Monthly Archives: February 2013

Penny Stocks Could Cost You a Pretty Penny

Okay so the title is designed to catch your eye. But if you are thinking about investing in penny stocks it is worth realizing you could lose a lot of money in doing so.

This is not meant as a scare story, merely as a way of reminding you that investing in penny shares doesn’t make them any less volatile or safe than regular shares. Indeed, they are generally even more volatile, which is the reason why they are available so cheaply anyway.

Think about the value of a company before you invest

Let’s say Company A has shares valued at one cent each. Company B has shares valued at $6.78 each. Clearly there is a lot more value in the shares of Company B than those of Company A. This is because penny shares are made available by those companies who show promise for the future. They are created largely to generate funds to put back into the company so it can expand and develop.

Of course we all know lots of companies and businesses fail in their early days. So your task is to invest in penny shares released by companies that have the biggest potential for a great future. Lots of people wish they’d invested in IBM or Microsoft when their shares first came out. They’d be worth a lot of money by now. And when you think about the idea behind penny shares it is easy to see how such an investment can seem extremely tempting.

The reality behind penny stocks and shares

Let’s take a look at the reality of the situation now. The truth is penny shares are affordable for many people looking at getting into the stock market. But they are the riskiest shares of all. You may be able to afford more shares from Company A than you ever could from Company B, but that doesn’t mean it is a wise investment.

The bottom line here is to consider how much you can afford to invest – and also to lose. There is a bigger chance of penny shares nosediving in value and becoming worthless than there is of shares in any other company doing the same thing. There are exceptions of course, which is why you should never invest in any types of stocks or shares unless you know what you are doing and what to expect.

Many people say you should only invest money you wouldn’t miss when it comes to penny shares. There is a lot of truth in this. You should never really invest in it to gain a particular amount of money in return. It is far more speculative than other shares, which is why they are not for everybody.

This doesn’t mean you should avoid them at all costs of course. It just means you should be aware of the pros and cons and of what you are investing in. The more you understand about penny shares, the better your chances are of getting it right.

New Recruitment Rules: How Will They Effect Umbrella Companies?

Through the recruitment process in the UK, an umbrella company acts as an employer to freelancers, sole traders and contractors who work under fixed contract assignments. These assignments are usually provided though recruitment agencies, and the agencies reduce their tax liability by issuing contracts to limited companies.

The umbrella company then issues invoices to the recruitment agencies, and once the invoice payment has been paid, the contractor is paid by the umbrella company through PAYE, with added benefits like certain elements of tax offsetting, including travel, accommodation and meal expenses.

Since the government introduced the IR35 tax legislation, umbrella companies have become more prevalent in the UK. Taking inspiration from the French version of IR35 (portage salarial), the British IR35 was brought in to determine contractors’ employment status and their ability to make use of small company tax reliefs.

How Umbrella Companies Work

Contractors first provide their umbrella company with their working timesheets, and in turn the umbrella company issues an invoice to the limited company (or client) for payment of those working hours. The client will always be the company or business for whom the sole trader or contractor works for, and this can be across all industries and levels of employment.

Umbrella companies are required to use the same tax (PAYE) calculations as other sole traders and contractors, however the only difference is will be the level of service they offer for their fee to their customers. There are a variety of ‘allowable’ expenses that umbrella companies claim for, and from hotel and accommodation expenses to mileage and general travel expenses, their popularity among contractors continues to rise. Food allowances can rarely be claimed, as the HMRC believes that a contractor would continue to eat, whether they’re working or not.

Auto Enrolment Explained

Although small companies don’t have to auto-enrol their contractors into pension schemes until 2014, larger companies have already begun the process. Contractors can choose to opt out of the auto-enrolment pension plan, for example if they already have a pension plan set up, but this can only be done once they have been auto-enrolled.

The service was set up to provide contractors with the same benefits as regular employees, seeing that the IR35 tax legislation makes contractors pay the same, and sometimes more, tax than regular employees anyway. If a contractor chooses to take advantage of their umbrella company’s pension scheme, they can benefit from their employer’s pension contribution, just in the same way as regular employees of that company.

Implications Of Auto Enrolment

Although contractors can take advantage of a funded pension from their umbrella company, as well as saving on tax and NI contributions, the amount of contribution and the fee it will cost the contractor will differ from company to company. To meet the increased costs, umbrella companies may decide to increase their rates. Furthermore, contractors that deal with multiple umbrella companies may end up having multiple pensions. Thus, a contractor would have to opt out of multiple pensions through umbrella companies in order to save for their retirement.

Brookson are a specialist accountancy that work with freelancers and self-employed professionals. Visit them to find out more.

The Importance of Planning and Saving for the Future

Most of us realize we should put some regular effort into saving money for our futures. However in reality we don’t all manage to do it. One report just released by HSBC says people in the US have only managed to save for around two thirds of their retirement years (on average). Of course none of us knows how long we will have to enjoy retirement, but according to the study the average length of time we have finances to cover is 14 years. The study also found the average retirement stretches out for 21 years.

The figure does not become any more promising if we take a look around the globe. Other countries find themselves in a similar position, with far less in savings on average than the number of years people have left to live.

How can you make sure you don’t become one of these statistics?

There is a lot to be said for living for the moment. But we also have to look ahead and ensure we can live comfortably in the future too. After all we spend so much of our lives working: it seems a shame not to enjoy our retirement and have a reasonable amount of money to see us through this period of time.

So it is a delicate balance we must strike: to spend money today and also to save for the future. If we can make sure we are able to do both, we should avoid becoming one of the statistics mentioned above.

How can we plan for the future?

The real task is to ensure we live properly today while freeing up some cash to invest in our futures. The current period of time is challenging for many people, with wages stagnant and many goods and services shooting up in price. This means many people are struggling to save anything at all. Many do not even have the luxury of a financial cushion to rely on in case anything should happen.

So you can see the task is to take a serious look at your finances now to see where you could possibly make savings. Many people can free up some cash in one way or another, depending on their situation. Even if it means giving up one or two so called luxuries, wouldn’t you rather have something to invest in your future? After all once your retirement arrives you will have no more time to build a nest egg to survive on.

They say the longest journey starts with one small step. This is true, and so is the need to focus on your desire to plan for the future. Even if you only start in the smallest of ways, you will be heading in the right direction. And once you get started you may gather pace and find new ways to save for your retirement.

The figures do not lie, and if you want to be able to fund your retirement the best time to start is now.

The state of UK consumer loans

Surprised at the state of UK consumer loans? View how quickly UK consumers accumulate debt with this live debt ticker.

This infographic is brought to you by QuickQuid

Are You Investing in YOU?

Whenever you hear someone talking about investments, you probably immediately think of the different types of investments they (or you) should make. But it can pay dividends to think along different lines too. This is particularly true when you start thinking about your own needs.

This is where we get to the idea of investing in you. If you were to read any definitive guide on investing, you’d notice that while some of the advice applied to you, not all of it would. The same would apply to other people. In reality no two people will ever have exactly the same requirements for their finances. Once you figure in their situation, their job, their future plans and so on, you’ll see how true this is.

So what do we mean by investing in you?

You have to figure out what you want from life in terms of your finances. If you do this you can work out how to gain the best possible results – not to mention amassing the largest sum of money to invest in your future. This is where we’re starting to get to the root of what it means to invest in you.

The idea here is to invest in your skills so you become better able to choose the right investments, and better able to free up more cash to put into them. The first way to do this is simply to educate yourself on how to invest your money for the best. If you have little knowledge of how to invest money, you could improve your knowledge by going online or buying books that will tell you more about the different investments available. The more you know about them, the less likely it is you’ll invest in the wrong ones or make any financial mistakes.

The other way of investing in you is to further your career so you are capable of earning more money. The investment here could be in a course or further qualification of some kind, so you are able to increase your worth to gain a better job.

As you can see, both of these methods invest in you as a person in different ways. Yet they both have one end goal in common – the ability to achieve the results you want by improving your own knowledge and ability to generate money to invest.

Decide where your investments need to be made

Of course you may already know a great deal about investments of all kinds, or at least of the kinds that interest you. However this is only the first step. You now need to ensure you generate enough money with your skills to be able to create those investments.

Conversely you may have the cash available to make investments but you may not have the knowledge required to help you place that money in the best way for your needs. This is why it makes sense to decide where best to invest in YOU, so you get the results you want.

2013 Real Estate: Buying or Selling?

Whether you intend to buy or to sell, the real estate market is a good bet for 2013. As the year begins the industry is showing promising trends. In many areas across the nation sales as well as median prices are on the increase.  In addition, foreclosures and distressed sales are down. Another positive sign in the real estate industry is the near record low interest rates.

Even with tightened mortgage credit availability, the real estate industry is slowly but steadily increasing. Some experts predict that over the next two years the housing market will be a driving force in the nation’s economy.

Buying Tips

If you will be buying a home in 2013 you should do your homework first. For instance, you should get a copy of your credit report as soon as possible. This gives you a chance to remedy any problem areas. Learn about the different types of loans available and take the time to calculate how much mortgage you can comfortably afford. Get pre-approved.

When it comes to choosing a home, if at all possible, you should choose for the long-term. Consider the neighborhood as well as your lifestyle and family, and the future you plan.

Selling Tips

Offering your home at a competitive price is essential, if you want to sell it fast you also have to ensure that it is in good repair. This will naturally attract more potential buyers. With that in mind, it is best to take the time to make your home look good. That is, you should make whatever repairs are necessary so that the house will appeal to anyone that may be interested in it. This includes things like a fresh coat of paint, new carpet, and replacing anything that is broken or missing.

The rule of thumb is to try to keep the repair costs down. In many cases you will only need to focus on aesthetics.

Also remember that when showing your home you should not personalize the space. Go with neutral colors and designs. For example, even if your home is located in Fort Worth, TX, you may want to hit up www,unclebobs.com to keep personal touches like bull horns and/or cow print couches out of sight. While it may be seem fun to show your personality with unique items it can hide a homes potential during showings.

Other things you might want to temporarily store away include things like family photos and trinkets, refrigerator magnets, and clutter. The idea is to create a clean space that allows potential buyers to ‘see themselves living there’.

People are looking for big open floor plans; even if your home doesn’t have this type of plan, storing your stuff temporarily can open up the space and make it look bigger. The idea is to make the most of what your home does have to offer. Don’t make potential buyers guess what a room is for – give each space a purpose with your staging. Turning a tiny bedroom into a home office is a creative way to give a real function to that room.

When sellers take the time to properly present their homes, potential buyers will take notice. Mortgage rates are low and real estate prices are on the rise. This is a win-win situation for everyone. This is the time to get involved in the real estate industry.

 

New Year, New Financial Goals?

We are now a little over a month into the New Year. The festive season may seem long gone, as is the time for setting New Year’s Resolutions. But it doesn’t mean it is too late to make strides in the right direction when it comes to achieving your financial goals.

For example, you may have set a financial resolution for the New Year. Whatever it may have been now is a good time to review your resolution and your progress. Have you done what you wanted to do? Have you achieved anything yet? Have you taken notable strides towards your financial goals?

If the answer is yes, you can review your position, adjust your focus if necessary and then keep on going. If the answer is no, it is also a good time to review your position. You may think you have failed in achieving your goals, or at least taking steps towards them. But this isn’t necessarily the case. You are only failing if you ditch your resolution now.

Have you forgotten your goal?

Don’t worry if you have – people around the world will have forgotten their goals by now. The thing that will separate you from the ones who failed is that you can carry on. There will be obstacles and challenges in the way of everything you try to achieve. It is how you get round or over these obstacles that will make the difference.

This is why it makes sense to review your goal and to see what is working and what isn’t. Even if you have strayed away from your goal over the past few days or weeks, you can make changes now to refocus.

How to get back on track

If you have found it difficult to remain on schedule with regard to your financial goal, think about what made you set it in the first place. Very often you can focus on the motivating reasons and use those to get you back on track again.

Alternatively you may find you no longer have any passion to reach that same goal. This can happen, and if it does this is the ideal time to find a new focus – a new financial goal to target. This doesn’t mean the earlier goal was a failure, or that you didn’t choose the right one to begin with. Times change and so do we, which is why we must be ready to find the right solution to the problem.

The point is we can set new financial goals or re-ignite old ones at any time of the year. Don’t wait until next January 1st to figure out what your goal is for the New Year, or to restart an old one. Start today and look at achieving your financial goals again. You’ll be glad you did, especially when you look back in months and years to come and see the progress you made. You might be pleasantly surprised at how much you achieved.

Why real estate is a good investment

By Betsy Fallwell

“It takes money to make money” – it’s one of the oldest sayings in the book, but is it true? When it comes to property investment, the answer is a resounding yes.

With the stock market still suffering triple-digit gains and losses on a routine basis, investing in the market is volatile; for some investors, it’s still too risky. But if you’re eager to invest in something with the possibility of an immediate return, property investment could be the right path for you.

The Right Time to Buy

Today we’re experiencing the perfect confluence of factors that make property investment a wise choice: nearly historic-low interest rates and property values that are only now beginning to dig out of the basement, where they’ve been residing ever since the housing crisis descended on the market.

This gives you the opportunity to make money from property investment on two fronts. First, not only can you expect to see the value of your property rise over the coming years, expanding your equity in the property with no effort on your part, but second, you’ll be able to collect rent on your properties from day one.

Uncle Sam Wants You (to Invest in Property)

The federal government makes it beneficial to invest in property, too. Those benefits come in the form of tax breaks. While homeowners have to pay out of pocket for building maintenance, homeowners’ association dues, and property insurance premiums without any breaks from the government, landlords aren’t subject to the same tax regulations. When you’re a landlord, you can write off all of these expenses – and many more, including the cost of utilities and advertising your rental space – and reduce your overall tax burden.

Diversify, Diversify, Diversify

What’s the first rule of real estate? Location! What’s the first rule of investing? Diversify! Combine the two, and you’ve got the first rule of property investment: diversity your holdings with a variety of locations. Similar to the saying, “Don’t put all your eggs in one basket,” don’t make the mistake of putting all your investment properties in one location. Look for a variety of home styles – whether they be apartment buildings, duplexes, or single-family homes – in a wide range of neighborhoods. This will give you properties with a wide range of monthly rental fees, which will open you up to a wide range of potential tenants.

How Much Could You Make?

The first step to making money in property investment is finding the right property. Work with a real estate agent to find quality properties in your area; consider foreclosures and short sales, which can reduce the up-front cost of purchasing a building and maximize your budget for any necessary renovations.

Once you’ve found the right property, you’ll have to secure financing. If you’re purchasing a multi-family property, you’ll have to apply for commercial financing as opposed to residential. This type of financing often requires larger amounts of capital up front, as well as higher interest rates over the life of the loan. After you buy your investment property, you may have to fix it up to bring it up to code or to make it appeal to renters.

At this point, you can begin to figure out a price for your property. Look at comparison properties in your area to see what similar apartments or houses rent for. The better a deal you get on the purchase price and the more wisely you spend money during any repairs or renovations, the wide the profit margin on your investment.

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