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UK Markets – Should I save or invest?

If you’re looking for the best place to put your money, it’s a difficult question to answer right now. Savings, property and gold have typically been seen as good places to put money and watch it grow, but the desirability of each can seriously vary over time. Here’s a look at saving or investing in the UK markets.

Savings

A great thing about British banks is the FSCS: the Financial Services Compensation Scheme. This is the UK’s ‘statutory fund of last resort’, which basically means it can reimburse people for money lost when financial firms go bankrupt (or are ‘unable, or likely to be unable, to pay claims against them’). This can cover people to the tune of £85,000 per firm.

On the other hand, the base rate / bank rate in the UK is at an all-time low of 0.5%, while inflation is officially 5.2% (as of September 2011). So the value of a pound is actually shrinking more rapidly than usual, but savings accounts aren’t paying much in the way of interest – a quick look on a comparison site shows that the highest-interest instant-access savings account offered around 3.1% at the time of writing.

Property

The good news about property values in the UK is that they’re holding quite steady (compared with many places in the US, for example), although the South (especially London) is doing markedly better than the North.

Looking ahead, however, opinions are divided on what’s due to come next, with some people pointing out how house prices have withstood many of the financial shocks we’ve had in recent years – and others predicting a major dip in house prices (when the base rate goes up, if not before).

Property prices aside, rents are high in much of the UK, which is one reason there are so many ‘amateur’ landlords. According to charity Shelter, rents increased one-and-a-half-times as fast as incomes between 1997 and 2007. The average monthly rent for a two-bedroom property in London is £1,360 – far higher than the £568 average in the rest of the country.

Gold

Gold has traditionally been seen as a ‘safe haven’ in troubled times – something many people will buy when the values of stocks and shares are unpredictable.

According to goldprice.org, the price of gold has just about trebled in five years, rising from $600 an ounce in mid-2006 to over $1,800 in 2011. However, ‘what goes up must come down’, as they say – it’s dropped a fair bit since then, and there’s no sure way of predicting what’s next.

Don’t gamble with…

As always, you shouldn’t gamble with what you can’t afford to lose. Someone with cash to spare who’s looking to make some real profit might feel confident about investing in higher-risk ventures – but someone who needs somewhere safe to put their hard-earned money will want to be a lot more careful.

Further reading:

Achieving Early Retirement Through Personal Finance

forced retirement

Retirement is something that most of us dream about. The days when you no longer have to work hard to provide for yourself and your family are to be savoured and enjoyed. You’ve spent a lifetime working and looking after everybody else, now it’s your time to relax and enjoy the time that you have left.

As much as you’d love to be able to plan when you are going to retire, unfortunately it doesn’t always work like that. There can be circumstances when you have to retire long before you have planned. It could be that your health prevents you from working and you need to retire early. Whatever the reasons, there are a number of ways to prepare for your retirement; no matter how early it ends up being.

Health Insurance – Your Early Retirement Protection

If you are ever forced into early retirement because of ill health, insurance could help you to get through it. Suddenly losing your wage with no sufficient savings can really cause you to worry. Even if you have retirement funds saved up, it’s likely that they won’t last as long as you planned. This means that your level of living with be strained.

The right health insurance can really put your mind at ease. The costs of treatment these days can be quite high. Could you afford the treatments as well as the cost of general living? If not then insurance is a must. Another type of insurance that you may want to consider is life insurance.

Why Life Insurance Could Be Important

If you do become ill and it turns out to be life threatening, life insurance will help to ensure that your loved ones are protected. Often even in retirement you will have financial obligations. Perhaps you are still supporting your children or grandchildren? If you have dependents then life insurance will ensure that they are looked after once you are gone.

Whether you opt for health insurance, life insurance or both, it’s important to shop around. Compare as many different policies as you can. They are all different and some policies will be more expensive than others. By comparing your different options you’ll also get to see the different types of cover available.

Optional Early Retirement – Is It Achievable?

Through careful financial planning you could choose to take early retirement even if you’re perfectly healthy. Most people would assume that early retirement is impossible; especially after the recent financial crisis. By following the tips below you could increase the likelihood of retiring early.

Tip #1: Cut Back Now

In order to save for an early retirement, you’ll need to cut back on various expenses now. Do you spend a lot of money going out and enjoying life? For most people they work to live and meals out, trips to the cinema and holidays a couple of times a year are how they get through the slog of everyday life.

However, if you constantly spend most of the money that you earn then how can you expect to retire early? In fact, how could you expect to retire at all if you have no real savings? If you want to be able to enjoy early retirement then now is the time to cut back.

Start by eliminating the larger things. If you eat out once a week then change it to once a fortnight and put the money you would have spent into savings. Once you start getting into a routine of saving money, it will become easier and you can start to cut back on little things. Cutting back doesn’t have to mean that you can’t enjoy life. Just start saving more than you currently do and that is a great start to early retirement.

Tip #2: Understand the Kind of Lifestyle You Want

When you retire what can you see yourself doing? Are you planning on becoming lazy? Would you prefer to stay as active as possible? What standard of living are you expecting? These are just some of the questions that you need to answer. Understanding what type of retirement you want will help you to see exactly how much money you would realistically need.

It may be that you need to become a little more realistic. Sure everybody would love to go on endless holidays and be waited on hand and foot for the rest of their days, but is it realistic? By being a little more honest about what you can realistically afford, it will help you to enjoy early retirement a little more.

The basic things that you need to account for in your retirement include:

  • Clothes
  • Food
  • Heating/Utility Bills
  • Accommodation (Rent, Mortgage, Care Home)

As long as you leave enough money to take care of the above, anything else that you earn is a bonus. Many people don’t bother to plan their retirement. This means that they have no idea what they have to save towards. By being prepared it will help you to enjoy life a lot more once your retirement days arrive.

Tip #3: Pay Off Debts and Avoid Further Debt

These days it’s so easy to get into debt. Most families have at least one debt that they haven’t paid off. If you are struggling with debts then now is the time to start paying them off. The last thing you need is to start your retirement in debt. You have no real income and it will just eat away at your retirement savings.

Always pay off more than the minimum monthly repayments when you can. The more that you pay off, the less time you’ll be in debt.

These are just three tips to help you to plan for early retirement. It may not be as far away as you imagine. Providing you save as much as you can and cut back, you should be able to save up a nice little amount. Follow this advice and set up a savings account today to plan for your future.

This article was written by Timothy Ng.

How To Start Making Passive Income In 2011

passive income streams

Most of us probably have the same fantasy at some point in life. The dream is to earn cash without having to do much, or any, work at all. Even after 25 years in the plumbing business my father used to read the classified advertisements every day. When asked what he was looking for the response was always the same, “my thousand dollar a week job where I don’t have to do anything.” We all used to get a chuckle out of it, but the idea always stuck in my head.

Ways To Earn Passive Income

Investment Property – Buying investment property, even in our current housing market is a great idea. There are stories all over the world of people who simply buy up properties and then sell them, trying to make money on the resale. While this can be lucrative you have to have a lot of money at your disposal and put in a great deal of work to make it happen. But, if you actually buy properties up and hold on to them you can earn income without having to do all that extra work. If you were to buy one house that carried a mortgage of $1,000 you could probably rent it out for $1,300 per month. Right there you have already added $300 of income to your monthly budget. Of course, in the first few years you probably want to stash some of that money away for an emergency fund or to make repairs to the property, but after that it is gravy. You can even use it to pay down the mortgage faster so that you send less on interest charges. After a few years you could sell it and all get the full purchase price back as profit.

Using The Internet – There are loads of ways to earn income on the Internet. If you are ambitious you could start your own membership site. On it you provide valuable content for a specific area. Your members pay a fee to see that content, which becomes your profit. This can be a lot of work and you have to have some area in which you are an expert or you will wind up spending a lot of money buying content from others. Another way is to use Google AdWords to set up a Pay Per Click campaign. When web surfers click through the ads that you promote you make money. While it is not a lot of money per click, over time it can add up. This is an excellent way to add profit to a web site that you have already set up or will set up. If you have eBooks you have written or other intimate knowledge of a subject you can set up the site once and then sell the advertising space. Ebooks themselves are an excellent way to earn passive income. If you choose to sell the book online you can make easy cash for as long as you choose to sell it.

Software – Even if you do not consider yourself the most technically savvy person in the world you could create software. All that you really need is one good idea. For example, if you know how to train a dog because you have had dogs all of your life, you could build software that helps teach others how to train dogs. Broad topics are excellent because they can be sold to people all across the globe and tend to be timeless.

You probably have some of your own ideas about how to build passive income. Most of us come up with little ideas all the time that we think could make us the next Steve Jobs. The difference between us and them is that many of us do not follow through on those great ideas. With a full time job, a family, and loads of other responsibilities it is easy to see how those ideas can get left in the dust. Take action to make sure that this does not happen to you.

Make Your Passive Income Dream A Reality

Step One – Do not forget anything. Carry a notepad and paper with you all of the time so that you can write down your inspirations and ideas. The wildly popular and lucrative Harry Potter series started from an idea written on a napkin. You just never know when brilliance will strike so be prepared all the time.

Step Two – Try it. Try everything, even those ideas that you think sounds silly at second glance. If you have an idea for an eBook, sit down and try to write one. If you think you can make some money doing Pay Per Click ads, then give it a go. Even if you do not make loads of money at first you can learn a lot so that eventually the money will start flowing.

Step Three – Build a war chest. If you want to create a passive revenue stream you might need some seed money to do it. So even if you do not have your million dollar idea yet, save money as if you do. That way you will have the cash on hand whenever you are ready to get started.

Step Four – Do it every day. If you do not work on your ideas every day they will gather dust. Instead, take time out every single day to work on your ideas or to track the income streams you already have going. It does not have to be a lot of time every day, but enough to keep you focused on the goal of having long term passive income.

Imagine how great your life would be if your could take a few simple ideas and put them into action that can generate passive income. It is completely possible. While it might not start out as passive income within a short time you could be earning money for nothing.

Timothy Ng is an experienced personal finance writer, specialising in credit card comparison.

How To Make Money With Your Credit Card

credit cards

It is possible to use your credit card to make some extra money if you know how. While credit cards are usually associated with the thought of debt, they can actually make you profit.

In order to make money using your credit card you’ll have to always use it wisely and use self-discipline when you spend with it. If you are able to keep these things in check, you have the potential right now, as a credit card holder, to start turning a profit.

Make money with your credit card

Here are some ways that you can use your credit card to make money.

Get a credit card that offers a cash back program

If you make an application for a credit card that has a cash back program attached to it, you will get paid for using your credit card. You’ll have to use your card often and for big items in order to see much profit, but if you plan on doing some spending in the near future it will definitely pay off.

The thing you have to watch when you have this credit card, however, is to always pay the bill in full every month. If you don’t, you’ll be hit with a high interest rate that you’ll have pay. This can cut into your profits so much that it is not worth getting a cash back card if you’re not sure if you can pay off the balance every month.

You also need to read the fine print before applying for a cash back card to find out if there are any limits as to how much you can get back in a year. Some cards will only pay out $300 or less on a yearly basis.

You also need to find out if you can get cash back on any type of purchase. If the purchase types are limited, this card may not work for you if it is a type of spending you plan on doing with the card.

A problem can also arise if you become a careless spender just to get the cash back. As long as you use this card properly, it can be a little money maker for you.

Get a balance transfer card

Start by opening an account for savings and begin to see interest accumulate. Next, apply for a balance transfer card with a 0% interest rate. Once you have transferred the balance over to the new card you’ll be able to pay off your debt without having to worry about any interest being added.

The interest that you save can be put directly into your savings account so that you start seeing more interest added to your savings.

Starting a new business with a credit card

If you are sure that the business you’re going to start up is going to give you immediate profits, the best way to get started is by using a credit card. While there is always a risk in beginning any new business, it is one worth taking if you have done some research and know that the profits will be there.

Finding a low interest card

If you can find a credit card that only charges 5% to 6% for a cash transfer or withdrawal, and a savings account with a 7% interest rate or more, you can transfer money to the account and profit from it. You’ll have to make sure that you don’t use your card for any spending if you follow this practice. Only use the card for this use and you will definitely end up with more money in your savings account every month.

While you may have never before thought it possible, a credit card can be used to earn income. As long as you use the credit card following the advice above, you will end up with more cash at the end of the month, every month.

This article was written by personal finance writer Timothy Ng from Sydney, Australia. He is genuinely passionate about helping people compare credit cards and helping them through researching to find the best credit card.

Does Energy Efficiency Add Value To Your Home?

green home

Improving the value of your home is important for resale and investment purposes. One of the most beneficial ways to do this is to improve your homes energy efficiency. By doing this you will increase the value of your house, save money, and help to save our precious environment all in one swoop.

Value Added Efficiency

If you are considering making changes to your home before you put it on the market, your best bet is to make it more energy efficient. Most everyone will tell you that conserving energy is important to them, but it is hard to know if it really matters when it comes to making choices about actually purchasing a home. The short answer is that yes, it does. Although an increased awareness of the environment and the need to save energy is part of the reason, it really comes down to the all mighty dollar. Everyone knows that if your house is more efficient you will spend less to heat it, cool it, and keep all your appliances and computers running. That savings is the bigger driver of getting an energy efficient home then the idea of conservation.

We should not ignore the ever increasing conservation awareness either. Ever since the former Vice President Gore released his Inconvenient Truth film there has been a move toward greater conservation and awareness of our energy consumption. From installing more efficient windows and appliances to unplugging items around the house, loads of people have cut back on their energy use and seen the reward in their monthly bill.

General Appeal

But, it was hard to know if that awareness translated when it came to the actual value of your home to a buyer. Now there has been some research done that proves that indeed a more energy efficient home is more appealing to most buyers. In a recent poll more then half the people who were asked said that they energy rating of a home played a big part in their decision to purchase it. Just over ten percent said the energy rating of a home had no affect on their choice. However, people tend to talk a big game when it comes to ecology, but they do not always follow through which is why this needed to be further investigated.

As it turns out there was a study done just a few years ago that took a homes energy rating in terms of stars. one star meant that a home was not at all energy efficient and five stars meant it was very efficient. In this study, improving a homes efficiency rating by just one star increased its’ value by three percent. Broken down into money terms that meant you could spend $1200 to improve the insulation in a $360,000 home and see a return on that investment with an increased sales price of around $8,500. That is a big profit for just a small change in your home. Imagine how much value you could add if you made even bigger changes like installing solar panels or changing out windows and furnaces.

You will probably find that homes with a poor energy rating are not as saleable as they once were. Most buyers will not be inclined to consider a home that they know is going to cost them a fortune to run or that they will have to spend a lot of money on to make more efficient. This is especially true in areas of the country that face extreme heat or extreme cold, in those places buyers want to know they will not have to spend a fortune to keep their home at a comfortable temperature.

Before you consider making any improvements to your home you should look at ways to make it more efficient. Not only will this increase your homes value for resale purposes, but it will save you money right now on your monthly electric and gas bills.

Congressman Ron Paul Demands Fed Audit

ron_paul.jpg

By Chadwick Matlin
MSNBC
Wednesday, July 8th, 2009

Ron Paul’s legislative history is a lesson in principled failure. Among the bills he has co-sponsored: ending U.S. cooperation with the United Nations, a repeal of antitrust law “to restore the inherent benefits of the market economy,” and stripping the government of the right to set a minimum wage. Just last week, he again introduced a bill “to repeal the Gun-Free School Zones Act of 1990,” which would presumably make schools less safe but which would reinforce our right to bear arms. For Paul, ideology almost always trumps politics.

None of these bills, I should note, have picked up much support. And Paul’s track record with economic legislation isn’t any better. His perennial efforts – shifting the country back toward a gold standard, abolishing the personal income tax, and dismantling the Federal Reserve – are nonstarters. They so change the very fabric of this country that Paul can’t marshal his colleagues to his side.

Which is why Paul’s most recent legislative accomplishment is so impressive. He has rallied the majority of the House to support his new cause: an audit of the Federal Reserve. Legislators are sick of not knowing what’s going on inside Bernanke’s fortress, especially as the Fed becomes further enmeshed in the nation’s fiscal policy. Paul’s little bill has become emblematic of a larger movement, one that could spell trouble for Obama’s troubled regulatory plan. Ron Paul – always an enemy of regulation – is now an enemy of Obama. And a mighty powerful one at that. Story continues below ?advertisement | your ad here

Paul wants to audit the Fed primarily because he wants to destroy it; the audit bill is just the latest chapter in Paul’s lifelong crusade against it. His vendetta is fueled by the belief that the Federal Reserve is unconstitutional, a central bank within a country that doesn’t allow central banks. That the Fed can manipulate the currency and “create legal tender out of thin air” is heresy. And so Paul attempts to dismantle it the only way he can: through legislation.

Thus we come to the audit. For Paul it’s a foot in the door to a much larger goal. To the 244 co-sponsors – 74 of them Democrats – it’s a way to show their constituents that they’re worried, too, about where taxpayer dollars are going. It’s an amusing dissonance between the leader of the rebellion and his revolutionaries. The two parties are after entirely separate goals, one (transparency) vastly more achievable than the other (the end of the Federal Reserve).

This again makes Paul’s coalition all the more remarkable. The distrust of the Fed has reached a point at which a majority of House members are following a radical into battle. Congress’ frustration was evident last month when Bernanke got roasted in front of Congress, putting his future as Fed chairman and the health of Obama’s regulatory plan in doubt.

Obama’s proposal is to make the Fed a super-regulator; one that can both intervene and responsibly interfere whenever necessary. It would keep tabs on all the financial institutions that are too big to fail – banks and insurers, mainly – and, theoretically, keep the economy safer from major shocks like the one we just went through. But critics say that the Fed is partly to blame for getting us into this mess, and its track record when trying to cushion a bank’s fall is suspect.

This is where the trouble begins. The Obama administration hasn’t promised to make the Fed any more transparent despite making it all the more powerful. Already over the past year the Fed’s role has become as large as the financial crisis was urgent. Yet we don’t know anything more about how the Fed does its business now than we did before it started guaranteeing trillions of dollars of assets. The Fed’s responsibilities have matured, but its personality has not. It is still the gifted child that can do whatever it wants – and its parents are still so in awe of its intelligence that they don’t ask any questions.

The audit bill would change that; Obama’s regulatory plan would not. The Obama administration has offered typical platitudes about accountability but doesn’t have specifics about how it would work. Ironically, a regulatory plan that’s all about increased openness and transparency for the markets may fail to apply the same standards on its newly empowered regulator. Story continues below ?advertisement | your ad here

And so we’re building toward a very interesting clash within the financial and political communities. Think of it as a math proof: Because of Ron Paul and the audit bill, we already know that Congress doesn’t like the Fed. It feels this way because of the relationship between two variables: power and accountability. The Fed has too much power and too little accountability. Congress believes the two variables should have equal values. They do not, so Congress does not approve. Now, if you give the Fed more power but not more responsibility, this is going to make Congress upset. So upset that they may not pass the new regulatory legislation.

And so Obama finds himself in a difficult spot. He needs Congress on his side for a host of other legislation, so he may need to appease them here. But if he makes the Fed more accountable, the agency becomes even more a part of the government than it already is. This would be fine, except for the fact that the Fed isn’t supposed to be a part of the government. So there’s that.

But something has to give. Paul’s Gang of 244 is fed up. They’re ready to kill something. It will probably be Obama’s regulatory plan. Then again, with Paul leading the charge you never know. It may be something central, something federal, something reserved. Never underestimate Ron Paul. Even if there’s no reason not to.

SOURCE: http://www.msnbc.msn.com/id/31784137/ns/business-us_business/

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