartment complexes, data centers, healthcare facilities, hotels, and infrastructure like fiber cables, cell towers, and energy pipelines, alongside office buildings, retail centers, self-storage facilities, timberland, and warehouses. Scott Tominaga explains that while REITs usually focus on specific real estate sectors, some offer diversified options with mixed property types. Many REITs are publicly traded on major exchanges, allowing investors to trade them like stocks, with high liquidity and significant trading volumes.

How can you invest in REITs?
You can explore investment opportunities in publicly traded Real Estate Investment Trusts (REITs), including REIT mutual funds and REIT exchange-traded funds (ETFs), by acquiring shares through a broker. If you are interested in non-traded REITs, you can purchase shares through a broker or financial advisor involved in the offering. Additionally, REITs are becoming increasingly prevalent in both defined-benefit and defined-contribution investment plans, offering a diverse range of investment options for individuals looking to diversify their portfolios.

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What are the Pros and Cons of Investing in REITs?
REITs can be a valuable addition to an investment portfolio due to their potential for strong annual dividends and long-term capital growth. Over the past two decades, REITs have shown better total returns compared to the S&P 500 Index, other indices, and inflation rates. Scott Tominaga points out that while they offer ease of trading on public exchanges, mitigating some real estate investment challenges, REITs provide attractive risk-adjusted returns and consistent cash flow. Including real estate in a portfolio can enhance diversification and yield dividend income, often surpassing returns from other investments.

On the downside, Real Estate Investment Trusts (REITs) typically do not offer significant capital appreciation potential. Due to their structure, REITs are required to distribute at least 90% of their income to investors, leaving only a limited portion for reinvestment to acquire new holdings. This can impact the growth potential within the REIT. Scott Tominaga adds that it is important to note that REIT dividends are subject to taxation as regular income, which may affect overall returns for investors. Some REITs may also incur higher management and transaction fees, which could potentially impact investors' net returns.

Scott Tominaga is an experienced professional in the hedge fund and financial services industry. For more on finance and investment, visit this blog.

Friday, March 15, 2024

Scott Tominaga on Understanding and Building Generational Wealth

 

Exploring Generational Wealth Building with Scott Tominaga

Generational wealth refers to assets, such as property, investments, or businesses, passed down from one generation to the next. It involves creating a financial legacy that can offer stability and opportunities for your descendants, ensuring they have a solid foundation for their future endeavors. Scott Tominaga mentions that building generational wealth requires dedication, strategic planning, and financial literacy, as it is not just about amassing wealth but also about managing and preserving it for the benefit of future generations. By establishing a strong financial foothold today, you pave the way for a lasting impact that extends beyond your lifetime, providing a pathway to financial security and prosperity for your family lineage.

Educate yourself financially.
Begin your journey in personal finance by educating yourself. Grasp fundamental concepts such as budgeting, saving, investing, and managing debt. The depth of your understanding will enhance your ability to make well-informed decisions.

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Start investing early and consistently.
Being financially literate empowers you to begin investing early, even with a modest sum. Consistency is key; consistent contributions, regardless of size, have the potential to grow substantially over time. Time becomes an ally in building wealth.

Establish an Emergency fund.
Establish an emergency fund for unforeseen costs. Having three to six months' worth of living expenses saved in a dedicated account serves as a financial safety cushion. This approach helps avoid tapping into long-term investments during challenging periods.

Optimize your investment portfolio through Diversification.
Scott Tominaga says to grow your investments by diversifying across asset classes such as stocks, bonds, and real estate. Diversification aids in risk management and boosts long-term return potential. Real estate investment, in particular, can provide appreciating property values and steady rental income, serving as a tangible asset for future generations.

Plan your retirement.
During the early stages of your career, it's advisable to begin contributing to retirement accounts such as 401(k)s or IRAs. Make the most of employer-sponsored plans by maximizing your contributions. A well-funded retirement not only helps you sustain your lifestyle but also enables you to pass on assets to your heirs. Consider investing in life insurance to safeguard your family's financial future. This safety net can provide crucial support in unforeseen circumstances and serve as a valuable asset for transferring wealth to the next generation.

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Promote financial literacy.
Teach your children and grandchildren about money management. It's crucial to instill good financial habits from a young age. By equipping them with the knowledge and skills to handle money wisely early on, you are empowering them to make informed and prudent financial decisions as they navigate the complexities of personal finance in the years to come.

Scott Tominaga emphasizes that creating lasting wealth for future generations is a process that requires dedication, patience, and meticulous planning. By adhering to these fundamental principles in your financial endeavors, you can lay the foundation for a legacy of prosperity that transcends generations, ensuring a secure and prosperous future for your loved ones long after you're gone.

Scott Tominaga is a professional in the hedge fund and financial services industry and is for all aspects of back-office operations daily, including investor relations and marketing. Learn more about Scott and his background in investment by visiting this page.

Monday, March 4, 2024

Scott Tominaga: Investing with Margin of Safety

 

Scott Tominaga on Understanding Margin of Safety

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The margin of safety in investing is crucial. It represents the percentage variance between a stock's intrinsic value and its current market price. A wider margin of safety provides a cushion against potential errors in optimistic valuation assumptions, thereby safeguarding your investment from undue risks. By carefully considering this factor, investors can enhance their chances of making sound investment decisions and protecting their capital in the volatile world of stock markets. If the current price is $7.50 per share and the intrinsic value is $10 per share, then there is a margin of safety of 25%, explains Scott Tominaga. It's worth noting that intrinsic value is not concrete. It is the sum of subjective inputs and could vary widely depending on the analyst.

The higher the margin of safety, the less risk in your investment. Theoretically, a stock with a 60% margin of safety will fall less than a stock with no margin of safety.

Understanding the margin of safety

Using the margin of safety as a guiding principle in investment decisions is a cornerstone of value investing. While this approach is commonly associated with value investing, it's interesting to note that growth investors also recognize its importance and consider the concept in their analyses.

Value investors generally use one of the methods below to find a stock's intrinsic value:

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Discounted Cash Flow (DCF): With the discounted cash flow model, you project 10 years of future cash flows, notes Scott Tominaga. You then discount the numbers because the money you have now is most probably worth more than the money you might have in the future. The intrinsic value is the sum of the projected future cash flows.

Multiples: Multiples such as price/earnings, price/book, or price/sales allow you to compare the stock with its competitors or the overall market. If the stock has a lower multiple than similar stocks or the overall market, it could have a margin of safety.

Liquidation value: The only way to value some stocks is to discount some of the assets to fair market value and determine what the whole company would go for if sold or broken up, adds Scott Tominaga.

Scott Tominaga is a professional in the hedge fund and financial services industry and is responsible for all aspects of back-office operations daily, including investor relations and marketing. Learn more about Scott and his background in investment by visiting this page.

Tuesday, February 27, 2024

Scott Tominaga on Low-Risk Investments for Young Professionals

 

Scott Tominaga: Build a Financial Base with Low-Risk Investments

Low-risk investments are a fantastic starting point for young professionals looking to establish a solid foundation for financial success. These investment avenues offer a delicate balance between safeguarding capital and attaining moderate returns, setting individuals on the right path toward their financial goals.

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Scott Tominaga discusses low-risk investment options specifically tailored for individuals embarking on their professional journeys. The array of asset classes available for consideration includes traditional options such as stocks, bonds, and mutual funds, as well as modern alternatives like exchange-traded funds (ETFs) and cryptocurrencies. Each asset class presents unique opportunities and considerations, allowing investors to diversify their portfolios and explore various avenues for growth and wealth accumulation.


Savings account 
A savings account is a simple and secure way to park your money. While the returns may be modest, the capital is easily accessible, making it a low-risk option for short-term goals or emergencies.

Certificate of deposit (CD) 
 A certificate of deposit (CD) provides a constant interest rate for a designated duration, varying from a few months to several years. It offers a marginally higher yield compared to standard savings accounts and presents a low-risk choice due to the constant interest rate.

Government bonds 
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Investing in government bonds, such as U.S. Treasury bonds, is considered low-risk. The government backs these bonds, which offer a reliable source of income through periodic interest payments and return of the principal upon maturity.

Corporate bonds
 
Similar to government bonds, corporate bonds offer a fixed interest rate. However, Scott Tominaga says they come with a slightly higher level of risk. Choosing bonds from stable and established companies, however, can somewhat mitigate this risk.

Money market funds 
Money market funds allocate funds to short-term, low-risk securities like treasury bills. Their goal is to sustain a consistent net asset value (NAV), rendering them a secure choice for safeguarding capital.

Real estate investment trusts (REITs) 
REITs allow young professionals to invest in real estate without the hassle of property management. These trusts own and manage income-generating properties, offering a steady income stream with relatively lower risk compared to direct property ownership.

When considering low-risk investments, Scott Tominaga says it's essential for young professionals to align their choices with their financial goals, risk tolerance, and time horizon. Although these choices might not yield the maximum returns, they establish a sturdy base for financial stability. They also can act as a starting point for developing more diversified portfolios as their careers advance.

Scott Tominaga is a professional in the hedge fund and financial services industry. He is skilled in all aspects of back office operations daily, such as investor relations and marketing. Learn more about Scott and his background in investment by visiting this blog.

Thursday, January 11, 2024

Scott Tominaga: How Does Compound Interest Work?

 

Scott Tominaga: The Power of Compound Interest

When it comes to earning interest, there are two basic choices: simple and compound. Simple interest means you get a set percentage of the principal amount every year, says Scott Tominaga.

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For example, if you invest $500 at 5% simple interest for 10 years, you expect to receive $25 in interest every year for the next decade. In the investment world, bonds are a good example of an investment that usually pays simple interest.

What is compound interest?

On the other hand, Scott Tominaga explains that compound interest is what you earn when you reinvest your earnings, which then also earns more interest. Compound interest essentially means "interest on the interest."

For instance, let's say you invest $500 at 5% interest. After the first year, you receive a $25 interest payment, but instead of spending it, you decide to reinvest the interest earned at the same 5% rate. For the second year, your interest would be calculated on a $525 investment, which comes to $26.25.

You get the idea. Compound interest means your principal gets larger over time and will generate larger interest payments. Scott Tominaga notes that the difference between simple and compound interest can be huge.

Note that the S&P 500 has returned a long-term annualized average of around 10% since 1957. Returns like this, compounded over the years, can result in some really impressive performances.

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There's also a similar concept known as cumulative interest, adds Scott Tominaga. Cumulative interest is the sum of the interest payments made, but it generally refers to payments made on a loan. For instance, the cumulative interest on a 20-year mortgage would be how much you paid toward interest over the 20-year loan term.

Scott Tominaga, the Chief Operating Officer of PartnersAdmin LLC, is an experienced professional in the areas of middle and back office, accounting, compliance, and administrative functions within financial services firms. He has previously filled primary roles in forming several operational infrastructures. He also interfaced with fund managers and professional service providers to establish efficient, transparent operations and reporting structures. For more about his work, visit this page.

Monday, December 18, 2023

Scott Tominaga: The Potential of an Investment Portfolio

 

Scott Tominaga: How to Grow Your Investment Portfolio


Investing is a game of patience and strategy. For many investors, the ultimate goal is to preserve their capital in the long term. It's not just about making a quick profit but about safeguarding their hard-earned money for the years to come. It's important to approach investing with a mindset that prioritizes minimizing risks and preventing losses.

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Today, Scott Tominaga reviews some strategies business owners can apply to make the most of and protect their portfolios as they go for more investment options. All investment ventures come with risks, but being aware of risks is part of maximizing the potential of one's investment portfolio.

First off, you need non-correlating assets.

According to Scott Tominaga, non-correlating assets refer to multiple stock portfolios such as commodities, bonds, real estate stocks, and currencies that often eliminate most unsystematic risks while helping compensate for the given systematic risks. These assets allow for lowered volatility since they react to market changes differently when compared to stocks. In short, non-correlating assets make for more balanced and safer returns.

Next up, your portfolio has to have diversification.

Anyone who's put together a winning portfolio knows how important diversification can be. In fact, Scott Tominaga has always emphasized that a diverse portfolio will often outperform concentrated ones. Individuals can gain a larger number of investments in more than a single asset class. This strategy goes well with non-correlating assets as it aids in regulating the unsystematic risk that comes with investing in a single company.


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Lastly, look for dividends.

Opting for stocks that pay in dividends is always a great idea, Scott Tominaga points out. Dividends guarantee above-average returns and act as a needed cushion in case markets decline. Many statistics prove that businesses that pay good dividends tend to earn more rapidly. Normally, the more secure they are, the higher the share prices and capital gains.

Scott Tominaga earned his degree in Business Finance from Arizona State University in 1988. An experienced professional in the hedge fund and financial services industry, he has expertise in the middle and back office, accounting, compliance, and administrative functions within financial services firms. More investment tips here.

Monday, November 20, 2023

Scott Tominaga: Is Cryptocurrency Worth the Investment?

 

Scott Tominaga: Is Cryptocurrency Still Viable Today?

 
 
  Despite their volatility, cryptocurrencies continue to be popular today, defying what many naysayers believe this fintech trend is nothing but a trend. According to investment expert Scott Tominaga, these digital assets exist online and combine the new technologies of blockchain, cryptography, and computing networks for tracking ownership and determining value.  

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A number of experienced investors continue to express doubts about the efficacy of conventional investment strategies for purchasing such digital assets despite the longevity of cryptocurrency. It is due to the perceived risk associated with cryptocurrency's speculative nature, which, according to these skeptics, makes it an untested commodity. It remains a challenge to develop a dependable investment strategy for crypto, which adds to the perceived risk associated with investing in them. Even as the sector matures, investors should be aware of the risks inherent to this volatile market.  
 
Potential investors will understandably invest in crypto the way they invest in any asset out there, basing their decision on the hope that the price will increase and someone will pay more. Other buyers, however, are more optimistic.  
 
Before COVID-19 happened, a growing class of advisors, investors, and average Joes believed that digital currency would ultimately transform financial services as we know it. Of course, that comes with great risk, as crypto's volatility has kept a lot of veterans in the global financial industry cautioning investors to stay away from digital coin investing.  
 
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There has yet to be a consensus on which digital currency will prevail. If one is keen on investing in cryptocurrency, Scott Tominaga says it's imperative to do research and do it diligently.  
 
By studying the history and fluctuation rates closely, potential investors may know more about crypto and set their minds at ease that this is ultimately worth the investment. That being said, Scott Tominaga adds that whether you invest in crypto or not, just like any investment, you must stay committed.  
 
  Scott Tominaga earned his degree in Business Finance from Arizona State University in 1988. He is an experienced professional in the hedge fund and financial services industry. His skills involve expertise in middle and back-office accounting, compliance, and administrative functions within financial services firms. For more articles on finance and investment, visit this blog.