Investing in the Future

Ever since the Reagan / Thatcher era in the 1980s more and more people have started buying and selling stocks, or shares as they are called in the U.K. Rewards can be great but you can also lose all your money.

When I was growing up, my parents bought shares in utility companies and other nationalized industries that were privatized – British Water, British Gas, British Airways to name but a few. These were sure fire winners in the economic climate of the time. You simply applied for your allotted number of shares and then got a share trader to sell them on the day of issue. The profits were modest, but to a middle-class family it seemed to be money for nothing.

Now all the crown jewels are gone. The present Tory Party in the UK is trying to privatize any remaining government concerns. I wouldn’t recommend these latest offerings: as I said, all the best concerns have long gone.

When I was at University some of my friends had success with buying and selling shares in companies with new technology. My friends were often the victims of their own success: as with any form of gambling, beginners luck encourages people to foolishly think they have the Midas touch. As a result, they end up investing too much and eventually getting burned by a sudden downturn in the economy.

It seems to me that the best gambles are those based on information about the future. Let me explain. What is going to be valuable in the future? The World’s population is set to double in the next 50 years. The result is going to be a shortage of natural resources such as food and clean water.

Already 66% of the world’s fresh water supplies are spent on irrigation. 1.3 billion People in the world lack access to clean water supplies. Already many parts of the world are water stressed. In the US, according to the National Climate Center, 43% of the country is suffering ‘moderate to extreme drought’. Did you know that it takes 140 liters of water to make 1 cup of coffee? Consumer culture is using up water supplies at a frightening rate.

My recommendation for buying stocks is simple: water is going to be the new ‘oil’. Investing in companies that are making technology to recycle water, to use grey water and to desalinate sea water will produce a healthy long term profit. Also companies that make low flow shower heads and low flow faucet aerators for the home will boom in the future. When water prices go up and up, people will be forced to change their patterns of consumption and will buy water conservation technology.

They say that only two things are certain in life: death and taxes. I would add a third item to that list and that is consumption. As humanity consumes the world’s precious resources those who can provide the basics of food and water will be positioned to make huge profits.

What You Need to Know When Buying Properties Overseas

Engaging in overseas real estate is no easy task. Choosing the country and the property itself is difficult, but finalizing all the necessary documentation and paperwork you need to complete your purchase can make the experience a bit discouraging. With the growing number of possible new homes to choose from, how do you find “the one”.

The numbers for overseas property investors are at an all time high with thousands of Americans and British nationals looking to invest in a strong and growing economy. As a result, we have a deluge of foreigners scoping out Cyprus properties for sale, as well as locations in Brazil and other exotic destinatiobns. But what does it actually take to buy and finance an overseas home?

Know your Reason for Buying

Defining your reason behind investing in an overseas property can effectively narrow down your options. If you are looking for a property that can bring in profits, then look for a country with a good tourism portfolio like Cyprus. If you, on the other hand, are looking for a more permanent place for your family, then choose one that has a good education system, diverse community and a strong growing economy. Brazil is a perfect example of this option.

Take the Time to Choose

Real estate in itself is a huge investment and doing it outside of your country increases the risks that can either make or break your investment. This is why it is pertinent that you choose wisely and carefully. Getting overly excited and rushing into buying overseas properties can leave you unprepared for any problems that may arise in the future.

Seek Professional Counsel

The process of buying a property across international borders can be quite complicated, this is exactly you need to arm yourself with the right realtor and lawyer who are equally adept at handling these requirements. Likewise, compare mortgage offers and rules for international purchases. This is also the best way you can protect your interest as an investor.

Conduct your Own Research

Rather than just relying on your hired help, it would be to your great advantage if you also do your own leg work in evaluating and choosing between your options. Do research on today’s strongest real estate economies, weigh their pros and cons, and study their unique environment. These factors will help you decide on whether you are on the right track towards getting your dream realized.

Know Your Needs

Aside from knowing your reason behind making the decision to buy property elsewhere, it is also equally important that you identify your needs and choose a location that you are happy to call home.

Should You Buy or Rent? The Answer May Surprise You!

Whether renting is better than buying depends on many factors, particularly how quickly house prices and rents increase.

The number one factor, however, is the length of time you stay in your home. [We’ll get to that in a minute.]

Buying Versus Renting

Obviously, buying a house isn’t strictly a financial decision. Finding a house in a neighborhood you love is very important as well.

Moreover, you should check on the sales price trends of homes in that neighborhood. If it looks like the prices are falling in that area, then you’re probably better off renting a house or even an apartment.

And don’t forget: when buy, you’ll still incur costs that you wouldn’t encounter as a renter—from the cost of painting walls to replacing dying appliances.

Here’s a quick breakdown of the pros and cons of renting and buying.

Renting Buying
Pros Cons Pros Cons
Mobility: You can relocate easily for a new job or when housing circumstances change. No equity. Tax-break: deduct mortgage interest and property taxes Property tax, upkeep and possible annual subdivision fee.
Can invest money elsewhere (stock market) Yearly rent increase could outpace inflation. Potential tax-free capital gain Monthly mortgage costs.
No maintenance: leaky roof, broken refrigerator, flooded basement, subdivision fees. Emotional satisfaction Less flexibility should you want to move for a new job or to be near family.

Now, before you buy, estimate how much those all out-of-pocket costs will be. After all, even though you are in your own home, you don’t want to live from check to check.

Down Payment Options

If you do decide to buy, it’s in your best interest to avoid private mortgage insurance by putting down at least 20% of the purchase price.

Twenty percent sounds like a lot of money. Where are you going to get it? Fortunately, Congress has come up with some options.

You can withdraw up to $10,000 from your IRA as a lifetime credit, penalty-free (but not tax-free) for the purchase of a first home. Combined, you and your spouse can withdraw up to $20,000.

It also means you can ask your parents to make a first-time home buyers gift to you by raiding their own IRAs. Again, this will be penalty-free.

Surprisingly, you can actually tap into the first-time home-buyer exemption more than once. But you must not own a home during the previous two years. However, no matter what, each person is limited to $10,000over a lifetime.

If you don’t have an IRA, you could also drain your 401(k). But this is a rotten idea. If you’re not 59 ½ years of age or older, you’ll pay some pretty stiff penalties for pulling money out of your account.

Furthermore, you’ll cripple your retirement savings, since most plans won’t allow you to contribute to your plan for at least a year following a withdrawal. You don’t want to lose out on your company’s match, tax-deferred contributions and the interest earnings on the money you’ve withdrawn.

Borrowing from a 401(k) isn’t much better.

If and when you leave the company, there’s a chance your loan will be called immediately. Besides, those dollars will also miss out on any market gains and tax-deferred growth when it’s out of your 401(k).

Bottom line: Save up your twenty percent down payment. Which brings us to our final answer.

According to the New York Times buy-rent calculator,

If you stay in your home for 6 years, buying is better. It will cost you $745 less than renting, an average savings of $124 each year.

In other words, if you’re NOT going to stay in your home longer than six years, rent. It’ll be easier on your bottom line.

Payday Loans in Georgia: Caveat emptor

Until 2004, Georgia citizens were able to take advantage of payday lending. Payday loans in Georgia were especially popular amongst residents with poor credit in need of fast cash. Payday lending offices are generally not selective about who they loan money to; in most cases, proof of employment and a bank account is enough to secure a small loan. What’s more, people can get the money they need the same day they apply for it. This lending arrangement would seem ideal to just about anyone on the outside, but the reality is that the interest rate on the average payday loan is often as much as 600 percent.

The Payday Lending Act of 2004

The Payday Lending Act went into effect in 2004, and it promptly put an end to all payday loans in Georgia. According to the act, lending offices in the state may be charged with felony and racketeering for charging borrowers excessive interest on small loans, typically $3,000 and under. Penalties for violating the act include fines of more than $20,000 and possibly even jail time. It’s no surprise that most payday lending offices in Georgia closed up shop as a result of the act. Georgia is now one of 19 states in the country that no longer allows payday lending.

Borrowers Nationwide Should Steer Clear of Payday Loans

When people are desperate for money, they often fail to see the big picture. Payday loans appear attractive initially to people with bad credit because they need money and have no other means of obtaining it. Borrowing $100 and being told the amount to pay back is $125 doesn’t seem like a big deal, but then there’s another $20 to $25 in interest tacked onto the balance for every $100 borrowed. There’s no denying this ultimately adds up to a lot of money. People who get into the payday loan cycle frequently end up in more severe financial shape than they were to start with when they only needed a few hundred bucks to pay a light bill or something equally minor. Payday lending isn’t worth it, and the fact that Georgia and other states have now banned the practice confirms this.

Some Simple Ways to Get out of Debt

Here are a few simple solutions to start getting out of debt. Remember, these aren’t suggestions or temporary fixes, they should be new habits that you form and a new mentality that you embrace:

1. Stop Spending on Credit

This one may seem obvious, but people tend to understand the principle but not follow it. Don’t spend anything on credit – only cash and debit. Once you start doing this, it’ll start to feel a little bit more real whenever you start spending money. And once that starts happening, you will see yourself slowly but surely cutting out unnecessary expenses. Do not finance any big purchases and force yourself to wait until you have money in the bank before buying anything. If you start thinking in this mentality, you will naturally spend less than you used to, and start building up some savings.

2. Pay Off as Much of your Debt as You can every Single Month

Every month you don’t pay off your debt, you are further in the hole. Why? Because your interest payment goes up and your credit score goes down. It is a never ending cycle, especially if you pay of your debt by going into more debt. People who make it a habit to pay off their bills every single month in full end up paying almost no interest and up with higher credit scores. These higher scores translate to better interest rates, which means less money paid to credit and finance companies.

A simple tip to reduce interest fees and salvage your credit: If you have lots of different companies you owe money to, pay the minimum balance on each one first. If you have money left over, pay off the smallest bills first, then progressively higher, until you’ve paid them all off.

3. Set a Budget Where you ALWAYS Spend Less Than You Earn

Time to get to basics. If you really sit down and think about necessities, you will realize people can live well on very little money. A roof over your head, a vehicle that gets from point A to point B, and three meals a day. Even if you are the head of a family, all that translates to is extra food. People love to spend when they are out and worry later, but if you look in any house, there are countless items that a person doesn’t use and doesn’t need. Once you sit down and calculate your needs and cut out all the excess, you will find yourself amazed at the monthly allowance needed to live just fine. This will leave you with more money which you can use to pay off debt. You could even start to think about how to save more money.

If you take these three simple rules to heart and don’t stray, you will find yourself with more money in the bank than you’ve ever had (as well as debt free), as well as a new sense of tranquility because you don’t have any urge to spend it. This kind of tranquility and freedom is something that can’t be purchased.

Personal Finance and a Kindle 3

You may well wonder what the Amazon Kindle reader and personal finance have to do with each other. This is what I want to talk about today. As you will find out, they are in fact closely related and buying one of these gadgets can actually be one of the most frugal purchases you could hope to make.

I feel that looking after your money is not solely about avoiding expense but rather making wise purchases. For instance, paying more for a higher quality item, that lasts longer is a more frugal purchase than buying a lower cost version that breaks after a short space of time. In many areas of life, we get what we pay for.

The Amazon Kindle 3G reader currently costs less than $200. Of course, this is still quite a lot of money to spend on something that is not exactly a necessary purchase. My opinion though is that this is inaccurate. I want to show why I think that the handheld electronic reader from Amazon is, in actual fact, a necessary purchase. There are two caveats to this though, you have to be a regular reader and interested in saving money.

It goes without saying that it would be a waste of money to buy an electronic reading device if you do not spend much time reading books. However, for those of you who do like reading, you can save $100 of dollars if not more once you own one of these gadgets.

The way that you save money with the Amazon Kindle is through reading. What do I mean? Well, the thing is, once you get hold of one of these eBook readers, you have instant access to hundreds of thousands of out of copyright titles that you are able to download at no charge whatsoever. These are not junk titles either. Quite the contrary. The out of copyright library consists of classics by world famous authors from centuries gone by.

What you will find once you own the Kindle reading device is that you need never pay for another book again!

Rolling Over Your 401(k) to a New Employer

It’s tough enough when you lose your job to think about anything but finding a new job, let alone searching out ways you can do a 401(k) rollover. Luckily, there are some options you have when and if this does ever happen to you. Here are some things you should consider when you are rolling over your 401(k) to a new employer.

First of all, congrats on finding a new job in this market, that’s not an easy task. Now you need to think about your new plan and the options that come with it. It doesn’t matter how much money you have in your 401(k), you will be able to transfer that money to the new 401(k). There are no charges or fees when you choose this option which makes finding a job more appealing.

The bad thing about rolling over a 401(k) into a new employer is that you are bound by the new investment options of the new employers 401(k) management. You may have had more options in your old account than this new one. Also, if you find a job with a smaller employer, the fees on the 401(k) may be higher – I’m talking about the investment management fees. So it all depends on who your new employer is and the options of that new 401(k) plan.

If you take these things into consideration when looking and choosing plans in your new 401(k) you should be fine. The fees may be higher in some cases, but maybe they have better investment options – you never know. It’s important that you set up a meeting with a financial advisor to make sure you are aligning your goals with the right investment decisions.

Investing In Nashville Tennessee’s Real Estate Market

Nashville, Tennessee is nestled in the beautiful rolling green hills of the middle Tennessee Valley located on the Cumberland River. Known as Music City, Nashville is the home of country music, the world class Schermerhorn Symphony Center and the Bonaroo Music Festival. Walk down any street in Nashville and you are bound to hear music streaming out of the city’s street speakers or someone picking on their guitar. Music is everywhere in Nashville. Maybe that is why the people are so darn friendly and why so many businesses are relocating here. Nashville was voted one of the top ten best places to live in 2003 and remains that way to this day.

Buying an investment property in Nashville is a good idea for so many reasons. Nashville is home to numerous colleges and universities such as Vanderbilt University, Tennessee State, Fisk, Lipscomb, Belmont College, Bethel College, Treveca Nazarene University and the Nashville Auto-Diesel College in East Nashville. Rental homes and duplexes are in great demand and fill up fast. Not only for the students, but for the staff that come from all over the world to teach at these prestigious universities. Nashville is a cosmopolitan and multicultural city with something to offer everyone.

Nashville attracts companies like Dell Computers and Nissan to relocate there because of it’s stable economy and great tax benefits. In 2005 Nashville was named the #1 Best City for relocation and expansion. Nashville is home to Bridgestone, Bell South, Am South, The Gaylord Entertainment Center, Purity and the Coca-Cola Bottling company just to name a few of the many big businesses.

Nashville’s economy remains strong amidst the national slump. While the housing prices have dipped a little in the last 2 years they are on the up swing again. This is why purchasing an investment property here makes a lot of sense.

Nashville real estate is still a great value compared to the national average. A residential home in a hip neighborhood such as Hillsboro Village near Vanderbilt University averages about $360,000. A ranch property in picturesque Leiper’s Fork with 20 acres of beautiful green land is had for about $700,000. Not a bad deal compared to a 3 bedroom home in Los Angeles for around $700,000! You get a lot more for your money here in Nashville without all the traffic congestion!

East Nashville, across the Cumberland River is an area that is set for growth. With its neighborhoods mixed with different socio-economic groups, it is on the verge of renewal. East Nashville is a great area to currently find foreclosures in small need of repair that are eager to be renovated and flipped for a new life.

Of course investing in real estate can be tricky if you don’t know all the ins and outs. That’s why you need a qualified realtor who specializes in residential real estate to help you become familiar with the local market.

Call me, Mark Haining, of Village Real Estate Services and I’ll be glad to show you around town. Whether you want city living in the Gulch or the country life in Franklin, we have it all here in Nashville.

Investing in Property in Thailand

Investing in property in Thailand is full of pit falls and potential scams. I know because I have firsthand experience of buying property in Thailand and I have seen several people lose their money because they did not performed due diligence.

It is essential with any type of property investment to keep a cool head and not to take anything for granted, and this is especially true of Thailand where property ownership laws are very different to in the USA or UK.

When you ask a developer what the property laws are in Thailand you will get a different answer to when you ask a lawyer. Both a lawyer and a developer have a vested interest – the developer wants to push you down the path of a long term lease and the lawyer sees the potential of bigger fees and pushes you down the path of incorporation of a Thai company.

Here is the official line in Thailand – foreigners cannot own land in Thailand. This is repeated so much on the internet, but what is not mentioned is that non-Thai nationals can own property in Thailand. This is paradoxical: you can own a building but not the land upon which the building stands. Developers get round this problem by offering the potential buyer a 30 year lease on the land. This lease is registered at the land office. It requires the owner of the land to appear at the land office. In the typical contract offered by developers 2 renewals of the lease are guaranteed making a total of 90 years leasehold.

Read this next part carefully: the contract obliges the owner of the land to renew the 30 year lease when it expires, but if the owner of the land doesn’t appear at the land office then ownership reverts back to the owner. The lease is immediately invalid. The Thai courts will not uphold the enforcement of a second or third lease because the law states that a lease to a foreigner only lasts 30 years! In other words, your investment is completely at the whim of the land owner.

The alternative route is to use a Thai lawyer firm to set up a Thai company. In the memorandum of incorporation preferential voting rights are given to the foreign share holders. The shares in a Thai company must be less than 50% owned by foreigners, but lawyers can set up a company to give only the foreign owners dividends and voting rights: thus, effectively giving control of the company and its assets to non-Thai nationals. These assets could include a house and land.

Although the Thai government has recently tried to close this loophole of preferential voting rights, it is still very easy for lawyers to give de facto (if not de jure) control of a Thai company to foreigners.

The downside of this approach is that it is in a legally grey area. Furthermore, you will be required to prepare tax returns twice a year and so you have to employ an accountant and your company has to be seen to move money around to appear like a legitimate company.

My advice is not to buy property in Thailand. I have seen too many people lose their money in Koh Phangan property. Developers have been known to sell land that they don’t actually own. Never buy on Koh Tao – there are no land titles for the island because it was a penal colony. If you just want a holiday home for retirement then a 30 year lease is fine. If you want a serious and safe investment then get a lawyer and get a Thai company. And most importantly, make your lawyer insist on seeing the original land certificates. If you go into a property investment in Thailand without a lawyer you are asking to be ripped off.

Easy-to-do Debt Reduction Strategies

There are a lot of people who are having troubles with their debt right and now and who probably feel lost and helpless with their situation. Being in debt is truly one of those situations that you would just wish could disappear in a snap of a finger. However, it is also a fact that properly eliminating debt will take time, sacrifice, and a lot of effort.  Debt reduction all begins with proper planning followed by strict discipline to be able to stick to that plan. If you are now determined to get rid of all of your debts, then you can pick up a thing or two from these easy and basic debt reduction strategies.

  • Use your savings to pay help pay off debt. There are a lot of people who have this mindset that they would rather put their extra money on their savings than use it to pay off their debts. Although it truly is advisable to start making an emergency fund or savings, it will benefit you more if you get rid of all of your debts first. Especially for those people who already have quite a few debts in their hand, it’s better to direct extra income towards paying off debt. Once you look at the whole picture, you will be able to save more money if you get rid of all of your debt the soonest time possible.
  • Transfer debts to lower interest rates loan. It is a fact that one of the biggest factors that can catapult your debt sky high is the interest rate it carries. If your debts carry very high interest rates, then you may definitely want to consider transferring it to loans with lower interest rates. Reducing the monthly interest rate can result to lower monthly payments and can help you catch up with your monthly payments.
  • Always pay on time. Whether you have small or big amounts of debt, it is always a no-no to neglect paying them on time. Most, if not all, debts are likely to incur penalty fees once payments made are late. The add-on fees may seem small, but when accumulated, they can already help to pay for your food and daily expenses. Always make it a habit to pay on time to avoid any penalty fees or added interest.
  • Try talking to your lenders. Most people would not even consider talking to their creditors about their debt. However, you can get a lot just by politely speaking with your creditors. You can try to negotiate lower terms or lower interest rate. You can even try to let them waive off your penalty fees if you start paying religiously. There are so money other proposals you can try to squeeze in when trying to negotiate with your creditors.

Having debt troubles is truly not the end of the world for you; there are so many tips and strategies that you can try in order to help eliminate your debts faster. Aside from the strategies given above, you also need to truly direct your actions into helping yourself get out of debt as soon as possible.

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