Investment Analysis

Real estate investments trusts (REITs) are a fundamental part in equity consideration and during fixed income portfolio. REITs are considered due to their ability to provide a diverse potential and better returns to investments. An investor looks at the income contributed through good investments. High and stable incomes are the best in investments. There is also long term capital appreciation, inflation protection and when there is good product investment.

Running head: INVESTMENT ANALYSIS
Investment Analysis
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INVESTMENT ANALYSIS
Investments
Real estate investments trusts (REITs) are a fundamental part in equity consideration
and during fixed income portfolio. REITs are considered due to their ability to provide a
diverse potential and better returns to investments. Equity has been used to state the value of
assets when we minus the value of its liabilities. Equity takes different forms to represent the
owner’s interest like stock or security (Chandra, 2017). Equity also represents some funds
that are initially contributed by the owner known as shareholders equity. This investments has
a role of increasing the long term expected performance in investments. They also assist in
diversification of retirement savings and investment portfolio. An investor looks at the
income contributed through good investments (Chisholm, Sweeny, & Saxena, 2016). High
and stable incomes are the best in investments. There is also long term capital appreciation,
inflation protection and when there is good product investment.
Fundamental analysis when investing is helpful. Fundamental analysis aids in aiding
financial data which is necessary for decision making. Quantitative analysis of financial data
helps in looking for kind of revenue. Quantitative analysis is fundamental in looking at the
assets, liabilities, revenues and expenses that are generated by the company (Crowe, 2017).
Using an analysis, an investor is able to evaluate the current and future performances of the
business.
Analysis
As per the data provided, the inflation rate is 3.0 %. Micro economic policies suggest
that inflation affects the purchasing power of a unit when the currency falls. Mr. Jack, needs
to invest in goods and services since at 1.0 %, the fixed deposit rate from banks seems to be
very low. This means that there will be no much profit gained if Mr. Jack invests at the
moment (Damodaran, 2016). The property mortgage rate for both residential and commercial

INVESTMENT ANALYSIS
properties is 2.5 % p.a. based on Mr. Jacks, the asking price for the property is fair at $2800
while the expected monthly rental stands at $8,500 to $ 9,500 respectively.
Equities
When using equity as an investment, the investor expects to have a permanent capital
in the company. If the company is there to stay, the investors equity is not expected to be
redeemed in the company’s lifetime. The equity shares in the invested company has an
equivalent and proportional right of income as a characteristic to this kind of investment. The
various advantages of equity is that it adds the commitment leading to achievement of sales
of the products. It also does not require the investor to keep up with the cost of servicing of
loans of the company (DeFusco, Pinto & Runkle, 2015). Some of the disadvantages of equity
are the high demands that is required to raise the kind of capital. There is also much power
which is lost while trying to make decisions successfully.
In equity investment, Mr. Jack can be recommended to invest since equity continues
to provide continued income. The investment is appropriate since it has been proven not to
have the 2.5% cost of bank loan servicing. The initial period of 1.0 % cannot be associated
with the equity invested in the initial period. From the initial deposit of 1.0%, the business
grows at its pace. Mr. Jack is not prone to have challenges in raising equity capital since he
has enough money to begin the investment.
REITs
Investors have been seen to invest in REITs so that they may get higher income while
looking at the long term growth. For an investor, every investment has advantages and
disadvantages. Some of the known advantages of REITs are that it offers higher returns in
terms of dividends at the end of the period (Dhrymes, 2017). It is also accompanied by

INVESTMENT ANALYSIS
diversification of portfolio of the stock prices. REITs shares are always traded on the major
stock exchanges therefore highly liquid. This makes it easier for investors to buy and sell
with minimal challenges of effort, expense and expertise. REITs have several disadvantages
which include lower growth rate and can much rely on debts for it to work.
Real estate investments
Real estate investment is a generational investment. Due to its durability, its targeted
to have multi-generational wealth. Real estate investment is considered to be highly liquid
because sales cannot take place without a significant loss of value. The market should be
fully regulated to create transparency in real time information delivery (Madan, 2016).
Advantages of real estate investment is that it can offer the investor much needed security
since the value does not fluctuate. It is also seen to have a better self-occupation. However,
there are various disadvantages that include challenges in acquisition of legal document
which has to go hand in hand with the existing laws. Real estate investments also comes with
high maintenance costs and high taxes (Sullivan & Mackenzie, 2017).
Security Last
transacte
d price
Avg
Daily
traded
volum
e
Mkt
capitalizatio
n
Price
earning
s ratio
E.P Current
dividen
d yield
Net
book
valu
e
Debt
to
total
assets
.
Associate
d land ltd
8.8 23 mn 13.50 22.6 0.3
9
1.10 7.90 25%
I-REIT 2.9 0.9 mn 1.85 na na 6.50 3.30 23%
L-REIT 1.45 6.8 mn 3.90 na na 3.5 1.35 45%
Regal 2.03 1.1 mn 0.95 9.2 0.2 2.50 2.65 71%

INVESTMENT ANALYSIS
property
ltd
2
Equities
Associated Land Limited=Yield Return= 1.1%* 8.8= 0.0968
I-REIT yield return= 23%* 1.85= 0.4255
L-REIT yield return= 45%*3.90= 1.755
Regal property ltd= 71%* 0.95= 0.6745
Relevant steps involved in coming to such conclusion
In buying of equity, REITs and real estate investment, equity is the best option since it has a
higher income and higher reward than both REITs and real estate investment. The main
reason for Mr. Jack to be recommended this is because, REITs have quite a smaller return on
investment while real estate has a lot of complications in legal documentations.
Recommendation
Having looked at the three options, Mr. Jack would be recommended to study the best
investment after looking at both the advantages and disadvantages of each other. From the
analysis above, Mr. Jack, a HNWI needs to choose equity as a form of investment. At the
moment, equity investment seems to suit him more before he establishes well. This
investment guarantees him more security as his first investment than any other type of
investment mentioned.
Possible results and consequences for Mr. Jack following the recommendation

INVESTMENT ANALYSIS
The possible consequences is that buying into equity will have a higher return and
higher return to investment compared to REITs and real estate investment. At the moment,
equity investment seems to suit him more before he establishes well. This investment
guarantees him more security as his first investment than any other type of investment
mentioned.

INVESTMENT ANALYSIS
References
Chandra, P. (2017). Investment analysis and portfolio management. McGraw-Hill Education.
Crowe, C. (2017). Real estate investment analysis.
Damodaran, A. (2016). Damodaran on valuation: security analysis for investment and
corporate finance (Vol. 324). John Wiley & Sons.
DeFusco, R. A., McLeavey, D. W., Pinto, J. E., Anson, M. J., & Runkle, D. E.
(2015). Quantitative investment analysis. John Wiley & Sons.
Dhrymes, P. J. (2017). Portfolio Theory: Origins, Markowitz and CAPM Based Selection.
In Portfolio Construction, Measurement, and Efficiency (pp. 39-48). Springer, Cham.
Madan, D. B. (2016). Conic portfolio theory. International Journal of Theoretical and
Applied Finance, 19(03), 1650019.