Investors Fed up With Corporate Abuse and Scandals

We raise our kids and mold them and shape them in hopes that one day, they grow up to be responsible, ethical adults. Then they get out in the corporate world and find out the adults running businesses act anything but responsibly.

They find out that these large public corporations not only act irresponsibly and unethically but in some cases, criminally.

They’re shocked that corporate budgets set aside funds that somehow end up supporting vices like gambling, alcohol, under-age smoking, etc. The news is replete with daily reports of corporate misdeeds:

  1. Facebook provided Cambridge Analytica – a data firm used by President Donald Trump’s 2016 campaign to target voters – with 87 million users’ personal information without obtaining proper consent.
  2. In 2015, it was discovered that from the 1980s through the early ’90s, Exxon (now Exxon Mobile) had teams of scientists studying global warming in the Arctic. The scientists concluded that global warming is real and that it posed potential dangers for the company – higher sea levels could damage Exxon’s drilling platforms, processing plants, pump stations, and pipelines. However, company documents reveal that, instead of helping to combat the environmental risk, Exxon decided to launch a multimillion-dollar campaign questioning climate change to bolster company profits.
  3. Google reportedly paid an executive tens of millions of dollars after he was let go over a sexual misconduct investigation. In July 2018, it was slapped with a hefty $5 billion fine by the EU for using its popular Android software as leverage to get phone manufacturers to pre-install Google apps on their devices.
  4. In March 2018, a woman in Tempe, Arizona, was killed by a self-driving car operated by Uber. It was the first time a pedestrian had been killed by an autonomous vehicle.
  5. In October 2015 investment firm Goldman Sachs was fined $50 million for not supervising an employee who allegedly used confidential regulatory information for the benefit of a client.

And when it comes to manufacturing, there isn’t enough print space to delve into the myriad of worker abuses ranging from child labor to horrid working conditions, poor pay and worker suicides that plague the supply chains of some of the largest apparel and consumer electronics retailers in the world including Nike and Apple.

Ironically, it’s the products and apps that some of these tech giants like Apple, Google, and Facebook peddle that have allowed a blaring spotlight to be shone on unethical behavior on their own companies as well as others. And it’s this type of behavior that’s causing a sea change in investor sentiment.

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Fed up with corporate abuse and scandals, more and more investors are turning to socially responsible investing to make sure their money is being used ethically.

As an investor in public companies that behave badly, it’s becoming harder and harder to turn a blind eye to the negative social impact these companies have on the public, their workers, and their environment. Perhaps because of the age of social media, exposure to the dark side of the shiny products we consume is becoming more frequent and intense resulting in heightened social awareness of the effects our buying and investing decisions have on the rest of the world.

Because investors are starting to care where their money goes, many are now embracing the socially responsible investing movement, because as some companies have demonstrated, it can be quite profitable. Socially responsible investing enables an investor to grow their money while impacting the greater good for society.

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Investors are no longer satisfied with just making money. They want it to count and to make a difference in the world.

Wanting to invest in a socially responsible manner and actually doing it are two different matters. To start, what exactly is socially responsible investing? Socially responsible investing, including its offshoots, ethical and green investing, means avoiding industries that negatively affect the environment and its people. This includes companies that produce or invest in alcohol, tobacco, gambling, and weapons.

Instead, socially responsible investing involves investing in companies engaged in ethical and socially conscious themes, like environmental sustainability and social justice. Socially responsible investing can cover a wide range of industries, activities, and locations, but at its root, socially responsible investing works toward both positive change and financial gain.

Although there are many ways to invest in a socially responsible manner, the key is research and due diligence. Many resources are available on the internet providing a wealth of information about companies you might consider targeting for investment.

Perhaps the most significant opportunities for social investing exist in local markets where investors have their finger on the pulse of local enterprises and where information is more readily verifiable.

In no other industry are opportunities or information more readily available than in the commercial real estate class where it’s easy to identify the exact uses of a particular property and to find investments targeting a social cause.

With proper due diligence and research, it’s these commercial real estate opportunities that provide the best opportunities for providing both income and an investment with a social component.

Visit GSM OPPORTUNITIES today to discover more about investment opportunities with a positive social impact and financial gain.

For Higher Returns | Go Against the Flow

If you’re looking for high returns, go against the flow. Why clamor for deals everybody else is pursuing?

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I will tell you how to become rich. Close the doors.
Be fearful when others are greedy.
Be greedy when others are fearful.

-Warren Buffett

Warren Buffett is teaching us to generate wealth by avoiding the herd mentality. This idea especially holds true for real estate. To make money in real estate, avoid what everybody else is doing and what everybody else is doing right now is single-family real estate. 

In no other real estate segment is there more demand or does a market plateau quicker than in the single-family fix-and-flip and buy-and-hold sectors. This is because market information is readily available and the barriers to entry are low.

The golden child of the real estate seminar circuit, single-family assets are the most often touted and promoted real estate segment because of the relatively low cost of entry and because of the widespread availability of market information. Single-family residential real estate requires less money to acquire and the lending requirements on residential properties are less restrictive than on commercial properties.

And with ubiquitous commercial listing services and real estate sites such as Zillow, Trulia, Redfin and Realtor.com that focus almost exclusively on single-family real estate, information on single-family properties placed on the market is readily accessible to the investing public, fueling demand and making residential real estate a favorite target for investing.

Generally speaking, real estate is an inefficient market. In other words, there are still opportunities to find bargains and make significant profits by utilizing informational advantages.

For example, you have a personal friend who works with a local builder that’s planning on developing a large residential community at a particular locale. Your local ties give you an informational advantage over your competition and can open up opportunities not privy to others. In this case, you might consider developing commercial real estate in close proximity to this new community to meet the needs of its future residents.

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Your informational advantage will allow you to snap properties up at reasonable prices before they’re driven up by competition.

Because informational advantages in the single-family sector are hard to come by and big profits even harder to come by, investors are wise to pursue niche real estate opportunities that are not as widely known or sought. As single-family real estate becomes increasingly competitive, yields become increasingly scarce.

Niche real estate that hasn’t developed a bandwagon yet offers the best opportunities for high returns because competition and demand haven’t overrun profit opportunities yet.

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Here at Global Summit Management, we’ve been successfully investing in real estate for years by finding and investing in niche real estate segments to stay one step ahead of the curve and the competition.

Once a segment becomes crowded with competition, we move on to the next niche. The niche we’re currently pursuing is near and dear to our hearts and offers significant potential for profit.

It involves the development of inpatient residential mental health facilities for children in the Spokane area where the need for these facilities is particularly dire. Having lived here for years and with our fingers on the pulse of our local real estate market, we know there’s a significant shortage of behavioral healthcare facilities to address the myriad of mental health needs of the area’s youth and children.

Children who get past the initial crisis stage are in desperate need of inpatient residential facilities to help them on the road to full recovery. There just aren’t enough of these types of facilities available to these children and their families at this time.

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Because this unmet need for mental health facilities involves children, we are highly motivated to do what we can to bring adequately equipped facilities to our backyard of Spokane and eventually to other communities.

The shortage is not imaginary. In Washington state, the lack of proper mental health facilities available to children reached crisis levels in 2016, so much so that during the state legislature’s session in March 2016, physicians with the Washington Chapter of the American Academy of Pediatrics converged on Olympia to present statistics and request funding for improving mental health care for kids. We are excited to be involved in the solution.

Niche real estate offers the best opportunities for high yields. 

We’ve learned that by staying away from crowds, we find gems generating real profits. Niche investing, like with behavioral healthcare facilities for children, is all the more rewarding when there is an opportunity to make a social impact.

Discover more today how partnering with Global Summit Management can help you make a social impact while generating wealth.

Top Tax Benefits of Real Estate

There are many great reasons to choose real estate as your primary investment asset. It creates income, is inflation resistant, is in constant demand, and more.

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Another one of the best features real estate investing offers is tax benefits.

In an effort to incentivize property ownership, the government offers several tax savings to individuals who own real estate. Even if you do not own property yourself, you will still benefit from these tax savings if you invest in private real estate funds. Those funds will take these tax breaks and use them to make your returns even better. The result is everybody winning and growing their wealth together.

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Whether you own a home for yourself, a rental property, or a stake in a larger real estate fund, these tax breaks will allow your investments and income to grow as quickly as possible.
1- Depreciation

When you purchase an asset, the IRS understands it will be subject to wear and tear. Real estate is no exception. What the IRS does to incentivize ownership despite these damages is allow you a deduction for depreciation. This deduction enables you to reduce your income every year significantly. While this is money you are not actually spending, it will deduct thousands of dollars from your tax bill.

2- No Payroll Tax

When you work a job or are self-employed, a certain percentage of your paycheck goes to Social Security and Medicare. For high wage earners, these taxes can reach up to 15% and cost them thousands of dollars per year. Alternatively, rental income is not subject to these taxes; thus, you or your real estate fund can enjoy extra income and have more capital to reinvest into growth. For people willing to invest a significant sum in real estate, their rental income could match or exceed the salary of a full-time job. The difference is that they will pay much less in taxes.

3- No Tax On Appreciation

Though rental income is usually a higher priority than appreciation, increasing value is another excellent way to grow your investment. One thing that makes it even more attractive is that you do not have to pay taxes as the value of your asset goes up. You can hold onto your property for decades while extracting rental income and never pay extra for it. You will not owe any tax until you sell that investment, and even then there are strategies that allow you to continue to defer the taxes.

4- Lower Capital Gains Taxes

Capital gains taxes are very high for short-term assets, but much friendlier when it comes to assets you hold long term. Because real estate is always a long game, you will pay a manageable capital gains tax when you choose to sell your stake. The amount you pay will depend on the gains you made, but you should never pay more than 20%.

5- IRA Eligible 

One thing that many mainstream investors don’t know is they can purchase private real estate funds in retirement accounts. The reason this is not well known is the top brokerage providers do not allow it. Fortunately, some brokerages do. This means that you can invest in private real estate while enjoying the same tax protection you do with assets like index funds.

6- Cost of Upkeep

When you own a property, you can deduct the various costs of upkeep from your declared income. While this might sound inconsequential to some, it can add up to a substantial amount depending on your circumstances. An example of this would be an apartment building needing a complete renovation. The building owner may have to pay out of pocket for the repairs, but they can deduct it on their taxes. If the price of upkeep is exceptionally high, they may not pay any taxes at all that year. So you increase the value of your property with repairs and maintenance, and you get to enjoy the tax deduction of the costs. This is yet another incentive that makes real estate such an attractive option for investors.

7- Property Tax Deductions

The last significant deduction real estate owners can take advantage of is property tax. Property tax is a fee you pay every year based on the value of your asset. Depending on your state, this number ranges from roughly 0.5-2.4%. While this percentage may not seem like a meaningful amount, it can be significant depending on the value of the property. Though real estate investors hate to pay it, the deduction allowance serves as consolation.

When deciding where you want to invest your money, consider the tax implications of each type of asset. Careful planning and investment selection can keep you from ending up with a hefty tax bill at the end of the year. You will find that real estate offers the most tax benefits of any other asset by a significant margin. This means you keep your money working for you generating more income and faster growth.

Discover more today how Private Commercial Real Estate Investments can help you create generational wealth.

Cause Capitalism

Investing used to be a soulless enterprise – out of sight, out of mind.

However, in today’s technology-centric age where there are more cell phones than there are people and with social media, very few things go unnoticed or undocumented.

Apple, for example, in 2013, had its Nike moment. In the ‘90s, Nike’s Asian suppliers were exposed for their horrendous working conditions, low wages, and use of forced child labor in factories that made Nike shoes and apparel.

Undoubtedly, Nike was not the only company that had labor issues with its suppliers. It just happened to be one of the biggest brands in the world, and Nike had to confront those labor issues publicly to preserve its public image and its athletic shoe and apparel empire.

Fast forward to 2010 when working conditions at Foxconn, Apple’s main iPhone manufacturer, were exposed. Although the iPhone was made at several different Foxconn factories around China, most of them were assembled at Foxconn’s 1.4 square-mile flagship plant, Longhua, just outside Shenzhen.

In 2010, Longhua assembly-line workers began killing themselves. Worker after worker threw themselves off the onsite dorm buildings, in tragic displays of desperation and protest of the work conditions inside. There were 18 reported suicide attempts that year alone and 14 confirmed deaths. Twenty more workers were talked down by Foxconn officials. Suicide notes and survivors told of immense stress, long workdays, unfair fines, lack of benefits, and harsh managers who were prone to humiliate workers for mistakes.

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As an investor in public companies like Nike and Apple, it’s hard not to feel guilty about the negative social impact these companies’ products have on unseen workers.

Perhaps because of heightened exposure to the dark side of the shiny products we consume, there’s been a elevated social awareness of the effects our buying and investing decisions have on the rest of the world. Investors are starting to care where their money goes, which explains the rise of socially responsible investing and its cousin, cause capitalism.

Is it possible to be a socially responsible investor and still make money? The short answer is yes.

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It is possible to align your investment portfolio with concern for people and the planet.

For those new to socially responsible investing, it may help to have an idea of what it means to invest in a socially responsible manner. Socially responsible investing is investing in companies that make socially responsible choices. In addition to being good stewards of the environment and their fellow man, these socially responsible businesses should treat their employees well, create healthy products and services, and have high ethical business standards.

Here are some reasons socially responsible investing might make sense:

 

1. Your money choices should align with your core values.

If you don’t care about the environment or your fellow man, then socially responsible investing is probably not for you. However, if you do care about your fellow man, then why not align your investing with your core values? I assume the way you treat people and the way you conduct yourself at work aligns with your core values. Why not take your investing to the next logical step? By aligning it with your values?

2. Why not place your money with the good guys?

Why invest your money in companies with unethical business practices? To take it one step further, why be merely satisfied with not putting money with unethical companies? Why not put money with companies that are actively trying to make a difference?

Take, for instance, Toms, the shoe company that donates a pair of shoes to needy children for every pair sold. Toms was created by Blake Mycoskie, an entrepreneur from Texas who, on a trip to Argentina, noticed that the children he was playing soccer with were not wearing the types of shoes most of us are used to. They couldn’t afford them. Instead, they wore a simple, affordable slipper as their everyday shoe.

Inspired by the design and a desire to help children like the ones he was playing with, Mycoskie created a similar, simple design and launched the product in America. His goal was to create a for-profit business that did not rely on donations, yet helped the poor. The popularity of the shoes caught on quickly, as the “socially conscious” young adult proudly bought and wore Toms know their choice contributed to a suffering child’s wellbeing. Toms is credited with kickstarting the “cause capitalism” movement, with other companies following suit.

One such example inspired by Toms, childhood friends Ben Friedman and Brad Gillis opened Homegrown Sustainable Sandwich Shop in 2009 and have since built it to 11 locations in the Seattle metro area. The better-sandwich concept sources all organic produce, eggs, and milk, as well as all-natural meats and cheeses. Everything in the restaurant is recyclable and compostable – there are no trash cans – and the company even founded its own farm outside Seattle to further invest in its passion for sustainability.

3. Let your money do the talking for your causes.

By investing in companies that align with your values, you can make your voice heard without having to take to the street. By investing in multiple companies, you can clone your voice and be heard in more places and across more platforms and causes.

4. Socially responsible investing can be profitable.

Socially responsible investing and making money are no longer mutually exclusive. In fact, there is evidence that it can be profitable. A 2017 study found that organic dairy farms in Vermont posted better returns than their conventional counterparts by almost double for similar size conventional dairy farms. Parson, Bob (Dec. 31, 2017) “Study Compares Profits of Organic & Conventional Dairy Farms,” https://www.lancasterfarming.com.

5. Diversification.

Socially responsible investments can contribute to the diversification of your portfolio, adding companies with philosophies and strategies distinct from their corporate counterparts.

Increased social awareness and concern for your fellow man are bipartisan, nonsecular, and gender neutral. There is no reason social responsibility shouldn’t permeate our investing decisions as well. As socially responsible investing gains steam, let’s not forget the other part of the equation – the investing piece. Otherwise, you’re just donating to a worthy cause.

Investing implies putting money in an enterprise that is hopefully profitable and enduring. For profitable investments that are both enduring and also sheltered from typical Wall Street volatility, investors turn to alternative investments. And of all alternative investment classes, few are as profitable and enduring as commercial real estate investing.

Why not mix socially responsible investing with commercial real estate?

Discover more about our socially responsible commercial real estate funds and find out how you can make an impact on society with your investing.