How to invest in 2013

by Magical Penny on January 22, 2013

investing adviceGaining access to investing information has never been easier.

Back in those fuzzy olden days of the early 90s, when I was but a small child, would-be investors had to venture out into the world and search for collections of  bleached paper gathered together with glue, which some affectionately named ‘books’. In these ‘books’ they might read about earnings reports and valuations and price-to-book ratios (‘book’ being different to ‘books’ of course). And they would likely stop reading shortly after due to overwhelm, that and their hands torn to shreds from paper cuts.

But occasionally there were brave souls who pushed through the jargon and decided they would enter the world of investing.

Here’s to the trail-blazers.

Taking a first step in the journey, our would-be hero steps out of his front door, faces the wintry wind, and visits a learned gentleman called an investment broker. If he had been feeling particularly adventurous he might have tried using an experimental technology called a telephone to make his investments.

Note: the telephone at the time was a newly discovered technology that used pulses of electrical current to transmit information through wires around the world. Exact figures around usage are difficult to find, being lost in the ravages of time.)

Anyway, once our adventurous investor was talking to the wise man gate-keeper of the stock market, the investment broker, he would open his wallet and either: a) pay an arm or a leg for advice;  or be taken advantage of through a ridiculously high commission on whatever he bought.

But it was worth it, for our lone explorer of the markets was now an investor!

Oh joy!

 So our hero is now a fully fledged investor

But if he wanted to keep track of his investments he would need to wait until the paperboy delivered another piece of bleached paper to him in the form of a ‘newspaper’. On its pages would be printed the valuation of popular shares. Whizzy.

 

BUT NOW WE HAVE THE INTERNET.

The internet allows us to learn about investing and actually invest, all from our laptops. And we don’t need to use rip-off brokers or wait for the paperboy to tell us how much our investments are worth over time. We can buy Shares, or unit trusts and funds, and all manner of investments, from home.

 

What is standing in your way?

What will it take before you start investing in things that, over time appreciate in value rather than decline?

The internet has taken away excuses for access.

But there are still problems:

  1. Finding the money.
  2. Overcoming overwhelm.
The solutions:
  1. Magical Penny archives show you how to find money
  2. Other articles from this site or others such as the excellent Monevator

In summary, you should be saving what you can, and invest the money you won’t need in the next 5+ years largely in index funds that track key markets across the globe for as low a cost as possible using a low cost investment broker/online fund supermarket.

Future Magical Penny articles will break this key concept down but I didn’t want to keep you waiting anymore.

 

Wherever you are in your investing journey, don’t be afraid.
Be like the hero investor of years passed…and step out into the cold stay safely in your house glued to your computer and (thanks to the internet) secure your financial future.

You don’t need a lot of money to start investing. £50 is very doable for almost every working person and getting started is more important than waiting for the perfect time. DIY investing might seem like it’s beyond the reach of the average person, but it really is not. Even on a strict budget you can begin investing with many institutions for just £50 a month.

Are you ready to change your life?

 

 

 

 

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The Future of Investment – Is Gold Bullion the Secret Ingredient of Success?

by Magical Penny on January 21, 2013

(Guest post)

With the economy currently in a state of disrepair and on-going recession-based threats, the future of investment is certainly up in the air. Traditionally, many investors would slowly but surely climb the way up the safe and profitable property ladder, but now sadly this is a thing of the past, as the housing market continues to fluctuate during hard economic times. For this reason, an increasing number of people are instead opting to invest in gold bullion rather than property, as this offers a steady guarantee of a constantly improving return.

Why You Should Invest

The highlight of gold bullion investment is its ability to hold its value. This is because gold is a finite resource, and therefore supply can’t cope with the increasing demand that occurs due to the continuous population growth. This type of material offers a low risk way of investing money, which will slowly increase in value over time.
Although the value of gold bullion does tend to fluctuate from time to time, overall long term investments bring back increasing returns, making it well worth the money that is initially spent on it.

When You Should Invest

Now is a better time than ever to turn to gold bullion for successful investment during a period of tough economic uncertainty. With an increasing amount of gold merchants supplying high quality bullion, there has never been a more suitable time to invest.
This said, it’s highly advisable to opt for gold bars and coins as oppose to jewellery and ornaments, as these are usually valued on aesthetics, and therefore cost and value can vary greatly. Bars and coins maintain a uniform appearance, and this also makes them much easier to transport and store in a secure environment.

Protecting Your Investment

It’s essential that you protect your gold bullion investment with a good insurance policy, as well as storing it in a safe that is also protected by a burglar alarm. Inform your insurance company before you collect or receive delivery of your gold to ensure it that you will be able to claim against a fire or theft should you fall victim to these occurrences.
You’ll also need to make arrangements well in advance of your purchase regarding the delivery or pick up of your gold investment. For security reasons, gold merchants usually won’t store large amounts of bullion on the premises, so this means you’ll be able to decide whether you wish to opt for delivery or collection.
UK Gold Bullion provides the purest gold bars and coins for the most profitable investments possible, ensuring you receive the best returns. Check out the website today for all the latest news and gold products available online.

 

 

 

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Sponsored Video | Energy Usage

by Magical Penny on December 20, 2012

Video source

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Organise your financial life

by Magical Penny on December 7, 2012

Organising and managing one’s finances are vitally important, especially in these tough economic times. No matter what the income level or source, simply being aware of the status of personal finances can go a long way toward keeping money problems at arm’s length

Keeping financial elements organised may sometimes seem overwhelming, particularly when starting from scratch, but following a few simple steps will keep those bills under control and your accounts in the black.

Organising your finances step-by-step

The first step in organising one’s personal finances is to make a monthly budget. Planning out the monthly spending is only a part of what budgeting accomplishes and, although some expenses will remain static, the monthly budget will need to be revised from month to month as payments increase or decrease. In the winter, for example, heating bills tend to increase, making some budget adjustments necessary in other spending areas.

It is also important to consider what can be saved when putting a monthly budget together. Many financial experts recommend saving 10 per cent out of every pay cheque, as well as 10 per cent from any other source of monthly income such as interest on bank accounts or investments. Also, it is a good idea to factor in an allowance for ‘incidentals’ when pulling the budget together, catering to some frivolous spending that does not interfere with bills and other commitments.

Keeping track of overall spending is a very important part of any monthly budget. There are numerous types of accounting software programs available that make the process of monitoring spending as simple as filling in the blanks. Software programs can even create the monthly budget itself, make adjustments and revisions quickly based on a single change in figures, and may be able to estimate future expenses based on established patterns of financial behaviour. These programs also offer the benefits of IT support and assistance that is just a phone call or click away at any time, day or night. Or you can just use a simple spreadsheet as I do.

Work to a system

In addition to creating and following a budget, one of the most important steps to take in managing finances is to pay all bills on time. Estimated payments for bills, based on past payments or averages, should already be factored into the budget, so when bills arrive in the mail or are accessed online, they should be paid immediately – or at the latest by the due date specified by the service provider or creditor. Occasional lateness of a few days or even a week is possible, of course, but establishing a pattern of paying bills in full and on time is not only a good habit to develop, it also demonstrates to service providers and creditors good faith and consistency in paying. This can be a useful history to have in occasional cases where lateness cannot be avoided.

Finally, a beneficial tip for organising finances: operate multiple bank accounts. Open two current accounts and a savings account. One current account should be for bills, the other for monthly spending, while the savings account holds the 10 per cent commitment and remains untouched, earning interest and building a saving mentality.

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Self-employed and thinking about your finances?

by Magical Penny on December 5, 2012

tax umbrellaFinancial management is one of the most important aspects of any business, and people who are self-employed need to be capable in this area since they have to take care of all of the details themselves. I’m still working on a lot of this myself so I thought it worth talking about!

There are a few different options for those who need assistance with the financial side of a business, but the first essential is always to get the right system into place, as problems with finances could very easily cause the business to fail.

Getting help

An accountant may seem to be the obvious choice for a small business, and there are many advantages to hiring one. Accountants are qualified to deal with self-assessment tax paperwork, payments to employees or contractors, and other financial matters. However, employing an accountant does not remove the need for the owner to devote some attention to administrative tasks, and of course time must be set aside to meet with the accountant periodically.

An alternative is to use one of the umbrella companies that offer assistance to business freelancers or contractors who value their independence but are less interested in daily mundane tasks. An umbrella company takes over a number of the administrative functions, and this gives the freelancer more time to concentrate on building the business.

Using umbrella companies

An umbrella company takes on the role of ‘employer’, but the freelancer retains their independence. This results in taxes being paid on a PAYE basis rather than on a self-assessment basis. The umbrella company will also deal with payments for National Insurance. As with self-assessment, the freelancer/contractor is able to claim certain expenses, and the umbrella company assists in claiming as much as is legally available to maximise the income.

When registering with an umbrella company, the contractor is required to submit tax and national insurance details. Any client that the contractor provides a service to will need to be invoiced, and the umbrella company takes on this function. Business owners who choose to operate independently need to devote some of their time to invoicing and chasing payments, whereas an umbrella company removes the need for this.

Anyone involved with an umbrella company works through a dedicated account manager, so any issues that arise can be resolved quickly. Tax matters such as IR35 are addressed by the umbrella company’s system; hence a business operator who might be confused by (or disinterested in) such things does not need to worry about them. Umbrella companies are available to help contractors across a wide range of industries, from care work to IT. Undertaking a relationship with an umbrella
company also provides various insurance protections that will cover the contractor in their work activities.

The importance of looking after the finances

It may sound obvious, but getting the right system in place to take care of business finances is absolutely vital for anyone who is self-employed. The umbrella company system has been designed for those who want to be independent as workers, but who are not ready or inclined to set up a limited company. It offers a middle ground option, and has worked very successfully for large numbers of contractors.

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Is land investment a viable option?

by Magical Penny on December 5, 2012

land investmentWith the construction market still fairly slow in many parts of the world, some people are seriously wondering if investing in land is still a good idea.  It can be, but it depends a lot on where in the world the land is.  Some regions offer good investment potential, while others are struggling at the moment.

Where to invest

There has been a lot of speculation about the prospect of purchasing land in Africa.  A recent report from the International Monetary Fund forecast that six of the ten fastest growing economies in the next five years will be in Africa.  However, some areas of the continent are not likely to achieve the infrastructure needed to make investment worthwhile.  At the moment South Africa is not receiving a great deal of investment in infrastructure and public services, so investors are looking to other countries such as Nigeria.

In Asia, land prices in Bangkok have been rising as the city has rapidly developed, so for those who have the funds to invest there is good potential here.  This also applies to those who want to invest in areas outside of the city itself.  Purchase-price rises have put off some local investors, but international investors can still make money here.  One of the issues in Bangkok is that most new developments are for small one-bedroom properties, and as these become more expensive there are fewer potential buyers.

Land ‘down under’ can be a good choice, as both Australia and New Zealand have seen a rise in urban and rural development and investment.  These countries are both attracting many migrants and expatriates who are seeking a better quality of life, and land investment is typically seen as the first step.  In both of these countries it is common for people to build their own homes.

Florida land investment remains a good choice for many people.  The area is still a very popular tourist destination and there is a great deal of development occurring, particularly in the areas around Miami and Orlando where tourists continue to flock all year round.

Property investment

Not everyone wants to purchase land to on-sell to a developer, and there is plenty of potential for those who intend to invest in property in order to rent it out to others.  Florida land investment is ideal for those who want a holiday let that they can make money from when they are not using it themselves.

The first thing to do is look closely at the local market in your selected country or region.  If there are many properties lying empty that are aimed at holidaymakers or long term lets, then investing there is likely to be a risky proposition.  Conversely, in areas where values are rising for both land and buildings, but the market is showing no signs of slowing down, these are potentially good areas for investment.

For long term prospects, buyers need to be prepared to ride out any fluctuations in the market.  As economies all over the world are still struggling to some extent at the moment, long term potential needs to be the main focus, and land investment still deserves strong consideration in any investment portfolio.

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Location-Based Deals with Priority Moments – Sponsored Video

by Magical Penny on December 3, 2012

Everyone likes finding a bargain or a special deal, especially as we approach Christmas when typically household spending goes up.

Whilst there are many sites on the internet that highlight deals and special offers on the high-street, they can be difficult to take advantage of when you’re out and about doing your shopping. The shops with the deals may be too far away or the offer may have expired before you get there. And browsing deal sites can be dangerous as you may be tempted to over-spend as you are presented with deal after deal.

However, there is a solution that only shows your relevant deals based on your location. It’s called Priority Moments . This service has only been around for roughly a year and is available to customers of O2, one of the largest mobile networks in the UK.

In short, Priority Moments is a location based mobile service that alerts you to exclusive deals on the high street.

O2 customers can download the app to access Priority Moments through their phones or text Moments to 2020 to register.

Relevant Deals

Perhaps unusual for a money-focused website, Magical Penny doesn’t usually feature many articles about shopping deals, mainly because irrelevant deals can be more of a distraction than a genuine way to save money. But one thing I’ve enjoyed about Priority Moments is how fresh and relevant the deals are. Business owners can quickly create relevant offers to drive footfall into their stores, and the customer is rewarded with something relevant for them. For example, cafes have run cold-drink promotions on sunny days (yes there were some sunny days in the UK this summer!), but if (or rather when) the weather turned wet and cold, an alert for discounted hot chocolate might come up instead.

A deal is only a deal if what you are buying is actually useful and relevant to you, and Priority Moments’, with it’s time and location sensitive targetting, provides a source of deals that are much more likely to be worth your time and money than what can be found on generic deal sites.

Arts and Crafts at Christmas

There’s a wide range of businesses on Priority Moments, but one that stuck out for me is Fred Aldous, particularly in the run up to Christmas. An art, craft and design shop in Manchester, it has the tag line “You can make anything!” and looking around on the website, I believe them. I’m tempted to visit the shop for Christmas ideas as handmade gifts are both money-saving and well-received by the recipient – it shows you have put a bit of time and thought into the present. The store used Priority Moments recently and is a good case study for how using the service is win-win for both local businesses and consumers.

As part of the Loving Local series from the Guardian, in association with O2, this is a short video about Fred Aldous. It looks at their marketing strategy and use of Priority Moments.

I’m sure Priority Moments will come in useful for Christmas shopping and help save some of those magical pennies.

Sponsored by O2 and The Guardian

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Planning Personal Finances for Festive Months

by Magical Penny on December 3, 2012

The Cost of Christmas Today

With Christmas fast approaching, many of us are still trying to find the money to fund the big day.

Christmas and New Year are notoriously expensive festivities and the current economic climate only increases the financial pressures on families. In the US in 2011, the average parent spent 271 dollars on Christmas gifts per child, with the average family spending over 700 dollars in gifts in total. When decorations, food and travel costs are included, the total bill often amounts to over 1000 dollars.

Then, most immediately after Christmas, we have the New Year celebrations which again can be expensive especially for those who are out partying on the night in question. So how can you plan to pay for these events? Here we will look at some tips to keep your finances in check over the festive months.

Save on your Gifts

Without doubt, the largest chunk of Christmas money is spent on gifts. Therefore, controlling this area of spending will go a long way to sorting your personal finances over the coming season.
Planning is key, so ensure you set a budget for each person and have an idea of what you want to get them before visiting the shops.

It is a great idea to purchase discounted gift cards before you go Christmas shopping. Such gift cards can save you between 5% and 30% off the face value of items. The average American who spends 700 dollars could, in theory, save between 35 and 210 dollars if he or she bought all presents with a discounted gift card.

Another good money saver is to search online for discount codes and promotional offers. Also look at retailer’s social media sites as they often contain exclusive deals and discounts. Try your best to avoid offers which actually encourage you to spend more. For example, a shop may offer 20 dollars off when you spend 100 dollars. The shopper sees this as a good deal so ensures they purchase 100 dollars’ worth of items and only pays 80 dollars. However, without this offer, the shopper is unlikely to have spent 80 dollars to begin with so the deal actually works in favour of the retailer.

Cash Over Card Every Time

A great way of managing your finances over the festive period is to only pay for items with cash. This makes it much easier to budget as you withdraw what you want to spend and once it is gone you cannot buy any more. Physiologically, spending cash makes you more aware of how much you are spending as you see the physical transfer of the money which you do not with credit cards. Paying on plastic can get you into difficulty. Indeed, 13.6 million Americans are still paying off their debts from Christmas 2011.

Credit Options: 0% Introductory Offers

In an ideal world you do not want to spend any money on credit during the festive period, however, for some this is simply not an option. If this is the situation you are in, it is a case of damage limitations. Apply for a credit card that has a 0% introductory rate – the longer the better. Some cards offer such rates for 6 to 9 months. During this period do your best to pay off the debt. This way you only pay back what you spent without incurring the often high interest rates credit card companies charge. If it is not possible to clear the debt in this time you can always apply for another credit card with an introductory offer and transfer the remaining balance to it. You then have even longer to pay back the debt without attracting any interest.

Plan for Christmas 2013 Now

In order to avoid the financial stresses of the festive months it is best to plan well ahead. Stock up on essentials such as cards and decorations during the January sales. Huge savings can be made on such products soon after the festive period. You could also put away some money each month so you have a reserve for Christmas. Saving 80 dollars a month would leave you with 1000 dollars to spend at Christmas.

Planning well in advance leaves you free to relax and enjoy the holiday season without the stress of worrying about how you will finance the period.

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Hoping To Buy a House? 3 Ways To Prepare

by Magical Penny on November 28, 2012

The home market took a deep plunge just a few years ago and it is only now that some areas are coming out of the pitfall. The word got around, and around, and around about the predatory loans that took advantage of the unwary buyer. People were scared off, or unable to purchase a new home. Now that things have stabilised a bit, so it might be a better time to buy a home than in recent years.

Once you’ve decided to take the step and buy a home, the real work begins.

Here are some solid ways to prepare for buying that dream home and making sure you make the right decisions.

How’s Your Credit?

This may be the biggest step in this phase of preparation. Have you checked your credit score? If you have, have you checked all three reporting agencies? Looking into your credit history can be like looking in your vegetable drawer in your fridge- you know there is something smelly in there and dread opening it to find out.

One way to monitor your credit is to consider a company like LifeLock. A company like this will monitor your personal information and keep your credit intact, safeguarding it from possible identity threats. Regularly monitoring your new credit score throughout the home buying process will ensure that you do not run into any surprises. What may be a good credit rating could quickly turn into a bad one if a surprise from your past suddenly pops up at the last second, according to Wallet Blog. Regularly making sure that your identity has not been tampered with is always a good idea anyway, and when buying a home, it is essential.

Are You Prepared?

Can you afford to dedicate money for an extended amount of time? You will want to make sure that your current employer will be around for the long haul of your mortgage. Nothing is certain, but make sure that you will have a job in a few years. Are there warning signs at your company? Have there been cutbacks? These are things to consider before buying a home.

Creditors and loan officers will need to make sure that you’ve been at your current company for a certain amount of time. They need assurances that you will be around to make those monthly payments for the length of your loan.

Have You Saved Enough?

You will have to make sure that you have a considerable lump of money set aside to ensure you can put money down on the new home. If you are able to put down a large amount, generally around ten percent, it could decrease your monthly payment. In addition to this, setting aside some extra cash for possible home problems is very helpful. Owning a home is much different than having a landlord. If something goes wrong, you will need to have money or considerable credit on hand to fix it.

For more ideas about how to save your pennies check out the Magical Penny Saving money articles archives.

Bonus Tip

Are you in the US and are veteran or married to a veteran? Check with the US federal government because you may be able to qualify for a VA loan. VA loans can qualify for zero percent interest and/or no money down. Make sure that you start the process and get started early, as there are often waiting lists.

Buying a home is becoming easier again, little by little. Having the right credit and funds are two ways to be better qualified in your goal of becoming a homeowner. Staying on top of the risks and preparing yourself financially and economically will only improve the experience of buying that dream house.

 

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How Does Your Spending Change at Christmas?

by Magical Penny on November 28, 2012

It’s almost Christmas…it’s less than a month away and maybe you’ve even started your Christmas shopping.

I certainly have not made a start yet but I came across this great info-graphic about ‘Holiday Spending’. It shows a side-by-side comparison of how much men and women plan to spend at this time of year.

Based on data collected in the US from a survey by BIGinsight, the infographic shows some surprising (and not so surprising) findings:

In summary:

  • Men will spend more this holiday season – Men plan to spend $51 more than women
  • Women start shopping earlier than men – 15% of women started their holiday shopping before September
  • There is a Gender Gap between gifts for friends and family
  • Men plan to spend almost twice as much ($30) as women ($16) on gifts for coworkers; AND plan to spend almost $30 more than women on gifts for their friends
  • Women anticipate spending more ($427) on gifts for the family than men ($416)
How will spending be this Christmas?
Have you got a plan?

 

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