Showing posts with label investments. Show all posts
Showing posts with label investments. Show all posts

Feb 18, 2019

How to choose the best investment for you

Investing can be an exciting venture to undertake and a great way to boost your overall income. Whether you’re trying to save for a more financially stable retirement or you simply want to reach certain financial goals, investing is something everyone should consider at some point in their lives. When choosing the best investment to undertake, there’s a range of options you could go for, with different benefits to each. From property to stocks, here’s a simple guide on how to choose the best type of investment for you.

One of the most popular investment types is property investment, with over two million property investors in the UK alone. There are a whole host of benefits that come with investing in property, the main ones being the opportunity to generate more immediate returns on your investment along with large returns from capital appreciation. If you choose to purchase a property for buy to let purposes, you’ll be able to generate a consistent amount of income each month through tenants rental costs, with higher rental yields bringing in better returns. Then, once you decide to sell your property later in life, you could find that the property has actually increased in value thanks to capital growth, leaving you with an attractive return on your initial investment.

Of course, while property investment can offer some attractive prospects, this is largely dependant on the area you choose to invest in. In London, for instance, the property market is in a declining state, with a decrease in house price growth and low average rental yields of 3.05%. This means that those investing in a buy to let property in the capital aren’t likely to see the returns they’d like. In property hotspots like Liverpool and Manchester, on the other hand, the property market is thriving. Those who choose to invest in these cities can expect high rental returns, a strong level of rental demand, and a lot of potential when it comes to capital appreciation. Some property companies based in the north-west such as RW Invest even offer opportunities with rental yields as high as 7 and 8%, with much more affordable prices than many other UK cities.

While property investment can be a great path to go down, stocks and shares are often the preferred investment type for many. With this form of investment, you’re able to buy small fractions of a company which entitles you to a return on investment if the company’s value rises over time. While stocks and shares allow you to spend less money on an investment, there’s often more risk involved compared to property. Without the right knowledge, you could come out of your investment with less money than you started with. For those who don’t have much cash to spare but are keen to get involved with this type of investment, a stocks and shares ISA is a good option. A number of companies such as Moneybox have started developing app’s for this purpose to provide an easy and hassle-free way for people to try investing, instantly investing small amounts of users money into global companies through simple tracker funds.

There’s certainly a lot to think about when deciding which investment route to take. To put things in perspective, it’s worth comparing the track record of each investment type. For instance, between 2000 and 2017, research showed that the average UK home’s value significantly outperformed the Financial Times-Stock Exchange. While both investment types can bring good results for the investor, information like this suggests that for those looking to make a big impact on their financial status, investing in the UK property market may be the best route to take.



Nov 7, 2018

Negative Gearing: What It Is and Why It Can Be a Positive Investment Move

There’s a good chance that you’ve heard the term negative gearing before. It’s in the news pretty frequently, which is how it’s slipped its way into the daily lexicon. If you’re currently a property investor or are looking to get into that world, then you’ve definitely heard of the term.

In Australia, a debate rages about the pros and cons of negative gearing and what the possible benefits and risks that come with it are — for both individuals and the economy as a whole, it’s been a favored strategy for Australian investors for the past decade.

If you’re looking for an overview to assist in achieving your dreams of building an abundant property portfolio, read on to learn what negative gearing is and why it can be a positive investment move.

What is negative gearing?

Negative gearing is a tax strategy in Australia. The term is used to describe an investment if the net income (after subtracting expenses) is less than the interest on the borrowed money.

In other words, an investment is considered negatively geared when the costs of owning it (such as interest on the loan, bank charges, agent fees, maintenance, repairs and capital depreciation) are more than the income it produces (such as rent).

Who is negative gearing for? 

Generally, negative gearing is used by property speculators or those with substantial tax obligations as it offers immediate tax benefits. It can also apply to shares, bonds and other investments.

Isn't negative gearing a foolish idea? 

On the surface, negative gearing can seem like an impractical way of investing. After all, why would you want the costs of maintaining an investment (such as a property) to cost more than the revenue it is producing?

Therefore, the critical benefit connected with negative gearing is that any loss can be negated against other income earned, such as the person's salary, which in turn reduces their taxable income and, consequently, their payable tax.

What are these tax benefits? 

As a strategy, negative gearing can work because it means that a person will be earning less income, resulting in having to pay fewer taxes at the end of the financial year.

These tax benefits are a significant factor for many people as they will be in a position to claim deduction and depreciation against income on the property. There are three main types of deductions available to investors:

Revenue deductions — Examples are interest on the loan as well as continuous maintenance and repeated charges (council fees, bank fees, body corporate fees, cleaning expenses, gas, and water).

Capital items — Examples are hot water service or white goods (which are subject to depreciation). However, the investor must declare the expense over a series of years. For this reason, the Taxation Department set depreciation schedules from a few years to more than 15 years.

Building allowances — Additionally, investors can claim depreciation of capital works, particularly for building and landscaping. The current rate is 2.5% over 40 years.

In short, there is a lengthy list of expenses and charges that you could potentially be able to claim on your tax return.

Besides, even with negative gearing, property investors are still potentially in a position to make a long-term profit on their investment if the value of the property rises to a point larger than the expenditure costs.

What are the risks of negative gearing? 

As with any other investment strategy that you may be interested in pursuing, there are risks associated with negative gearing. As a potential investor, you must reflect on the inherent risk that comes with borrowing money for an investment.

This means that you should thoroughly examine your ability to reimburse the shortfall and proceed to maintain the investment loan even if it stops making any resemblance of a return (for example, if the tenants move, or for another unexpected circumstance).

Other cons of this type of investment are that it can drive up prices on existing houses and that it does little to generate new housing supply, which in turn means that it favors those in the high-income bracket and makes it more challenging for first-time home buyers or those in the low-income bracket to have access to the property market.

Before you opt to make any investment, you should speak with a professional financial advisor to discuss which strategies are aligned with your personal circumstances and risk preferences.

Have you ever considered using negative gearing as an investment strategy? Do you think you ever will? Why or why not? Let's start a discussion in the comments below!


AUTHOR BIO: Rob Chaloner is the Founder and Managing Director of Stratton, and is passionate about smarter ways to buy and finance cars. With Stratton, he's working to help Australian buyers disrupt the traditional car buying, financing and insurance markets through smarter products and online services.

May 23, 2018

Secure Your Child’s Future with the Best Buying Tips

Child Future with the Best Buying Tips
Child insurance plans are specially designed for growing child so as to meet their increasing costs of education and other financial requirements. It provides risk cover related to the life of child throughout the policy term and during extended term, that is seven years after the expiry of the policy term. As the education cost is growing rapidly, it is essential to have a child insurance plan for the better future of your child. This is the plan that will help you provide your child the best education and ensures the cash flows even at the crucial stage of your child’s life.

Feb 23, 2015

Be your own advisor when it comes to personal investment plans

Be your own advisor when it comes to personal investment plans
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Growing personal wealth always has to begin with a plan, and also the simpler the strategy is, the better your chances is going to be of following through and which makes it happen. Too many people begin motivated to create a change in their own financial life, and also have a super driven and overly complex plan. The problem with this particular approach is that after things start to obtain a little hectic, a complicated plan is simply too hard to stay with. So here is an easy plan for gaining control of the financial life as well as increasing wealth.

May 8, 2014

How to Invest in CD with Proper Knowledge?

How to Invest in Certificate of Deposit (CD) with Proper Knowledge
The best thing about long term CD investment is that the interest rates are high. Short term strategy will attract even smaller interest rates. A Certificate of Deposit (CD) investment has always been a reserve for the wealthy but things are changing. If you are the type of investor who is future oriented, you will want your investment to earn better interest over time. CDs are good for long term investments and the risks are negligible. In order to ascertain whether or not CD is right for your investment portfolio, you need to look at two distinct factors:

Jan 24, 2014

Trading Binary Options in the United States

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Binary options have become a very popular trading vehicle and new binary options brokers are opening their doors in a steady stream. But most binary options brokers are not under supervised by any recognized regulatory organization and there is very little oversight involved, so caution is always advised when opening a binary options account.

Dec 23, 2013

Binary option trading - the Russian Binary Market

Binary option trading is undoubtedly a global phenomenon and traders from across the globe have access to the market, regardless of whether they are in front of their computers and trading their favorite assets or they are physically present on the floor where the trading is taking place. Binary trading has seen traders from all quarters and in this article, we will focus on the option trading market in Russia.

Dec 20, 2013

4 Mistakes you can make in Your Relationship with Banks

Although it is a necessity, working with banks can prove to be extremely exhausting and confusing at the same time. It is true that banks are there to help you when you cannot help yourselves. They give you a hand when you need it, but they also take everything from you when you cannot pay your debt.

There are two ways that your relationship with your bank works. On one hand, things work out smoothly, and your relationship is based on trust and respect. On the other hand, each of you tries to cheat on the other one and misunderstandings occur. Either way, here are the mistakes you should avoid when it comes to bank/client relationship.

Discover How to Manage to Buy Your Favorite Car

Buying a car is an investment that should not be taken for granted. This implies a person should be very careful when buying a vehicle for his own use. It is important to learn how to manage to buy your favorite car. The customers need to consider several factors to enable them find quality products for their own use. In this case, they will purchase vehicles that will serve them fully.

These are some of the common tips that may help any customer to make good decision when acquiring cars.

Oct 9, 2013

Binary v Vanilla: What’s Your Option?

If you’re even remotely interested in trading shares, then you are probably already familiar with the terms ‘binary options’ and ‘vanilla options’. To put it very simply, binary options, also commonly referred to as digital options, offer two results to each transactions, while vanilla options only offer a single result. In the following, we take a closer look at these two different types of options, in order to help potential upcoming traders make up their minds as to which of the two is best suited for their trading style.

Sep 26, 2013

How Exactly to Determine Just How Much Life-insurance you want

Some folks believe that life-insurance is merely for the affluent. But it's the operating person of small means that truly must consider what a sudden death along with a lack of profit can mean to those left out. This composition can allow you to really see the advantages of insurance, in an entirely new light.  If you're between the ages of 20 to 50, term life-insurance could be the easiest & most powerful kind of insurance. Cash value insurance actually is logical for individuals’ people that are affluent and on age 50. A cash-value strategy may be tempting; however it will not be just as powerful.

Aug 28, 2013

Basics of Stock Markets: The A-Z Quick Sheet for a Beginner-Level Investor

Several individuals wish to engage themselves in stock market and invest their money in stocks, but they don’t have an idea about Stock markets and how they work. In fact, there may be lot of info available to you, but they may all seem confusing without actually knowing the basics. This post aims at educating the beginners about the basics of stocks market. Read on to enlighten yourself about the A-Z of stock market. 

May 21, 2013

Weaknesses to be Known Before Investing in Exchange Traded Funds

A small as well as big investor always treats Exchange Traded Funds (ETFs) as a grand investment. Considered similar to standard mutual funds, these funds trade like stocks. However, this does not mean that one can blindly invest in them without knowing about the shortcomings or weaknesses. In fact, a wise investor will always look at both the sides of the coin to gain possible information. After all, complete and precise information acts as a vital decision-making tool for the investors. So, discussed below are some weak aspects of ETFs that every investor needs to know and understand.

Apr 26, 2013

When and how should we get Financial Advices?

We are all in need of someone who can cut our bills. For that we have to stop using Independent Financial Adviser. We have to know that from where and how we can get proper advice. If we have shortage of time in researching while searching for financial products which are complex, then the financial advice will seem worthwhile to us. We should take our full time for researching for the best products. Professional help has to be taken each and every time as paying the adviser is worth as it will ensure that we are getting all the things right.

Help from the experts are needed in some areas which are quite common. The first area which includes is the pensions. At the time of retirement we are supposed to get a pension which is the annual payment for the rest of the life. It is a financial transaction which is pretty big. For this, most of us would require an adviser as we have to acquire the best deal after searching in the market. The other financial transaction which is huge is mortgages. We should always remember that we will not be getting an instructor but an adviser. So it is important to know all the basics from before. The products which are complex include life insurance, protection of income, critical sickness, and also there are several exclusions. In some particular events, the adviser is not needed and it can be done cheaply.

Apr 25, 2013

Impact of the UK Budgetary Announcement 2013

The announcement of the UK budget will have a lot of impact especially to the both the employers and the contractors.

The budget has greatly considered the working parent. Parents will benefit from the new tax free vouchers that will offer £ 1,200 childcare to parents earning less than £150,000 per year, aimed at encouraging more parents to return to work after maternity or paternity leave. This will come as a boost to employers in the region.

Jan 7, 2013

Guide to improving your finance by investing in gold

Today finance is one of the important things that shall be given attention. This is recommended because over the period inflation keeps on rising high. There may be no end to this and hence all that can be done on our side is investing wisely. Investments are generally done for secure future with present hard earned money. Therefore it is very important you make an investment which get you guaranteed return. Investments are of various types which include fixed investments, low risk, high risk investments and so on. Well, if you start to compare every type have its own advantages and disadvantages. However once you decide to make an investment then there shall be no looking back. One of the best recommended ways which is a low risk investment type is investment in the gold.

Dec 11, 2012

Facts to Know About Binary Brokers

In the age of globalization where everyone is finding new ways of multiplying their money the trading industry is obviously not very far away from this competitive market. There are different ways in which the people are investing money but things have become less tedious and hence they are going for binary options trading, an online way of multiplying money in the trading industry. Here comes the role of brokers.

Oct 19, 2012

High Yield Bonds Prove to be a Risky Way to Drive Investments

Return on investments is the most important aspect attracting investors to select any financial instrument. The potential risks attached to high yield bonds are overlooked by most in lieu of the great returns they offer. But a number of risks must be gauged to mitigate risk in the portfolio.

Mar 15, 2012

How Diversified Investments Are Beneficial in Retirement

What many people don't understand is the importance of saving for retirement earlier on in their lives. The sooner you start with a retirement plan, the bigger your retirement investment will be. However, a lot of retirement plans only stick to investing in certain market segments.

At times the market segments that you are investing your savings in do not grow due to any number of reasons. That is why it is important that your financial advisor hedges your retirement investments against the volatility in the market and diversifies your investment.

Dec 2, 2011

Defining the Business Investments

Generally it is seen that investors invest in two different ways in a particular business - through stocks and bonds. Stocks usually represent a particular unit of ownership and the potential to share the business earnings. But, bonds stand for a unit of debt that any business pays out interest on. Both stocks and bonds are considered to be investments. Though both stocks and bonds are common forms of investment, there are also other cash raising transactions that can also be considered as an investment. The description of the term also depends on how well the term is being defined.