Friday 3 February 2012

3 Investing Traps -- And How To Avoid Them


These tips should help you sidestep some common accounting pitfalls.

Alcoholics have 12 steps. Grievers have five stages. Investors have their phases, too, with the biggest leap coming when a fledgling shareholder begins tossing accounting ratios around. I've calculated ratios for years myself, both as a hedge-fund analyst and in making share recommendations for The Motley Fool, and I'll say this: ratios are both powerful and open to misuse by novices. I'd like to share a few tricks with you to help you avoid some common pitfalls.

Trap 1: Focusing too much on return on equity (ROE)

The much-vaunted ROE seems pure: take net profits, divide by shareholders' equity, and you see how efficient a business is with investors' money. ROE is Warren Buffet's favourite ratio, and executive pay is sometimes tied to it.
When it's a trap: When it's enhanced by debt. Borrowing funds to make more money for shareholders isn't necessarily evil, and is sometimes beneficial. But investors strictly watching ROE will miss the additional risk taken by a management team 'gearing up' to meet performance targets.
Protect yourself: Add return on invested capital (ROIC) to your arsenal. Using the same principle as ROE, ROIC essentially compares after-tax operating profits to both debt and equity capital, and thus provides a better measure of operational success that can't be inflated by a financing decision. Moreover, research by American equity strategist Michael Mauboussin of Legg Mason shows that companies whose ROICs either rise or remain consistently high tend to outperform others. Search online to find the precise formula, or drop me a comment in the box below.
Using Standard & Poor's Capital IQ database, I screened for companies with returns on capital (a near-identical cousin of ROIC) above 20% that have seen an improvement in return on capital during the past five years. These shares are not recommendations, but rather screen results that may be of interest given the discussion.
CompanyMarket cap (£m)Return on capital
Last fiscal yearFive years ago
Croda International (LSE: CRDA)2,63826.3%22.8%
Renishaw (LSE: RSW)1,05325.1%16.9%
Burberry (LSE: BRBY)6,17224.4%20.0%

Trap 2: Taking turnover growth at face value

A sale is a sale, right? Wrong. Turnover is a prime line for accounts manipulation.
When it's a trap: Intricate shenanigans with turnover figures can be tough to uncover, but a simple rule of thumb is to become suspicious if growth in trade receivables (for instance, the amounts customers owe) meaningfully exceeds growth in revenues. This could indicate 'channel stuffing', whereby a company extends overly generous terms to customers simply to gain a short-term turnover boost.
Protect yourself: Using a screening tool or your own sums, compute the relative growth of both sales and trade receivables, particularly for companies whose growing turnover forms a major part of your investing thesis.
Again using Capital IQ, I noticed retailer Dunelm (LSE: DNLM) reported attractive 9% growth in sales last year (especially in this consumer market) -- albeit accompanied by a troubling 22% increase in trade receivables. While not a red flag outright, it's something to investigate further.

Trap 3: Using accounting profits to compute dividend cover

I've done this myself, and feel it's probably acceptable with stable companies clearly able to pay shareholders.
When it's a trap: The first thing a budding investor learns is that for accounting reasons, profits don't always match cash flow -- from which dividends are paid. Though cash flows and profits should theoretically match over time, profits are skewed by 'accrual' calculations, such as spreading the cost of equipment purchases over the life of the equipment, versus charging the costs in the year they occurred.
Protect yourself: Experienced analysts use free cash flow instead of reported earnings to produce a more reliable measure of dividend safety. Read this old-school Fool article for a moredetailed discussion on free cash flow. Swapping cash flow for accounting profits in your dividend cover calculation should increase its reliability.
Capital IQ turned up these companies as having cash flows materially exceeding accounting profits.
CompanyNet profits (£m)Free cash flow (£m)
Marks & Spencer (LSE: MKS)603701
Sage Group (LSE: SGE)189283
Rexam (LSE: REX)154265
There you have it. You're now three traps wiser, which is a step ahead of most investors. Indeed, while spotting numerical chicanery may be best for sidestepping share-price stinkers, avoiding losers is more than half the battle to building a winning portfolio.

http://www.fool.co.uk/news/investing/2012/02/02/3-investing-traps-and-how-to-avoid-them.aspx?source=ufwflwlnk0000001
Posted by at No comments:
Labels: , , , ,

I had so much cash, all I wanted to do was spend


Gary Numan: I had so much cash, all I wanted to do was spend

Singer Gary Numan, 53, chose to buy fast cars and planes rather than invest for the future.


By Richard Webber
7:30AM GMT 22 Jan 2012
Comments

HOW DID YOUR CHILDHOOD EXPERIENCE INFLUENCE YOUR ATTITUDE TO MONEY?

Unfortunately, not much. My dad was a baggage handler at Heathrow and careful with money. He worked hard and had three jobs when I was young. I wish I'd inherited his care for money. Sadly, I've grown up to be rather scatty when it comes to finances.
Before breaking into music, I had various jobs: forklift driver, driving a courier. But I was forced into working rather than doing it off my own bat because that was my dad's way: you got a job and paid your way.
Fame came quickly. I was only 19 when I secured my initial recording contract and my first two hit records – Are Friends Electric? and Cars – were number ones.
I became massively famous with all the money in the world for a while. At that stage, I never had any appreciation of money: I knew it was hard to get, but I had so much – I'm talking millions – and all I wanted to do was spend. I went mental with it, including buying a big house next to Wentworth golf course, Surrey, in the early Eighties. It was about £165,000 back then but would be worth millions now.

ARE YOU A SPENDER OR SAVER?

Still a spender, although not as bad as I was because other commitments soak up much of my earnings, like sending my children to private school. Nowadays, there isn't so much free money around to buy aeroplanes, helicopters and all those lovely things I used to acquire.

HAVE THERE BEEN ANY TIMES WHEN YOU WERE WORRIED ABOUT MONEY?

Many. Two business ventures in the Eighties didn't work out. I opened a restaurant – Coffee Pot – in Hounslow and my own record company; both were disasters.
When I started having success in music, everyone said it wouldn't last and to ensure I had another source of income. So I tried diversifying for the day the music career collapsed. But it was naive because I knew nothing about restaurants or running a record company.
Setting up Numa Records in 1983 would have been OK if I'd concentrated on my music, but I signed other bands. The company lost hundreds of thousands and closed a few years later. My father knew what he was doing but I kept sticking my nose in and making it difficult for him.
Our debts levelled out at around £600,000 and perhaps the biggest cause of this was my desire for elaborate light shows long after my career could justify it. But even during the early Eighties I spent too much: on one sell-out tour I lost £150,000 due to expensive lighting and production – pure stupidity.

WHAT'S BEEN YOUR BEST BUSINESS DECISION?

Despite my first attempt at running a record label being a disaster, I tried again in 2005 when I launched Mortal Records. It's only two years or so since my dad retired from running the business so it's been a steep learning curve for me. This time, I'm concentrating solely on my music and doing a much better job.

WHAT'S YOUR MOST TREASURED POSSESSION?

Until a few years ago, I'd have said my Harvard, a Second World War plane, but I sold that. I did air display flying but two things happened: my second child came along and my flying team-mate, Norman Lees, was killed in a crash.
Now, my most treasured possession is a Gibson Les Paul guitar I've had since I was 15. My dad bought it in Ealing and it's some guitar to have when you're a teenager – another example of me being a spoilt child.

WHAT'S BEEN YOUR BEST BUY?

My house. It's a Twenties six-bedroom detached property set in eight acres of Sussex countryside. Originally two houses, we bought it in 2005 for around £850,000. It was valued recently at around £950,000-£975,000. We're thinking of selling up and moving to the United States.

WHAT ARE YOUR FINANCIAL PRIORITIES FOR THE NEXT five TO 10 YEARS?

I don't have specific financial goals but I want my children to remain in private school, whether we move to the US or not. So it's all about earning as much as possible and spending as little as I can.
Album sales have collapsed, with few artists making money from albums; touring is more lucrative. But I'm 53 now and won't be able to tour forever so a logical step is to get into writing film scores. Trouble is, you need to be somewhere which has a big film industry – another reason why I'm thinking about living in California.

WHAT'S BEEN YOUR WORST BUY?

My own studio, Rock City, in Shepperton some years ago. Initially, it seemed to make sense but soon became a bottomless pit in terms of money. I poured so much cash into it, but couldn't make my money back on it. By the late Eighties, I decided to move on.

HOW DO YOU PREFER TO PAY – CARD, CASH OR CHEQUE?

I have Visa and Mastercard credit and debit cards but prefer cash, if I've got it. I carry various amounts, depending on what I'm doing. We recently attended a Hallowe'en party, so the day before went out with £1,500 to buy some stuff. Yesterday we went to London with the kids and I only took £300.
Cheques seem to be disappearing, while I struggle establishing a mental picture of my financial state with cards. At least with cash I can go out with a chunk of notes and control myself when it starts dwindling. It may sound simplistic but that approach works for me.

HOW DO YOU TIP?

Ten to 12pc if people are friendly and helpful. But if they're surly little people, I won't give them anything.

DO YOU BANK ONLINE?

Yes, with HSBC. I banked with Barclays for years but moved after a diabolical problem during the first day of a Florida holiday last year. I was with my wife and children and had just got our shopping for the week when my card was declined. I rang Barclays from the US and was asked the most stupid security question concerning what I'd bought several months earlier – how could I remember that?
Having failed the security check, the bank wouldn't help and the guy hung up when I started shouting. I had a fortune tied up with them at that point so switched to HSBC when I got home.
I love online banking and I check my accounts constantly. Going to a branch can be embarrassing sometimes, especially if you're at the counter with a long queue behind you and suddenly find you haven't got the right ID or have filled a form in wrong.

HOW DO YOU FEEL ABOUT PENSIONS?

I don't rate them, especially after the recent bad press about returns. My dad was always keen that I paid into a scheme but I never saw the point.
When I took over the running of my company, I inherited a number of things my dad had set up for me. I didn't get involved at that point so don't really know what they are, so I'm talking to a financial adviser at HSBC to establish exactly what I've got. Whatever it is, we're probably talking peanuts.

HOW DO YOU INVEST?

I don't, I'm afraid to say. This is what I'm discussing with the friendly man at HSBC. Most of my money is in various bank accounts rather than investment products.

HAVE YOU EVER INVESTED IN SHARES?

No, I don't do anything like that – I don't even have Isas. I know it sounds silly but none of these forms of investment seems worth the hassle because you get so little out of them.
If you know what you're doing, perhaps some are worthwhile, but to make money on shares you need to be clued up and prepared to gamble.
For someone like me, who is ignorant about financial products, investing in shares would probably result in picking something so safe that I'd probably only earn a penny on a grand or something ridiculous.

YOU ENJOYED SEVEN TOP-10 UK HITS. WHAT WAS THE MOST SUCCESSFUL?

At the time, Are Friends Electric? did better than Cars but the latter has lasted the longest. It's been used in adverts, films and been covered many times. Barely a week passes without receiving a request for a new cover version or for the song to be used in a film or advert.

DO YOU HAVE A FINANCIAL ADVISER?

Only the guy from HSBC who is helping me sort out life insurance and my general financial situation. As yet, we haven't discussed anything in terms of new investments.
Regrettably, I never had a forward-thinking head on my shoulders and was so childish when I was younger. While I was earning lots, I never thought about which financial product to pick, it was what Ferrari to buy! I've owned several cars, including a Corvette, but having children I now drive a grey seven-seater Jeep Commander.

DOES MONEY MAKE YOU HAPPY?

Yes, it makes a real difference. OK, if you've got a terrible illness or your wife has left you, all the money in the world won't make a difference. But if things are ticking along quite nicely, life is better if you have money.

WHAT DO YOU HATE ABOUT DEALING WITH MONEY?

I find tax demoralising. As my money comes in, I have to put aside a significant chunk and pretend it's not there. That's always depressing.

HAS THE RECESSION AFFECTED YOU?

Not on an everyday basis because my company can still afford to pay me the same as it did one or two years ago. But from a business point of view, it's harder selling concert tickets as people tighten their belts. If it continues like this, I'll have to think about my concerts and perhaps reining in the production somewhat.
Gary's new album, 'Dead Son Rising', is out now on Mortal Records. Visitnuman.co.uk for more information

Posted by at No comments:
Labels:

Hospital patients 'overtreated and overcharged’


Hospital fraud is becoming a serious concern in Britain, but expats need to be even more careful

By 
9:32AM GMT 23 Jan 2012
Comments
Suspicions that five private hospital groups in Britain are operating a money-spinning cartel have prompted an investigation by theCompetition Commission.
The inquiry follows a damning report last month by the Office of Fair Trading (OFT) that accused hospitals and surgeons of not publishing meaningful data as to their success rates.
It explained that without information such as infection rates it was impossible for patients and GPs to assess quality – a clear suppression of competition.
The OFT also alleged that the hospital groups made inflexible pricing arrangements with insurers. The aim of this was to exclude new hospital groups from breaking in to local provision.
Private medical insurers have long claimed that some private consultants routinely put their bank balances before their patients’ needs. They welcomed the decision of the OFT, following a year-long inquiry, to refer its findings to the watchdog.
Publication of the OFT report highlighted the friction between insurers and providers that has existed for years. Relations further deteriorated when Bupa, the leading medical insurance company in the UK and internationally, said 20p in the pound was being wasted on “inappropriate” surgery.
Dr Natalie-Jane Macdonald, managing director of Bupa Health and Wellbeing, said hospitals in Britain were half-empty. The implication was that they were spinning out treatment cycles and doing unwarranted tests and treatments to stay in business.
What is not disputed is that health insurance premiums have risen by about 10 per cent per annum for several years in the UK – and even more for expats buying international cover.
And while the problem of prolonging treatments, instituting unnecessary tests and putting patients through surgery when better options are overlooked is a big concern in Britain, the picture elsewhere in the world is often worse.
According to the Association of International Medical Insurance Providers (AIMIP), fraud is endemic in parts of the system.
Carl Carter, chairman of the London-based association, said: “We are working among ourselves and with other industry bodies and databases to share information and combat provider fraud and inflated costs – for instance where hospitals are overcharging, charging for treatments they never did, or are overtreating, such as unnecessarily long admission periods.
“Many overseas doctors see an international medical insurance policy as their meal ticket and are keen to charge heavily inflated 'tourist’ rates for much more than they would charge a self-paying or local customer.”
Mr Carter, managing director of IMG Europe, told of a 35-year-old customer who suffered a nosebleed while in Tokyo. He attended a private hospital where the condition was viewed as extremely serious.
Doctors wanted to admit the man for 30 days, but the patient called his insurer. Mr Carter said: “Our medical team liaised with the treating doctor and we agreed to a three-day observation and to review after that.
“It turned out it was a simple case. By coincidence, with the mild concussion he also had high blood pressure and he had scratched inside his nose when he’d been jolted from behind and had fallen over.”
The case highlights the importance of policyholders contacting their insurance company in advance of treatment, emergencies excepted. Routine pre-authorisation is key to curbing abuse.
Mr Carter concluded: “Luckily, the customer followed the instructions on his membership card and all was fine. He made a full recovery and was quickly reunited with his family, and without his policy incurring the bill for 27 unnecessary days of in-patient stay.”
Last year, AxaPPP International linked up with Medix, a global consultancy firm, to give policyholders the chance to take a second opinion before treatment. That is one defence against unnecessary treatment, argues Jonathan Gray, the company’s director of medical services. He also points out that patients may be saved from intrusive and potentially risky diagnostic tests and treatment.
“We recognise that over-treatment is a factor in provision of health care, whether in the UK or abroad. It varies according to the pressure on the providers,” he said. “In the Middle East, where doctors are mostly employed by the hospitals, there’s pressure on them to utilise the hospital facilities. That can lead to unnecessary diagnostics and treatments.”
But similarities occur in all countries. “Particularly with surgeons, a significant proportion of their remuneration is related to the procedures they do. So it’s in their financial interest, if they have the opportunity to justify medically that a procedure takes place, that it goes ahead.”
Mr Gray does not think that unethical practice is systemic in all countries. “We believe it’s a factor in all markets to varying degrees, depending on individual providers or specialists.”
AxaPPP has an anti-fraud team of six people who will investigate a suspect case and, if malpractice is established, will then investigate the whole hospital. Overtreatment is more difficult to detect. A second or third MRI scan in a straightforward case arouses suspicion.
“The key in all this is that additional interventions are not good for health outcomes,” Mr Gray said. The Medix scheme was “about getting people the right treatment for their condition in the right way – it saves the heartache of going through unnecessary procedures.”
One example was a patient who was about to undergo prostate removal, an operation often leading to long-term complications. He was spared surgery when a leading specialist in the US reviewed the tests.
Another insurer to set up an anti-fraud unit recently is InterGlobal. As for Bupa International, it is just as aghast as its UK partner at the relentless rise in premiums.
Sneh Khemka, medical director of Bupa International, points to the apparent readiness of some doctors to perform keyhole knee surgery without clinical need. “Doctors work on a reimbursement basis – the more they do, the more they get paid. In the UK, where we have been looking at the rates of knee arthroscopy, for example, the rate of operations in the privately insured market is almost three times that in the NHS.”
He continued: “One of the postulated reasons is that doctors may be incentivised to do a procedure that they would not otherwise do. That’s the UK situation, but in certain countries outside the UK, I’d say the situation is even more exaggerated.”
While UK doctors are well regulated, the same does not always apply elsewhere. “The standards and the regulations are not there,” he said. “That gives doctors freer licence to practise and that leads to inappropriate intervention.”
Dr Khemka – who has previously voiced a warning that private insurance would become unaffordable if trends continued – added that Bupa, because of its size, had a special responsibility to tackle the problem.
“We don’t want to keep members beholden to ever-rising premiums because hospital groups are charging way above what they should and trying to fill gaps in their capacity by overcharging – which is then directly transferred to individual private members.”
HOW INSURERS POLICE OVERTREATMENT
» Pre-authorisation: It is standard practice for insurers to insist that customers contact them before seeking treatment, except in emergencies. The UK-based body representing global insurers (AIMIP) advises: “The first requirement is clear documentation and membership cards and to always ensure that the insured person gets in touch with their medical insurance provider before getting the treatment or admission.”
» Case management: It is an advantage to have an insurance provider who has in-house medical teams and doctors available as well as a panel of medical specialists available for second opinions. “It’s unlikely that specialists will seek to overtreat if they know someone is monitoring their work,” says AIMIP.
» Information exchange between international insurers so that hospitals known to make fraudulent claims are boycotted.
» Dedicated anti-fraud units set up by insurers.
WHERE ARE THE WORST OFFENDERS?
Insurers mainly point to Asia, South America, the Middle East, Turkey and Spain. But no country is free of medical fraud. Generally, Europe is less infected with the culture of overtreatment because regulation of the medical profession is tighter.
Carl Carter, chairman of AIMIP, says: “Due to very little competition, certain hospitals in China, Hong Kong and elsewhere in Asia are charging exceptionally high rates to expats who are demanding US- or EU-style private hospital facilities when perfectly adequate modern local facilities are also available.
“Among other major offenders are Turkish hospitals and clinics, for trying to admit people when not required, as well as some of the tourist hospitals in Spain for charging 'tourist’ rates to expats.
“It’s not just these areas. In many parts of the world it is common practice for some hospitals and clinics to have a different rate for locals, expats and the tourists.”

http://www.telegraph.co.uk/health/expathealth/9017881/Hospital-patients-overtreated-and-overcharged.html
Posted by at No comments:
Labels:

Make Estate Planning A Priority


Thinking about who will take care of your children or how your assets will be distributed if you die is never pleasant. However, it is important to have a will to provide financial security for your loved ones. If you do not have a will, make it a priority to draw up a will this year. For basic estates, you can use an online website to create a will. However, you should visit an estate planning attorney for more complicated situations. (For more information, see Everything You Need To Know About Wills and Estate Planning.)

If you already have a will, set some time aside to review the will with your spouse to make sure it reflects your current wishes. Evaluate if the people named as guardians of your children are still the best choice. Verify that all beneficiaries of your estate are still the desired recipients and that all are currently living.
Give a copy of your new or updated will to several family members for safekeeping and also keep a copy at your home. Additionally, create a list of all bank accounts, monthly bills, retirement accounts and insurance policies to help your family continue paying your bills and distribute your assets quickly in the event of your death. Keep a copy of the list at your home so you can easily update it. Make sure to tell a family member where it is located.

Posted by at No comments:
Labels: ,

Talk More About Money


Money can be a hard topic to talk about, but having open conversations about finances with your loved ones can be important to both your future and theirs.

One of the most important gifts you can give the children in your life is a healthy attitude about money and the tools to make sound financial decisions. Teach children living in your home how to manage money on a small scale through weekly allowances, saving for a coveted toy or working on the family budget. Have honest conversations with adult children or grandchildren this year about money mistakes and successes that you have made during your life. Take the time to listen to any concerns or questions that they may have. (To learn more, see Teaching Your Children About Money.)
If your parents are senior citizens or nearing retirement age, talk with them about their financial wishes as they age and get a clear picture of their finances. You should also make sure that you or a close family member has all of their financial account information and a copy of their will to alleviate stress if they pass away.
While it is easy to view financial resolutions as a one-time goal or something to check off your list, spend time throughout the year measuring your progress and making adjustments. Think about any personal financial goals that you have and create additional resolutions that are meaningful to your situation.

Posted by at 1 comment:
Labels: , ,

10 Frugal Living Tips To Happiness On A Tight Budget

10 Frugal Living Tips To Happiness On A Tight Budget
By Matthew CenzonΙ Published September 28, 2011

Whether you're dealing with a mountain of debt or trying to save money for your retirement, there are numerous circumstances that can force someone to change his or her spending habits. Frugal living is typically viewed in a negative light, where the word "sacrifice" becomes synonymous with "suffering." However, this does not have to be the case. Here are 10 frugal living tips to achieve happiness on a tight budget.


1. Keep Track of Your Spending

If you're planning to live on a tight budget, you need to start by keeping track of all your expenses. From car repairs to that cup of coffee you buy every morning, everything must be recorded. It's easy to lose track of how much you spend in any given week. The next thing you know, you are looking at a credit card bill that is well outside your means. So, you pay the minimum payment, which is another no-no, and the cycle of perpetual debt begins. Keeping better track of your spending can help you avoid wasting money on unnecessary expenses.

2. Change Your Spending Habits

Now that you're keeping track of what you're spending your money on, look through your monthly expenses and start trimming the fat. This is where people begin to think that frugal living is a complete downer compared to a lifestyle of superfluous spending. Don't think about limiting yourself on the things you want, start thinking about cutting out the things you don't need or waste money on. Avoiding name brand items, buying in bulk, and buying used or refurbished items are just a few examples to help you save and change your spending habits.

3. Monitor Your Money

Many people are guilty of not knowing how much money they are carrying in their pocket or purse on a daily basis. Even worse, many people are guilty of not knowing how much money they have in their bank account. How are you supposed to follow a budget if you don't even know what you are working with? What if you dropped some cash without even knowing it? Finding random cash in your pocket is the best feeling in the world, but you should be taking better care of your money if you plan on living on a tight budget.

4. Carry a Coin Purse

Want to live happy on a tight budget? Start carrying a coin purse, and stop treating loose change like it's the plague. Most people become annoyed with fishing through their pockets for change, so they just pay with large bills and get more loose change that they don't want. Keep those coins organized with a coin purse. If you still refuse to pay with exact change, just stuff the coins in the coin purse and empty it into a jar when you get home. When the jar is full, take it to a coin counter at your local grocery and exchange it for cash or a gift card.

5. Give Yourself an Allowance

Limit yourself to a set amount of spending cash per week, like $100, and only withdraw that amount from your bank account. Stretch that weekly allowance as far as you can, and if you spend it all, don't withdraw more money until it's time for your weekly withdrawal. Giving yourself an allowance will help you develop better spending habits to help you save money for when it counts.

6. Start Living a Healthier Lifestyle

Yes, your health can play a factor in how much money you're spending. One of the best frugal living tips anyone can follow is to get in better shape. Those who smoke, consume too much alcohol, have poor eating habits, are out of shape or are overweight tend to spend more money than a person who is living a healthy lifestyle. If you are in shape, you will eat less. If you quit smoking and drinking, you aren't wasting money on alcohol or cigarettes. If you jog, walk or run on a regular basis, you are giving yourself an activity that will make you healthier and hardly costs any money.

7. Look for Ways to Earn on the Side

While you don't necessarily have to take up a second job or even a part-time gig, finding ways to earn money on the side is a frugal living tip that will help you reach your retirement goals, or give you more spending money. Earning money on the side will also keep you preoccupied so that you feel less tempted to waste money, and what better way to live happily on a tight budget than to spend time earning money rather than spending it.

8. Stop Impulse Buying

Never walk into a store and purchase something without thinking about it first. Frugal living requires you to consider all purchases with at least a 24-hour timeframe. If you still feel compelled to have the item in question after 24-hours, then it might be worth buying.

9. Never Buy Anything at Full Price

Have you ever purchased something, only to see it go on sale a month later? If you find an item, and followed the suggestion in tip #8, make sure that the item you must have is at least on sale. If it's not, then wait till it goes on sale before you buy it. Hopefully, by the time the item goes on sale, you'll no longer feel compelled to buy it, thus saving even more money in the long run.
Another useful tip would be to only allow yourself to purchase something if you are able to find a coupon for it. Websites likeCoupounMountain.com provide free coupons you can use for online purchases. This is another great way to help you curb your shopping impulses and practice frugal living habits.

10. Change the Way You Eat Out

Giving up on restaurant dining and eating out may be a good tip to save money, but it probably won't make you very happy. Instead of giving up on it completely, try changing the way you eat out. Always keep an eye out for promotions or deals. Restaurants tend to offer discounted meal prices during off hours, so try eating earlier or later than usual to save. Scan the appetizer section and see if you can turn an item into an entrée. Many times, a restaurant will have an appetizer and an entrée that are virtually the same, only the appetizer is a bit smaller and comes at a cheaper price. Also make sure you take advantage of any coupons you receive in the mail, or print your own from online.

http://www.candofinance.com/debt-management/frugal-living-tips/
Posted by at No comments:
Labels: , ,

'The investment industry has been ripping off customers for far too long'

Alan Miller, founder of low-cost fund business SCM, has launched a campaign calling for greater transparency on investment fees and charges.

By Rosie Murray-West4:01PM GMT 31 Jan 2012

The True & Fair Campaign argues that the investment industry has been "ripping off customers for far too long".

"The British public faces a minefield of hidden charges," Mr Miller said, adding that people were being left "seriously out of pocket" with regards to their pensions and other investments. He said that investors were entitled to know what they were being charged.

The campaign comes the day after Fidelity warned about the emergence of "Ryanair" fund pricing – where people are charged what looked like a low upfront fee and then end up paying more on top of it. "We know investors are concerned about charges and they are becoming more complicated," he said.

SCM is launching a True and Fair Code and Labelling Scheme, allowing investors, for the first time, to compare investment products and providers with a clear breakdown of costs and fees.
Mr Miller said the new code will provide 100pc transparency by showing the whole range of fees and the resulting all-cost for investment, which will be known as the Total Cost of Investment (TCI).

However, Gary Shaughnessy, Fidelity Worldwide Investment UK managing director, said that SCM itself was guilty of 'Ryanair' pricing on some funds, because only those with large amounts could invest.

Mr Shaughnessy said: "A consistent way of showing charges is essential to restoring investors' trust in the industry and encouraging them to feel confident to save for the future."


http://www.telegraph.co.uk/finance/personalfinance/investing/9052119/The-investment-industry-has-been-ripping-off-customers-for-far-too-long.html
Posted by at No comments:
Labels: ,

Thursday 2 February 2012

Character Traits Of Value Investors


In his 2002 book The Valuegrowth Investor, Glen Arnold describes the character traits and personal qualities of a ’valuegrowth’ investor as follows: (Note: Arnold describes the ’Valuegrowth’ investor as a distillation of the principles used by Ben Graham, Warren Buffett, Charlie Munger, John Neff, Philip Fisher, and Peter Lynch... a fine crowd indeed!)

To be successful investors we need to develop the ability to keep emotions from corroding the advantages brought by the Valuegrowth framework. The following qualities are needed:

Independence of mind: The market is full of beguiling rationales for the current consensus view. The Wall Street crowd has a tendency to follow a few lead steers like manic-depressive lemmings. Don’t accept Mr Market’s judgment of value. Think independently. Gather facts, apply tests and standards, and critically evaluate the business using sound principles.

If you do all these things you will have confidence and courage that comes from knowledge, experience and sober reflection. It does not matter that the popular view is different to yours. Be prepared to cut yourself off from the crowd and zig when the rest of the market is zagging. Be prepared to think and to act unconventionally--to go with your own reasoning. Be somewhere that allows you to ponder the really important issues--get away from the day-to-day stock market stimuli. Don’t be intimidated by the ’professional investor’. Remember: the vast majority of ’professionals’ fail to outperform their indices. The Valuegrowth investor is far superior to most Wall Street analysts.

Capacity for hard work: Valuegrowth investing requires full commitment. A good knowledge of strategic analysis, accounting, finance and economics are required. A willingness to spend time in scuttlebutt is necessary. The rewards of the Valuegrowth method are huge, but it asks for constant toil.

The ability to make decisions with incomplete information: In investment we are making judgments about the future. Owner earnings that are yet to occur cannot be stated with any great precision and yet we must still form a view. If you are uncomfortable with analysis based on shaky numbers and ball park figures; if you require facts that are provable before you can make a decision then you will not make a good Valuegrowth investor. Investment is a probability-based art form. The successful investors tilt the odds in their favor.

Resistance against the temptation to speculate: Discipline is needed to stick to sound investing criteria. This is especially the case in bull markets when you see speculators making vast returns. Don’t be tempted to play catch-up hoping to get your money out before the crash and return to thorough-investigation-with-a-margin-of-safety-investing later. You are more likely to go down with the rest, as Fisher and Graham discovered in 1929. You must resist emotions and gut feelings. Like the dog in Aesop’s Fable stick with what you know to be good rather than lose it trying to grab for deceptively better offerings. Buffett is content to aim for 15% annual appreciation. Why should we think we can safely aim for more than that.

Patience, perseverance, fortitude and consistency: Valuegrowth investors are not impatient to buy stocks. Stand on the plate and let the bad pitches pass by. Do not drop your standards. Patience, perseverance and fortitude are also needed when the stock price falls after purchase. Doubts about the wisdom of the investment start to appear. If you have done your homework and you are convinced that the stock represents good value then a falling price creates buying opportunities if you hold your nerve. Market pessimism is the friend of the investor, but it takes a strong will to stand against the tide of opinion.

Don’t be impatient to sell-- hold on to good stocks. It sometimes seems ages before the market recognizes the intrinsic value of a stock. If you hold on you can benefit from both rising earnings and an increase in the price-earnings ratio. On other occasions the price can rapidly appreciate and you are showing a good rate of return. The temptation is then to cash in your chips. This often needs to be resisted too. The best part of the return may yet be to come.

The Valuegrowth investor is consistent in his or her investment activity. Do not switch investment styles. Have a regular routine of investment following best practice. Even following Valuegrowth investment principles there will be down years. In these periods resist the temptation to give up and try the latest fashion. Also, consistency is needed in continuing to follow the story of the company. On a regular basis investigate if the story is still strong enough for you to hold.

Willingness to admit and learn from mistakes: Mistakes are bound to occur in investment. It is impossible to be right about companies all the time. In fact, excellent performance only requires us to be right six times out of ten. When a mistake does occur don’t sweep it under the carpet because you can’t bear to look at it and be reminded of your ’failure’. Face up to it, examine it and learn from it. In this way the quality of your investment decisions will improve. Also, learn from the mistakes of others-- ’you can’t live long enough to make them all yourself’ (Martin Vanbee).


Posted by at No comments:
Labels: , ,
Subscribe to: Posts (Atom)