Monday, September 29, 2008

Living Cheaper - What to Wear

Clothing is one area where money can be saved and put towards your saving account or into your managed fund. Learn how... Mix and match clothing is what saves you heaps when it comes to clothing. If you make sure you buy from just a few colour ranges, then everything you have will go with everything else. Experts advise the black, white, gray and beige range, but it these colours don't suit your skin type coloured tops will go with most black, grey or beige bottoms.

Basic items for the working girl are blazer, coat, dress, trousers and skirt. Shoes and bag will also be needed of course, and buying one good quality bag is better than half a dozen cheap ones. It will always look smart and go with everything if you choose a toning colour. Shoes need not break the bank. But buying reasonable quality will save you in the long run because they will last longer and feel more comfortable.

If you have three pairs of shoes for each season you can wear them turn about and so look smart all the time. You don't need to limit yourself to wearing a suit all the time; separates are more fashionable. And if you air a suit after wearing it for one day, there is no need to have it dry-cleaned quite as often.

Thursday, August 28, 2008

Online Savings Accounts - selecting the best

Online savings accounts often appear to give you a more value - in other words a much higher interest rate, over 6% in some cases. Better still, there are often no fees, or very low fees. You can also access your money whenever you want.

The thing to watch out for is the fine print. You may be fine with placing your savings in an account like this and never - or rarely - withdrawing it. But an emergency could crop up and you need to access some of your savings. Then you find that not only is there a high transaction fee, but you've blown your interest on the balance for the rest of that month.

One month of no interest may not seem like much to worry about. However, it actually puts you further behind than you would be if you had an saving account with slightly lower interest rates and no transaction fees. Another possible problem could be that your single transaction may put your balance below the minimum required to keep your high interest. So not only have you blown your high interest for the month, but your account has reverted to low interest until such times as you can get that balance back up.

How do they work out compound interest?

Compound interest rates can be referred to as an Annual Percentage Rate, Effective Annual Rate or Effective Interest Rate. Of course, our saving account are not the only places we see compound interest at work. It cuts both ways; compound interest is also charged on loans. When you borrow money for a house, car or whatever, you'll notice that the amount of interest you have to pay at first is really high. In fact you pay off more interest than principal.

Gradually that comes down and you begin to see light at the end of the tunnel. You start to pay more off the principal and that brings your total interest down more. Meanwhile the financial institution from whom you borrowed is smiling all the way to their bank.

But to get back to that savings account earning compound interest for you. The longer you hold a savings account, the more interest you will get on it because you keep getting more interest paid on your interest all the time, like a tier effect. So sticking with a savings account is a good and very safe way to invest your money. You could get a higher return on some other types of investments, but there may be more risk attached to them.

What is Compound Interest?

Most of us have heard of interest. That's what you have to pay when you get a loan. That's what makes it so hard to pay back the loan when the interest rates keep on rising! Ah yes, and that's the measly little bit of extra money the bank gives - grudgingly, it appears - when we have a few bucks saved up. But wait! It's not as bad as it seems.

Those two magic words "compound interest" that Einstein referred to as the world's greatest discovery are put to work for us when we have a savings account. But those of us who have just a few hundred dollars don't seem to notice it all that much. That's because it shows up better on larger amounts - and if you don't keep withdrawing. These days most high interest savings accounts work on compound interest.

The interest that you earn on your $100 may not seem much, but it is added to the balance, and then in the second year interest is paid on that total, rather than just on your original $100. So you are basically getting interest paid on your interest or if you have a managed fund then it is the dividend reinvested. When this keeps on every year - as it does, so long as your keep your savings account going, then that total really begins to add up.

All About Managed Investment Schemes

A managed investment scheme is when you pool your money with other investors with the intention of getting back a good return. By using a managed investment scheme, you can access a great many more investment opportunities than if you did it by yourself, but is more complicated than putting your money in a saving accounts. Some investments may require a minimum amount before shares can be purchased. When you pool your resources with others, you can access these types of investments that may otherwise be out of your reach. This means that you can start investing with a smaller amount of money.

You don't need to know a lot about investments when you use a managed investment scheme. Professionals trained in the art of investing do all the hard work. While this means you don't have control of your finances on a day-to-day basis, you can have peace of mind in knowing that they are relatively safe.

Before choosing a managed investment scheme, be sure to check it out on the Australian Securities and Investment website. Each scheme must be registered with the Commission. If it is not, suspect a shady deal and avoid it. You can't afford to risk losing your money in something illegal, there is no harm putting your money in a term deposit while you think it over. Different types of schemes include property or cash management trusts, equity trusts (shares), or agricultural trusts such as horse breeding or aquaculture.

Wednesday, August 27, 2008

Superannuation for the Self-Employed

For self-employed people to enjoy the benefits of superannuation or a self managed superannuation, they must make the payments themselves. Normally, the employer is the one who must make payments and this is compulsory. If you are self-employed, you are your own boss, so you have to make the payments. You may wonder if there is any use bothering, but self-employed contributions do attract significant tax savings. However, you will still need the services of an accountant as percentages and age limits seem to change every year.

There is a wide field of choice when it comes to super funds. When choosing a public fund from a bank or other financial institution or an insurance company, you need to carefully consider what fees they charge and what benefits they give. The reputation of the institution should also be taken into account. Choosing a rock solid reputation will give you peace of mind and ensure the success of your investments, there asset diversification can be similar to those you might see available in managed funds.

Public-offer funds such as those offered by banks give limited participation. You should be able to choose what level of risk you are comfortable with, though. That is, a high return but riskier investment strategy or a lower return but more dependable one. This is about all you can choose, as the trustee is the one who must make all other decisions.

Is Self-Managed Super for You?

If you were thinking of self managed super funds, experts advise to double check certain salient points. For a start, they tell us that you need to have at least $200,000 to make it financially worthwhile. The cost of running your own fund can be around the $1700 per annum mark. This includes the regular audit and reporting that are mandatory.

Time and expertise are other factors. Creating your own super fund is not as simple as opening a saving account. Unless you have plenty of time to spare and know what you are doing, you could find that managing your own super fund is more trouble than it's worth. You have to choose which investments are right for you and know which should be insured. If you change funds you will be changing benefits and fees too. You need to be sure that the fees are kept down while giving you the most benefits possible. You have to be the trustee of your fund and if something goes wrong, then you are legally responsible, even if it was not your fault.

Help is available for those interested in running their own super fund, but be sure you choose the right help. Unless an accountant is licensed they are not allowed to give advice. They can get into a lot of trouble - and so can you - for giving advice they are not qualified to give.

Managing Mid-Year Finance

Aren't you glad that the end of the financial year doesn't come at Christmas time? Instead, June rolls around and we have to be prepared for all the extra work necessary to sort out our finances, find details of those managed funds investments and get receipts in order. But why not be a wise owl and get in ahead of time? You can save yourself a bit of stress by being prepared. Get all your receipts to hand and do that bookwork right now. And to start with, how about trying to save money? If you inspect all those phone plans and electricity or gas and insurance bills you may find that switching to another provider can save you heaps. Of course, you know to always read the fine print so you don't sign up for something unpleasant.

You can often save in the home, too by donning warmer clothes before turning on the heater or working with the weather to dry clothes instead of using that convenient but costly clothes dryer. Looking at your saving accounts is another way you may be able to save money and make more interest. Electronic accounts are often fee-free and give wonderful rates of interest compared to ordinary savings accounts.

If you've been putting off buying that new monitor or printer for your business, remember that it is tax deductible. But there have been recent changes to what you can claim, so check that out too.

Money Management for Women

Most women can manage their day-to-day finances admirably. In fact, according to experts, they are highly skilled at budgeting and finding ways to reduce spending and building up their savings accounts. This is really important, since women traditionally don't get as much money as men do. Where their skills don't match up to those of the menfolk is in the areas of investment and retirement savings. Nor do they understand financial terminology as well as men. But they are eager to learn and should make every effort to do so if they are to take full control of their financial future.

Reports show that many women don't feel that money is necessary to be happy in life. And while this sentiment is admirable, it is also likely to cause them to have less money than they need as they get older and cannot work. If women were to work on building up their confidence in investing, they would find that the stress and boredom of handling money in this way would be gone and they would soon be able to see all the benefits.

Women have gradually broken through many male dominated barriers in the past; now they need to hone their skills in the area of money management and investments. But first they must change their attitudes. Money is not the be-all and end-all of life, but we do need a certain amount of it and it is good to know the difference between a managed fund and a term deposit. And it's only wise to work towards protecting your future. Women live longer than men, so they cannot expect to have a man around into their old age to take care of finances for them.

Be Aware of ID Theft

Identity theft is on the increase across the globe, with over 25% of all fraud reported in Australia involving false identities. In its simplest form, false identities are created using fake documents: much worse is when criminals take the identity of a real person and use his documents - such as credit cards - to run up huge bills in his name. Other crimes may also be perpetrated in the person's name. Very often, the first the innocent victim knows about any of it is when a debt collector comes calling. Or it may be when he is refused a loan or finds a great deal of money gone from his saving account.

The victim sometimes knows people who commit this kind of fraud; they can be family or 'friends'. Some people find the temptation to tap into the finances of another person just too big to resist. Never let your personal details such as credit cards numbers or PINs for bank accounts become known to other people, even those you trust. Don't give your details to anyone over the phone either, even if they sound friendly.

Credit card receipts should be torn into pieces or shredded by machine before disposing of them. Thieves often go through trashcans to get these details. When you receive bank statements, go through them carefully to make sure there are no purchases there that cannot be accounted for. And if you even suspect fraud, then contact your financial institution to cancel all your cards and prevent access to your accounts - and report it to the police.

Monday, July 21, 2008

What to Look for in a Savings Account

Each savings account has different features and what suits one person may not suit another. You may want your savings account to act as a place to stash that cash you are saving for a special treat like a holiday. In this case, you will look for high interest rates above other features. Low fees are always attractive, but if the fees are for transactions and you don't plan on doing any, then it won't concern you.

Compound interest is another thing to look for in a saving account, especially if you are simply saving for a rainy day and have no firm plans for a withdrawal date. While it can be tempting to withdraw and spend your interest, if it is left in the account you will be paid interest on your interest.

If you want your savings account to simply be a place where you keep all your money, and you intend to use it to pay all the bills that come in, then you will want other features such as free transactions and a chequebook. You may also want the choice of ATM, Bpay and other more modern ways of moving your money around. You will also need to be able to withdraw your money whenever necessary, so a cash-at-call feature is what to look for. Most accounts have a daily limit, so make sure yours has enough to service your needs.

Internet Banking Benefits

Internet banking is the way to go for any person who has their own PC and Internet access. How much better to sit at your computer and do your banking without having to queue up inline to wait your turn - having first had to get in the car, drive to the bank, find a parking spot and then get your banking done in time to pick up the kids from school. Life often seems just one daily rush, but with Internet banking and an online savings account you can cut a bit of slack time and relax.

Internet banking lets you keep up to date with payments in the easiest way possible and they can even be used for business savings. You can set your account to pay money automatically every day, week, month or whatever time slot is necessary. For those bills that vary in their payable balance, you can simply hit the Pay Anyone button and add their banking details just once. After that, they are there until you cancel them.

You can also set up your account to automatically transfer certain sums of money to other accounts or transfer funds to a term deposit, either in the same financial institution or in others. You can print out your own statements or receipts and you don't have to wait until the bank opens. You can have access to all your details 24/7. How good it that?

Tuesday, July 15, 2008

An important finance lesson, savings goals

If you are not used to saving, the best way to pick savings goals is to start with something short-term and open a savings account. In other words, choose something that won’t cost you a fortune. This is because you will achieve your goal quickly and so be really encouraged to do it again for something a bit more expensive or long-term.

This small thing you save up for first could be an iPod, a digital camera or a weekend away. What ever you choose, make sure it is something your really do want. If you only half-want it, your enthusiasm will be difficult to maintain. Then you’ll find that before long, you'll be frittering your money away on small things like a coffee or chocolate instead of saving it. If you have a solid long-term goal then you might open a term deposit to make the money saved that little bit harder to access.

It's quite amazing how quickly money can mount up when you put a bit of effort into saving. You might like to save your money in a jar or a shoebox, just so that you can have the satisfaction
of seeing it mount up. But this is only good if the amount is small, otherwise you may get robbed. It’s also not a good idea if you are the impulsive type of person who is likely to blow the lot just because you had a fight with your boyfriend/hubby/ sister/mother. In this case it’s better to get a savings account at a bank.

Learn about Self-Managed Super Fund and see if it is for you

Self managed super funds (SMSF) are one in which up to four people pool their superannuation for investment purposes. This gives them the opportunity to invest in a wider variety or resources than only one. Each person must become a trustee or directors of the fund. SMSFs are strictly regulated by the Superannuation Industry (Supervision) Act and Regulations (SIS) and the Australian Tax Office (ATO).

Some people like to have an SMSF because it gives them the flexibility to choose their own type of investment strategy, because they are in control and they have the flexibility to arrange everything to suit themselves. When properly set up, the fund can invest in a great diversity of products from property to art to online savings accounts.

If your SMSF complies with all the rules and regulations of SIS and ATO, a concessional tax of only 15% applies. The rules? There must be no borrowing to invest, and financial assistance to members or relatives is prohibited. Any assets acquired must not belong to members or relatives. It must meet the sole purpose test and document an investment strategy. The sole purpose test is that the fund exists to provide retirement benefits to its members.

In fact, while there are benefits to owning a SMSF, there are so many rules and regulations to which you must comply that many people use a specialist SMSF administrator - that costs extra, of course if you want to go beyond simple DIY investment such as term deposits and the like.

What in earth are Term Deposits?

Good question!

Term Deposits are a safe form of investment where you are paid a set interest for a certain length of time (term). It could be a month, six months, a year and so on. With a set interest rate you are protected from falling interest, but on the other hand cannot take advantage of rising interest rates. This may be suitable or not depending on your situation, some the best savings account that are available may stack up more favourably in some cases.

In some cases you may not add more funds during the set term and there may be a penalty for withdrawal before the term is up, or maturity date. On maturity, the account holder must instruct the bank what to do with the money. The choices are withdrawing it to another account, leaving it there for another - or different - term, adding more funds, adding the interest, or withdrawing the interest. If no instructions are forthcoming, then the bank will renew under the same conditions as before.

A term deposit is a good way of saving for a certain goal and helps you not to spend on unnecessary items. It attracts a higher interest rate than a transaction account. Generally, the longer the term, the higher the term deposits rates are - although this does vary depending on market conditions. In some cases there may be no fees. While there is no maximum amount, there is often a minimum amount to start.

What types of Managed Funds are available to buy into?

Managed funds are classed as listed and unlisted. Listed funds are traded on the stockmarket. Supply and demand determines their value. Listed funds are usually closed, with a certain number of units issued.

Unlisted funds can be either closed or open. Open funds have new units issued depending on the demand for them. A new prospectus is issued each six months. They are valued daily or weekly by the fund manager. Dividing the current value plus selling or buying costs by the number of units issued, is the way their value is calculated. The prospectus will tell you how quickly you can access your money by selling your units. Always read all the fine print carefully before investing in what you think may be the best managed funds.

Some managed funds don’t make money for their investors. Don't forget you have to pay the fund manager a percentage of your profit. A fund manager needs to be someone who is thoroughly trustworthy, but even people of integrity can make mistakes and this would be a great concern if you had self managed superannuation funds.

Another thing that may concern you is that you have no control over where your money is invested. For instance you may be dead against gambling and so would not want your money invested in a gambling casino. To prevent this, you need to choose carefully from the prospectus before joining up.

Benefits of High Interest Savings Accounts

The main benefit of a high interest savings accounts of course, is that the higher interest rate gives you a better return on your money. Traditionally, interest rates for savings accounts have not been very high, but with the advent and popularity of online-only accounts that offer such great rates and no fees, banks have been forced to re-think what they offer their customers in an effort to keep them.

To be able to get a good return on your money is paramount, but just as important is low or no risk, and low or no fees. Many high interest accounts have minimal fees, or you can keep them down by limiting your transaction number per month. This makes them ideal for business savings.

However, convenience is also a consideration. While many customers left their traditional banks to take advantage of the better interest rates elsewhere, it may not have been nearly as convenient to have their assets divided because they may have term deposits elsewhere. If they wanted to transfer money from one to another, it would take some days before the deed was finalized in real time, even though it was done so quickly online. These customers would be pleased to see that banks now offer high interest savings accounts with the convenience of having your other accounts at the same bank.