For the self-employed tax can prove to be quite a headache. Those lucky enough to be in full-time employment and paid via a PAYE system are in an incredibly fortunate position of having all their tax calculated and deducted automatically each month before they see any money. Some that are self-employed may look at this method with a certain amount of envy, however they will raise a wry smile in the knowledge that they are in full control of their finances. [Read more…]
Before investing in a timeshare property, you might want to first take a read of the article, Timeshare horrors: fresh hope for 100,000 people locked in costly contracts, published via The Telegraph News website. The article documents the reality of timeshare investing experienced by thousands, both in the UK and abroad. [Read more…]
There are all kinds of expenses to pay for in a busy modern life. From rent and utility bills to car insurance and clothes, it seems as if all of your salary goes on the essentials you need to survive. Perhaps you think that you can’t cut your expenses any more than you already have, but there are probably several things you’re spending too much on. Sometimes your essentials aren’t quite as essential as you think, or you can change the way you spend on them. Even expenses like electricity and water bills can be carefully managed so you can cut them down.
Food is, of course, essential to our everyday lives. But it may surprise you that you can save money on your food in ways you haven’t thought about. Some ways of saving might require you to change the way you think. For example, one way to make the most of your food budget is to avoid buying branded products. Many unbranded products, such as supermarket own brands, are no different from the products with big names. The ingredients are the same, and the taste is often the same too, but the price is much lower. It might be hard to let go of your favourite brands, but doing so will save you a lot of money. You can also save money on food by planning meals in advance to help you avoid the temptation of frozen and ready-made foods.
There are plenty of sensible ways you can cut down on your household bills. With the price of utility bills rising, you obviously want to reduce them in any way you can. Of course, you need to keep your family warm, clean and fed, which requires water, gas and electricity. But you don’t need to push your bills to their limits. Avoid putting the heating on unless everyone is still cold with a jumper on. Don’t run the water unnecessarily and take showers, not baths. If you look at stats on cutting your water bills, you’ll find that you could save 50 litres of water by cutting your shower time by 5 minutes. Turn lights off when you aren’t in the room and don’t leave things on standby to save electricity.
If you drive, your car is probably one of your biggest expenses. There’s the cost of buying it, the insurance, tax, fuel and maintenance costs. You may think that all these costs are inevitable if you want to be able to drive, but there are ways to cut back. To begin, consider buying used cars instead of new. If you’re careful about buying and make sure to research and check each car, you can get a decent vehicle for a much lower price. Buying several used cars in a few years could end up cheaper than one new one. You should always shop around for insurance too, and get the best deal on any maintenance costs. Don’t always go with the first company you find.
A hedge is a trading position taken to neutralize changes (gain or loss) in another, primary position. The classic hedge involves agricultural commodities. A palm oil producer (for example) has a crop they intend to sell in six months. To guard against a dramatic fluctuation in palm oil prices, the producer establishes a futures market position that fully covers their risk of owning palm oil; this fixes (guarantees) the current commodity price for them. Should palm oil suddenly fall in price, the producer will not lose; should the price increase, they will not gain. The arrangement is undertaken to acquire certainty; it is entirely non-speculative.
Ownership always entails the possibility of loss. The diamonds can be stolen, the house can burn down, the stock can fall. It is common to pay for insurance against loss or damage — insurance is a type of hedge. Diamonds and houses can be insured; so can stocks. The risk of establishing an ownership (long) stock position can be reduced by also paying for insurance; this is invariably done with put options. Combining put options and stock ownership (the “protective put”) generally results in one of three outcomes: the stock is unchanged and the investor loses the relatively small option premium; the stock rises and the investor’s profit is slightly offset by the premium; the stock falls but the option becomes more valuable, mostly offsetting the investor’s loss. An investor can simulate this position using binary options – buying put options and call options from reputable USA binary options dealers.
An investor buys stock with a bullish or neutral outlook. When the outlook is bearish, the equivalent stock position is the short. Working with a lender (invariably the broker-dealer), the investor simultaneously borrows and sells the target stock, hoping it will fall. This is short selling, or going short. The investor closes the position by buying the target stock and simultaneously reimbursing the lender. Short selling is not free; the investor must sometimes pay fees and must maintain a dynamically varying minimum account balance (margin).
The short seller suffers when the stock refuses to fall and, in fact, rises in price. When a shorted stock rises, it can do so significantly due to the mechanism of shorting itself. As the price rises, more and more short positions will (usually automatically) close to limit loss; closing a short involves buying, and buying generally increases prices. This accelerating cycle is called a short squeeze.
Just as stock ownership can be insured by purchasing put options, stock short selling can be insured by purchasing call options. If the short trade goes the wrong way (up), the investor’s call options will increase in price. Furthermore, the account’s margin requirements are fixed. The combination of long call and short stock is known as the synthetic long put.
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Earning some money gives you an opportunity to grow them through investment. For a beginner who is in search of the possible investments that they can make with their hard earned money, there are many things that you can explore where you can start investing. There are basic things however that you need to understand regarding your personal finances to start investing right. Here are some investment tips for a beginner to help them plot their investment path for a healthier financial condition.
What are your realistic life goals?
This is a question that you need to answer before you start defining where you invest your money. You will have a better direction where and how you can reach your financial goals if you make one that is more realistic to achieve than one that is merely a list of financial goals that are difficult to attain. It is crucial to make your goals attainable otherwise you will just find yourself with a lot of frustrations in your investment.
Spend less than what you make
A very simple and basic investment principle that you can always adopt when handling your finances is spending less than what you make. This is a prudent financial management plan that you can adopt everyday which forms an important aspect of your income investment. Your choice on what to do with your money is either to spend some or save some. It is best to establish a budget plan that will cover for your expenses and other financial obligations and giving more room for savings. Saving for the rainy days is a prudent investment that you can make and this goal is more attainable if you are able to control how much to spend and save with your money.
Invest on emergency fund
Because eventualities are occurrences that are not predictable to happen, setting aside your money for emergency fund is a sound investment practice. You can always look for a liquid investment plan where you can invest your money to grow the principal overtime with the ability to convert it into cash in case of emergency. Opening a saving account where to keep your emergency fund is a good idea. By separating your savings account for this purpose alone, you will not be tempted of using the money for other expenses.
Evaluate what you expect to earn
There are different types of investments that also differ in terms of the return of investment it can give you. Investing on mutual funds, stocks and bonds allows you to sell them any time however the amount that you get from them may differ from the amount when you first bought them. Moreover, some investments promise a fixed amount in return while others may be liquid that goes along with the market changes. As an investor you should also know whether the return of your investment will be from rent, interest or dividends. There are many factors that can affect the outcome of your investment and talking to a financial adviser will guide you through the process of understanding the nature of a particular investment that you want to engage in.
Weighing the risks
All investments have its risks. You cannot discount the fact that your investment will not yield better profit to you or that it may result in losing your investment. The general rule observed in investment is the greater potential of return of investment the greater is the risk involved. If you want to take the safer side of investing your money, you are better off pursuing an investment that is insured like building your savings accounts which is usually insured by the government Treasury securities.
Irina Webandyou is a finance advisor for Logbook Loans. She writes articles about finance, business and debt consolidation.