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Archive for July, 2012

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How to Invest for Income – Consider Preferred shares

It can be difficult for investors to find more income in a world where many investments are now paying close to zero percent returns.

Preferred shares are an interesting diversification for any investment portfolio that are often overlooked.

Preferred shares also go by the name of “preferred stock” or “preference shares”.

Preferred stock usually carries no voting rights, but usually pay a dividend. The term “preferred” is applied because this class of shares has rights that are above those of ordinary stock.

There are both advantages and disadvantages to preferred shares.

Advantages

– A higher yield than an ordinary stock – preferred shares are routinely paying around 6-7% yield

– Preferred shares dividends must be paid in full before any dividends are paid to ordinary shares

– In the event of a corporate bankruptcy, preferred shares are ahead of common shareholders – although in reality if a company is liquidated it is rare for preference shareholders to receive any substantial return of capital

– In a volatile market, preferred shares tend to drop less in value when a market declines

Disadvantages

– Preferred share values are similar to bonds in that they are sensitive to interest rates changes . Ie – If interest rates go up, then share valuations of preferred stocks will usually decline (and vice versa). This is due to the fixed nature of the preferred shares dividends

– Unlike bonds, preferred shares do not have a maturity date so the holder will not receive a return of the investment principle at the end of a given time. This means in a period of high and increasing interest rates, the value of preferred shares will continue to decline.

When to hold Preferred Stocks

Preferred stocks should be part of a well diversified income portfolio. These should combine with a laddered bond portfolio of differing maturity dates, risk and yields.

How to invest in Preferred Stocks

There are two choices when investing in preferred shares. Either preferred shares in individual companies can be held, or alternatively ETF’s can be used to hold a basket of preferred stocks with minimum administration. A good example of this is the iShares S&P US Pref Stock Idx Fnd (ETF) which goes by the trading symbol “PFF”.

Accountants Ongar – Transform AccountingEssex Accountants

Disclaimer – The information presented in this article is intended for education purposes and is not intended to be used as the sole basis for any investment decision nor should it be construed as advice intended to meet the investment needs of any investor. The author may hold positions referred to in this article. Please perform your own research or contact a qualified financial adviser prior to making any investment decisions.

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Investment tips – Why Position Sizing is key to any investment portfolio

An individual investment portfolio will at any time be comprised of a number of positions, and usually an element of cash waiting on the side lines for investing opportunities.

But when you have a conviction for an investment opportunity, have completed your research and are ready to put on a trade, all investors are faced with the question of how large a position to take in any single investment.

How you size your stock trading position can be equally as important than the actual trades you make.

If your position size is wrong by being too large, even if your investment conviction (ie – the reason why you decided to make the investment in the first place) is right you may get knocked out of your trade too early if you suffer some short term volatility and close the position out.

When it comes to investment position sizing, you have to be in your comfort zone, because if you are not then fear will dominate your trades causing you to miss out on potential upsides if your convictions turn out to be correct.

One thing that many investors do wrong when handling their own portfolio is to put on an individual investment in a bigger position than they are comfortable with and because of that they can be right on the conviction, but if the position goes against them in the short term they panic and get out of the trade prematurely and miss out on the upside.

Getting position trading right is a fundamental key to successful individual investing. A smaller position in a high beta stock means that the investor is more comfortable and feels able to live with short term fluctuations, allowing them to stay with their position longer and to follow the investment idea through with greater conviction.

It is a generally held consensus that portfolios should not exceed 2-5% in any one position.

Of course, the investment world is always made up of conflicting opinions, and every individual circumstance and risk appetite is different.

Many successful individual investors would balance their portfolios with larger positions in lower risk stocks (eg – utilities, world dominating dividend paying stocks etc) and much smaller positions in more volatile but potentially lucrative growth high beta stocks, allowing them to feel comfortable with setting higher stop losses and riding out short term fluctuations.

Small Business Accountant ChelmsfordTransform AccountingEssex Small Business Accountants

Disclaimer – The information presented in this article is intended for education purposes and is not intended to be used as the sole basis for any investment decision nor should it be construed as advice intended to meet the investment needs of any investor. The author may hold positions referred to in this article. Please perform your own research or contact a qualified financial adviser prior to making any investment decisions.

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Investor Tips – What’s the best diversified portfolio mix?

As with anything related to investments, opinions can vary wildly and it is often hard to know which is right or wrong.

But conventional thinking tells us that a diversified portfolio is made up a mixture of stocks and bonds with a small element of alternative investments.

The standard investor portfolio should generally contain 10 – 30 different individual stocks and bonds, and possibly a few mutual funds.

But what about the balance between stocks and bonds?

The mix is usually around 60% stocks and 40% bonds.

A mix of 70% stock and 30% bonds is considered more aggressive.

Generally, the higher the percentage of stocks, the more aggressive the portfolio.

Alternatively the higher the percentage of bonds, the more defensive the portfolio.

But what if you don’t have the time to research up to 30 different stocks and bonds?

The use of ETF’s (Exchange Traded Funds) has now made it possible for the average investor to easily purchase a simple bond or stock index whilst paying very low management fees (unlike mutual funds where fees can often exceed 2% per annum, regardless of performance).

This could be done with just two ETF’s – “DIA” represents the Dow Jones Index of America’s leading 30 shares, and this could be combined with the ETF code “TLT” which represents US government treasury bonds.

Just by buying these two investments in a 60/40 ratio, you can achieve low cost diversification in a relatively low risk investment.

Accountant Loughton – Transform Accounting – The Essex Accountants

Disclaimer – The information presented in this article is intended for education purposes and is not intended to be used as the sole basis for any investment decision nor should it be construed as advice intended to meet the investment needs of any investor. The author may hold positions referred to in this article. Please perform your own research or contact a qualified financial adviser prior to making any investment decisions.

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ebay logo

Trading on E bay – Do I have to tell the taxman?

You may have heard that HMRC now use computer programs to scan popular internet sites such as e bay to look for UK citizens who are making multiple transactions.

So, when do you have to tell the taxman if you are trading on ebay?

Firstly, if you are just selling some of your personal possessions, then you do NOT need to tell HMRC via your tax return.

But, if you are purchasing goods, in order to sell on e-bay, then you DO need to declare your trading to HMRC.

Also, if you are making items yourself (such as jewellery or clothing), with an intention to sell to make a profit, then you DO need to declare your trading to HMRC.

Or, if you are selling goods on e-bay on behalf of others, for which you are charging a commission, the you DO need to declare your trading to HMRC.

Remember – if you are VAT registered, then you need to charge VAT on your e bay sales.

Brentwood Accountants – Transform Accounting – Accountants In Essex

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workwear

Can I offset my clothing costs for tax?

A common question that arises when working with our clients is with regards to expenditure on clothing and what is allowable to be offset for tax.

What CANNOT be offset?

The simple ruling is that any ordinary items of clothing that can be worn during the course of business cannot be allowed to be offset for tax.

The term “ordinary” in this case would apply to shirts, suits, and shoes that could be worn either at work, or in a non-work environment.
So even if your business requires you to wear smart suits for meeting clients, unfortunately this is not classified as work wear and is not allowable to be offset for tax.

What CAN be offset?

Items that can be offset would include protective clothing or any item of clothing that cannot reasonably be worn outside of the work environment.
This would include any item of clothing that has the company logo such as t shirts or coats.

So, if you routinely issue clothing to your staff, it is worth exploring the option of purchasing clothing which includes your company logo which will both promote your business, and also save you money on your tax bill.

Accountants Harlow – Transform Accounting – The Essex Accountants

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French Holiday Home

New French President Francois Hollande has recently announced a series of tax hikes that will impact UK citizens who own a holiday home in France.

The headlines are;

Capital Gains Tax rises from 19% to 34.5%

Tax Rental Income Taxes rise from 20% to 35% back dated to Jan 1st 2012.

Until this recent announcement, UK residents who owned a holiday home in France used to be at an advantage compared to French citizens when it came to Capital Gains Tax on French properties.
French citizens had previously been charged the same 19% as UK citizens, but then had an additional 15.5% “Social Charge on top”.
This “Social Charge” had previously been deemed to improve the lot of French citizens, so was considered inappropriate for non-French EU citizens to pay.

Austerity – French Style


In the current financial crisis, the new French president has declared that all must do their bit to aid the French national finances, and this will include foreign property owners.

More worrying for UK residents owning properties in France was the general statement of intent from the president that this was just the beginning and that further taxes on assets and wealth are likely to follow.


These are likely to be levied on both French citizens, and non-French residents owning property or living in France.
It is a reasonable assumption to make that this will make owning holiday properties in France less attractive to the biggest overseas group (the British), and that this is highly likely to result in a reduction in demand, and a further fall in property values.

In the last 20 years, many UK investors have seen great profits in owning overseas property in countries such as Spain and France.
The Spanish property bubble has crashed spectacularly and the value of the Euro has fallen.
Now, following the general election, the investment risk in holding property in France has taken a definite turn for the worse.

The whole area of overseas property tax for UK residents is quite complex with taxes due in both France and the UK.
The above are just the headlines, for more complete tax advice please contact your qualified UK accountant.

Epping Accountants – Transform Accounting – Accountants In Essex

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laptop

How to pay less tax – Top 10 Tax efficient perks

Did you know that there are a variety of different perks that can be paid to employees that do not attract either a tax or national insurance charge?

All of the following perks are not taxable, but in all cases you still should keep records of the payments to enable you to demonstrate to HMRC that the conditions required by the provision of the benefit are being met.

Note that employees can include directors and family members.

  1. Private use of office equipment such as computers
    Conditions – the equipment must be primarily provided for work purposes and the private use be insignificant
  2. Provision of one mobile phone
    Conditions – only one! A second mobile phone would be taxable
  3. Parking spaces at or near work
  4. Work related training
  5. Long service awards
    Non – cash awards worth up to £50 per year of service to an employee with at least 20 years of service so long as you haven’t made another long-service award to the employee within the previous ten years
  6. Relocation costs
    Conditions – capped at £8,000 maximum
  7. Cheap or interest free loans
    Conditions – capped at £5,000
  8. Office parties
    Conditions – Not to exceed £150 per person per tax year
  9. Contribution towards the costs of working from home
    Conditions – Up to £4 per week if the employee has a home working agreement
  10. Authorised mileage payments for business journeys by car
    Conditions – different rates are allowable for mileage up to and exceeding 10,000 miles per tax year.

The above is just a rough guide – please consult your accountant or the HMRC web site for detailed guidance.

Accountant Romford – Transform Accounting – The Essex Accountant

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Apple iMac

For those who love becoming the owner of a new piece of technology, nothing really competes with a new purchase from Apple.

Be it an iPhone, iPod or a shiny new iMac, all are objects of desire with just one snag – the price.

Apple products are notoriously expensive, although their millions of fans feel they get value for money in the long run even if it is very painful at the time of purchase.

If you try shopping around, there are usually very few retailers who will discount any Apple product, but there are a few ways that can save some money when it comes time to treat yourself.

Here are 6 ways to save money when making your Apple purchase. Be sure to post a comment and let me know if you know of any more.

1 – Buy a Refurbished Machine.

Refurbished Apple products can be purchased from the on-line Apple store.

These machines have usually been returned to Apple for a variety of reasons, they are refurbished and then sold through the Apple on line store at a discount.

They always come with a warranty of some description and can be a good way to save at least 15-30%.

In the UK – here is the link.

http://store.apple.com/uk/browse/home/specialdeals/mac

2 – Student Discounts

Apple have always offered discounts to Students and teachers through their Apple Education Store.

These vary according to product but are usually at least 10%. Apple’s definition of a student can include both University students and school children and as with the refurbished machines, these need to be ordered from the on line Apple store.

Apple doesn’t seem to be especially rigorous about checking up that the machine is being purchased for a student so there is no need to get letters from schools or universities or to send any documents.

Here is the link for the UK Apple education store.

http://store.apple.com/uk/browse/home/education_routing

3 – Buy an Apple computer with minimum RAM and purchase it online

Apple are quite notorious for charging very high rates for memory upgrades at the time of purchase.

It takes less than 5 minutes to upgrade the RAM memory on an iMAC, and at current prices, you could save nearly £100 if you upgrade to 16GB RAM from the standard 4GB.

RAM memory modules can be purchased from a number of on line retailers – Transform Accounting recommend “crucial.com”.

http://www.crucial.com/uk/

If you are scared of taking a screwdriver to a computer, then this money saving tip may not be for you.

To decide if this is an option for you – take a look at this demo on youtube showing how to install RAM on a 2011  iMAC

http://youtu.be/ac4b3vZg4aw

It really is very easy and even easier if you have seen someone demonstrating how to do it.

Take a look and then compare prices !

4 – Purchase Cables and Peripherals on line from non-Apple sources

If you need to purchase any additional items such as cables and adaptors, these will always be very (and many would say outrageously) expensive if purchased from the Apple store.

There is no doubting that the Apple store will only sell official, approved and high quality accessories but it is not uncommon to pay in the region of £30 for a cable or plug that can be purchased for just a few pounds from a retailer on Amazon or e bay.

The quality is often not the same, but very often the cheaper quality is good enough and the price saving makes this a worthwhile option.

5 – Purchase Software from Software 4 Students

If you have a school or university age child, then you are eligible to purchase software for your Mac from “software 4 students” where you can take advantages of considerable discounts.

www.software4students.co.uk

This web site will require your childs name and also needs to have their school registered but most schools and universities in the UK are already registered.

Savings vary depending on the software authors, but can often be considerable.

This company serves the UK, if you are not in the UK, it is worth searching for companies offering a similar service with similar discounts.

6 – Fill Your Shopping Basket and be Patient

This is a little known tactic that I learnt a number of years ago. At first I was sceptical, but I tried it and found that it really did work.

It goes like this;

Log onto the Apple web site – it is important that you register with your up to date details including a telephone number and e mail address.

Then browse the Apple store on line, and add the items that you want into your basket, but do not complete the purchase.

Be sure to save your basket of goods.

Then all you have to do is wait….

Now this does not always work, but if the items in your basket are high value items such as a new iMAC or laptop and it is approaching Apples quarter or month end, then there is a chance you will get a phone call from an Apple sales representative asking if they can help you to complete your purchase.

This may take several days or even a week or two.

If a nice person from Apple calls to enquire why you didn’t complete the purchase, you just need to say that you would like to complete the purchase, but that the price is a problem for you.
In my experience, and in that of my friend who told me about this ploy, discounts are often forthcoming to help you complete your purchase.

Of course, this depends on a few things – firstly the sales targets for Apple for that month or quarter in the region where you live, and secondly the items that you are attempting to purchase.

Remember – even Apple have sales targets that their sales department are desperate to meet.

But remember, if you are attempting to purchase that shiny new iPAD or IPhone just before Christmas or just when it has been released as a new product, and people are queuing around the block to get into the Apple store, then there is no chance of getting a discount, and I have not heard of this tactic ever working for a new iPhone.

But when it comes to purchasing a high value computer from Apple, give the above a try and you just might save a few Pounds, or Dollars or even Euros !

What have you got to lose ?

Good Luck!

If you know of any other ways to save on Apple products that I have missed, please post a comment.

Accountant Loughton Transform AccountingAccountant Essex

Now also on Facebook at

http://www.facebook.com/TransformAccounting

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iMac

6 Ways to save money on Apple Products

Part 5 – Software 4 Students

For those who love becoming the owner of a new piece of technology, nothing really competes with a new purchase from Apple.

Be it an iPhone, iPod or a shiny new iMac, all are objects of desire with just one snag – the price.

Apple products are notoriously expensive, although their millions of fans feel they get value for money in the long run even if it is very painful at the time of purchase.

If you try shopping around, there are usually very retailers who will discount any Apple product, but there are a few ways that can save some money when it comes time to treat yourself.

Here is the fifth in a series of six ways to save money when making your Apple purchase. Be sure to check back for the rest of the series.

5 – Purchase Software from Software 4 Students

If you have a school or university age child, then you are eligible to purchase software for your Mac from “software 4 students” where you can take advantages of considerable discounts.

www.software4students.co.uk

This web site will require your childs name and also needs to have their school registered but most schools and universities in the UK are already registered.

Savings vary depending on the software authors, but can often be considerable.

This company serves the UK, if you are not in the UK, it is worth searching for companies offering a similar service with similar discounts.

Good Luck!

Once I have posted all 6 tips, add a comment and let me know if there are any other ways to save on Apple products that I have missed.

Accountant OngarTransform AccountingAccountant Essex

Now also on Facebook at

http://www.facebook.com/TransformAccounting

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Apple iMac

6 Ways to save money on Apple Products

Part 4 – Dont buy cables and adapters from the Apple Store

For those who love becoming the owner of a new piece of technology, nothing really competes with a new purchase from Apple.

Be it an iPhone, iPod or a shiny new iMac, all are objects of desire with just one snag – the price.

Apple products are notoriously expensive, although their millions of fans feel they get value for money in the long run even if it is very painful at the time of purchase.

If you try shopping around, there are usually very retailers who will discount any Apple product, but there are a few ways that can save some money when it comes time to treat yourself.

Here is the fourth in a series of six ways to save money when making your Apple purchase. Be sure to check back for the rest of the series.

Purchase Cables and Peripherals on line from non-Apple sources

If you need to purchase any additional items such as cables and adaptors, these will always be very (and many would say outrageously) expensive if purchased from the Apple store.

There is no doubting that the Apple store will only sell official, approved and high quality accessories but it is not uncommon to pay in the region of £30 for a cable or plug that can be purchased for just a few pounds from a retailer on Amazon or e bay.

The quality is often not the same, but very often the cheaper quality is good enough and the price saving makes this a worthwhile option.

Good Luck

Once I have posted all 6 tips, add a comment and let me know if there are any other ways to save on Apple products that I have missed.

Accountant Chelmsford Transform AccountingAccountant Essex

Now also on Facebook at

http://www.facebook.com/TransformAccounting

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