ShareThis

ShareThis

ShareThis

ShareThis

ShareThis

Let’s look closer at the mentioned reasons.

• Liquidity of an asset is an important stabilizing factor. In the equity markets, stocks can be bought and sold in minutes. You should know that this ease of liquidity lends itself to investor mood swings and it also lends to the volatility of the latest unemployment report or other government index report.

On the other hand, real estate other than owning it in the form of a real estate mutual fund is not very liquid. It means that in order to sell real estate, the seller has to have some patience and even if a buyer is found, the buyer generally has some due diligence time to look over the property in order to make a final decision to buy.

Here naturally appears the question concerning the wisdom of purchasing real estate when you contemplate the recent housing market. However, the housing market varies a lot from the investment real estate market. Housing has been subject to forces that inflate value. First of all it should be pointed out that housing value is generally based on comparable sales and a decision to buy a house is determined by the “value” of the school system, the amenities of the neighborhood, the curb appeal, and other abstract factors.

On the other hand, investment real estate is seldom an emotional decision. The major determinates are the income and expenses from the property while the value can be affected by some of those abstract factors. The net income determines the value to an investor. So, the investor moves on to another investment in the case that the income doesn’t warrant the asking price.

In addition, the mortgage market in the past has created lots of programs to help sell houses. Longer terms to pay off the note (amortization) have lowered monthly costs; which in turn, has created an upward affect on home values. Investment real estate typically has shorter amortization periods.

• The scarcity of real estate is a stabilizing factor. There is little downward pressure on the value because there is a finite amount of land. On the other hand, stocks are paper assets and their value can be affected by the supply that is created. Usually, the supply of investment real estate is controlled by outside influences, such as zoning, typography, availability of sewer and utilities, and financing.

• Real estate can be depreciated while it appreciates in value. It means that under current tax law, improvements upon the land can be depreciated off of your federal tax liabilities. So, the government allows you to deduct a percentage of its value each year even though your investment continues to appreciate in value.

Before making any investments - read reviews, for a review of LargeSum visit this site.

Save your paper money from stupid inflation with the help of junk silver coins.

And learn about best place to invest money.

ShareThis

Has your purse taken a pounding over the last couple of weeks? Here’s our selection of websites to lend an online hand:

cccs.co.uk

The free “debt remedy” at the Consumer Credit Counselling Service is a top-notch dose of online medicine for anyone whose finances are groaning under the weight of debts. Click on the “Complete your debt remedy” icon on the left-hand side of the website’s main page and, after preliminary questions about the health of your finances and receiving a reference number, you’ll be whisked through a range of questions that probe every aspect of your debts, income, spending and personal financial commitments. It takes roughly 20 minutes to fill in and results in a tailored guide to help dig yourself out of debt. For those who prefer to speak to a person, there’s always the free helpline on 0800 138 1111.

cashmadeclear.fsa.gov.uk/tools/

You may well be wringing hands about loans, credit cards, mortgage repayments or bills but your anguish might be unnecessary: take the “debt test” on the Financial Services Authority’s self-help website and you’ll be able to determine whether your cash needs a proper MoT or just a mild makeover. Its test is full of tips and, while it might sound light-hearted, its questions will help you to tackle your debts if you are in trouble. Of particular use, the test will show how you are likely to appear as a customer to a credit rating agency.

adviceguide.org.uk

The Citizen’s Advice Bureau’s copious pages of debt help cover almost every question you could possibly imagine. Click onto its “debt help” icon and you can pick from a four-step debt detox package; tips on how to offer to slash your debts by negotiating with your lenders; whether consolidating all your debts into one is worthwhile or carries a financial penalty; the dangers of bankruptcy, or the impact of heavy debts on credit records. Even better, it outlines plenty of sample scenarios and is full-to-bursting with useful telephone numbers and addresses for local offices.

direct.gov.uk

Who’d have thought the government proffered decent debt advice? Its “official website for citizens” sports a user-friendly section on managing debt and even includes an online budget planner.

unbiased.co.uk/gu/thrifty-calculator/

Use our cunning calculator to see how much cash you could save every day.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds

ShareThis

Late last year, Dot Net Solutions, a small business in Windsor, applied for a £100,000 loan at Barclays bank through the government’s small firms loan guarantee scheme. It was turned down, as it had been when the firm applied to NatWest, Lloyds TSB and RBS before it.

Under the scheme, designed to help lending to young firms, the government would have guaranteed three-quarters of the loan, leaving just £25,000 at risk.

Dan Scarfe, who set up the firm with his brother four years ago, said: “The bank said it had refused the loan because we couldn’t offer any security for the 25% not covered by the government. They are just not interested in taking any more risk … there is no one you can appeal to. The banks are judge and jury.”

Lloyds has also cut lending against invoices at Dot Net, hurting cashflow.

For many small firms, the contraction in lending in the fourth quarter disclosed by the Bank of England yesterday, despite the government urging banks to keep the taps open, was not a surprise.

Another entrepreneur, who runs a golfing holiday business, said he faced disaster after being turned down for a £200,000 loan through the government scheme. The businessman, who asked not to be named, has run the company for six years, and started it with £50,000 from remortgaging his house. Turnover has hit £1m, but last year, as the pound sank in value against the euro, he lost £150,000. He approached his bank, Barclays, for the loan in November. “They wrote to me and said the government scheme was not allowed to cover existing debt. We are a young company and can’t absorb those losses.”

He fears that without the loan, his balance sheet will not be robust enough to qualify for an Abta bond, leaving consumers unprotected and ruining the firm. He also complained at the rise in interest rates on the firm’s £37,000 overdraft facility. Three years ago, it was 4.5% above the base rate but has risen to 11% above the base rate, only recently dropping down again to 9%. His interest bill in the most recent quarter was £1,100. He has since widened his search and made contact with both Lloyds and NatWest, as well as approaching business “angels”.

In November’s pre-budget report, the government announced a package of measures for small businesses, including a £1bn finance scheme for otherwise solid companies struggling to raise working capital in the credit squeeze. Alistair Darling also said that seven UK banks had applied for £1bn of £4bn made available by the European Investment Bank for loans to smaller firms. It is also making £50m available as equity investments in small firms.

But each of the small firm owners complained that there was scant detail available about any of the schemes.

At the time of the pre-budget report, the Guardian interviewed Stephen Peters, who had opened two bike shops in the summer and was worrying how he would pay the bills. The situation has since got worse, after a poor Christmas. He is looking to raise £80,000 to help cashflow and absorb some of the losses he has taken as the market has slumped, in the hope of reaching the spring, when he hopes business will start to improve.

“Things have deteriorated,” he said. “You can’t get any kind of cash for a retail business. We are in the part of the market that is strategically well placed … but the banks are just not interested.”

His problems have been made worse by suppliers now refusing credit. “The banks are upping the ante, they want guarantees of fixed assets, houses - they won’t take any kind of risk.” He has been given an overdraft of just £2,000. He raised an original £25,000 from HSBC with a personal guarantee but without the additional £80,000 loan, he will have to close the business, he said.

HSBC announced a £1bn fund last month to invest in small firms in Britain but Peters’ bank said lending criteria had not changed. “It is all rhetoric … I am not very hopeful,” he said.

The Federation of Small Businesses partly blamed a generation of bank branch managers who had never been through a downturn and, out of fear, were bringing down the shutters. It said many businesses feared going to their bank for further cash, in case it raised alarms and only made matters worse.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds

ShareThis

Whew, what a year! For many people, 2008 was probably their most financially challenging year ever, and amid apocalyptic predictions this week of a “winter surge” of redundancies and further sharp falls in house prices, all the signs are that we could be set for an even bumpier ride this year.

It is easy to feel there is little you can do to insulate yourself from the recessionary winds, but by giving your finances a makeover and making your cash work harder, you can cushion yourself from some of the shocks that may be around the corner.

The new year is an ideal time to resolve to get a better grip on your finances. In fact, it tops the nation’s list of 2009 new year’s resolutions, according to price comparison website Gocompare.com. Research by the site found that paying off debts and saving cash are more popular resolutions than seeing more of our family and friends, losing weight and stopping smoking.

To help you on your way, Guardian cash has compiled its top new year’s resolutions to make 2009 a better year financially. If you have been flexing the plastic in a big way over the past few weeks, you may want to start with tackling your festive financial hangover.

Pay off your debts

It might sound like a daunting task, but make time to sit down and write a list of all the cash you owe on credit cards, store cards, loans, overdrafts and so on.

“This is the hardest bit,” says Andrew Hagger of personal finance website cashnet.co.uk. “Many people know they have cash problems but won’t own up to them. If you’re not prepared to face this first step, it’s unlikely that you’ll manage to get your finances on track.”

Switching to a cheap credit card deal could be one of the best ways of getting your finances back into shape. Hagger adds: “If you have built up some debt on credit cards and store cards and you are paying interest rates of 25%-plus, you could be paying a great deal less. Zero per cent balance-transfer deals can work well for those with expensive debt to switch over. The best thing to do, once you’ve transferred your balances, is to close the old card/loan accounts and also cut up your new card to stop you being tempted to use it for purchases.”

Among the companies offering cards boasting 0% interest on balance transfers for more than 12 months are Virgin cash (0% for 16 months - also offers 0% on purchases for six months) and HSBC (0% for 15 months - also offers 0% on purchases for three months).

Set a budget

Make 2009 the year you get your finances under control by setting a budget and sticking to it. Look at what you have got coming in each month and your monthly expenditure on essentials such as mortgage or rent, food and petrol. Then take away the amount you are setting aside for debt repayments.

What you have left is what you’ve got to live on. Take a fixed amount of cash out of the ATM at the beginning of each week and try to make it last until the following week. If you are not sure where your cash is going, keep a list of everything you spend cash on - you will be surprised how the cost of daily lattes or pub lunches can add up.

Check your mortgage

David Hollingworth at mortgage broker London & Country says it makes sense to look for a new mortgage deal up to six months before your existing one comes to an end - so put a note in your diary.

“Lenders continue to tier their product offerings based on loan-to-value (LTV), with the best rates available to those with 40% equity,” Hollingworth says. “With house prices continuing to fall, shopping around earlier could mean you qualify for a cheaper, low LTV banding. A mortgage offer will typically be valid for three to six months.”

There are still savings to be had for many homeowners, and remortgaging should be a priority for those not tied into their current deal. What looks like a small difference in rate can amount to a big difference in monthly outgoings. Someone with a £150,000 25-year repayment mortgage could slash their monthly payments from £932 to £843 by switching from a rate of 5.5% to 4.5%. That’s an annual saving of £1,068.

If you have been lucky enough to benefit from recent interest rate reductions, it makes sense to resolve to overpay on your mortgage. If you have a tracker that allows overpayments, you can do this simply by asking your lender to keep your payments at the same level, regardless of base rate reductions. “As well as cutting the cost of interest, this could help to maintain a level of equity for when a new deal is required,” Hollingworth says. “It will also make life easier when interest rates head back up.”

Shop around

This is the year you should make sure you get the best deal on everything from current accounts and credit cards to utility bills and mobile phone contracts. The golden rule is to always shop around.

Comparison websites such as uSwitch.com, cashsupermarket.com and Confused.com make this easy - so spend a couple of hours on the internet making sure you are on the cheapest deals possible. “Savings of up to £325 a year are still up for grabs for those who have never swapped energy supplier,” says Scott Byrom, utilities manager at cashsupermarket.com. “It will be interesting to see if the government goes as far as forcing providers to reduce rates in an era of falling wholesale prices.”

And if you have been on the same mobile tariff for some time, chances are there is a better one out there for you. Other ways to cut your mobile bill include opting for a “sim-only” tariff where, as the name suggests, you get a new sim card but have to provide the phone yourself (ie, you use your existing handset). Some experts reckon sim-only deals are set to really take off this year.

Last year, supermarket group Asda slashed pay-as-you-go UK calls to a flat rate 8p a minute, and texts to 4p. An Asda Mobile sim card, which you can pop in the back of your existing phone, costs just 49p. Asda sim packs are available from the retailer’s website and in stores. You can keep your current number. Ikea also offers a low-cost sim-only deal for pay-as-you-goers.

Start saving

Research by price comparison website cashExpert.com shows that most people would only be able to support themselves for two months if they lost their job, and with unemployment figures going up by the day, that is clearly a worrying figure.

Sean Gardner at the site says: “Obviously the more you save, the better the position you’ll be in should the worst happen, and - despite massive cuts in the base rate recently - there are still worthwhile savings options available.”

If you have not yet developed the habit of saving, a regular savings account, where you commit to paying in a set amount each month, can be a good place to start. HSBC’s Regular Saver is a good option for customers of the bank, offering 8% on accounts up to a maximum of £3,000, Gardner says. Other institutions offering regular savings accounts at decent rates include Abbey (6%) and Barclays (5.84%).

Cut your tax bill

Make it a resolution not to pay more tax than you have to. You should make use of your annual Isa allowance, as well as claiming any tax credits you might be eligible for.

If you have to complete a self-assessment tax return, make sure you do so by 31 January. More than 850,000 forms were submitted late last year, according to Unbiased.co.uk, the search engine that helps people find an independent financial adviser.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds

ShareThis

The number of people unable to cope with their levels of debt is expected to soar to record levels in 2009, an accountancy firm said today.

According to KPMG, in 2009 a record 150,000 people are expected to file for bankruptcy, enter into individual voluntary arrangements (IVA) or make use of a new debt relief order.

KPMG’s predictions represent a 50% increase on 2008’s levels. Personal insolvencies reached more than 104,000 last year, more than double the 46,650 seen in 2004. An estimated 37,000 people used IVAs – an agreement drawn up between debtors and creditors which allows debtors to reduce the amount paid back to a level the debtor can afford – while around 67,000 people were declared bankrupt in 2008.

KPMG claims that creditors saw £1.1bn of debts written off last year, with the average IVA debtor owing £47,800.

Mark Sands, director of personal insolvency at KPMG, said most IVAs were used by people failing to cope with repayments on personal loans, credit cards and other forms of unsecured debt. “Most of this cash was borrowed to meet current expenditure including lifestyle items such as holidays, or to meet monthly shortfalls in the household budget, rather than to acquire assets or to fund a business,” he said.

“By the time people realise the extent of their problems, their total debts will have been swelled by interest, charges and even further borrowing to fund the minimum repayments.”

Sands said it was important for debtors to communicate with their creditors as soon as they ran into problems with repayments. “It remains essential that all involved continue to hold an open dialogue about the wide variety of solutions which are available to the increasing number of consumers struggling to manage their debts. Lenders as well as debtors will want to ensure that the best solution is found for all concerned.”

The government is introducing another tool to cope with unmanageable debt in April 2009, in the form of debt relief orders which are designed to help people with debts of less than £15,000.

guardian.co.uk © Guardian News & Media Limited 2009 | Use of this content is subject to our Terms & Conditions | More Feeds

ShareThis