Does Your Family Need The Help From A Guardianship Lawyer?

Does Your Family Need The Help From A Guardianship Lawyer?

If you suspect that a love one should have a guardian assigned, but you're not exactly sure if it's possible, it's vitally important that you learn more about which situations call for legal guardians and which ones do not. Understanding when it's possible to have one established can save your family a lot of strife and heartache.

How A Guardianship Lawyer Can Help In Case Of Mental Illness

If you suspect that someone you love is mentally ill and needs help, it's possible to establish guardianships that will control their medical and financial decisions.

The most well known case of this involves Britney Spears. When she spiraled out of control several years ago, her parents agreed that she needed help after she shaved her head and attacked a paparazzo's car with an umbrella. Her father petitioned the court and asked to be granted conservatorship. Although it's not exactly the same thing as becoming a guardian, it's similar (though you should consult an attorney to find out the specific differences in your state).

This conservatorship meant that Britney was no longer able to make her own decisions regarding her finances or medical choices. It's said that her father saved her life by stepping in, but it's unclear whether the conservatorship would continue as a long-term situation.

How A Guardianship Lawyer Can Assist A Minor Child

Situations involving minor children are some of the most commonly understood guardianships. If both parents die without a will, no one is named as the guardian. In these cases, an attorney can help determine who will act as the guardian for the child. It needs to be legally established through the court to ensure that the adult has decision-making authority.

Another situation involving minor children is if parents are unable to care for their children. This can happen because of neglect, but could also be a result of military duty. If a single parent is deployed, he or she can establish guardianships to ensure that a responsible adult is available to make major decisions for the child.

How A Guardianship Lawyer Can Assist The Elderly

If you have a loved one who is getting older and you feel they're unable to make their own decisions in financial and medical situations, it's possible to set up guardianships. Some seniors need help ensuring they receive proper medical care, especially if they have health problems such as Alzheimer's Disease or if they suffer from dementia. Other seniors are especially susceptible to financial scams, and having someone act as a guardian can protect their assets. It can be difficult for seniors to relinquish control over their financial or personal well-being and an attorney will aid families navigating through this tricky situation.

If you're unsure whether a guardianship lawyer can help your family, contact one in your area. He or she will be able to analyze your situation and let you know whether it's appropriate to petition the court to grant a guardian for your loved one.

Large Mortgages Do Not Always Require A Large Income

Large Mortgages Do Not Always Require A Large Income

Until the present economic downturn it was not particularly difficult to arrange a very large mortgage in comparison to your income. But we all know where that situation led us and many people are still suffering in the UK, Europe and the US from the lax lending rules that most banks and lending institutions were applying. The effect of this laxity is still being felt and is likely to be felt for some time to come.

Many young professional people who would have been able to secure a good mortgage deal pre-recession are struggling to save enough deposit to buy their first property and this lack of activity at the bottom end of the market is having an effect on the whole market (perhaps with the exception of the prime London residential property market which is being supported by overseas investors looking for a safe haven for their assets as well as a chance to sample the cultural highlights of the capital). This lack of activity on the first-time buyer front has meant that many are stuck renting properties that, ironically, they could probably afford to buy and for which the mortgage payments would be lower than their rent.

It is especially difficult to secure a mortgage from the main high-street banks and lending institutions because of their continuing stringent lending criteria such as affordability calculations and income multiples, despite government schemes to make mortgages more readily available. It is equally difficult to borrow adequate funds for a house purchase from these same lenders if you want a large mortgage, particularly one in excess of £500,000 as many institutions have that figure as their maximum lending limit.

For high net worth individuals who can finance a large mortgage there are alternatives to the high streets lenders, such as private banks but what if you want a million pound mortgage to buy that dream home but, on paper at least, your income does not appear sufficient to cover the mortgage interest?

Those same private banks and also other lenders who do not simply impose a checklist when determining affordability are often prepared to take into account other aspects of your background when deciding how much they are willing to lend as a residential mortgage. For people with other significant assets or family wealth some lenders will review the bigger picture of your ability to repay the mortgage and will not impose traditional income multiples on your ability to borrow.

Mortgages from these types of lenders are not the "self-certified" or "non-status" mortgages that many self-employed people are obliged to take out, and which are invariably on very expensive rates of interest. They are simply mortgages where the lender will take into account your full financial circumstances in deciding how much you can borrow. And if your wider financial circumstances allow then it is possible to take out a million pound mortgage or more. So obtaining a large mortgage is possible, even if your income on paper, on your tax return or on your P60 would suggest otherwise.

Checking Potential Tenants' Histories of Credit Problems and Legal
Issues Is a Must

Checking Potential Tenants' Histories of Credit Problems and Legal Issues Is a Must

Having to rent to a new tenant is like walking into an unknown dark room. By the time your eyes adjust, you may have walked into some pretty deep muck that could be hard to get out of. Renting to new tenants does not have to be scary or uncharted territory when you check their backgrounds and credit history.

You may be wondering if you have any right to be checking into a potential renter's private background or credit history. The fact of the matter is that you do. When you specifically state to an applicant that you will be performing a background and credit check on the application and the applicant signs off on it, you are able to perform the checks without worry. If you have further concerns, consult your attorney about your rights.

You would not hand over the keys to your home or car without knowing anything about a person. The same can be said for your rental properties. You could be handing the keys over to your property to anyone when you choose to do so without a background or credit check. It would be unthinkable to do this with your other property, so why should your rental property be any different?

What can this background information tell you about a tenant? For starters, your potential tenant may have a criminal history of serious crime. You should be aware of this type of information in order to protect yourself and other tenants from violent or fraudulent crime. He or she may have a history of being evicted and sued for rent money, too. You need to be aware of this and other information.

Knowing a tenant's history can save you a legal headache in the long run. Taking tenants to court who have no assets or money can seem like an expensive and fruitless cause. Knowing their job history can help you to decide whether the potential renters are people who are diligent in staying on track and out of trouble.

It is not easy to spot someone that could turn your life upside down by damaging your property, not paying rent on time or at all, or harassing other tenants. A person who seems like a perfect match for your property at first meeting may be the person that you've wished to avoid all along. The only way to know for sure is to take a risky chance.

A less risky chance is by checking the person's credit history. A person who has great credit will not likely want to jeopardize it. They have shown financial responsibility and are unlikely to suddenly forget these responsibilities. Quite frankly, a person who has shown that they care about their creditworthiness will not typically take a turn for the worse and neglect to pay you your rent.

You should also verify employment through a background check. A person that has been at the same job for many years has a solid income and has shown responsibility by remaining with the same company for so long. Anyone can tell you that they have a job with regular income, but the only way to know for sure is through a background check.

Your rental property is an expensive investment, and you don't want to allow anyone to jeopardize your careful planning and care of your property. Renting to the wrong person can cause a loss of revenue, damage to your property, and a lot of lost time fought in legal battles. You can prevent these negative things from happening when you require background and credit checks for potential renters.

Why Are Forex Forums Important

Why Are Forex Forums Important

Forex forum is the best place to get all the information that is needed for successfully trading in the forex market. You will be able to keep yourself updated on the latest happenings in the fast changing currencies market by becoming a member of a forum of your choice.

Apart from gaining information from forex forum regarding the various aspects of trading, you will also be able to connect with other traders through the online medium. It is also one of the best places to interact with other members. You will also be able to get tips from other traders about the pair of currencies that they trade in.

It is important to remember that any interaction done through the forex forum must be relevant to the topic that is been discussed. You should not post anything that looks like spam. There are some forums where members try to promote products and services that are not relevant to forex and this need to be avoided.

There are some rules and guidelines that need to be followed in these forex forums and this will differ based on the forum you join. If you consistently post spam, you might be banned from these forums.

There are a number of forums that are available online and some of them are set up by brokerage firms that trade in forex. There are various reasons due to which people join these forex forums. Individuals who are new to forex trading will gain a lot by joining them.

You can use the Internet to search for the best forex forums that are available. The preferred pair of currencies can also be used in the search terms to get information about the forums of your choice. There are various factors that influence the movement of currencies and you will be able to gain knowledge about them easily from these forums.

The strategies that can be learned from these can be applied to live trading. You can also use these forums to ask questions to other traders and gain information from them. It is important to remember that while asking questions or while answering queries you should always stick to the point that is been discussed.

The forums should not be abused by members and any rude remarks that are made will lead you to get banned from them permanently. Most beginners find forex trading to be very complex and end up accumulating losses and eventually give up trading.

There are various pitfalls that need to be avoided and you will be able to learn about them from forex forum. Most of the traders who participate in these are willing to share information and tips about how to trade and the various winning strategies that they use to become successful.

There are also paid forex forums where the members need to pay a small amount to gain membership. You will be able to gain access to a number of features that are not available on free forums.

Understanding Security of Payment Schemes

Understanding Security of Payment Schemes

No matter what we work as and where we work there are times wherein we come across problems related to payment issues. It could be boss - employee payment problems or even worse payment problems between companies working together on a single project.

For boss - employee payment issues there are already plenty of schemes in place. However, when it comes to payment between different companies this matter needs a legal system in order to be solved. Therefore, the government of most countries has come up with a scheme termed "Security of Payment".

There are plenty of "securities of payment schemes" under different security of payment acts for issues related to the construction and building industry as this is the main sector where problems arise.

Benefits of these schemes

There are plenty of benefits that you would be able to avail from these schemes and one of the main one's is that of increasing the flow of cash. You would be able to receive quick, cheap and non-legalistic solutions for all your disputes and therefore you would spend less time fighting and more time constructing. The process followed is termed as adjudication and it's sought of a judicial system which isn't an actual part of the judiciary.

How it works

The process of adjudication is carried out by accredited adjudicators. They decide how much of the claim needs to be released and whether it's payable to the party who's filing for the claim or not. The adjudicator is selected by the ANA (Authorized nominating authority) and its they who manage this process on behalf of the government.

Main parts of the scheme:

There are a few things that you should know related to the scheme before you think of signing up:

· Written as well as verbal arguments and contracts are covered and this is a boon for the construction industry and both parties involved.

· Clauses such as "Payment will be released when paid" and "if paid" are not taken into consideration. So, if you're hired you must get paid and it's irrespective of whether or not the party who hired you gets paid.

· If at all the contract is not framed well, they would go through it and see what best could be done out of the current event of circumstances.

Therefore, if you work in the construction industry go ahead and get yourself signed up as these schemes are definitely made for your benefit.

Exposed - Mortgage Offset Accounts Viciously Slashes Years Off Of Home

Exposed - Mortgage Offset Accounts Viciously Slashes Years Off Of Home Loans

Securing an offset account when establishing any home loan mortgage can be beneficial to those who have a focus on wanting to save thousands of dollars and pay their home loans off faster.

Mortgage offset accounts aren't exactly new, but they are a recent banking innovation that evolved from lines of credit loan products. Lines of credit were the flavour of the month for quite a while, however many of their users found to their detriment that they couldn't resist the temptation to spend the easy money that was on offer.

Because, with a line of credit you only needed to make interest only repayments and in some instances you didn't have to make any payments at all. This was made possible when you had a line of credit with a pre-approved limit (a bit like a giant credit card). In other words when you established the loan you got the bank to give you a loan limit for more than what you immediately needed.

Anyway, at the end of the day the banks found they were starting to lose custom, because of the waning popularity of the line of credit. So, some genius in the backroom came up with the solution for these declining sales, which was the offset account, or mortgage offset account as some call them.

Less Temptation - With a Better Result

One issue that was removed with the use of offset accounts is that the borrower must make a regular repayment. This can be either a principal and interest repayment, or an interest only repayment.

How it works

With the initial set up of your loan, the bank simultaneously sets up a transaction account for you that you're able to deposit your cash into. This could be your pay cheque/s, money from other sources like rental or investment income received. Even one off payments you may have received from selling something like a car, can be deposited into the offset account (transaction account).

The payoff is, that any money that sits in the offset account (transaction account) will automatically reduce the amount of interest you have to pay on your mortgage.
In other words, any money you have sitting in your offset account on a daily basis will automatically offset and reduce the balance of the loan that you have to pay interest on.

Are you getting the picture?

For arguments sake, let's say you have a $400,000 mortgage and you have accumulated $10,000 into your offset transaction account. This means that the $10,000 offsets against the $400,000 and now you only have to pay interest on $390,000.

There, I knew you would get it.

But, wait a minute, you say. Hold your horses, not so fast!

I can't leave the whole ten thousand in there all month. I've got to live, expenses to pay, food for me and my family.

What about those issues?

That's not a problem at all. With today's technology the banks computers can do the interest calculations on a daily basis. In fact, that's exactly what they do. They keep track of the daily balance in your offset account and they charge the accrued interest back to your loan account monthly in arrears.

In other words they total everything up at the end of the month and then charge it back to your loan account. In the meantime, you have benefited from the interest savings your cash deposits have earned you while they were sitting in the offset account.

Wait! The Deal Gets Even Better

It's a pretty good deal all up, because interest saved is interest earned and its tax free.

Think about that for a moment. If you deposited the same amount of money in a savings account, what would you earn in the way of interest?

Maybe four percent on a really good day, but more than likely less than one percent.

But, even if you earned the four percent, you would still have to pay tax on it.

Whereas with your offset account, you saved interest, you didn't earn interest, therefore no tax. And depending on your tax bracket, in today's market, you would have to find an interest bearing account paying approximately 6-8% before tax.

If you don't already have an offset account attached to your mortgage, it's worthy of your serious consideration.

Prepare Children for a Bright Future by Teaching About Money

Prepare Children for a Bright Future by Teaching About Money

Being a parent requires you to teach your kids to be responsible. One thing that is often overlooked is teaching kids about money. Many parents make their finances into a secret thing rather than involving the whole family in the conversation. This can lead to a generation of children who have no clue what it means to have and use money wisely. Instead of avoiding money conversations with children, it's important for parents to make sure their kids understand money and the way credit works. Parents should even talk to kids about how to monitor credit scores so that they can track their own financial health in the future.

Introduce Money Early

In order to teach kids about money, you need to get money into their hands. Money should not be looked at as an abstract concept. Rather, parents should be sure to show kids exactly how to use it. This includes giving them an allowance, having them pay for some of their own needs, and showing them how to save. It's essential to set up a savings account for a child as soon as feasibly possible. Make a habit out of going to the bank and depositing money. Sit down with your kids and discuss how much money they have and what they plan to do with it. This practice shows them that money is a powerful thing and that you trust them to make their own decisions with it.

Teaching kids about money is a long process that needs to be a full experience. Don't just hand them some money and tell them to go shop. Model the idea of shopping by taking them with you. Simply by taking a child grocery shopping, you are teaching about adult life and what it means to be responsible with money. You should also teach kids about credit at an early age. Since credit cards and debt are such big factors in the financial lives of most people, the sooner someone is exposed, the better they should be able to handle it in the future.

Encourage Kids to Save Money

One of the best ways to teach kids about money is to set an example. If you are always suffering under mountains of debt, then surely they will do the same when they are older. Rather than spending everything you have on the nicest things, explain the importance of saving for the future. Share your savings routine with your children. For example, you could follow the ten percent savings rule. By putting away ten percent of your earnings into a special account, you can show the importance of planning for the future. Have your kids do the same thing. Offer them a small allowance until they are old enough to get a job and start earning their own income. Teach them to set aside ten percent of their allowance each week into a special savings account that you have set up for them. Every few months, show them how much money they have saved up and explain why this is important. You can also encourage them to save up for something they really want, but make sure this is in addition to the ten percent set aside. Teaching kids about money needs to be a constant fixture in your household. It's not something you can just talk about once and expect them to do. It's an ongoing learning process that is only truly accomplished through routine practice.

Explain the Importance of Credit and Credit Monitoring

With so many people in debt these days, it should be no surprise that many of these financial habits were learned behaviors from their parents. Too many people believe that credit is just a means to get things now and pay for them later. This idea leads to much irresponsible spending. Parents need to stress how much debt is too much, and they need to set the example through their own spending habits. The best way to teach kids about money is to keep them involved and have them model the spending habits themselves. Giving kids access to credit cards when they are mature enough to handle them can help them understand exactly what credit is.

Don't end the conversation about credit with how to handle a credit card. Teaching kids about money needs to be a thorough lesson that involves a discussion of credit monitoring and an explanation of how to get your credit reports. It's important for kids to understand that being responsible with money takes time and effort, and it's a lifestyle decision. If you share a credit report with them and explain the good and bad things on your credit report, they can make better decisions for themselves in the future.

All parents know that it's their job to teach their kids about many things in life. Unfortunately, not all parents understand how important money is in this equation. By teaching your kids about money from an early age, you can make sure they will be responsible with money when they are adults. These lessons about money benefit everyone involved, and reduce the possibility that you will have to help bail them out of money trouble in the future. Teaching kids about money needs to be a thorough process that involves frequent discussions, modeled behaviors, and lots of hands-on practice.

What Is a Portfolio Management Service?

What Is a Portfolio Management Service?

Portfolio management services are provided by corporate intermediaries to enhance the value of a client's underlying securities. They are not investment services, however, and simply play an advisory role, which is executed by a portfolio manager. As per SEBI stipulations, any individual who contractually guides, analyses or undertakes the administration of a client's securities is a portfolio manager.

A professional one is ethically bound to administrate his client's funds prudently and to make carefully reasoned decisions in choosing investment channels for his client. Ultimately, his aim is to do with the portfolio what is required by the client, which in most cases means high returns or liquidity.

There are essentially two types of managers. These are discretionary and non-discretionary. In the former, the investments lie at the discretion of the portfolio manager. The client plays no role and cannot intervene in the course of the investment. The latter is simply the opposite. The portfolio manager simply advises the investor, who makes the final decision.

Mutual funds and PMS are similar to each other, in that they acquire money from investors and pool it before proceeding to invest them in various securities. However, there are a few differences. These are targeted to high-net investors whereas mutual funds remain the domain of smaller, retail investors. Also, mutual funds not pay specific attention to the individual client's securities. The returns on a mutual fund are simply divided in proportion, whereas it manage every portfolio separately.

Income that is derived through it is, unlike mutual funds, treated at business income and is taxed at an individual investor level. One is not required to retain at least 65% of the dividend through a portfolio management service in equity funds to avail of tax benefits.

Like all aspects of finance and investment, these services come with certain disadvantages. For one, it remains a very elitist means of investment, with the target market being seriously cash rich individuals. While SEBI regulations require investors to have at least Rs. 5 lakh worth of securities to avail of PMS, most-professional services themselves accept portfolios that are much more valuable. The average range of such portfolios can be anything over Rs. 20 lakh.

While having your portfolio professionally managed might seem tempting and rewarding, there are serious preliminary considerations to be made. PMS can be expensive to avail of, and it is important to be sure of what your investment goals are, in the long-run and short-term, before opting for a portfolio management service.

The Big Nest Egg

The Big Nest Egg

"You know that if you want to quit well before the traditional retirement age of 65, you need a big nest egg. The best way to get there: Save more, a lot more, than the average Jane or Joe."

I read this remarkably immature statement online this week on a very reputable website.

I couldn't decide whether I was angry or just confused.

There is no way that an Oldster, someone in retirement already, or someone soon to be taking retirement would speak like that. Even those who are working out their retirement lifestyle ahead of the big event would find incredulity in those words.

There is nothing inherently wrong with the statement as such, it's just the naivete of it.

I came up with similar daft statements:-

  • If you want to live healthy, eat healthy.
  • If you seek inner peace, be happy.
  • If you want to awaken refreshed, sleep well.
  • If you want friends, be friendly
  • If you want more money, make it

You see, none of these could be argued against, but their simplicity is so absurd to be unattainable, and thus meaningless.

Of course a bigger nest egg is wanted by all of us, but it is just not that easy to achieve. Thus, to throw the statement out as glibly as that, in my opinion, insults those of us who are in our later years, especially those of us who have no active income any more, or those of us who are handcuffed to a job, in our sunset years of employment, which has no prospect of huge wage increases between now and our retirement date, early or otherwise..

We cannot turn the clock back and say "Wow, I intend to retire in 3 years, so I'd better get cracking on increasing my income to build that nest egg". It doesn't work like that.

Only a person in mid-life could have the ability to say, "save more, a lot more... " I sure hope he/she takes their own advice, because if not, and they want to retire early, they'll soon find out that "saving more" is extremely difficult in later years.

Once the earning years are drawing to a close, then apart from investment windfalls, the pension pot is relatively fixed. The trick is to make income and expenses treat each other respectfully. By loosely stating that one needs to be bigger than presently structured is a cheap shot, and disrespects those of us who would dearly love to increase our nest egg, but can't

I do wish that when people write about retirement they would give ample consideration to what it is actually like to be living in the retirement years. It really annoys me to be "advised" to do this, or that, by someone who has not experienced the feelings and emotions and realities of older life. Their day will come, and then, and probably only then, will they understand how stupid their statements were back then.

Rant over.

How to Purchase Debt and Make Better Investments

How to Purchase Debt and Make Better Investments

With the economy facing an upheaval and investors taking turns in grabbing the best opportunities in the market, knowing the most practical steps in spending your capital is crucial to survive in whatever industry you are in. In recent years, debt purchasing has seen a rapid growth in the country. This is mainly due to economic-related problems such as high unemployment rate, default rates, and soaring consumer debts. But before jumping into the bandwagon, read on these few tips on how to purchase debt and maximize your available resources.

Get the Best Debt Leads

To purchase debt, you have to identify which type will you most likely fit into. Take note that there are different types of debts. The most common classifications are government and corporate debts. Government-issued debts are further grouped under local, state, federal, and special bonds. Some investors are more comfortable in dealing with bond issues than mortgages and other types of loans. From the buyer's perspective, keep in mind that the main purpose is in purchasing. It is best if you know the current status of the market and see which debt instruments are most in-demand and highly traded. From there, you can weigh your options as to which type of debt can fully materialize your desired return of investments.

Conduct a Background Check

It is also crucial to check the history of the outstanding debt which you plan to purchase. Conducting a background check will help you predict the likelihood of a purchase to succeed or fail. Corporate-issued debts, for example, are quite tough to handle as these are often caused by bankruptcy shutdown. These causes require higher risk and are more susceptible to loss.

Determine Debt Packaging Options

To purchase debt, it is also your responsibility to identify different package options. You have to know whether the outstanding debt is outright or part of an Exchange Traded Fund. Outright debts are not included in the portfolio of a mutual fund. But you can also opt for mutual funds which hold bonds as an alternative choice. Take note that mutual funds serve as good options in building a portfolio with different types of bond investments. Small investors are likely to benefit from this as they are given the chance to purchase different types of bonds in just one investment.

Check on the Credit Rating

You may want to refer to reputable financial service companies in checking the credit rating. Fitch, Standard and Poor's, and Moody are just some of the companies which issue credit ratings. Some of the parameters used in determining a bond's credit rating include the financial status of the company, government issues, and other related risks and advantages. To purchase debt with the best value, you have to keep in mind the risks involved in terms of credit rating. You will find that riskier bonds often provide more profits because the debt issuer can pose high default risk. Your task is to determine the risks of bond and see how it will benefit your investments. It is also okay to consult various financial services firms to help you purchase debt more efficiently.

How to Become a Financial Planner

How to Become a Financial Planner

Yesterday I went to an optometry store and had an eye test done, so I had a chance to talk to one of customer representative while waiting. One interesting topic we were talking about is "how to become a financial planner". As there has been quite some people asked me this question before, I think it makes sense for me to spend some time to write about it as it was a goal I planned to achieve a few years ago.

First of all, you want to work in the financial industry. As financial planners are usually working for banks, credit unions, investment firms, I will suggest you to start with applying for a job in those types of companies.

Once accepted, you can begin with some work positions in entry-level such as administrators or tellers to communicate with customers on regular base, because this is a foundation. Financial planners need to ask proactive questions to customers about themselves and their family in order to better understand their whole financial picture and determine the financial needs from the customers, so excellent communication skill is a must.

While you are getting familiar with your daily job, learn more about the company structure and talk to your peers to gain chances to job shadow a financial planner. This serves as a basic understanding of what the job is about and you will see if it's a good fit to yourself. At the same time, you need to get some credentials done in order to earn a title called Certified Financial Planner (CFP), which is an industry standard to be eligible for this job. For detailed information about the designation, I will suggest you to check out the institution who is offering the relative education. Here in Canada, we use a website,

In order to become a financial planner, you need to first be licensed to sell mutual funds and/or other investment products in your area. This will give you more opportunities to employ more tools in the future to manage the overall financial affairs. Secondly you need to life insurance licensed to sell financial products to protect potential loss that has huge impact to life.

In a nut shell, financial planning can be divided into a few steps:

  1. Saving - this is about to manage your budget and save the extra income for rainy days
  2. Investing - once saved up some money, to invest them smartly for a better return and also deal with inflation risk for a long time period
  3. Protection - protect yourself from disability and protect you family for loss of income if something happens to you
  4. Plan for future - To manage your goal for retirement and prepare for your estate as well.

Inflation and the Equation of Exchange

Inflation and the Equation of Exchange

Let's start with a big question: What reasons are there for inflation to occur? One way of answering this question is to take the monetarist approach and focus on the so called Equation of Exchange. It will help us to easily identify the culprit.

First we take a look at the quantities necessary to understand this equation step by step and using an example. One quantity is the money supply M. It's simply the total amount of money present in the economy. For introductory purposes, I'll set this value to M = 100 billion $.

Also important is the velocity of money V. It tells us, how often each dollar (bill) is used over the course of a year. This quantity depends on the saving habits of the people in the economy. If they are keen on saving, the bills will only pass through a few hands each year, thus V is small. On the other hand, if people love to spend the money they have, any bill will see a lot of different owners, so V is large. For the introductory example, we'll set V = 5.

Note that the product of these two quantities is the total spending in the economy. If there are M = 100 billion $ in the economy and each dollar is spend V = 5 times per year, the total annual spending must be M · V = 500 billion $. This conclusion is vital for understanding the Equation of Exchange.

There are two more quantities we need to look at, one of which is the price level P. It tells us the average price of a good in the economy. If there's inflation, this is the quantity that will increase. Let's assume that in our fictitious economy, the average price of a good is P = 25 $.

Last but not least, there's the number of transactions T, which is just the total number of goods sold over the entire year. We'll fix this to T = 200 billion for now and make another very important conclusion.

The product of these last two quantities is the total sales revenue in the economy. If the average price of a good is P = 25 $ and there are T = 200 billion goods sold in a year, the total sales revenue must be P · T = 500 billion $. It is no accident that the total sales revenue equals the total spending. Rather, this equality is the (reasonable) foundation of the Equation of Exchange.

For the total spending to equal the total sales revenue, this equation must hold true:

M · V = P · T

which is just the Equation of Exchange. Now think about what will happen if we increase the money supply M in the economy, for example by printing money or government spending. We'll assume that the spending habits of the people remain unchanged (constant V). Since we increased the left side of the equation, the total spending, the right side of the equation, the total sales revenue, must increase as well.

One way this can happen is via an increase in price level P (inflation). Indeed empirical evidence shows that in the US every increase in money supply was followed by a rise in inflation later on.

Luckily there's another quantity on the right side which can absorb some of the growth in money supply. A rise in the number of transactions T (increased economic activity) following the "money shower" will dampen the resulting inflationary drive. On the other hand, a combination of more money and less economic activity can lead to a dangerous, Weimar-style hyperinflation.

At some point of your life, you probably thought to yourself: If governments can print money, why the hell don't they just make everyone a millionaire? The answer to this question is now obvious: The Equation of Exchange, that's why. If the government just started printing money like crazy, the rise in price level would just eat the newly found wealth up. Each dollar bill would gain three zeros, but you couldn't buy more with it than before.

Of course there can be much more trivial causes for inflation than a growing money supply. Prices are determined by an equilibrium of supply and demand. If demand drops, the retailers have to lower their prices to sell off their stocks. Similarly, if demand suddenly increases, the retailer will be able to set higher prices, resulting in inflation. This happens for example when a new technology comes along that quickly rises in popularity. Appropriately, this kind of price level growth is called a demand-pull inflation.

Professional Financial Planning Advice That Is Simple, Proven And

Professional Financial Planning Advice That Is Simple, Proven And Effective

It can be very frustrating to get professional financial planning advice. You may become discouraged as you hear the same advice you have heard countless other times: make a budget, live within your means, pay down your debt, invest wisely. Some financial planners simply do not provide advice that applies specifically to your situation. Seeking professional financial planning advice can help soothe some of your frustrations, and will provide you with the knowledge you need in order to plan for a prosperous future.

Why You Should Invest in a Professional

When people think of investing, they may think directly of stocks and bonds and the flurry and confusion found on Wall Street. However, some investments are less complicated, but just as important. Hiring a professional financial planner is one of these investments.

Some may balk at the idea of spending money in order to make money, but that is one of the core facets of investing as a whole. In order to get the greatest return on your resources, you need to expend some of your own resources in the process. A professional will give you tried-and-true financial advice, and will help you to implement it in your day-to-day personal or business transactions.

The Basics

They may seem too simple to be any good, but the basics of financial planning are at the core of even the most prosperous company's and private investor's successes. The problem most people have is not in understanding the basics, however, but in implementing them.

Savings, spending, and debt are what makes or breaks a sound financial plan. You could be saving, but not in the right types of accounts. You could be spending just a little too much, and a quick budget review will fix that problem. You may be shying away from the right kind of debt, or be buried too deeply in the wrong kind. Financial planning advice from professionals will help you to look at your finances with new eyes and see the easiest ways to achieve your financial goals.

You can learn the basics of financial planning from many sources, some even offer financial advice for free or nearly free, but the problem comes with applying the advice to your unique circumstances. No two people or businesses have the same financial assets, burdens or goals. Because of this, you could be implementing sound advice in a way that is inappropriate for your circumstances. A professional financial planning firm will be able to tailor-fit a plan to your needs, instead of trying to change your needs to fit a generic plan.

If you have questions about good debt and bad debt, interest rates, high yield savings accounts, or investing in your future, make an appointment with a professional to get your questions answered today. The sooner you begin sound financial planning strategies, the better off you'll be.

New Mortgage Lenders for Top End Property Market

New Mortgage Lenders for Top End Property Market

It has been frequently discussed in the news and other media about how the London property market is bucking the property price trend in the UK. There are a range of reasons why this should be so: the property market in the capital is seen as a stable place for investment, the value of the pound is weak and there is a limited supply of available and desirable property. Whatever the reasons for the boost in the high value residential property market in London, what is clear is that foreign buyers continue to buy.

In the wake of this surge of international buyers it is not surprising that there is also a new style of mortgage lender coming on the scene. Even the traditional high-street lenders are gradually reducing their interest rates and increasing their limits on maximum loan size in order to attract both wealthy UK buyers and also the overseas buyers.

As property prices are showing greater stability right across the country and buyers are contributing larger deposits many of these lenders are again viewing mortgages as a good bet for the first time since the start of the global economic crisis.

For those seeking large mortgages that still exceed the typical maximum loan amount of the traditional lenders i.e. those in excess of a million pounds, UK buyers can benefit from the significant number of UK-based private banks. Some of these, such as Handelsbanken and Barclays Wealth are dominating the market for large mortgages for high net worth individuals. Lenders such as these allow non-resident and non-domicile individuals to borrow a mortgage. They will take the borrower's full financial circumstances into account when deciding at what level to agree the mortgage lending. They will take a wider view of the solutions available to repay the loan such as using offshore income, background assets and limited companies. They also commonly consider high loan to value amounts with an annual repayment where this suits an individual's financial situation.

The main reason why private banks are prepared to be more flexible when it comes to mortgage lending is that they typically view the mortgage as the start of building a relationship with the client. Their longer term aim is to manage other assets and provide regular banking facilities and services to the client. So such arrangements can benefit both the private bank and the client. The client obtains a mortgage of the type and value they desire at a reasonable rate of interest (often discounted further depending on how much of their personal banking business they transfer to the private bank). And, of course, the bank benefits from all the additional services it provides.

More typically in the UK a mortgage is seen as a standalone transaction - one that could be done with any bank or building society and not necessarily with your regular bank. People looking for a mortgage would consider cost, interest rate, penalties, lending criteria and availability as more important than obtaining the mortgage from a particular lender. Indeed the high-street lending institutions encourage this approach by competing with each other on the factors that affect the customers' choice.

So the private bank approach is quite a departure from the traditional mortgage route in the UK but this full-service approach is now more and more popular with customers looking for large mortgages (typically a million pound mortgage or more). With the consequence being that there is more and more competition between this type of lender to secure the business of high net worth individuals. London mortgage brokers report sourcing loans for wealthy individuals from the traditional sources such as Switzerland and the Channel Islands, but also from lenders in Luxembourg Canada, Singapore and Dubai.

Top Tips for Hiring the Best Bankruptcy Attorney

Top Tips for Hiring the Best Bankruptcy Attorney

Facing a financial crisis could be one of the most difficult times in a person's life. More often than not, people tend to file for bankruptcy, as a means to come out of the situation. It is always preferable that the bankruptcy is handled by an experienced bankruptcy attorney. Since dealing with finance does require specialized knowledge, it is something that is best handled by professionals in the field.

The first thing that you need to make sure is to find an experienced bankruptcy lawyer. He or she should have been in the field of handling bankruptcy cases for at least a few years. Many a times people tend to hire the services of an attorney who handles bankruptcy cases only occasionally and end up regretting their decision later on. Getting to hire a greenhorn just because of the price is also not a good decision to make, for an inexperienced attorney may not be able to handle the case competently and in fact, could put you into more trouble.

The law firm or the attorney that you hire should understand your financial position and must be able to offer you a flexible payment option. They need to remember that you may not be in a position to shell out their fee in full and would be only able to do so in installments. The attorney or the law firm should be sympathetic to your situation.

Filing for bankruptcy could be one of the toughest decisions that you may take in your life. With so much pressure around you from creditors you could find yourself trying to save the last penny. In such situations it makes sense to hire the services of a bankruptcy attorney who would offer you free consultation of y our present financial position. If an attorney is not willing to waive off the consultation fee, then it is better that you look for another one. Remember, there are scores of bankruptcy attorneys available these days and you are sure to find someone who will offer free consultations.

Filing for bankruptcy could be one of the most emotionally taxing experiences. You need to find a lawyer who would fully understand your state of mind and offer you a sympathetic hearing. The attorney should also show a ready willingness to answer any questions that you may have about the case.

You must never make the mistake of hiring the services of a bankruptcy attorney just because he or she lives down the street in your neighborhood. You need to remember that we live in a day and age where location is no longer a constraint for smooth communication. The criteria for hiring the services of an attorney should be only competency and nothing else.

Shares, Property or Cash?!

Shares, Property or Cash?!

For the past five years as a whole, bonds and cash have been the place to be. While yields on bank deposits have been single digit, they have been higher than the returns from both shares and residential property. Of course, some shares and some property locations have done well but the broad experience has been poor, as the global financial crisis and its aftermath have weighed on returns from growth assets.

This flight to "safety" has been a worldwide phenomenon. The trouble is that all investment trends end up getting pushed too far, eventually giving way to a reversal. We are likely now at, or close to that point, in the case of cash and bonds relative to growth assets like shares.

What's the outlook?

The return from an asset is a function of the income flow or yield the asset generates and capital growth. Of course, in the case of cash or term deposits, the yield is all that drives the return. And on this front the return outlook for cash is looking less promising.


Over the last year the official cash rate in Australia has fallen from 4.75 per cent to 3 per cent, as the Reserve Bank has sought to boost activity in areas like housing and retailing, as momentum in the mining investment boom slows and inflation is benign. While this is not the only influence on bank term deposit rates, it is the major one. As a result, while term deposit rates of 6, 7 and even 8 per cent were available a few years ago they are now nearer 4 per cent and falling.

Given the softness in the domestic nonmining economy and the prospect for further RBA rate cuts, term deposit rates are likely to fall even further. This means that the prospective return on cash is rapidly dwindling.


By contrast, residential property already offers comparable yields and will benefit as economic growth improves. House and apartment yields are running around 3.7 per cent and 4.8 per cent respectively, which are well up from their lows last decade. With mortgage rates well off their highs and likely to fall further, the residential property market appears to have bottomed out after falling since mid-2010, with a mild cyclical recovery likely over the next 12 months.

However, short term gains from property are likely to be limited as buyers remain cautious about taking on excessive debt, particularly as job insecurity remains high. Furthermore, capital growth in residential real estate is likely to be constrained over the next five years by still very high property prices relative to incomes.

There are two risks for property. The main downside risk is that China has a hard landing, with the hit to export earnings resulting in higher unemployment, forced sales and in turn, lower house prices. The risk of a hard landing in China seems to be receding though.

The other risk is on the upside; there is always a concern that the old housing bubble is reignited by the latest collapse in mortgage rates. Again this seems unlikely though, given Australian's more cautious approach to debt since the GFC.


Shares are probably the most attractive asset. After a five year period of poor returns, despite the rebound over the last year, Australian shares are offering relatively attractive yields of around 5.7 per cent with franking credits added in. This is not to say that shares are in for a smooth run. Risks remain in the US and Europe regarding public sector debt problems, but they seem to be fading.

With reasonable yields (or income flows), only modest capital growth of 3 to 4 per cent pa is required to provide a decent return. If global growth continues this should be achievable. The main downside risk here would be if global and Australian growth slides into recession taking profits with it. This seems less likely now given how easy monetary conditions are.

Counter to this, there is always the possibility that the easy monetary environment really takes hold globally, resulting in a huge surge in economic growth and investor flows back into growth assets. This would obviously be very positive for shares.

Behaviors That Will Change Your Life - Part Two - Living Below Your

Behaviors That Will Change Your Life - Part Two - Living Below Your Means

If the common sense makes sense, then seek no other sense. It is a common and simple mathematical equation; spending less than what you earn results in a surplus. Too bad our government can't get this one correct. There is no secret to living below your means other than creating a system of priorities. This system has four basic categories: obligations, necessities, commitments, and wants and desires. Extrapolated out, obligations are items that are generally auto-drafted from your pay check such as taxes and company sponsored benefits. If you have a faith-based worldview, you might add tithing or giving as an obligation. Necessities are items that meet your physical needs of existence such as food, clothing, shelter (to include utilities), and transportation. These items are the necessities to sustain a comfortable life. If your income does not exceed these two categories, then you need to increase your income. If your income exceeds these two categories, then you can move to commitments. Commitments are self-imposed future financial expenditures that have been put in place to acquire material possessions now. In other words, you bought something on credit and you have to make a future payment for the privilege to own the item today.

Let me define the concept of credit and debt. Debt is a result of using the financial product known as credit. Banks, lending institutions, and many retailers are in the business of selling you the product known as credit. Credit is a product. It is not a tool, it is a product. People use credit as a tool to artificially inflate their incomes to purchase things and experiences today that they cannot afford. If you can cover your obligations and necessities, but cannot afford to purchase something you want or desire, then don't purchase it. I include this priority in the list of priorities because many people reading this have already made the mistake of purchasing the product known as credit. Credit is a promise to make a future payment with interest, to take possession of another product that will lose most if not all of its value the second you remove it from the store. A better product to purchase with the extra income that is not committed to obligations or necessities would be stocks and bonds. In other words, investing is a better product than credit.

Living below your means is a sure step to improving your retirement planning. By incorporating this behavior into your retirement planning, you might be able to purchase your retirement property while you still have a substantial income. If you own your retirement property, free of debt, you can reduce your expenses in retirement and you are likely to retire without a mortgage. Let me give you an example of living below your means. Let's say your income is slightly above average at $71,400.00 annually. With total obligations of $20,244.00 (including taxes, company sponsored benefits) and no debt (including the mortgage), you would have a net income of $51,156. Assuming that your annual budget (the amount of money needed to meet your necessities) is $30,365.00, you would have $20,791.00 to save and invest.

If you were to reconfigured these numbers with a mortgage payment of $1,560 a month and debt payments of $385 per month, your net spendable income would be -$2,549.00. As you can see it is likely that in this scenario you would continue to increase your use of credit and continue to incur debt. Retirement planning would be a thing of the past. Living below your means requires you to build a system of priority and master your behaviors concerning the use of credit. You need to resist the desire to attain the material possessions and temporal experiences you cannot afford. Making this behavioral change alone can have a dramatic impact on your retirement planning.

God Will Deal With Cheaters

God Will Deal With Cheaters

When the Lord told Jacob to leave Laban and go back home, He explained the situation to his wives, Rachel and Leah. Laban was their father, so this was not just a work-related dispute; it was also a family dispute.

We can see in Genesis 31:6-9 that Jacob "kept his cool" throughout the years of Laban's unfair treatment. Rather than try to tackle this problem himself, he allowed God to fight the battle on his behalf. Psalm 140:12 reminds us, "I know that the LORD secures justice for the poor and upholds the cause of the needy." (NIV) Let's see how God deals with cheaters.

Success won't last

Laban probably felt pretty good about himself. First, he was able to get 14 years of work out of Jacob in exchange for both of his daughters. To Laban, that was a 100% increase over the original negotiation of seven years. Overall, it was not a bad return.

Then, he attempted to pull off another great negotiation in exchange for Jacob continuing to tend the flock. He thought that the idea of separating the flock by color would work out in his favor. After all, who would expect white sheep and goats to produce colored offspring?

For six years, the white flocks repeatedly produced colored offspring. Seeing something like that would lead us to proclaim, "But God!" Only God could turn a seemingly impossible situation into a possible one. Laban may have thought he would be able to get away with his plot, but God had another plan.

Our ways of cheating may not be as extreme as Laban's, but we can all think of a time where we took advantage of someone's kindness or weakness in order to get ahead. It may have worked temporarily, but it did not go unnoticed. "He thwarts the plans of the crafty, so that their hands achieve no success." (Job 5:12 NIV)

Eternity is forever

The worst part is that the suffering is not a temporary thing. If we do not change our sinful ways, the agony will last for eternity. Psalm 37:38 reads, "But all sinners will be destroyed; the future of the wicked will be cut off." (NIV)

God confirms this is Isaiah 57:21, "'There is no peace,' says my God, 'for the wicked.'" (NIV) Is there really any temporal pleasure that is worth an eternity of torment away from God?

It doesn't have to be that way

God is not out to punish us, but He will correct us if we stray from His path. Obedience will keep us from unnecessary heartache and pain. Encouragement is found in Ezekiel 33:14-15. "And if I say to the wicked man, 'You will surely die,' but he then turns away from his sin and does what is just and right - if he gives back what he took in pledge for a loan, returns what he has stolen, follows the decrees that give life, and does no evil, he will surely live; he will not die." (NIV)

Being fair and considerate of others is essential to the Christian body as a whole. Micah tells us what to do. "He has showed you, O man, what is good. And what does the LORD require of you? To act justly and to love mercy and to walk humbly with your God." (Micah 6:8 NIV)

The best part is that there is still time to turn things around. We are not promised tomorrow, so let's begin working toward fairness today.

Securing Wealth And Expanding Businesses Through Investment Services

Securing Wealth And Expanding Businesses Through Investment Services

Investing money is a fairly simple concept. An investor uses his money to buy stock in a public company, a bond, perhaps real estate or some such equivalent commodity or financial security with the hope of generating either profitable returns or material gain. Thus investments, in a nutshell, involve using finances that already exist to garner even more finances. This definitely beats the pains of having to save up rupee by rupee in a 'piggy-bank' fashion.

A huge benefit of choosing to invest in today's market, in whatever instruments you choose, is the professional guidance that is offered by several financial wealth management services. By carefully selecting the correct service, investors may find their portfolios growing at much greater rates than they originally expected. The returns generated by the portfolio might also turn out be to of greater monetary value than any salary that the investor is likely to get paid, which only adds to the advantages of investing.

Business owners will be tempted by the aspect of long-term wealth creation that investments offer. Companies are always looking to increase their value, either through direct profits, or by investing these profits. Depending on the instruments one chooses to invest in, business owners can also significantly expand their businesses through the investment channel.

One often hears of people reluctant to invest their money owing to the risk factor involved. After all, once an investment is made the investor is obliged to accept whatever returns it accrues, if at all. This is where investment services play an important role. By keenly tracking market trends and scouting for favorable opportunities, investment services ensure as far as possible that their client's interests are kept safe.

However, as an investor one must also learn to be prudent and educate themselves as to the nuances of investing. Investment services should not be treated as a substitute for one's own lack of knowledge. It is crucial that the investor make continuous checks on the status of his/ her portfolio. Not only does this keep the investor clued in, it also encourages them to suggest and or dissuade their portfolio manager from making this or that decision. Such a level of commitment and involvement is necessary if one expects his investments to grow enough to secure their financial future.

Investment plays great role at individual or corporate level for their success, but take right decision to invest at right place through the safest way.

Are Forex Traders Who Win Necessarily Professionals?

Are Forex Traders Who Win Necessarily Professionals?

Most traders have heard or read that 95% of forex beginners do not make money. This is a very common myth widely spread on the internet. Furthermore, this myth is not based on verifiable statistics and unfortunately, it prevents many traders from reaching their full potential by creating an unnecessary and harmful trading fear.

What Are the Chances of a Forex Beginner to be Successful

Basically, there are always traders who make money in forex. In theory, for every loser there is a winner. However, earning money regularly is another story. In the long term, there are fewer winners than losers. Also, 95% of traders are not professional full-time traders, but that does not mean they do not make money. A forex trader does not need to be professional; in fact the unrealistic hope of becoming a pro trader is often an obstacle to success as often investors trade with too much leverage to rapidly increase their profits.

The goal of the novice trader should be to make small profits regularly. A trader who increases his capital each month for an extended period is a profitable trader who gradually gains confidence from his negotiating skills. He is not yet a professional, but profitable. Thus, with the goal of making a small profit each month, the chances of success are statistically quite high. With more experience on forex, the trader will then set a weekly target before eventually becoming a professional trading.

By practicing regularly and seriously realistic and systematic trading, the trader refines his strategy and steadily increases his capital. The novice trader must make a distinction between professional trading or full-time and part-time profitable trading. Traders who do not aim to become professionals, but just to earn some extra money are more likely to succeed in the foreign exchange market in the long term. The psychology of the trader is a very important element, a trader who has no ambition to become a professional in the early stages is in a much better emotional state. Having realistic expectations results in the trader being more objective and consequently not use high leverage and increased funds, because the main goal is not to live from trading, but only to generate an additional monthly income. The fact of having no pressure and not relying on trading to ensure a lifestyle can play a significant role on the psychological factor. As a result this will have a positive impact on the quality of the trades and the rational amount of invested money. Significantly minimizing the emotional element is the easiest and fastest way to be successful in forex trading as this is most often the reason to failure. Given that it is possible to trade currencies profitably part-time, statistics of people who actually generate profits each month is probably closer to 20 to 30% and perhaps even more.

In conclusion, we need to stress the fact that, the chances for the novice investor to become a profitable forex trader are excellent if the ambition of becoming a professional immediately does not come in the way. Initially, a beginner should just expect to win consistently, regardless of the amount of profit. This mentality increases the chances of success, because it gives a realistic goal avoiding the common trader's mistakes of speculating hastily in order to live from forex trading. Consequently it's best for beginners to establish a part-time trading plan.

What Is Factoring and How Can It Help Your Business?

What Is Factoring and How Can It Help Your Business?

In the world of business, one of the biggest challenges that entrepreneurs often have is figuring out how to handle cash flow. They have surpluses at one time and deficiencies at another. If you're having a hard time handling your business cash flow, one option that you may want to look at is factoring. What exactly is factoring and how can it help your business operate more smoothly?

Factoring Basics

The basic idea behind factoring is pretty simple and straightforward. When you write an invoice and a customer commits to pay for that invoice at some point in the future, you have an item that can be borrowed against. Factoring is an arrangement that involves you turning over that invoice to a financing company. They give you a certain amount of money for the invoice and then they collect the money from the customer. The amount that you receive for the invoice is less than the total. The factoring company gets to keep the rest as their profit for fronting the money.

How it Impacts Your Business

The nice thing about this particular form of financing is that it can increase your cash flow substantially. Instead of having to worry about how you're going to make ends meet, you get the money that you need right away. You can use that money to buy materials, pay wages, and take care of other overhead.

Instead of having to wait around on slow paying customers, you can instead get the cash that you need to make your business operate. This makes it much easier to handle the day to day responsibilities that come with running a business.

Using Factoring

Once you are set up with a factoring company, getting your hands on the money you need is simple. You simply write an invoice for a customer and get them to agree to pay it. The customer has to sign the invoice and agree to pay the debt. You then turn this invoice over to your factoring company. They take over the invoice and then give you your portion of the money. In some cases, you get all of your payment at once. In other cases, the factoring company will give you an initial advance and then will pay you the rest after the customer pays their bill.

Finding a Factoring Company

If you are interested in improving your business cash flow with factoring, you'll need to be able to find a good company to work with. Not all factoring companies provide reasonable terms and shopping around a bit can help tremendously. When you take the time to shop around, you'll be able to save money and get access to the money you need from a reputable company.

Look for a company that offers a low interest rate on the factoring arrangement. This way, you can maximize the amount of money that you get to keep out of the payment from the customer. Once you find a good factoring company, apply for an account with the and get your first deal started.

7 Basics Rules of Bookkeeping You Must Never Forget

7 Basics Rules of Bookkeeping You Must Never Forget

1. Use an accounting package and not just a piece of pen and paper, not even just Excel. Many small businesses run their accounts on Excel. Firstly, Excel has inherent flaws in itself that could run your finances to ruin. A small formula error can cause you to show excessive income and thereby an incorrect amount of VAT charged to your business. The business could be paying more VAT than it should. With an accounting package you are sure to record the correct amount unless there is an error in entering information.

2. The next important thing is attention to detail. If you miss something or enter incorrect information, you should have the accounting knowledge to review your own work and ensure that the information recorded is correct. No accounting package will correct errors on its own and worse, if you are working on Excel, mistakes are more than likely to happen through incorrect formulas or even wrong cell co-ordination. Hence you should be 100% sure of what you are doing. Bookkeeping can be tricky even for the most experienced, but the advantage is that experienced bookkeepers are able to review their own work. If you are doubtful, leave it for the bookkeeper or the accountant

3. All invoiced amounts are not to be viewed as income. In a small business, all invoicing is considered as income. This is a fundamental error in the accounting system. In our experience, several businesses believe all money that comes in to the business is income and accordingly any balance in the bank account is profit. It is very obvious that bookkeeping has been made into a simple exercise; however, any fresh entrepreneur could easily fall for this and create a massive hole in his/her business if he/she is not aware that everything that is invoiced is NOT income. There are various problems with this scenario and in our experience we have worked for several clients where bookkeepers clearly failed to recognise the difference between invoiced amount and income. These businesses have financially suffered due to this elementary flaw and most of them were blissfully unaware. Revenue recognition is even more difficult for some other businesses. If you are not sure, take help from an experienced accountant as this is not a matter for DIY accountants or bookkeepers.

4. Record all your existing income but do NOT record any income that is to be received in the future. This is another classic mistake that can easily happen. Income that is to be received in the future is NOT to be accounted as income. Even for tax purposes, it is important to differentiate between the date of the invoice and the posting date of the invoice. This can create disparities in VAT accounting, especially so if you are accounting for VAT on accruals basis. Bookkeepers within the business should be aware of implications of VAT accounting on accruals basis or cash basis. The choice of VAT accounting method is very important for your business cash-flow. If the bookkeeper is unable to identify the optimal VAT accounting method for the business then it could wipe out the cash reserves within the business leaving businesses with nothing to pay suppliers or meet other liabilities.

5. Understand your liabilities and account for liabilities. Another big factor is for the entrepreneur to have a clear understanding of business liabilities. Any VAT or PAYE registered business should be clearly aware of their liabilities on any single day of the business and they are required to leave sufficient reserves to meet these liabilities although many small businesses use VAT on sales as a cash flow buffer, this could be a dangerous idea as HMRC keeps a tight rein on liabilities within businesses. Keeping track of income and expenses on a piece of paper would never enable a business to understand their true liabilities. Most businesses end up overtrading as they are clearly not aware of their liabilities in terms of when they arise and what would be the amount. An accounting package is required if a business needs to know the exact level of liabilities and the bookkeeper needs to have a good understanding of accounting concepts.

6. Always book accruals. Accruals are recorded in the business if a business has incurred an expense but an invoice for the expense has not yet been received. Just as all invoiced amount is not income, expenses/costs are not limited only to bills/receipts that have been booked in the accounting system. There would be regular expenses/costs incurred each month for which an invoice may not have been received but it nevertheless an expense and needs to be recorded in the accounting system and when the invoice is later received, ensure the expense is not booked again through an invoice. An expense can be booked through an accrual or through an invoice but NOT both. The bookkeeper should ensure that expenses are NOT booked twice and that they are definitely booked once. It can be very difficult to run a business, no matter how small it is, without a proper accounting system and a bookkeeper who can ensure all costs are booked accurately within the system.

7. Always keep an eye for lagging debtors and overdue supplier payments. Both are responsible for business failures. Lagging debtors can cause cash flow problems leading to delayed supplier payments which could in turn lead to supplier making a legal claim and the business could end up paying far more than the initial due amount. Another problem with lagging debtors is that seriously overdue debts can quickly turn into bad debts and leaves the business with a permanent loss. If businesses pay VAT on accruals basis, prompt debt collection is a key part of sound bookkeeping. For prompt debt collection to materialise, the books have to be updated regularly on a daily/weekly basis. Again, recording expenses on a piece of pen and paper can hardly make this happen.

Based on the above 7 key areas of concern in bookkeeping, a business would clearly prefer to have an experienced bookkeeper than a bookkeeper without knowledge of how a single factor can affect several other areas within the business with a cascading effect.

The Benefits of Working With an Insurance Broker

The Benefits of Working With an Insurance Broker

When you are looking for a new insurance policy you want expert, unbiased advice from someone who really knows the industry and can help you find the best possible solution for your needs. Whether you are looking for insurance for your car, home, or business you will achieve better results by consulting an insurance broker.


One of the most valuable aspects of the broker-customer relationship is that it is unbiased. Brokers have strict ethical requirements they must adhere to in order to keep their licenses which includes:

· Confidentiality of your personal information;

· Full disclosure on their commission rates and how this affects your premiums; and

· Required to state any financial links that may be considered a conflict of interest.

Because they work for you, not for a specific insurance company, they are more invested in your interests and will find the best deal for your unique requirements as opposed to overselling you to increase their commissions.

Industry Knowledge

Unless you work in the insurance industry yourself, there is probably a lot you don't know and finding the right coverage for your home or business can means hours of research or trusting the advice of comparison websites. This process can take up a lot of your valuable time and still not ensure that you have acquired the best possible policy.

With their significant product knowledge and industry experience, an insurance broker can help you find specialist providers you may not otherwise have discovered. They will be much more efficient at cross-checking policies as well as explaining the costs and answering questions. Brokers will also be an indispensable resource if you need to make a claim against a policy as their years of experience will make that otherwise troublesome paperwork a breeze!

The resources they have at their disposal along with their independence from insurance providers will offset the cost of expert advice by saving you money on exactly the right policy. And because the risk is lower for insurance providers when you work with a broker, you will likely get a better rate than you would if you approached the same company for the same policy independently.

Peace of Mind

The main consideration in the minds of consumers when they buy insurance is achieving peace of mind that they are protected from loss. Working with an experienced insurance broker will increase this peace of mind with the knowledge that you are:

· Insured by a reputable company;

· Not overpaying for your policy; and

· Insured for the things that really matter most to you.

Social Security Traps and How to Avoid Them

Social Security Traps and How to Avoid Them

Just earlier this week, I came across an article by Kandice Bridges from and found it pretty compelling. The article lays out common social security traps and gives you pointers on how to navigate around them so you don't end up getting taxed on your retirement benefits or face deductions on your payments.

You can start collecting at age 62, but the rules are fairly complex and can impact the dollar benefit that you receive, so let's look at some Social Security "caveats" that everyone should know.

Pitfall #1: Did you know that your Social Security income may be taxable?

If the annual sum of all your income-taxable, tax-free and 50% of your Social Security benefit exceeds $25,000 ($32,000 for married couples filing jointly) then you may have to pay taxes on your Social Security income. Also note that under certain circumstances, up to 85% of your benefits could be taxed.

Also, many seniors like to convert their regular IRAs into Roth IRAs so they can subsequently grow their money tax-free. But beware - this conversion could add to your income from a Social Security perspective so you're always better off converting your IRA to Roth before you start collecting.

Pitfall #2: You must take Required Minimum Distributions

I recently covered Required Minimum Distributions on one of my radio commentaries and have included a link on my website - To summarize, once you're over 70 ½ - the IRS stipulates that you withdraw a certain minimum amount from your tax deferred retirement account such as an IRA basically so they can finally get their hands on the taxes you owe them. And these RMDs must be factored into your annual earnings - that $25,000 threshold I just spoke about in Pitfall # 1 - else you risk getting taxed on your benefits. So while you cannot avoid RMDs, I want to make sure you're at least aware of their tax consequences.

Pitfall #3: Some workers do not get Social Security

This may surprise you but many Americans simply do not qualify. For example, certain railroad workers and local, state and federal employees are not covered by social security because they have other retirement pension plans.

The caveat comes in because most of us have held multiple jobs before we turned 60 so it's possible that some of your employers did not pay in to the system. Make sure you look into your paycheck deductions to see if Social Security listed because your expected benefit is based on your contribution history.

Pitfall #4: Early benefits could be a big mistake

While you become eligible at 62, your payable amounts will be small because the government expects to amortize your payout over a longer period of time. But if you wait until you're 70, your benefits actually go up as much as 8% for each extra year that you wait - simply because your money can grow a lot more over 8 years (age 62 to 70) and partly because the government is willing to reward you for delayed gratification.

In addition, social security is annually increased to factor-in inflation so you will get higher inflation adjusted amounts if you wait. And, come to think of it, an extra 8% per year is well above what the stock market delivers so it actually makes good financial sense to hold off on social security benefits till later.

Of course, if you don't see yourself living too long for health reasons, then you might as well collect your benefits sooner but a good general rule is that if you see yourself living beyond 77, you should hold off on social security till you're 70.

Pitfall #5: Windfall elimination provision

Sounds like quite a mouthful, I know, but all it means is this: if you worked for multiple employers and if one or more employers did not participate in social security but had a retirement pension plan instead, then the amount you receive as social security could be less than what your social security statements show - simply because the guys who administer social security (the SSA) only find out that you're eligible for a pension when you apply for your benefits. This is your windfall that the SSA is happy to eliminate by reducing your benefits... and just so you know - this Windfall Elimination Provision (or WEP) was limited to a maximum reduction of $383.50 in 2012.

So, again, look at your employment benefits and make sure you're not planning your financial future on both - your maximum social security benefits plus your pension - and plan for a reduction of about $400 or so and consult your financial advisor so your expenses are in-line with your actual benefits.

Pitfall #6: Limits on benefits while working

Now, you're allowed to collect benefits when you reach 62, even if you have a paying job... but if you make more than $15,120 (in 2013) then your benefits will be reduced by $1 for every $2 you earn above $15,120. So say you earn $6,000 above the $15,120 threshold, your annual social security benefits are reduced by $3,000. That's a pretty severe penalty and a rather low threshold. But it's not all bad... because you get a credit for this reduction and can claim it after you reach full retirement age.

Then when you're between 65 and 67 years of age, depending on your year of birth, you're allowed to earn up to $40,080 and collect full social security. But if you earn more than $40,080, it is deducted 1-for-3... so if you make $6,000 above the $40,080 threshold, you lose $2,000 in benefits under the lose 1-for-3 rule. Of course, this is much better than losing $3,000 in the pre-65 scenario.

And once you reach full retirement age, there is no cap on your income and there are no deductions. So if you plan on working after you're 62 and expect to make more than $15,120 each year, it's in your best interest to defer benefits till you reach full retirement age.


Social Security is a ubiquitous part of our lives so it makes sense to know the traps and pitfalls which can seriously affect us. I hope I have added just a little more knowledge to help you live your one best financial life.

Why to Outsource Your Accounting Needs?

Why to Outsource Your Accounting Needs?

As a business owner, most of your time is focused on your core business than going through your balance sheets. The time which you will spend languishing over your books can be spent acquiring new customers. For some businesses bookkeeping can be stressful. Therefore they prefer to go for accounting outsourcing services to make financial control of their business stress-free. You can keep accounting headaches at bay by hiring an expert bookkeeper that is fast, reliable and affordable.

The most common reasons due to which companies go for accounting outsourcing services are to reduce operating costs, increase flexibility and improve company focus to meet business requirements. By outsourcing your services, you can focus on your core business to increase profitability and make best use of your time. No matter how small or large company you have, outsourcing grants you the freedom to dump the non-core.

Data management is an important part of accounting which is based on simple concept. Most business need to access high-quality, relevant data which should be provided in a cost-effective and timely manner. Access to accurate data is important for effective investment decisions, trade execution, security pricing, portfolio valuation and accuracy. According to a reputed data management service provider, it is just more than technology. A holistic approach to data management coordinates with business and people processes including all kinds of technological innovation. Firms need to consider some key elements like data architecture, taxonomy, storage and security.

When it comes to employee expense reimbursement, everybody in the expense management chain wants to get paid as soon as possible. It is important to integrate your expense management process with an online payroll service to reduce reporting and processing time with overall costs. It is a part of expense management which is deployed by a business to pay, process and audit employee-initiated expenses. It includes policies and procedures that govern spending, technologies and services that utilize to process and analyze the data associated with it.

Speaking about travel and expense processing, it is an integrated solution that enables an organization for easy, quick and affordable way for an organization to automate their entire travel and expense management process. This from reimbursing the employees to booking travel schedules. Some of the features and benefits include direct payments, payment notification, flexibility and active administration.

Direct payments means that card is charged to the card company which saves valuable time of the employees and ensuring that the payment is done properly to get maximum rebates. Then payment notification means a notification is sent to the users when the payment is done which leads to lower payment costs, delighted user base and reduced burden on internal staff. It does not matter which payment processing system you use, organizations can still pay their employees through proprietary system. With the help of active administration, valid electronic expense report transactions are processed which help to create files for financial institutions to verify proper the funding requirements, handle exceptions, transmit the payment files and reconcile the account.

Capital Budget Financing

Capital Budget Financing

Capital budgeting is the process of calculating whether or not an financial investment is rewarding. Often business owners will have several chances and must estimate each one's potential in order to make assessment and choose just one or a very few. For instance, a business might be trying to conclude whether to buy new goods to expand manufacturing capacity on an existing product, or to invest in research and development for a new service. The three main techniques of taking this measuring are Net Present Value (NPV), Internal Rate of Return (IRR) and Payback Period.

Capital budgets Finance are the long-term budgets that bolster building conditions. Capital budget items require a new kind of thinking of finance because the expenditures are uncommon and not familiar. Capital budgets allow more scope and evaluation. You have to power your building working expense, but you don't have to swap the roof capital expenditure.

Internal Rate of Reciprocate is a percent very similar to the interest rates, and is used to analyze a capital investment versus to other kinds of financial investment. Divide the assumed profit by the expected costs, and you'll arrive at a percent of returns. Then look at the company's other works and determine the minimal acceptable percentage of return; this is called the hurdle rate. If the IRR is high than the hurdle rate, the project is worth seeking. The IRR is easy to comprehend, and is thus the most famously used technique, though the NPV is more realistic.

Net Present Value, or NPV, combines two tactics of value. First, it pinpoints how much money will flow in as a result of the financial investment, and analyzes that against the money that will flow out in order to make the investment. Since these kind of flows take place over a moment, and often the investment will pay back much later, we also take into account the current and long-term value of money. Because of rising prices, money accumulated in the future is worth less in present moment than the same amount would be now. Therefore, NPV calculates all of those inflows and outflows over time, takes ostentation and foreign trading rates into account, and articulates the final benefit to the company in terms of today's hard cash.

Multiple Techniques
Most companies use multiple techniques for all of their capital budgeting judgments. There are a number of minor techniques, such as revenues index and sensitivity researching, which can also be applied in making decisions. Since each strategy looks at the financial investment from a different perspective, it is best to employ several analyses and take the opportunities with the safest return in accordance to all techniques.

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