SOUND INVESTING: Five Steps to Successfully Marketing Your Business

Sound Investing with Jason Lampa, MBA

You can be the very best at what you do, but if no one knows it, or has ever heard of you, you’re going to have a tough time achieving the success you desire. This is a series of five articles which discuss ways to successfully market your business and make sure that people know who you are. The five methods we will discuss include:

• Strategic Networking


• Niche Marketing


• Community Marketing


• Social Prospecting


• Reciprocity Marketing

Emerging enterprise owners or those considering becoming one, after reading this article, will have the foundation in which to create a winning marketing strategy.

There are many ways to grow your business. Most business owners have tried a variety of techniques, with varying degrees of success. In the world we are living today, change is accelerating at a light-speed pace, global competition is mounting, and the internet is providing consumers the ability to shop for the best prices without leaving their home. Given the changes taking place, the ability to effectively market your business to the right consumers, at the right time, with the right message is paramount. This process starts with Strategic Networking.

The first step in the strategic networking plan is to perform a detailed analysis of your top 25 customers to identify the 10 with whom you have the strongest relationships. The criteria for choosing these 10 customers should be based on those which score the highest in the following areas:

• Annual Revenue brought to your company


• Influence in the community


• Are professionals within an industry in which your company would like to focus

Incorporating this strategy into your business will increase the probability that you will increase the number of "right" clients to your business. The first step in finding the best prospects is to look at your best clients, and replicate this group of clients, making this your niche market. By finding the commonalities that your top 10 customers share, you will have created your niche market that you want to pursue. To optimize the benefits of this segment of your marketing strategy it is critical that you do homework to better understand that market.

Step two of Strategic Networking is to research your target market. Do the clients in this market have an association or publications? How many people are in the group? How likely are they to be willing investors?

After researching the markets of your top 10 customers, call these customers and arrange individual meetings. Share with them that you are working on a business plan and that you would like their advice.

When you and your staff meet with these loyal customers, you will need to be prepared to discuss the following points in a natural manner. I understand that it can be difficult to go through this process with clients as you may be afraid of annoying them or creating a situation that may be uncomfortable. I firmly believe that should you have provided first-class service to these customers over a long-period of time then you deserve referrals from them. If they are not willing to help, scratch them off the list and replace them with another customer from your Top 25 list.

You may want to consider starting the conversation using the following words: "Mr. customer, I have a strong business, but I am looking to grow my business selectively. I am seeking additional clients like yourself. Do you think this is a good way to grow my business?"

It is important that you are able to explain the meaning of "just like yourself". Your research on them should help you address this issue effectively. "I am considering customers who are executives retiring in the next five years and are looking to establish businesses of their own." Hopefully, the customer lets you know that this is a good idea. After they have agreed that you have a good idea, ask, " Do you have a suggestion on how I can begin to identify these people? In most cases, they will begin to help you at this point. Congratulations, you're on your way to not only attracting more customers, but you'll be attracting the "right" customers.


For more information, please visit Jason's TNNWC Bio.

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Capital, Traffic Building, International Customers and unique SERVICES.
The National Networker Publications™ produced by TNNWC Group, LLC
Resources for Business Planning, Development, Capital and Growth

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SOUND INVESTING: Five Steps to Successfully Marketing Your Business

SOUND INVESTING: Why Business Owners Need to Understand Their Company's Retirement Plan

Sound Investing with Jason Lampa, MBA

Emerging Enterprises who currently sponsor an existing retirement plan or have thoughts of starting one need to be aware of the responsibilities placed on them by the DOL and ERISA. This article will cover the three main areas in which business owners need to be fluent, in order to meet their fiduciary responsibility:

• Costs
• Investment Options
• Employee Education

Since having an expertise in retirement plans is not the core strength of most business owners, more often than not, he or she is not aware of the fiduciary responsibility that they have to provide their employees with a retirement plan that is cost effective, has adequate investment options and provides ongoing education for new and existing employees who participate in the plan. The retirement plan consultant and the vendor they represent will not disclose all the fees involved within a retirement plan if the business owner does not ask the right questions. Here are a sample of costs that can be associated with a 401k/Profit sharing plan:

• Administration/Recordkeeping Fee
• Annual Audit
• Back-End Load
• Balance-Inquiry
• Brokerage Commission
  
• Contract Administration Charge
• Contract Termination Charge
• Conversion Fee
• Distribution Expense

This is just a small list of the fees that can be involved with a company retirement plan. It is important for me to mention that if your company currently is utilizing an insurance provider for your 401k/profit sharing plan, you and your employees may be paying in upwards of 4% per year in fees. Taking into consideration that the average investor has made 4.5% annually during the past 20 years, when you subtract the 4% fee, it leaves the retirement plan participant with a .5% annual return. Simply put, at this rate, the investor would double their money every 144 years!

Most the business owners with whom I speak, face a major challenge in choosing the investment options for their employees to choose from within a retirement plan. Though they usually have the best intentions, too many times, the business owners selects the lowest cost investment options because large asset management firms convince them that investment options with the lowest expense outperform other investment options with higher expenses. Nothing could be further from the truth. One of the main reasons that employees have lost more than half of their retirement savings within the past five years is because the investment options within their plan were did not provide them the diversification necessary to manage downside risk.

In my experience, less than 50% of business owners provide their employees with access to educational resources with regards to the company retirement plan. By not providing access to these resources, business owners are opening themselves up to lawsuits. We have already begun to see this happening with larger companies and as this trend continues it will begin to affect the emerging enterprise community as well.

Fulfilling your fiduciary responsibility as business owner to an employer-sponsored retirement plan is not an issue to take lightly. If you do not follow the rules put in place by Department of Labor and ERISA law, you could wind up paying a hefty price. Though your intentions are pure, in providing your employees with a vehicle to save for retirement, failing to provide them with an adequate retirement plan can land you in hot water.


For more information, please visit Jason's TNNWC Bio.

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Capital, Traffic Building, International Customers and unique SERVICES.
The National Networker Publications™ produced by TNNWC Group, LLC
“Empowering Emerging Enterprises”

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SOUND INVESTING: Why Business Owners Need to Understand Their Company's Retirement Plan

SOUND INVESTING: Alternative Investment Opportunities for Accredited Business Owners

Sound Investing with Jason Lampa, MBA

More often than not, most investors have tunnel vision when it comes to viewing the entire opportunity set available to them. When they are able to adjust the lens, a new world of investment opportunities open up to those who can understand the difference between perceived and actual risk.

Experienced investors understand that sitting in cash or short-term income notes will not provide sufficient returns in the long-run. Investors are looking for equity-like returns with the volatility of fixed-income. Finding an opportunity like this is challenging; however, there may be opportunity to find such an opportunity in Life Settlement contracts.

A life settlement is the selling of one's life insurance policy to a third-party for a one-time cash payment. The purchaser then becomes the beneficiary of the policy and begins paying the premiums. Typically, these policies have face amounts in excess of $250,000.

Enterprising individuals realized that billions of dollars in face amount of policies were being lapsed or surrendered simply because the insured no longer needed the coverage or did not want to continue with the premium payments. These contracts (policies) were being sold (or even given) back to the issuing insurance company for a fraction of their true value. Should somebody wish to make the premium payments to keep the policy in force and pay the insured a lump sum value much more reflective of what the policy was worth, then that person could become the owner and beneficiary of the policy and realize its benefits at the insured’s demise. That is, in a nutshell, what a life settlement is. An insured sells the benefits of his or her policy to somebody else in order to realize a greater gain from what he or she has paid in so far. After the sale of the policy, the investor must maintain all premium payments in order to keep the policy in force. It is really just a function of contract law; an insurance contract is being bought and sold, much like mortgage contracts are bought and sold. (Global Wealth Management)

Life settlements have gained favor among institutional investors as viable investment options to then in-turn sell to accredited investors. The attractiveness of this investment opportunity is that these contracts are not tied to the stock market or any other index; it is directly dependent on mortality and is independent of traditional financial fluctuations.

Industry experts believe that regulation, demographics and a low national savings rate will drive the expansion of the supply in the life settlement market.

Before putting money into a life settlement vehicle it is critical that you consult with a financial advisor who is experienced in performing due-diligence in this space. There are companies within the life settlement industry that are promising returns of 30-40% annually. They are forecasting these results over 8, 9 and 10 year periods. If it sounds to be good to be true, it probably is. A conservative life settlement program should provide you between 6-8% return over a 10 year period, and can possibly yield more if the contract were to mature quicker than expected. As with any investment there are risks. Please speak to your financial advisor before entering into one of these contracts.


For more information, please visit Jason's TNNWC Bio.

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The National Networker Companies™ and TNNWC Group, LLC

“Empowering Emerging Enterprises”

Membership in TNNWC’s Global Interactive Cooperative Business Community is free of charge and entitles you to receive both The National Networker Newsletter and The BLUE TUESDAY Report, as well as access to our unparalleled Suite of Business Services.

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SOUND INVESTING: Alternative Investment Opportunities for Accredited Business Owners

SOUND INVESTING: Hire A Financial Advisor: A Sound Investment Decision

Sound Investing with Jason Lampa, MBA

Though not a philosophy shared by many of my peers in the financial services industry, it is possible to beat the market (S&P 500) on an annual basis. Money managers do so in their personal accounts more times than not. This is kept secret because if it were made public, it would make continuously beating the market more challenging. I have always been one to ruffle some feathers and this time is no different.

It is time that individual investors take control of their finances and empower themselves through education. Contrary to what the media may publicize, 99.99% of the financial advisors that I work with on a daily basis are honest professionals who treat their clients money as if it is their own account or the account of a family member. The first thing that all serious investors should do is hire a financial advisor. It isn't because it guarantees fantastic portfolio performance. The purpose of hiring an advisor is to make sure your money stays invested in the investment vehicles that can make you money. A good financial advisor is there to manage your behavior more than your money. The Dalbar study is probably the most convincing evidence of why investors should hire a financial advisor. For a period of 20 years ending in 2008, the average investor account made 1.87% per year, while the S&P 500 did 8.35%.

That is a tremendous difference. This is why discount brokerage firms make commercials telling the general public to fire their advisor and do-it-yourself. These firms push the use of index investing and that most investment managers under perform the market. It is a dangerous message. For investors who have a competent, experienced advisor, most likely they are not part of the group that had accounts generating 1.87% per year. Investors get into trouble when they begin to actively trade on their own, selling low and buying high. Please hire a financial advisor before investing.

Your relationship with a financial advisor must be a two-way street. Your input should be appreciated and the advisor should incorporate your ideas into your overall portfolio. Beware of those professionals who tell you to trust them and they will take care of everything. These people do not have your best interest in mind. The quality advisor will take the time to listen to your investment goals and that which you want to accomplish in your lifetime. They actively involve you in the selection of individual stocks and alternative investment ideas. Overtime, this benefits good advisors. A knowledgeable consumer will realize the value that advisor brings to the table and remain with that advisor through the course of many decades. A good financial advisor is worth their weight in gold.

The prevailing opinion in the marketplace is that investment professionals charge too much for their services. For some reason that I still do not understand, the general public feels that investment professionals should work for free or do not deserve to charge fees on the money they manage. Let me provide the following example to make a case for advisors and their fee.

Acme Investment Management charges 2.50% on annual basis to manage investors money. Included in this fee is access to world-class investment managers, a monthly newsletter provided by Acme and monthly financial education seminars hosted by Acme. The wealth mangers at Acme invest their clients money in publicly traded companies as well as exchange traded funds that provide access to alternative investment instruments that exhibit low to negative correlation with the overall stock market. In 2008, the average client of Acme Investment Management lost between 3-12% based on the model portfolio they invested in.

As we have seen the average investor return is under that of the market but for this example will say that those investors performed as well as the market did in 2008. The S&P 500 went down more than 35 percent in 2008. Using our hypothetical example, we note the Acme Investment Management's clients that experienced the worst performance lost -12% in 2008. Taking into consideration their 2.5% annual fee and the 23% Acme outperformed the market, investors received 9.2 years of free advice and portfolio allocation. If we take 23 and divide it by 2.5, we come up with 9.2. Based on most on the average investor performing worse than the market, our example is conservative.

When you meet with advisor, I recommend that investors tell them they want to be invested in five or more asset classes. Let them know that you believe in both traditional and alternative investments and you want no more than 150-200 companies in your entire portfolio. Overdiversification is one of the biggest culprits for investors receiving poor returns.

In summary, before investing, meet and hire a financial advisor. Make sure you play an active role in deciding what investments go into your portfolio and make sure that you invest in securities within multiple sectors which perform differently based on the economic cycle. Empowering yourself by becoming an educated financial consumer will help you find an advisor that fits your needs.

For more information, please visit Jason's TNNW Bio.

---

The National Networker Companies™

“Empowering Emerging Enterprises”

Membership in TNNWC’s Global Interactive Cooperative Business Community is free of charge and entitles you to receive both The National Networker Newsletter and The BLUE TUESDAY Report, as well as access to our unparalleled Suite of Business Services.

Join Us! Simply click on http://bit.ly/JoinTNNWC

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SOUND INVESTING: Hire A Financial Advisor: A Sound Investment Decision

SOUND INVESTING: Artificial Constraints: The Truth About Investing

Sound Investing with Jason Lampa, MBA

DALBAR’s update of its Quantitative Analysis of Investor Behavior (QAIB) study found that while the S&P 500 has returned 8.35% over a 20-year period ending in 2008, the average equity investor earned just 1.87%, which was less than the inflation rate of 2.89%. Bond investors fared no better. They earned returns of just 0.77% compared to 7.43% for the index. Using the rule of 72 (a simple method for finding out the number of years it will take to double your investment), we find the average equity investor would need 39 years to double their investment, while bond investors would have to wait 94 years, respectively. Something has to give.

As part of my mission to help investors generate the returns necessary to make the experience of investing worthwhile, I would like to begin by discussing asset classes, investment styles, and individual securities. Stocks, bonds and cash are the most common asset categories. These are the categories that most investors understand as asset allocation, and hence rely on to generate the returns that will provide them a comfortable retirement. Let's add a couple of more to the asset allocation mix that can benefit investors. Real estate, precious metals and other commodities, and private equity are four additional asset classes that should be added to an investor's wealth building strategy.

For many years, gaining access to these additional asset classes was difficult, only available to the ultra-affluent. Through advances in technology, and a growing interest among the mass-affluent for additional investment choices, the opportunity for investors to take advantage of these options is now a reality.

Investment style refers to the different style characteristics of asset classes within a given investment portfolio.

Active vs Passive
Active investors rely on the belief that they have the ability to outperform the overall market by periodically adjusting their investment holdings and by selecting professional mangers to generate returns. Taking a passive approach, other investors buy into the philosophy that investors can not beat the overall market. It's a philosophy that industry pundits use to convince the general public of their expertise, though this philosophy is a false belief system.

Growth vs Value
In an effort to bring additional confusion to the investment process, the industry has created labels such as growth and value companies. A mutual fund or individual security is either labeled a growth or value play based upon numerous measurements. The following are a few of the fundamental characteristics measured:

1. Price to Earnings
2. Sales Growth
3. Return on Equity
4. EPS Growth
5. Dividend Percentage

Small Cap, Mid Cap and Large Cap
Based upon the market value of a publicly traded company, it is assigned an artificial "box." Companies that have a market value of under $1 billion are labeled small capitalization companies, those between $1 billion and $ 5 billion are labeled middle capitalization and those above $5 billion are put into the large capitalization "box." The prevailing belief system is that smaller cap companies are a higher risk than large companies.

Individual securities are placed into sectors in which their firm operates. Companies that make software are placed into the technology sector. Those companies that make items such as refrigerators, washing machines, and tractors are put into the consumer durable sector. Overtime these sectors have exhibited certain return characteristics which the investor community believes is a result of the sector they are in. This is yet another false belief system that restricts investors from looking at what is actually happening here.

In summary, we have discussed asset allocation, investment styles and individual securities. The artificial labels that are placed on individual companies has been a convenient way for large, institutional investors to take advantage of retail investors who are not provided the entire story. In my next article, we will discuss how to ignore these artificial barriers and give yourself the best opportunity to generate wealth utilizing equity and fixed income securities.


For more information, please visit Jason's TNNWC Bio.

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The National Networker Companies™ and TNNWC Group, LLC

“Empowering Emerging Enterprises”

Membership in TNNWC’s Global Interactive Cooperative Business Community is free of charge and entitles you to receive both The National Networker Newsletter and The BLUE TUESDAY Report, as well as access to our unparalleled Suite of Business Services.

Join Us! Simply click on http://bit.ly/JoinTNNWC

Visit our website at http://www.TheNationalNetworker.com
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SOUND INVESTING: Artificial Constraints: The Truth About Investing

SOUND INVESTING: Belief Systems Do Not Equal Fact

Sound Investing with Jason Lampa, MBA

Conventional wisdom says that it is almost impossible to consistently outperform the respective stock market indices on a year by year basis. During the past 25 years, investment professionals from Wall Street to Hollywood have preached the same mantra to investors: "Investment performance is driven by asset allocation, not stock selection."

The basis of their argument stems from one research study, published in the summer of 1986 by Gary Brinson, Randolph Hood and Gilbert Beebower. The study said that more than 90% of the variance in portfolio returns could be explained by asset allocation to stocks, bonds and T-bills. The study took approximately 90 pension funds and calculated how closely these well-diversified funds return would relate to similar market indices. Being that a market index is built on the same premise as the pension, to eliminate market risk, it should not have been a surprise when the correlation of these pension funds was very high to that of their respective market indices.

The popularity of this study spread like the chicken pox at a nursery school, advocated most strongly by the likes of Vanguard and other indexing investment shops. These findings turned into a belief system that has perverted the average investors experience for the past 25 years. Folks, it is time that we start to evaluate what is under the hood.

Just because there is belief system in place for a long period of time doesn't mean that this belief is actually correct. In fact, it seems as though the belief system of simple strategic asset allocation is the main ingredient in determining investment returns has began to unravel during the past decade. With most investors either flat, slightly down or a little up in their retirement accounts during the past 10 years, investors as well their financial advisors are beginning to look at new belief systems, challenging the current paradigm that has held the average investor down so very long.

The key to achieving success in the investment universe, in my opinion, is utilizing a combination strategy, otherwise known as Core-Satellite. Using a mix of 70% core positions and 30% satellite positions, I will show how this works.

The core holdings are made up of Exchange Traded Funds which provide investors an inexpensive way to replicate the returns of market indices. Core positions would include buying a basket of ETFs investing in Large Cap, multi-national companies, corporate bonds and large-cap International companies. In addition, investing in small-cap ETFs and mid-cap ETF can be included as well.

The satellite positions though making up only 30% of the portfolio is made up of a select group of investment managers who have consistently provided returns above that of their peers. Of equal importance, is finding managers who deliver returns that do not move in the same direction during a particular market condition. This is where it is important to find a financial advisor who can navigate the satellite portion of your portfolio, finding managers that invest in natural resources, specific corporate events, real estate, life settlements, managed futures and other exotic strategies whose performance has little to do with the daily moves in the stock market.

The action plan for this month is to go to your financial advisor or find a financial advisor and ask them about their strategy for the satellite portion of your portfolio. In addition, I recommend that you go on the internet and look up information on strategic vs. tactical allocation as well as Core-Satellite portfolios. If you have any additional questions please feel free to email me at jasonlampa@armanacap.com.


For more information, please visit Jason's TNNW Bio.

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SOUND INVESTING: Belief Systems Do Not Equal Fact

SOUND INVESTING: Unified Managed Accounts for Mass Affluent Investors

Sound Investing with Jason Lampa, MBA

Over the past several decades, the account structure and asset management options available to investors has shifted from the most basic of accounts, a brokerage account, to the managed accounts of today. Historically, affluent clients have preferred fee-based advisory services that offer customized investment management solutions. But, the growing demands of this affluent investor group have evolved. The account progression is illustrated below.

Brokerage Accounts →Mutual Funds→ Separately Managed Accounts →Unified Managed Accounts

The account options can be generally defined as follows:

Brokerage Accounts- Offer investors the ability to purchase individual securities, but without the professional services of money managers. Brokerage accounts are available with low initial purchase requirements, have minimal asset allocation capacity and require minimal suitability information from the clients to establish.

Mutual Funds- Offer investors professionally managed portfolios, but with limited customization capacity on the individual fund strategies and overall portfolio design. Individual investors are typically charged higher account fees with this option.

Separate accounts, such as the SMA and UMA, offer the ability for an individual investor to gain access to institutional quality portfolio managers in addition to portfolio customization and active tax management.

Separately Managed Accounts- Investment managers are available. A higher minimum opening investment is required to establish these accounts.

Unified Managed Accounts- Offers customized asset allocation models for each individual investor and the ability to implement. Professional investment managers are readily accessible, diversification strategies can be implemented, offer a simple fee structure, require low initial investment requirements (as low as $25,000 per account) and are competitive in terms of annual growth results

Until today, investors seeking professional money managers were limited to Separately Managed Accounts (SMAs). Technology was the enabler of SMAs. SMAs, as favorable as they were initially, are not perfect products. Individual investors began to take note, realizing that their investment returns were negatively impacted by limited investment selections and high fees; hence the development of the UMA.

UMAs of today now offer the ability to capitalize on professional money manager skill sets with less hassle, more transparent fee structures and convenient account monitoring and access capabilities. An UMA offers the ability to accommodate institutional managers, ETFs, mutual funds and bonds within a single account, opened with one application, with one associated fee and available for review on a single account statement.

While these accounts were initially only available to the wealthiest clients due to technology restrictions, the account type is beginning to make sense for most affluent households. In an attempt to provide accessibility to investors, turnkey management providers (TAMPs) have been developed in parallel to UMAs, attempting to build a more cohesive managed account program. TAMPs are the outsourced solution that allows virtually any broker-dealer to compete within the UMA space.

UMAs best serve those investors seeking some degree of tax management which cannot be achieved using mutual funds alone, and who do not have the level of assets to achieve diversification using separately managed accounts.

The primary benefits to the client who chooses to place their assets within UMAs include:

•Customization capability of investments
•Open architecture
•Due diligence performed by a variety of investment managers
•Convenience of having a single account
•Ease of manager and asset class comparison
•Automatic investment rebalancing allowing for the avoidance of overweighting in asset classes
•Consolidated tax data, reporting and attribution


For more information, please visit Jason's TNNW Bio.






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SOUND INVESTING: Unified Managed Accounts for Mass Affluent Investors

SOUND INVESTING: Eastern Europe: Gaining Exposure to Emerging Growth Through ETF's and Open-Ended Mutual Funds

Sound Investing with Jason Lampa, MBA

Before we can discuss the Eastern European investment markets, it may be prudent to define what ETFs and open-ended mutual funds are.

Exchange Traded Funds (or ETFs) are innovative open-ended investment funds listed on the stock exchange. These are not mutual funds, although they offer all the benefits of diversification that a mutual fund offers. An ETF can be treated more like a stock than a mutual fund. ETFs can be bought and traded throughout the day (unlike mutual funds) which can offer a specific advantage to the investor due to flexibility and liquidity. ETFs can be sold short and bought on margin, taking advantage of the market movements within a particular sector. ETFs also allow commodity investing (like in gold, oil, or agricultural products) and currency investing.

Typically, ETFs are passively managed, meaning that each ETF follows a particular sector, country or broad-market index and the manager doesn’t specifically choose which stocks to buy or sell. Most ETFs have low expense ratios and some target specific countries (like those in Eastern Europe).

An open-ended mutual fund meets the true definition of a mutual fund, where financial intermediaries (professional money managers) group with investors who pool their money together to meet the investment objective of making money. An open-ended mutual fund, unlike a closed end mutual fund, issues and redeems shares on demand. As investors deposit money into the fund or take it out, the total assets of the fund grows and shrinks daily. Open-ended mutual funds have the advantage of flexibility and liquidity, and the majority of them allow transferring monies amongst various funds with the same ‘family’ of funds without any fee charges. The risk of an open-ended mutual fund is lower because of the diversification of funds involved, but can also depend on the investment strategies and objective of the types of holdings chosen.

The establishment of the European Union in 1993 provided a lot of potential for growth in the Eastern European investment market. The present European Union is comprised of 27 sovereign Member States (Austria, Belgium, Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, France, Germany, Greece, Hungary, Ireland, Italy, Latvia, Lithuania, Luxemburg, Malta, the Netherlands, Poland, Portugal, Romania, Slovakia, Slovenia, Spain, Sweden and the United Kingdom, with Croatia, Macedonia and Turkey as other official candidate countries who are currently negotiating membership in the EU and Albania, Bosnia and Herzegovina, Montenegro, Serbia and Iceland which are potential candidates).

Previously the Eastern European Bloc of countries was mainly composed of all the European countries liberated and occupied by the Soviets. But since 1989 and the fall of the Iron Curtain, the political landscape changed and the Soviet Union ceased to exist. Since then many countries in Eastern Europe joined the EU, namely Estonia, the Czech Republic, Hungary, Latvia, Lithuania, Poland, Slovakia, Slovenia, Bulgaria, and Romania. As you can see, with all the European countries adopting a standardized system of laws, which applies to all member states, this ensures the free movement of people, goods, services and capitals making the Eastern European countries a prime market for investment.

Russia, however, still plays a major role in the Eastern European emerging markets. It is in itself the most prominent of the Eastern European emerging markets, but it does tend to get hit hardest when raw material prices are weak.

Now that you understand what ETFs are, you can consider why it is a good idea to include Eastern European ETFs in your global portfolio. The Eastern European markets have been generating exciting returns on investments over the past couple of years. One reason has been because the large amount of money is being poured into Poland, Hungary and the Czech Republic with their inclusion into the EU and their adoption of the euro.

A few facts to consider are that the Western European economy has finally taken off, and the Euro currency is at a relatively high level. The European community in the EU is expanding eastward and a lot of growth potential seems likely in that area as the economies of these less-developed regions are forecast to grow in the coming years. Germany seems to be the backbone of European growth, and it borders on the Czech Republic and Poland and is close to other Eastern European countries. Russia also borders Eastern Europe and is seen as the largest and richest commodity countries in the world. Also Eastern European countries still have a relatively cheap workforce. . All of these reasons seem to indicate that there is great potential for investment in the Eastern European markets.

Also, the U.S. dollar has declined while European currencies have dramatically boosted the European equity returns. That means if you own a mutual fund that buys stocks denominated in Euros, the fund gains in value when those currencies appreciate. Most of Europe’s gains over the past 3 years have come from the currency exposure. But it doesn’t stop there. There are many European companies that are global players. Normally, where a company’s headquarters is located is not a real factor as to its importance in the marketplace, but since European interest rates remain low, this has stimulated economic growth and increased business activity.

The question remains “Will the Eastern European investing still be a good market to get into?” No-one knows the future and hot markets often cool off. If you consider that the U.S. market was soaring in the late 1990’s while the European market and the Euro were not prominent.

Since ETFs centre on a particular sector in the investment marketplace, the growing economies of the Eastern European countries are quite promising. At the moment, however, the Eastern European investment opportunities look great, but it is possible that this could change. That is why looking at ETFs and open-ended mutual funds are a good way to go when considering investing in Eastern Europe. If the market does take a performance plunge, those types of funds make it easier to go with the current flow of events because they are so flexible.

For more information, please visit Jason's TNNW Bio.

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SOUND INVESTING: Eastern Europe: Gaining Exposure to Emerging Growth Through ETF's and Open-Ended Mutual Funds