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E-1 Treaty Trader Visas and E-2 Treaty Investor Visas

The Immigration and Nationality Act (“INA”) gives special status to citizens of countries which have entered into treaties with the United States. E-1 trader and E-2 investor visas offer benefits which are not available in many other non-immigrant categories. For example, E visa holders can extend the duration of their visas almost indefinitely and do not have to show ties to their home country as long as they affirm that they will leave the United States when the period of their authorized stay (including any extensions) ends. They can also engage in self-employment as entrepreneurs, which is not permitted in most other nonimmigrant categories.

Visas Required for Canadians

While Canadians are visa-exempt for most categories, §212.1(l) of the immigration regulations (“8 CFR”) specifically requires any alien seeking admission as a treaty trader or investor under the provisions of NAFTA must be in possession of a nonimmigrant visa issued by an American consular officer classifying the alien under that section.

Only two consular posts in Canada process E visas. As of January 3, 2006, the United States Consulate General in Vancouver processes E visa cases for British Columbia and Yukon. The United States Consulate General in Toronto processes all E visa cases for Ontario, Alberta, Manitoba, New Brunswick, Newfoundland, NW Territories, Nova Scotia, Nunavut, PEI, Quebec, and Saskatchewan.

If the Canadian is already in the United States under another category, it is also possible to apply for a change of status to E from within the United States. However, if the Canadian leaves the United States and attempts to re-enter, he will still need an E visa issued by a U.S. consulate abroad. The automatic visa revalidation provision available at 22 CFR 41.112(d) will not help a Canadian in this case since he or she will not have a visa to revalidate.

Consulates generally believe that they should be adjudicating E visa cases rather than USCIS (formerly INS) so they will reconsider the case themselves before deciding to issue a visa. In most cases, Canadians seeking E classification are better off applying at a U.S. consulate abroad, even if they are eligible for a change of status.

That said, it might be appropriate to seek a change of status in cases where the alien must commence work pursuant to E status immediately and cannot wait for an E visa case to be adjudicated abroad. In such cases, a change of status might be useful as a short-term measure while the alien’s case is pending at the consulate. Also, in cases where the alien’s E case is too weak to be approved through the consulate in his or her home country, it might be appropriate to file a change of status request and then seek an E visa later, once the business has grown.

Existence of Treaty

INA §101(a)(15)(E) requires the existence of a treaty of Friendship, Commerce, and Navigation (“FCN”) between the United States and another country in order for the E visa classification to be granted to nationals of that country. Similarly, the term “treaty country” is defined in 22 CFR §41.51(a)(5)/22 CFR §41.51(b)(5) as a foreign state with which a qualifying Treaty of Friendship, Commerce, and Navigation or its equivalent exists with the United States. 22 CFR §41.51(a)(5)/22 CFR §41.51(b)(5) also clarifies that a treaty country includes a foreign state that is accorded treaty visa privileges under INA §101(a)(15)(E) by specific legislation (other than the INA). This essentially recognizes the existing E visa eligibility of nationals of the Philippines, Canada and Mexico, which arises from legislation.

A list of treaties or the equivalent in effect between the United States and other countries, which give rise to E classification eligibility, appear in the Foreign Affairs Manual (“FAM”). This list is also reproduced here. The most recent additions to the list of eligible countries are Chile and Singapore. Some treaties permit both E-1 and E-2 visa eligibility while others only permit either E-1 visas or E-2 visas, but not both.

Required Nationality

To qualify for either treaty trader or investor status, the applicant must possess the nationality of the treaty country. The authorities of the foreign state of which the alien is a national determine the nationality of an individual treaty trader or treaty investor.

The nationality of a business is determined by the nationality of the individual owners of that business. A business that is at least fifty percent owned by nationals of the relevant treaty country will be eligible for E status. Therefore, where two aliens equally own a company, both of which possess different nationality, the company will possess both nationalities.

Applicants who hold dual nationality (other than United States citizenship) may qualify for E status but they must hold themselves out as nationals of the treaty country in question. Consequently, such an applicant must be documented and be admitted into the United States as a national of the treaty country from which the treaty benefits accrue. However, nationals of a treaty country who also hold United States citizenship or United States lawful permanent residence status are not considered nationals of the treaty country for the purposes of E eligibility.

The country of incorporation is irrelevant to the nationality requirement for E visa purposes. However, in cases where a corporation is sold exclusively on a stock exchange in the country of incorporation, the consular officer may presume that the nationality of the corporation is that of the location of the exchange. However, where the stock of a corporation is exchanged in more than one country, the presumption will not apply. In such cases, the applicant will have to establish nationality through other means.

Canadian citizens are eligible for both E-1 and E-2 status as a result of the North American Free Trade Agreement. Canadian landed immigrants are not eligible for E visas unless their country of citizenship has entered into its own treaty of commerce and navigation or bilateral investment treaty with the United States. In addition, the U.S. Consulate General in Toronto will also entertain an E visa application pursuant to a treaty other than NAFTA where the applicant has been in the United States under an employment authorization for at least six months.

Intention to Depart the United States Upon Termination of Status

Pursuant to 22 CFR §41.51(a)(1)(ii)/22 CFR §41.51(b)(1)(iii), an E visa applicant must “intend to depart from the United States upon the termination of his status.” However, an applicant does not have to establish an intention to remain in the United States for a specific temporary period of time or the existence of a residence in a foreign country that the applicant does not intend to abandon. The applicant’s expression of an unequivocal intent to return when the E status ends is normally sufficient, in the absence of specific evidence to the contrary.

A limited form of dual intent is recognized for E nonimmigrants. The Department of State (“DOS”) position is that an applicant who is the beneficiary of an immigrant petition may still be eligible for E status by showing that she will not remain in the United States to adjust status to lawful permanent resident or otherwise remain in the United States regardless of the legality of his or her status. The USCIS position is that an application for initial admission, change of status, or extension of stay in E classification may not be denied solely on the basis of an approved request for permanent labor certification or a filed or approved immigrant visa preference petition. In addition, an applicant who has already filed an application for adjustment of status may still file for an extension of E status after that date.

Notwithstanding the above, INA §214(b) still applies to the E nonimmigrants. A prior overstay or violation of status while in the United States will often strongly infer that the applicant does not intend to depart from the United States upon termination of her status and it will be very difficult to overcome such an inference. The only way to overcome the presumption of immigrant intent in such situations is to establish (if possible) that the violation or overstay was brief and inadvertent.

Employees of Principal Aliens

General

An alien employee of a treaty trader may be classified E-1 and an alien employee of a treaty investor may be classified E-2, if the employee is in or is coming to the United States to engage in duties of an executive or supervisory character, or, if employed in a lesser capacity, the employee has special qualifications that make the services to be rendered essential to the efficient operation of the enterprise. Employees of treaty traders or treaty investors seeking E status must also have the same nationality as their employer.

In order to support a treaty investor or treaty trader application filed on behalf of an alien employee of a treaty trader or treaty investor, the employer must be:

A person having the nationality of the treaty country, who is maintaining the E-1 or E-2 status if in the United States or if not in the United States would be classifiable as a treaty trader or treaty investor; or An organization at least 50% owned by persons having the nationality of the treaty country who are maintaining nonimmigrant treaty trader or treaty investor status if residing in the United States or if not residing in the United States who would be classifiable as treaty traders or treaty investors.

In other words, where the employer is residing in the United States in some capacity other than treaty investor or treaty trader, it is not possible to seek treaty trader or treaty investor status on behalf of employees. The same applies in the case of a corporate employer, where more than 50% of the individuals who own the employer are residing in the United States in some capacity other than E-1 or E-2.

Executive or Supervisory Character

Executive or supervisory duties grant the employee ultimate control and responsibility for the enterprise’s overall operation or a major component thereof. An executive position provides the employee great authority to determine policy of and direction for the enterprise. A supervisory position grants the employee supervisory responsibility for a significant proportion of an enterprise’s operations and does not generally involve the direct supervision of low-level employees.

In order to qualify as an executive or supervisory employee, the executive or supervisory element of the employee’ position must be a principal and primary function of the position and not an incidental or collateral function. For example, if the position principally requires management skills or entails key supervisory responsibility for a large portion of a firm’s operations and only incidentally involves routine substantive staff work, an E classification would generally be appropriate. Conversely, if the position chiefly involves routine work and secondarily entails supervision of low-level employees, the position could not be termed executive or supervisory.

In determining whether the proposed position is executive or supervisory, consular officers will consider the title of the position, its place in the company’s organizational structure, the duties of the position, the degree to which the applicant will have ultimate control and responsibility for the company’s overall operations or a major component thereof, the number and skill levels of the employees the applicant will supervise, the level of pay, and whether the applicant possesses qualifying executive or supervisory experience.

Essential Skills

The applicant bears the burden of establishing at the time of application not only the need for the special qualifications that he or she offers but also the length of time that such skills will be needed. In general, the E classification is intended for specialists and not for ordinary skilled workers.

Special qualifications are those skills and/or aptitudes that an employee in a lesser capacity brings to a position or role that are essential to the successful or efficient operation of the enterprise. The essential nature of the alien’s skills to the employing firm is determined by assessing the degree of proven expertise of the alien in the area of operations involved, the uniqueness of the specific skill or aptitude, the length of experience and/or training with the firm, the period of training or other experience necessary to perform effectively the projected duties, and the salary that the special qualifications can command.

Whether the special qualifications are essential will be assessed in light of all circumstances at the time of each visa application, on a case-by-case basis. In assessing the specialized skills and their essentiality, the consular officer should consider such factors as:

The degree of proven expertise of the alien in the area of specialization; The uniqueness of the specific skills; The function of the job to which the alien is destined; and The salary such special expertise can command.

The availability of U.S. workers provides another factor in assessing the degree of specialization the applicant possesses and the essentiality of this skilled worker to the successful operation of the business. This consideration is not a labor certification test, but a measure of the degree of specialization of the skills in question and the need for such skills. For example, a TV technician coming to train U.S. workers in new TV technology not generally available in the U.S. market probably would qualify for a visa. If the essential skills question cannot be resolved on the basis of initial documentation, the consular officer might ask the firm to provide statements from such sources as chambers of commerce, labor organizations, industry trade sources, or state employment services as to the unavailability of U.S. workers in the skill areas concerned.

There is no requirement that an “essential” employee have any previous employment with the treaty enterprise. The only time that such previous employment is a factor is when the needed skills can only be obtained by that employment.

There are two distinct types of essential skills workers: (a) short-term essential skills workers, and (b) long-term essential skills workers. Each type is briefly discussed below.

Short Term Essential Skills

In the case of short-term essential workers, the employer may need the skills for only a relatively short period of time when the purpose of the employee’s admission relates to start-up operations (of either the business or a new activity by the business) or to the training and supervision of technicians employed in manufacturing, maintenance and repair functions. Ordinarily skilled workers can qualify as essential employees but this almost always involves workers needed for start-up or training purposes.

A new business or an established business expanding into a new field in the United States might need employees who are ordinarily skilled workers for a short period of time. Such employees derive their essentiality from their familiarity with the overseas operations rather than the nature of their skills.

Employers in such cases are expected to train United States workers to replace these employees, usually within one or two years. Short-term essential skills workers are therefore in a less desirable position than L-1B specialized knowledge workers, who are not required to demonstrate that U.S. workers will be trained to replace them.

Long Term Essential Skills

Long-term essentiality may be established in connection with continuous activities in such areas as product improvement, quality control, or the provision of a service not generally available in the United States. If an applicant establishes that she has special qualifications and, on a long-term basis, these qualifications are essential for the efficient operation of the treaty enterprise, the training of United States workers as replacement workers is not required. It should therefore be possible for such an employee to remain in the United States, in either E status, for an indefinite period of time.

The precedent decision relating to long-term essential skills workers is Matter of Walsh and Pollard, 20 I. & N. Dec. 60 (BIA 1988). The employees in that case were automotive design engineers from Britain who were coming to the United States (pursuant to a contract between the treaty investor and General Motors) for the purpose of redesigning General Motors’ line of cars in a smaller more European fashion. It was established that a worker with an engineering degree would still require approximately ten years of training to become an automotive design engineer and that there were not sufficient numbers of United States automotive design engineers to fill the present needs of the automotive industry. The Board of Immigration Appeals (“BIA”) concluded that the employees were long-term essential skills workers and the treaty investor was not expected to replace the employees with U.S. workers in the future.

Labor Disputes (Canadian and Mexican Citizens Only)

Because of the terms of the NAFTA, citizens of Canada or Mexico are not entitled to E classification if the Attorney General and the Secretary of Labor have certified that:

There is in progress a strike or lockout in the course of a labor dispute in the occupational classification at the place or intended place of employment; and The alien has failed to establish that the alien’s entry will not affect adversely the settlement of the strike or lockout or the employment of any person who is involved in the strike or lockout.

E-1 Treaty Trader Visa — Specific Requirements

General

The E-1 treaty trader visa is available to enterprises engaged in trade with the United States. Treaty traders must be entering the United States solely to carry on trade of a substantial nature, which is international in scope, principally between the United States and the treaty country. In the case of an E-2 employee of the business, the employee must be working in an executive, supervisory, or essential skills capacity.

Definition of “Trade”

The word “trade” is defined in 22 CFR §41.51(a)(7) as the existing international exchange of items of trade for consideration between the United States and the treaty country. Existing trade includes successfully negotiated contracts binding upon the parties which call for the immediate exchange of items of trade. This exchange must be traceable and identifiable. Title to the trade item must pass from one treaty party to the other. According to 22 CFR §41.51(a)(8), items which qualify as items of trade include but are not limited to goods, services, technology, banking, insurance, transportation, tourism, communications, and some news gathering services.

Trade Must Be in Existence

The treaty country must show a continued course of trade so it must have already commenced prior to the alien applying for E status.

Trade Must Be International

The above definition of “trade” requires an international exchange of items of trade for consideration between the United States and the treaty country. Development of the domestic market without international exchange does not constitute trade in the E-1 visa context. Thus, engaging in purely domestic trade is not contemplated under this classification. The traceable exchange in goods or services must be between the United States and the other treaty country.

Trade Must Be Substantial

According to 22 CFR §41.51(a)(9), “substantial trade” entails the quantum of trade sufficient to ensure a continuous flow of trade items between the United States and the treaty country. This continuous flow contemplates numerous exchanges over time rather than a single transaction, regardless of the monetary value. Although the monetary value of the trade item is relevant, greater weight is given to more numerous exchanges of larger value.

Large corporations engaged in international trades of high monetary value would have no problem establishing that their trade was substantial, as long as they were engaged in more than one transaction. In the case of smaller companies, trade will still be considered substantial if the income derived from the international trade is sufficient to support the treaty trader and his or her family.

Trade Must be Principally Between the United States and the Treaty Country

The term “principal trade” is defined as meaning where at least 50% of the total volume of the foreign business’s international trade is between the U.S. and the treaty country. Accordingly, domestic U.S. trade is not considered when calculating the percentage of principal trade.

To measure the requisite trade one must look to the trade conducted by the legal entity that is seeking eligibility as the treaty trader. As a subsidiary is a separate legal entity from its parent, a U.S. subsidiary could qualify as a treaty trader even if its foreign parent corporation was engaged in any trade between the United States and the treaty country. However, the U.S. branch of a foreign parent corporation would not be considered a separate legal entity.

E-2 Treaty Investor Visa — Specific Requirements

General

The E-2 is available to nationals of the treaty country who are engaging in investment in the United States. The investor must show that she has invested or is actively in the process of investing a substantial amount of capital in a real and operating commercial enterprise, other than a marginal one solely to earn a living for the investor and her dependents. He or she must also be in a position to “develop and direct” the enterprise.

Investment Must Be at Risk

The concept of investment connotes the placing of funds or other capital assets at risk, in the commercial sense, in the hope of generating a return. If the funds are not subject to partial or total loss if business fortunes reverse, then it is not an investment. Therefore, the funds must be committed and personally at risk in order to qualify and the business must be an active and substantial investment.

Indebtedness secured by the assets of the business is not considered a qualifying investment. This is true even where personal assets in addition to the assets of the business secure the indebtedness. However, unsecured loans or loans secured solely by the alien’s own personal assets are considered qualifying investments.

Investment Must be Irrevocably Committed

Investment capital that is “in the process of being invested” must be irrevocably committed to the enterprise. However, it is possible to use various legal mechanisms, such as holding funds in escrow, to establish the necessary commitment of funds. For the alien to be “in the process of investing”, the alien must be close to the start of actual business operations, not simply in the stage of signing contracts (which may be broken) or scouting for suitable locations and property.

A mere intention to invest, or possession of uncommitted funds in a bank account, or even prospective investment arrangements entailing no present commitment, will not suffice. However, a reasonable amount of cash, held in a business bank account or similar fund to be used for routine business operations, may be counted as part of the investment funds.

Other Assets as Part of the Investment

Payments in the form of leases or rents for property or equipment may be calculated toward the investment in an amount limited to the funds devoted to that item in any one month, since the remaining payments will presumably be paid out of earnings from the treaty business. However, more than one month of payments may be counted if they are made in advance.

The amount spent for the purchase of equipment and for inventory already in the possession of the applicant may be counted as part of the qualifying investment. The value of goods or equipment transferred to the United States may be considered part of the qualifying investment, if it can be demonstrated that the goods or machinery will be put to use in an ongoing commercial enterprise.

Real and Commercial Enterprise

The enterprise must be a real and active commercial or entrepreneurial undertaking, producing some service or commodity. A shell company, passive investment, or uncommitted funds do not qualify as they do not require the intent to direct or develop a commercial enterprise. However, an active real estate development would be a qualifying enterprise.

Investment Must Be Substantial

According to INA §101(a)(45), the term “substantial” means “such an amount of trade or capital as is established by the Secretary of State, after consultation with appropriate agencies of Government.” The DOS position continues to be that there is no set minimum dollar amount that will be considered “substantial” for the purposes of E-2 eligibility. The FAM states that, as long as all the other requirements for E-2 status are met, the cost of the business per se is not independently relevant or determinative of qualification for E-2 status. While a manufacturing business might easily cost millions of dollars, the cost of purchasing or establishing a consulting firm may be relatively low.

A definition of the phrase “substantial amount of capital” within the context of an E-2 investment is now defined at 22 CFR §41.51(b)(9) as an amount which is:

Substantial in relationship to the total cost of either purchasing an established enterprise or creating the type of enterprise under construction; Sufficient to ensure the treaty investor’s financial commitment to the successful operation of the enterprise; and Of a magnitude to support the likelihood that the treaty investor will successfully develop and direct the enterprise.

For the most part, this definition reiterates the “proportionality test” described in the FAM. In order for an investment to be substantial, it must be proportional to the total value of the business. The definition also requires a sufficient investment to support the likelihood that the business will be successful.

The FAM states that the requirement of substantiality is met by satisfying the “proportionality test.” It defines the proportionality test as a comparison between two figures:

The amount of qualifying funds invested; and The cost of an established business or, if a newly created business, the cost of establishing such a business.

The cost of an established business is, generally, its purchase price, which is normally considered to be the fair market value. The cost of a newly created business is the actual cost needed to establish such a business to the point of being operational.

Neither the above definition nor the FAM describe a minimum required investment for E-2 eligibility. The FAM used to include several examples of acceptable proportionality at various levels of investment. However, these examples have since been deleted from the FAM since too many consular officers were using them as bright line tests.

In practice, the quantum of the investment is still unofficially considered. In the past, the U.S. Consulate General in Toronto has readily accepted ,000.00USD investments. This is perhaps because the FAM previously referred to an investment of ,000.00USD (it requires a percentage of investment approaching 90-100% of the total value of the business) as an example of a substantial investment. However, consulates in other countries often require a higher investment amount.

Investment Must Not Be Marginal

The alien must not be investing in a marginal enterprise solely for the purpose of earning a living. A marginal enterprise is an enterprise that does not have the present or future capacity to generate more than enough income to provide a minimal living for the treaty investor and his or her family.

At one point, consular officers were permitted to consider other sources of income in determining whether the treaty business was marginal. Unfortunately, 22 CFR 41.51(b)(10) now precludes establishing that the business is not marginal by providing evidence of other sources of income or financial means.

22 CFR 41.51(b)(10) also states that an enterprise that does not have the capacity to generate such income but that has a present or future capacity to make a significant economic contribution is not a marginal enterprise. However, the projected future capacity should generally be realizable within five years from the date the alien commences normal business activity of the enterprise.

Ability to Develop and Direct the Enterprise

A treaty investor (but not E-2 employees) must be seeking entry solely to develop and direct the treaty business. The ability to develop and direct can be established by owning at least 50% of the treaty business (if the owner retains full rights of control over that portion of the business and has not assigned them to another), by possessing operational control through a managerial position or other corporate device, or by other means. Factors considered include ownership, control of stock by proxy, management position and authority, etc.

Duration of Stay and Extensions

E visas are generally valid for a period of five years or less. The maximum visa duration permitted will depend upon the nationality of the alien. The maximum period allowed for each nationality can be determined by referring to the Reciprocity Schedules contained in the FAM. For example, the maximum duration of a treaty trader or investor visa for Canadian citizens is 60 months, or five years. It is important to remember that a consular officer may choose to grant an E visa for a shorter period of time.

Despite the fact that E visas may be valid for up to five years, pursuant to 8 CFR §214.2(e)(1), treaty traders and investors may not be admitted for an initial period of more than two years and may not be granted extensions of stay in increments of more than two years. Therefore, an alien in treaty trader or investor status with a five year visa will initially be admitted for only two years. He or she can then apply for an extension of stay of two years or simply leave the United States and seek reentry with the valid visa for an additional two years.

There is no limit on the number of extensions allowed under this category.

Dependent Spouse and Minor Children

The dependent spouse and minor child of a treaty trader or investor are entitled to the same classification as the principal alien; the nationality of the spouse or child is immaterial. Dependents may remain in the United States for the duration of the principal alien’s stay.

Until recently, they could attend school but could not seek employment. However, on January 16, 2002, President Bush signed H.R. 2277 (PL 107-124) into law. This law now permits spouses of treaty traders and investors to obtain employment authorization. This eligibility is effective as of the date of enactment. In a memorandum to field offices dated February 22, 2002, the INS explained that the spouse must obtain an employment authorization (“EAD”) by filing Form I-765 with the required fee and evidence of his or her relationship to the principal alien before being permitted to work.

Tags: Investor, Trader, Treaty, Visas

Private Investor Loans

Although much of our articles have focused on bank and finance company issued loans, this next article will focus on the issues that come with obtaining a loan from a private individuals. For many small business owners, entrepreneurs from time to time, will look for a business loan privately rather than going to a financial institution. However, you should be aware that the interest rates associated with these loans often carry a higher interest rate (assuming that the transaction is “arms-length”).

 

More often than that not private investor loans are often referred to as promissory notes. This, much like any other business loan agreement, is a contract between you and a lender. This term is also often used among borrowers that do approach lending institutions for their debt capital needs. When negotiating with a potential private investor for a business loan – you absolutely must make clear that what you are seeking to obtain is a business loan. In some instances, there have been issues where private investors who provide debt capital believe that they are receiving a percentage of the business rather than simply an interest payment on the outstanding principal balance. As such, and as with any business agreement, have a clear and decisive contract that clearly showcases how much money you are borrowing, the fact that you are borrowing the money rather than selling a percentage of your business, the term of the loan, and the interest rate that will be applied to the loan. It is also maybe very helpful for you to have a full business loan amortization schedule built into the promissory note contract so that it is even more clear that this is in fact a loan rather than an equity investment.

 

If you are having issues drafting a promissory note then it is imperative that you speak to an attorney that can assist you in this process. Even if you are very well versed in contracts, it is still highly advisable that you seek appropriate legal advice when developing a contract with a private investor who is providing you with debt or equity capital.

Private Fast Loans.com is also a Financial Adviser with 10 years as an Accountant and Student Loan Consolidator.it has the author of Defaulted Student Loan Consolidation. Are you in danger of default? Do you have a US guaranteed student or know of any one who does? Erase Your Student Loan…

Tags: Investor, Loans, Private

What Type Of Investor Should You Be?

Getting started in the business of investing is much easier than it used to be. So is improving your returns if you already invest. No longer is the field restricted to the wealthy or large financial institutions. More and more these days every day people like mums, dads, students and even children are trying their hand at what used to be the exclusive playground of the rich.

However before delving into what is a very exciting and potentially financially rewarding world you should assess what type of investor you actually want to be. In the thirty years that I have been investing I have seen people who haven’t answered this question come and go and lately I’ve seen it happen with alarming frequency.

Think about it for a second…. have you really thought about what you need to do to start creating wealth for you and your family. If not you need to seriously consider what type of investment style would be best for your position.

Types of investors

The buy and holders of the community put their money into shares that they feel are good value and hold them for expanses of anywhere between 1 and 50 years. This investment style is most suited to people who are long term orientated by nature, not looking for a quick profit and have an eye for good companies. The most famous proponent of such an approach is the world’s second richest man, Warren Buffet, so you could say that it isn’t such a bad style.

Day trading is the complete opposite of the buy and hold approach and involves individuals who buy and sell shares in a very short period generally within the same day. If you have a lot of time and are prepared to watch market movements very closely then this approach may be for you.

The next thing you need to look at is what sort of analysis you want to conduct on the shares that you are considering. Generally there are two schools of thought, one being fundamental and the other technical. You will always find people pushing one or the other but it makes more sense to incorporate a blend both.

Fundamentalists tend to look at company profits, management direction, future plans/growth prospects, the economy as a whole and such like company and economic factors.

While those with a mathematical or scientific background might look at share price charts employing various technical analysis techniques, ratios, indicators and trends in order to identify which shares they want to look at further.

You should realise that relying wholly on one or the other is not the wisest thing to do. For example a chart that has all the indications that a share is going to be a good choice for the future is useless if the company is going to file for bankruptcy. As I mentioned earlier a blend of the two should be considered.

When you are deciding what type of investor you want to be, one of the most important considerations is your risk threshold. In other words how much you are willing to loose. This again will have an impact on the investment style that you choose and will also have a relationship to the level of returns that you may be seeking.

Investors come in many forms and there is no right or wrong way. Different things work for different people. It is vital that you decide which method best suits you and that you stick to this method.

About the Author
Phil Wengier, VIC, Australia
More details about Successful Investing can be found here . Phil Wengier has been successfully investing in financial markets for over 30 years and is the owner of several companies. In particular, Saratoga Pty Ltd has been on the Internet since 1996 helping many who wish to discover how to invest safely and successfully. If you would like to subscribe to my Savvy Investor newsletter please click here

Tags: Investor, Should, Type

12 Basic Stock Investing Rules Every Successful Investor Must Follow

There are many important things you need to know to trade and invest successfully in the stock market or any other market. Twelve of the most important and basic things that I can share with you are based on many years of trading experience.

There are many important things you need to know to trade and invest successfully in the stock market or any other market. 12 of the most important things that I can share with you based on many years of trading experience are enumerated below.

1. Buy low-sell high. As simple as this concept appears to be, the vast majority of investors do the exact opposite. Your ability to consistently buy low and sell high, will determine the success, or failure, of your investments. Your rate of return is determined 100% by when you enter the stock market.

2. The stock market is always right and price is the only reality in trading. If you want to make money in any market, you need to mirror what the market is doing. If the market is going down and you are long, the market is right and you are wrong. If the stock market is going up and you are short, the market is right and you are wrong.

Other things being equal, the longer you stay right with the stock market, the more money you will make. The longer you stay wrong with the stock market, the more money you will lose.

3. Every market or stock that goes up will go down and most markets or stocks that have gone down, will go up. The more extreme the move up or down, the more extreme the movement in the opposite direction once the trend changes. This is also known as “the trend always changes rule.”

4. If you are looking for “reasons” that stocks or markets make large directional moves, you will probably never know for certain. Since we are dealing with perception of markets-not necessarily reality, you are wasting your time looking for the many reasons markets move.

A huge mistake most investors make is assuming that stock markets are rational or that they are capable of ascertaining why markets do anything. To make a profit trading, it is only necessary to know that markets are moving – not why they are moving. Stock market winners only care about direction and duration, while market losers are obsessed with the whys.

5. Stock markets generally move in advance of news or supportive fundamentals – sometimes months in advance. If you wait to invest until it is totally clear to you why a stock or a market is moving, you have to assume that others have done the same thing and you may be too late.

You need to get positioned before the largest directional trend move takes place. The market reaction to good or bad news in a bull market will be positive more often than not. The market reaction to good or bad news in a bear market will be negative more often than not.

6. The trend is your friend. Since the trend is the basis of all profit, we need long term trends to make sizeable money. The key is to know when to get aboard a trend and stick with it for a long period o ftime to maximize profits. Big money can be made by catching large market moves. Day trading or short term stock investing can capture the shorter moves while waiting for the longer term trend to establish itself.

7. You must let your profits run and cut your losses quickly if you are to have any chance of being successful. Trading discipline is not a sufficient condition to make money in the markets, but it is a necessary condition. If you do not practice highly disciplined trading, you will not make money over the long term. This is a stock trading “system” in itself.

8. The Efficient Market Hypothesis is fallacious and is actually a derivative of the perfect competition model of capitalism. The Efficient Market Hypothesis at root shares many of the same false premises as the perfect competition paradigm as described by a well known economist.

The perfect competition model is not based on anything that exists on this earth. Consistently profitable professional traders simply have better information – and they act on it. Most non-professionals trade strictly on emotion, and lose much more money than they earn.

The combination of superior information for some investors and the usual panic as losses mount caused by buying high and selling low for others, creates inefficient markets.

9. Traditional technical and fundamental analysis alone may not enable you to consistently make money in the markets. Successful market timing is possible but not with the tools of analysis that most people employ.

If you eliminate optimization, data mining, subjectivism, and other such statistical tricks and data manipulation, most trading ideas are losers.

10. Never trust the advice and/or ideas of trading software vendors, stock trading system sellers, market commentators, financial analysts, brokers, newsletter publishers, trading authors, etc., unless they trade their own money and have traded successfully for years and/or provide third party verification of performance.

Note those that have traded successfully over very long periods of time are very few in number. Keep in mind that Wall Street and other financial firms make money by selling you something – not instilling wisdom in you. You should make your own trading decisions based on a rational analysis of all the facts.

11. The worst thing an investor can do is take a large loss on their position or portfolio. Market timing can help avert this much too common experience.

You can avoid making that huge mistake by avoiding buying things when they are high. It should be obvious that you should only buy when stocks are low and only sell when stocks are high.

Since your starting point is critical in determining your total return, if you buy low, your long term investment results are irrefutably better than someone that bought high.

12. The most successful investing methods should take most individuals no more than four or five hours per week and, for the majority of us, only one or two hours per week with little to no stress involved.

Tags: Basic, Every, Follow, Investing, Investor, Must, Rules, Stock, Successful

Basic Step To Becoming A Successful Investor

It is frequently said that the 1st step to becoming the best trader is a simple one — put off the Television.

Top financial channel — along with its competitors — will only make you dumber and poorer.

This arrives like a shock to a lot of people. After all, financial channels offer a gentle stream of well-credentialed specialists, women and men with extraordinary titles from prestigious companies. Nearly everyone hold PhDs, years of practice, or manage huge sums of funds. They look good. They sound sharp. They have insightful thoughts plus reams of arcane investment data tripping off their tongues.

How could listening to them perhaps make you a poorer trader?

Since the unstated premise behind these shows — that exist, certainly, to sell advertising — is that investors need to be in a near-constant state of reaction:

“The market is hitting a new high today. What should traders do now?”

“The Fed has left interest rates unchanged. What should investors do now?

“GNP was up an unexpectedly strong 3.8 percentage last quarter. What should investors do now?”

They bring on an analyst with a bullish view and another with a bearish one — on shares, bonds, currencies, commodities, rates of interest, or the economy — allow them to square off for after sometime, followed by cut to commercials. A few minutes later, they come back and perform it some more. This goes on each day, week after week, year after year.

Why do numerous brilliant, talented, educated people spend countless hours staring blankly at the tube?

The quick answer, of course, is we enjoy it.

But can we, really? Is watching TV more fulfilling than what you would be doing if you were not?

If you get particular about it, you may feel somewhat ridiculous. For instance, have you ever told yourself something like:
Gee, I actually need to find more exercise, however Dancing With the Stars is on in ten minutes.
I promised my daughter I’d educate her how to play chess, but these Seinfeld re-runs are really funny. It’s long past time I ended in to visit my aging grandmother, but I can’t miss the game!
I promised myself I would learn to play the piano this time, but this week will be finals of American Idol.
I really do like to plant that garden. However I can’t miss my soaps.
If we’re challenged, of course, we’ve got plenty of rationalizations.

Let a Television critic inform you that many of the programming is senseless scrap and you will point to the learning stuff on The History Channel, Discovery, or National Geographic, regardless of whether that is only a part of what you watch.

If he replies that you’re still being subjected to several hours of commercials each week, you tell him you tape the programs and fast-forward through them.

If he counters that taping just enables you to use more television, you could for all time play your trump card: “Mind your business.”

After all, you are an grownup. It is your life to survive. You can spend it any style you desire.

However, between South Park and Grey’s Anatomy, do you ever reflect on how you’re spending it?

No matter how good the programming is — and let’s face it, a number of it is superb — or how rapidly you fast-forward with the commercials, the time you spend before the tube is time you have not spent pursuing your ambitions, living out your desires, or simply interacting with another human being. If you’re elderly and companionless — or housebound for some other reason — that is different. But that doesn’t describe the majority of us.

Twenty-five years ago, Neil Postman warned of our consuming love affair with TV in Amusing Ourselves to Death. In book — a jeremiad about the danger of turning serious conversations about politics, business, religion, and science into entertainment packages — he argues that TV is generating not the dystopia of George Orwell’s 1984 but rather of Aldous Huxley’s Brave New World:

“Religious devastation is more likely to appear from an enemy having a smiling face than from one whose countenance exudes suspicion and hate. In the Huxleyan prophecy, Big Brother doesn’t watch us, by his option. We tend to watch him, by ours. There is no need for wardens or gates or Ministries of Truth. When a population becomes distracted by trivia, when cultural life is redefined like a perpetual round of entertainments, when serious public talk becomes a type of baby-talk, when, in short, a people become an audience and their public business a vaudeville act, then a nation finds itself at risk.”

He concludes that we’d all be better off if television got worse, not better.

According to A.C. Nielsen, 99 percent of American households contain a television set. Two-thirds have above 3. These sets are on an average of 6 hours and 47 minutes per day.

49 percent of Americans polled say they spend too much time in front of the TV. It’s not difficult to see why. The average viewer watches above 4 hours of Television daily. That is two months of non-stop TV-watching per year. For a 65-year life, an individual will have spent 9 years glued towards the tube.

You by now know how little you’ll gain by watching a lot TV. But have you also considered what it will be costing you?

Tags: Basic, Becoming, Investor, Step, Successful

How Can I Become A Successful Property Investor In 2010?

To make real, sizeable positive cash flows of £500+ a month, you need to have a firm grasp of how the property market works, what it entails and what insights you need to make it happen.

Below we will explain exactly how you can acquire this knowledge and end 2010 with a profitable property portfolio.

What Is Buy To Let Investment?

There are many misconceptions about the property market, the first being the type of properties you can invest in. Residential, commercial, land, holiday lettings, development… each of these property routes can each provide you with a decent monthly cash flow if you invest.

The second and biggest misconception is how you invest in these properties.

In the past property investment was considered to consist of solely of the buying, renovating and selling of property which during the property boom of 2007 proved to be highly profitable. Yet the easiest and surest way to make money from property – no matter the economic climate is buy to let.

In its simplest terms, buy to let investment involves: ‘buying property with the intention of letting it out to a tenant.’ Simple, straight forward and if done right will incur limited renovation costs.

Creating A Property Portfolio

The key to becoming a successful property investor is to ensure that you keep to following key points. Follow these and you can be sure of a profitable year:

• Research – using property portals, letting agents and newspapers take the time to research where are the best rental yields, tenancy demands and buy to let mortgage deals before constructing a list of 100 properties.

• Does The Property Produce A Positive Cash Flow – the phrase ‘positive cash flow’ is determined by the size of the profits your make after your properties mortgage payments have been deducted. To calculate this profit, simply enter your mortgage term, loan amount and interest rate into a mortgage repayment calculator, and taking its calculated interest rate payments deduct this figure from your properties predicted rental yields. Should any of the properties from your list produce a positive cash flow of less than £300 a month, remove it.

• Is There A Tenancy Demand – the incredible thing about buy to let investment is the fact that your tenant’s rental yields will be covering the entire cost of your mortgage payments. However, should your property remain empty for a prolonged period of time and it will be YOU who is footing the bill. For this reason, it is important that you first ensure that your property has got a strong tenancy demand, before you invest. If they haven’t remove them from the list.

• BTL Deals – at this point in your journey, seeking out the help of a broker can not only help you to negotiate further discounts of 10%-30% off the property price (essentially covering the cost of your deposit), but can also ensure that you only receive access to the best buy to let mortgage deals. 85% LTV B-2-L Mortgage, 100% LTP Bridging Mortgage… all of them.

• Assured Short Hold Tenancy Agreement – it is important when constructing a tenancy agreement that all your rights are protected. For this reason, investing in a solicitor may be a worthwhile investment as they will be able to ensure that your tenancy agreement does not contain any clauses which will prevent you raising rents or ending a tenancy before an expected date.

In The Future

Making the decision to invest in property is only the first step. To ensure you achieve a profitable 2010, it is important that you invest in multiple properties and build a credible property portfolio.

If you have got cash spare to invest in property, then building a property portfolio quickly and efficiently will be easy. However, if you haven’t got the cash to raise a deposit, then there are other techniques you can use to initially make your mark on the property ladder.

By attending a property course for example, you can gain the tools, the strategies and the technique to effectively use No Deposit Down, No Money Down or All Money Back and invest in property without putting down a single penny.

Tags: 2010, Become, Investor, Property, Successful

Easy Philosophy Of New And Old Investor

Many people consider that it is impossible to earn money on HYIP market, one is full of SCAMs. They think that only the wealthy or uneducated get involved in HYIP. But it is not true. I know many people who invest in HYIP every day and earn near $4000-5000 a month additional income.

One financial advisor once told: “It does not matter how good of job someone has, if they want to acquire wealth in this life, at some point they are going to have to invest in something.” Investing is very popular thing. Many people consider investment one of the best way to success. Investing is something most people will do during their lifetime. They may invest in real estate, life insurance, stocks, bonds, mutual funds or a simple 401K.

HYIP is one type of investing. We live in a world of information and there is a wealth of information about investing. A lot can be learned from credible websites, you can find books at your local library, join an online investment group, talk to your peers and even sign up for free investing seminars. Many young investors invest in HYIP without knowledge. They rashly put their money in every HYIP (very often new investors invest money in HYIP with big percentages) and look forward to withdraw their profit. As rule, they lost money.

Many new investors get involved in an HYIP because they receive an email with all of these amazing claims for a short-term high yield investment program that will change their life. Many HYIPs are listed on theHYIPs.net. Unfortunately, it is usually the newer investor that cannot see the limit to such investments and goes all in with a large sum of cash. While there is a chance that all will go well and their first big investment will be a huge success, this is usually a setup for a huge loss. Newer investors are often excited by all of the promises and the deflection of suspicion and questioning that they fall prey to a scam, or to a poorly construction HYIP. It is often through a loss of any amount of money that a new investor learns to really research any investment before opening their wallet.

There are also cases where the new investor is so cautious that he or she can end up making a good deal of money through an HYIP because they do not just jump at the first opportunity that crosses their path. Instead, they learn about HYIP and do some research until they find the right program. This can be a great way to start off your investing, although one must remember that there are no promises with HYIP and next time the results may not be as favorable.

Many experienced investors do not hesitate to get involved in the high-risk world of HYIP because they have learned how to tell the difference between a good investment and a bad one. Experienced investors usually have a bit of money put away as well, and while they do not look forward to losing money, they might be better able to afford a loss if the HYIP investment does not go well. Experienced investors know the type of questions to ask, the type of data to look for, and probably know what type of HYIP program will be most beneficial to their investment portfolio. Many such questions you can find on theHYIPs.net. With experience comes the knowledge to more adequately weigh the risks and benefits of any high-risk investment, including high yield investment programs.

This is not to say that the experienced investor will never experience loss through an HYIP, because it happens to investors will all experience levels. Some scams are set up so that even the most cautious fall for the false promises. And, sometimes even the best laid HYIP plans are not as lucrative as everyone first thought they would be. This leads to a loss of money for all involved, no matter their experience level.

It does not really seem to matter what the experience level is, you may win with one HYIP and lose with another. In the world of high yield investment programs you just have to be aware that there are high risks associated with a possible high pay off. While there are no promises to anyone who invests in this sort of program, you can protect yourself a bit by looking into the HYIP before you invest, to get a track record, and be sure that business is conducted in a manner in which you feel comfortable with.

It is up to each investor to decide what HYIP is worthy of the risk and which is not. Remember that any HYIP worth your time will acknowledge the risk associated, if they do not, it is better not to take that much of a risk!

I know how to choose good HYIP for investing, developed my own rules of successful HYIP investment, so I do not hesitate to you about this. All my secrets I revealed in my HYIP course. David Vagner tells you his own tactics of becoming rich. Read his rules right now aboutHYIP investment.

Tags: Easy, Investor, Philosophy