Monthly Archives: July 2012

Diversity: the Key Word to Remember When Investing

We’ve all heard the advice not to put all our eggs in one basket. This certainly holds true for investments. If you were to sink everything into one investment and it lost its value, you could lose a lot of money. However if that investment was one of several, the impact on your savings would be far less severe than it would have been otherwise.

So let’s take a closer look at how you can incorporate diversity into your investment plans.

Focus on entirely different kinds of investments

The usual suspects always rear their heads whenever we think about investments – stocks, shares, financial products of various kinds. However there are other options too, such as investing in property, antiquities and collectables and even wine.

It always pays to explore one or more of these areas if they hold an interest for you. For instance wine lovers will enjoy investing in aged bottles of wine; the process will be fascinating to them quite aside from the potential there is to make money in the long run.

Look at your existing investment portfolio to see how diverse it is

This is a good place to begin if you want to introduce more diversity into your investments but you’re not sure how to do it. By looking at your current investments you’ll see which areas you are focusing on and which ones have been ignored, willfully or otherwise. You can then make notes to see whether there are any areas you would like to get involved with in future.

The important thing is to take time to research an area before you allocate funds to invest in it. Diversity is just as much about exploration as it is about actual investment. Don’t choose an area to invest in just because you feel you should or because someone you know is investing in it. Make sure you make logical coherent decisions in order to get the right balance of diverse investments for your own specific needs.

Find out more about other types of investments you haven’t yet explored

You may be happy with the balance of investments you already have. But if you want to be more diverse in your portfolio you shouldn’t just focus on the types of investments you already know something about.

For instance some people focus on investing in stocks and shares, but never think about other kinds of investments such as business and property. There are all manner of possibilities to make your investments more diverse, so make sure you look into all of them – even if you only ever actually invest in a few.

In short diversity is all about maximizing the opportunities you have to make money from the money you already have. Regardless of whether you have just a few hundred dollars or several thousand, the most important thing is to know where to place that money. This is vital if you want the highest returns in the months and years to come.

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Three reasons to outsource your payroll to online services

Whilst an in-house accountancy might seem reliable, it is often much more beneficial to outsource your payroll needs to an online service.

More than just being online, which has the benefit of being highly accessible any time of day or night, there are a few other advantages that you might not have considered. Whether it’s the reduced cost, automated process or the expert knowledge behind the service, there is plenty to benefit from outsourcing your payroll to a reputable online service.

Cost

To put it simply, most businesses can’t afford the cost of keeping accountants in-business to monitor the payroll duties. It can be expensive, offering minimal benefits. Since it’s a regular and inevitable cost, there would be little you could do in the way of saving costs with this option.

Even when you can afford it, it takes away a lot of staff hours. Doing some basic maths, by figuring out or determining how many hours each week and month are spent on managing payroll accounts, will show just how much time is being wasted on the payroll.

The alternative then, is to outsource somewhere cheaper. Since these companies regulate the payroll of various businesses, rather than solely relying on your custom, the cost is much more reduced.

Automated

Being online, the payroll process can be automated to a certain extent. Since it’s a regular procedure, it makes sense to have it done at specific points without constant input. It should still be monitored, of course, but by being automated you can save a lot of time and energy.

Furthermore, by being an outsourced automated process, any errors are not your responsibility. Should anything go wrong, the online service will quickly and effectively remedy the situation. Not only does this ensure that everything is in order but it will keep your employees happy as they get paid on time.

Knowledge and insight

Finally, online services work in a similar fashion to an accountancy firm, in that the staff and company providing the service understand the complicated system of the payroll and related taxes. This means that you’re entrusting your payroll, and the related money, to the hands of knowledgeable professionals such as Sage One.

More than just an expert opinion, having these accountants monitoring your payroll means you have access to professional advice. Both you and your employees will most likely have a limited understanding of the payroll system and the online service can easily explain any situations to you and your employees; keeping everyone happy in any situation and allowing for greater peace of mind. This, in turn, should hopefully keep the workforce happy, increasing productivity.

In conclusion, these are only a few of the advantages available when you outsource to an online service. Reliable and effective, online services are becoming a very popular option. If you’re looking to improve your payroll, than this might be an option for you too.

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Unemployed? – Ways to Invest When You Don’t Have a Job

The Great Recession has turned unemployment and layoffs from a distant thought in people’s subconscious to a constant concern in the forefront of their minds every single day. It’s probably because unemployment is at an all-time high. Even if you feel secure in your job, you still need to have a plan of action in case you find yourself without a boss or a paycheck that cannot pay even your cheap home loans.

Once you establish an emergency fund and make accommodations and comparethemarket.com  for other key areas of your life, such as health insurance coverage during your gap in employment, you can start planning for things like continuing your investment activities while unemployed. Let’s look at ways you can do invest when you don’t have a job.

Stick with Safe Stocks

If you are already invested in the stock market and you lose your job, the worst thing you can do is panic. Don’t freak out and cash out – just make some minor adjustments so you’ll weather the storm a little better. While you’re without work, keep your money invested in safe, dependable companies – think blue chip stocks – that pay regular, dependable dividends. Companies such as Wal-Mart (WMT), AT&T (T), and Procter & Gamble (PG) are some great examples.

Bonds are Okay, Too

Bonds are a great way to store your money for a few years, so you’ll have access to it later on if you need it. They’re a great vehicle if you think you may need money around five years from now, but for immediate cash if you lose your job, the best way to go is to open a savings account. You’ll have cash on-hand during your job loss; but it’s also there in case you become ill and can no longer work, or if you have another financial crisis that merits dipping into the funds.

Hands Off That IRA!

Investing in your retirement regularly and for the long term is the most important investment you’ll ever make. Before you deal with stocks, bonds, or anything else, you need to have your retirement on lockdown. This brings us back to the point about your emergency fund – beef it upon in order to avoid dipping into your retirement account if you lose your job but still need a way to pay your bills.

The Best Investment You Can Make

If you’re unemployed, investing in yourself is a great way to yield higher returns, guaranteed, for life. What are we talking about?

Your education.

Investing in your education during a gap in employment will equip you with additional skills that are vital to have in a highly competitive job market. It’s tough out there, and there aren’t enough jobs to go around. Therefore, at a juncture in your life as critical as unemployment, it may be worth a few student loans to make yourself more appealing to your future boss, and increase your potential paycheck in the process.

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Are You Ready to Buy a Home?

For the last few years, in many areas of the United States, home markets have fallen while interest rates have reached historic lows.  Many who are underwater in their homes have been waiting and waiting for the market to rebound while those who are waiting to become home owners continue to wonder where the bottom of the market is and when is the best time to buy.

There are now indications that the market is slowly beginning to improve.  If you haven’t jumped into home ownership yet, you may wonder if now is the time to begin your home search and to see how much you qualify for a mortgage loan.  However, before you take the leap to homeownership, make sure you are truly prepared.  Remember, many people who found themselves in dire financial straits a few years ago were in that position because they bought a home before they were truly prepared.

Can you pay 10 to 20% down?  Conventional wisdom used to be to have a down payment of 20%, but that can be difficult in some areas of the country where typical housing prices are $400,000 or more.  At the very minimum, you should plan to have at least 10% down.  If you can’t, from a conservative viewpoint, you are probably not yet ready to own a home.

Have you practiced making the monthly payment?  If you are currently renting and paying $1,000 a month and a house in your price range with your available down payment would cost $1,560 a month, begin setting aside an additional $560 a month for at least 6 months to make sure you can comfortably afford the monthly payment.  (Plus, practicing like this can bulk up your savings.  Setting aside an additional $560 a month for 6 months will net you an extra $3,360 in your savings.)

Can you afford to set aside money for repairs and maintenance?  While many homeowners wish their homes would never need expensive repairs, that just isn’t reality.  Homes need to be maintained and repaired, and if you don’t put that money aside, you can find yourself in a financial mess.  Experts recommend you set aside 2 to 4% of your home’s value for annual repairs.  On a $250,000 home, that means you should set aside $5,000 to $10,000 or approximately $415 to $830 a month in addition to your monthly house payment.

Can you afford annual property tax?  Property tax rates can vary widely depending on your location and the value of your home from just a few thousand dollars to $10,000 or more.  Before you buy, determine what your property taxes will be and how much you should set aside annually.

Unfortunately, new homebuyers often just focus on one price—the monthly property investment mortgage payment.  However, there are many more variables and expenses than just the mortgage.  Even though now is still a great time to buy, before you take the leap into home ownership make sure you can afford all of the expenses.  And remember too, you will be able to deduct some of your expenses on your income tax filing, essentially lowering your expenditures a bit.

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Do You Know Enough to Be a Successful Stock Market Investor?

For many people the obvious route to take when thinking about investing is to head for the stock market. But is this really the wisest route for everyone?

There is certainly a lot of money to be made with stocks and shares. However there are significant losses that can be made too, especially if you don’t know what you are doing. Unfortunately some people are tempted by the potentially big gains available. This means they can end up investing money in shares that are not right for them.

So if you are considering investing in this way, here are some points worth bearing in mind before you do so.

Can you invest money you would be happy to lose?

This is the main point to bear in mind, even if you know little about anything else. Investing your life savings in stocks and shares is not a good move. If the stock market were to crash – and as we know it has happened before on more than one occasion – you could lose everything.

This is why it is wise to split your cash and invest it in a number of different ways. It spreads the risk you are taking as well.

Do you have an interest in the stock market?

You don’t need to know the ins and outs of how a car works in order to drive one. But when it comes to the stock market it does make sense to have a rough idea of how it works and what kinds of ups and downs you can expect. Otherwise there is a much higher chance of investing money in volatile stocks. There is also a higher chance of viewing the market through rose tinted glasses – seeing only the potential gains and not the potential losses.

Do you understand not all stocks are the same?

Here we simply mean that some are issued by big name companies we’re all familiar with – Coca Cola or Microsoft for example. Others are issued by small companies that are just starting out.

Everyone wants to invest in the next big global success. If you know what to pick you stand a chance of making a lot of money – just as you would have done if you had invested in Microsoft shares right at the very beginning. But picking future successes is very difficult to do – and best done with money you can lose if that’s what it takes. It is almost a form of gambling when you think about it.

While the breakout successes will achieve the highest returns, they are very few and far between. You are more likely to make gradual returns on a more stable stock from a well known company.

So you see you may not necessarily be the right person to invest in the stock market. It all depends on your level of knowledge, how much you are willing to invest and whether you can accept the ups and downs of this particular type of investment.

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Is Public Liability Insurance mandatory?

Business owners work hard to develop and maintain their businesses. With so much going into owning a business, it is important to also protect it. Business owners should have certain types of insurance coverage in order to do this.
One type of business insurance that a business should have to protect it is public liability insurance. While public liability insurance is not mandatory, it is strongly recommended for businesses. The reason for this is that it can protect your business from any claims being made by third parties.
In customer-facing businesses, customers as well as members of the public will come onto the business premises. This also includes those who operate businesses from their homes. Public liability insurance provides many different aspects of coverage.
If a third party were to make a claim against your business insurance, the policy would cover any damages awarded to the third party. The damages are awarded in the cases of injury or damage to their property. However, this is not all that is covered. When dealing with these kinds of claims, it is often necessary to obtain the services of a solicitor. This can be quite expensive. Public liability insurance will reimburse a business for these expenses.
Sometimes when dealing with third party claims, the injured party will seek treatment from the hospital. They may also need an ambulance. In some of these situations the NHS may seek reimbursement. If this is the case, a business with public liability insurance would be covered for this expense.
When obtaining public liability insurance, the premiums will vary according to the business and the industry. Many times it depends on how many people may be on the premises at one time, as in the case of a hotel. Also, the premium amounts depend upon the level of coverage selected.

Another Golden Rule for Investing: No Plan is Set in Stone

If you want to invest money you need to have an investment plan. This much is certain, but you also need to know the limitations of that plan. For example you should know the circumstances that led you to create that plan to begin with. And you should also know what type of circumstances could lead you to revisit that plan with the intention of altering it in some way.

Life gets in the way

Here is an example of what I mean by this. You might have an investment plan that has been created with the intention of letting you retire early. This is all well and good, but supposing you lost your job? What would you do then? You may well have to revisit your plans to see whether they are still valid in light of such a major change to your circumstances. Your idea of early retirement may have to be shelved; alternatively you may be able to put your investments on hold rather than cancelling them and opting for something else instead.

The point of all this is that your investments can work wonderfully for you in some situations. But if those situations change the investments may have to change as well. It is wise to be alert to this fact when you set the investments up in the first place.

Looking for a get out clause

Most people realize the longer they can tie their money up for, the more they are likely to earn from it as a result. But with that said, it is also the case that circumstances could lead you to cancel an investment you were previously very keen on. If you suddenly needed access to more cash because you had lost your job for example, it would be very frustrating to know you had the cash you wanted but couldn’t get to it.

So whenever you think of investing in something new – whether it be property, stocks, shares or any other investment plans – make sure you know what you can do if you needed to get your hands on the cash in a hurry. Is it possible to cancel an investment without getting penalized for doing so? If you are penalized how much will it cost you? Hopefully you won’t need to cancel anything, but it is wise to find out what you can do just in case the time should come.

Revising your plan

If you should need to revise any investment plans you already have, don’t make any kneejerk reactions. Take some time to consider all the options – you may not have to make any adjustments at all. The last thing you want to do is to panic, cancel an investment and then find out later on you needn’t have done it at all. A little time and a level head are the two best things you can have on your side at this point so always bear that in mind.

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Are Your Parents Jeopardizing Your Savings Plans?

Have you ever wondered where you got your financial habits from? In most cases we learn them from our parents. If your parents have good habits, saving regularly and not getting into debt, the chances are good that they will have passed the same good habits on to you. If on the other hand they have weak financial habits, piling up debt, making bad financial decisions and failing to save, you may recognize those same habits in your own financial life.

The good news is that you can change your own financial habits if you recognize you have them. Even if you learned the worst habits from your parents you can still turn them around. The first step is to recognize you have those bad habits and to admit that you are not responsible for them. The one thing you ARE responsible for is to change those habits so you can head into a stronger financial future.

How to work out what your bad habits are

Perhaps the best way to do this is to take a critical look at how your parents handle things. You don’t have to ask them: you should have a good idea of how they handle money simply by considering your parents’ stance. Did they argue about money a lot when you were young? Did they educate you about money? Did they discuss money matters and think about how to solve problems when they arose?

As you find answers to these questions you will start to realize whether your parents gave you good or bad habits. You will also start to identify your own money habits and where they came from. This is the first step to resolving any bad habits you may have.

Will you have exactly the same habits as your parents?

Not necessarily. Sometimes we can do the exact opposite to what our parents do. For example if you have a parent who spends too much and gets into debt, you may remember saying to yourself you would never get into that same situation. This could lead to habitual savings, to the extent that you forget to enjoy yourself and save too much rather than spending anything.

Conversely you might see your parents as being too conservative with money. In this case you might decide to go all out and enjoy it in your own life, rather than planning for the future. So you can see that either way you can be affected by your parents’ habits.

How to change for the better

Identifying the problems goes a long way towards starting to resolve them. Once you know what you are up against you can begin to consider how you will resolve any money issues you have.

Tackle one at a time and come up with ways in which you can resolve each issue. It may take time to conquer bad habits that were formed in your childhood. However you can be sure you will be able to conquer them if you persevere.

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