7
Jan
2010
Insurance that will reduce your credit risk
Your life insurance policy may have a cash value against which you can borrow. The interest rate for borrowing your own money, in effect, is usually lower than almost anywhere else you could borrow the money. If yours is a whole life policy, this may be a possible source of money that you could use in the development of your product. If it is a term policy, there will be no cash value option. Check with your insurance agent to see if this is a possibility for you. Be certain that borrowing against the cash value will not reduce the benefits to your family should something happen to you. No matter how great your invention and how much faith you have that it will be a fabulous financial success, the financial security of your family should be your first priority, not funding your invention. You can find creative ways to plan for expenses or obtain funds for your invention without putting your family at financial risk.
5
Jan
2010
Credit card interest rates are high for high amounts
If you do not have personal savings with which to fund your invention, you could use your credit cards. This is a slippery slope, however. Never charge more than you can easily pay back within a reasonably short time. Credit card interest rates are among the highest and using credit cards for large amounts that must be paid back over an extended period of time is not a wise course of action. It is appropriate to use your credit card for small purchases of prototype materials or prototyping services, for example, especially if you are like us and like to get air miles for nearly everything you purchase.
5
Oct
2009
How swiftly can you process your emotions?
Stocks trade on exchanges. Because dividends are either small or nonexistent, the value of your stock is determined solely by what other investors are willing to pay for it. In a calm market, you will experience a sense of unmanageability, because there is nothing you can do to force others to raise the price of your stocks. Even small losses in calm markets can be troubling because investors rarely want to admit their mistakes, feel the pain of loss, and move on. Focusing on prices rather than the cause of the losses, they hang on to losers until they can break even.
Optimism can grow into fantasy. Investors sometimes fall in love with their companies. They fantasize about new products and skyrocketing stock prices. All evidence of deteriorating fundamentals is rationalized away or ignored. Individual stocks can decline for years or decades. Believing fantasy can lead to many years of pain even in calm markets. However, we have seen few calm markets in recent years, and volatile markets are more troublesome.
In most markets, stock losses happen quickly. A bad earnings report can cut a stock price in half. An unexpected rate hike by the federal government can knock the whole market down 15 percent in a month. For still unexplained reasons, the whole market dropped 22 percent on October 19, 1987. Few investments move so quickly. Real estate rarely moves 1 percent a month. Unless you can process your emotions quickly, stocks will cause you a lot of pain.
7
Sep
2009
Difficulties with employees is not going to change
I want to point out that difficulties with employees is not going to change. The interests of shareholders and employees have always been and always will be opposed. In fact, in the last two decades, employees have increasingly siphoned off a larger and larger share of profits. According to a 2001 study by Sanford C. Bernstein & Co., accounting tricks disguised the fact that there was no growth in profits between 1995 and 2001. Nevertheless, salaries, bonuses, and stock options soared. Industries in which shareholders have no chance to make a profit may soon be the norm. Claims that stocks are the best investment for the long-run ignore this trend.
You cannot change the fact that employees have an advantage over shareholders. This is an inalterable, long-term fact of stock investing. You must focus on yourself, not them. If you can handle a long-term relationship with decades of built-in conflict, stocks may be for you. If you currently have great difficulty with conflict in relationships, yet you really want to own stocks, you may be able to change. Always ask how you can change, not how you can change them, or how they can change themselves. However, be realistic about how much emotional turmoil you can handle and how much you will have to change internally if you are going to stay in stocks. Even if you can handle the conflict of interest with employees, there are other equally difficult issues.
4
Aug
2009
The 3 Steps of Investing
To get from the chaos of your investment life to your comfort zone, you need to take three steps: study the emotional content of different investments, study your own emotional makeup, and match your emotional makeup to the appropriate investments.
To avoid confusion, I have divided this book into three steps rather than three parts:
Step 1: Chapters 3 through 7 set out the emotional content of the different investments. Step 1 requires study but no writing or analysis. The material in Step 1 will also be used as a reference when you reach Step 3. Per the discussion in Step 1, saving, investing, and speculating are different activities. However, throughout this book, the term “investor” is used to signify a person engaged in all three activities unless otherwise specified. The term “investment” also includes savings, investments, and speculations unless clarified. Among other things, Step 1 is about learning the difference between a saver, an investor, and a speculator.
Step 2: Chapter 8 shows you how to study your emotional makeup. It requires writing and analysis. Step 2 is the workbook section of Comfort Zone Investing.
Step 3: Chapters 9 matches you to the appropriate investments.
26
Apr
2009
Real Estates Taxes
Although tax shouldn’t be the most important consideration when choosing a property, it’s not to be overlooked. The tax implications vary in complexity and impact according to the country you are investing in and what you intend to do with the property. In addition, you need to take into account that the United States taxes you on your worldwide income. Taxes levied on international property investments usually fall into the following categories:
- Capital acquisitions tax, inheritance tax, stamp duty, or transfer tax for purchasing, inheriting, or transferring property
- Local and national property taxes and land tax for owning and/or residing on the property
- Income tax on rents received, of which there may be additional taxes imposed on nonresident or foreign landlords
- Capital gains tax, gift taxes, or death duties and estate taxes for disposing of the property
To avoid or minimize taxation, there are countries or jurisdictions with no taxes on income or capital gains, such as the Turks and Caicos Islands. However, some of these tax havens are an option only for the very wealthy who are willing to contribute substantially to the local economy and purchase luxury real estate, and some of these locations limit the number of foreigners permitted residence or work permits. In comparison, governments in nontax-haven countries tend to impose fewer restrictions on nonresidents purchasing property, yet the likelihood is that you will face more taxes on your investment. But some high-tax countries provide advantages over the long term. For instance, in France rents over the last fifty years have averaged a net operating income (NOI) of about 7 percent, which is not terrific. But if you hold onto the property for at least fifteen years, your tax on capital gains is vastly reduced. And when you consider that property values have gone up about the same rate as rents, you will have an enormous gain.
25
Apr
2009
With Real Estate Timing Is Everything
With exchange rates, one day can make a difference, so know when the funds will be transferred and when they are to arrive. Verify the receiving bank’s rate of exchange and how many days it takes the bank to handle the transfer. Calculate this into your purchase price.
One of our clients learned the hard way. Tom was ready to purchase his pied-?-terre in Paris, so he transferred funds directly from the United States to the escrow account at the bank in France. He calculated the exchange rate on the Internet on the day of transfer and expected to receive i425,000 (euros) to pay for the apartment. At the closing, he discovered that he had only i414,000. Tom protested that someone had shorted him on the exchange rate. Unfortunately, here is what happened.
Tom transferred the money on a day that the exchange was indeed favorable—if the exchange had taken place on that day. The money was sent from his U.S. bank on the day he requested, but the French bank didn’t receive the funds until two days later. And then the bank did not exchange the money until four days later, when the rates went against Tom. The funds were actually credited to the bank on the date it received the dollars, but it disintermediated the exchange to profit from the lower rate.
Tom complained to the notaire (legal agent) who was helping him with the transaction, but there wasn’t anything to be done. The bank had chosen when it wanted to exchange the money, and Tom was out i11,000. The notaire would not, of course, close the deal unless another i11,000 was forthcoming. Then Tom also discovered that there were wiring fees and conversion fees that totaled another $30 from his U.S. bank and i25 from the French bank. But at least these were small surprises in comparison to the i11,000 exchange
difference.
24
Apr
2009
Real Estate Investment – When in Rome…
To make your real estate investment opportunities fare well in other countries and societies, consider the following.
Learn the language. Having just a small vocabulary goes a long way in the success of your investment. Knowing past, present, and future tense is very helpful. After all, that is the time line in which your real estate deal operates.
Learn the culture and local customs. Read up on and experience the culture. The culture you see on vacation is different from day to day. Religion makes up a large portion of culture and society.
Whether it is nonexistent, polytheistic, monotheistic, all have an influence on the society in which you plan to do business. Failure to understand and respect the nuances and roles that culture, customs, and religion play can cause your deal to fall apart or change adversely. Knowledge and understanding is power. Humility on your part is not weakness.
Understand the local economy. The local economy is usually different from the national economy. What makes the local economy self-sustaining: building aircraft, growing wine, services and to whom, education, fishing, tourism, a combination thereof? How does this fit into your personal and real estate goals and objectives, in both the short and long term? Is the local economy working, and what is its future? Will the area be deserted or abandoned in a few years? All these factors can affect your investment.
26
Sep
2008
New tenants bonus cuts taxes
Not just house builders, but also the tenant may have been recently on an entirely legitimate form of tax savings are happy: The operating costs for a rented property in the tax may be specified. New rules for household services make it possible – even retroactively. Unless the outstanding tax can also operating costs for 2003 through 2005 be claimed. But how does it all?
Material costs are not included
Those who work in the apartment by professionals it leaves, can be 20 percent pure wage settle. Material costs remain ignored. But the operating expenses of the landlord to the tenant continues, there can be claimed for tax. Caretaker costs and repairs in the house belong to the garbage disposal is not.
Wage and material separately indicate
Since this year, a landlord wage and material cost of operating separately in payroll specify. Thus, it is easier for tenants, wage costs in the cover sheet indicated the tax return. Older settlements are often not separate costs. It remains the only tenant left, the wage cost estimate. A test compass of the German Federal helps tenants here, the corresponding cost for the chimney sweep or caretakers correctly.
For outstanding tax applies:
Who operating in the outstanding tax assessments fit, you must note that for the years 2003 to 2005 only the work are deductible, the tenant would even work. , Professional work ‘(eg, maintenance of a heating system) can therefore for this period are not invoked.
26
Sep
2008
Patronage Websites
The following websites are currently under our patronage:
- Business Digest Blog – Current information about business affairs
- http://money.best-real-estates.com/ – Experts’ advice on money investments
- Loans Insider Blog – Professional advice on loans and mortgage
- Real Estate Informer Blog – Fresh update on real estate market situation
- http://finances.best-real-estates.com/ – Personalized help for money investors
- http://investments.best-real-estates.com/ – Your source of information about investments