The savingandinvesting.com blog

New Video: P3. What is an ISA? (UK)

2009-05-12T05:44:00.000-07:00

An Individual Savings Account or ISA is one of the most common and easy to access saving and investing tools in the UK. This video provides an summary of this products.

P2. What is a 401k Plan?

2009-04-20T02:00:00.000-07:00

401k plans are spoken about very frequently in the US, and represent a potentially very tax efficient manner for money to be set aside for the future. This video introduces what 401k plans are - building on the concepts of taxes and compounding, providers and users of capital, principles of taxation, mutual funds and even dollar-cost averaging.

New Video: P1. Structures, Products and Services

2009-04-20T01:41:00.000-07:00

This is an introductory video to some of the structures, products and services that we as investors have to consider on a regular basis. It builds on the concepts and examples of products of the other videos - in this series the items discussed are often more specific, and often specific to a country or region as opposed to being more generic and potentially available in many regions.

New Video: S2. Securitization, CDOs and the Sub-Prime Crisis

2009-03-13T04:13:00.000-07:00

The volume of issue of CDOs and the corresponding ability of banks to issue mortgages had a significant impact on the quantity of mortgages that could be made by banks. This video explores the topic of securitization further with a particular focus on CDOs and how that relates to the sub-prime crisis.

E3B. Introduction to Deflation

2009-03-13T03:25:00.001-07:00

Deflation very much related to the subject of inflation, and in fact is a negative rate of inflation (i.e. prices are falling) for a sustained period of time. This video introduces deflation and some of the issues associated with it.

New Video: 36C. Defined Contribution Plans

2009-03-13T03:04:00.000-07:00

Defined Contribution Plans are the other of the two main pension plans available for many employees - and in fact, they have become the prevalent form of retirement or pension plan type in most countries, particularly in the private sector.

New Video: 36B. Defined Benefit Pension Plans

2009-03-13T03:02:00.000-07:00

Defined benefit pension plans are one of the two main categories of pension plans available. This video follows on from the types of pension plans video to provide more information on this particular type.

New Video: 25. Closed-Ended Funds

2009-03-09T07:31:00.000-07:00

We sometimes hear about closed-ended funds which are a type of fund that shares similarities with standard mutual funds which are open-ended, but also has some very key difference in particular with respect to how money flows in and out of the funds.

New Video: 18. Dividends

2009-03-09T07:28:00.000-07:00

Companies can pay out a part of their earnings in the form of dividends which shareholders receive as one element of their potential return (the other being capital appreciation).

This video provides more information on this and how this looks both from the company's and the investor's perspective.

Although dividends come up in a number of other videos, this video focuses specifically on the subject.

New Video: CF1: Dividend Policy

2009-01-19T00:54:00.000-08:00

Deciding how large a dividend to pay, or whether to pay a dividend is one of the corporate finance decisions that companies have to take. It is partly influenced by the companies desires and nature of business and corporate finance considerations, and partly by the nature of investors. This is the first in a series of videos on corporate finance issues.

New Video: S1: What is Securitization?

2009-01-14T00:28:00.000-08:00

Securitization has come up a lot recently, especially in the context of the sub-prime mortgage crisis. This is a first introductory video describing briefly what securitization is.

New Video: E5. Introduction to Monetary Policy

2008-11-03T04:06:00.000-08:00

We have uploaded a new video - the video provides a brief introduction to monetary policy - one of the main elements of economic policy.

New Video: E4. Economic Policy

2008-10-31T03:56:00.001-07:00

Economic policy is an important factor that relates primarily to governments and central banks and their initiatives to affect growth, inflation, employment etc. This video introduces the subject, and introduces monetary and fiscal policy - two key elements of economic policy.

New Video: E3. Inflation

2008-10-31T03:55:00.000-07:00

Inflation is not a complicated topic - this video briefly highlights what it is and why it is considered important to keep under control.

New Video: V8D. Earnings Yield

2008-10-30T04:50:00.000-07:00

We have uploaded a new video that rounds out the valuation series entitled Earnings Yield. The earnings yield is often referred to in the context of comparing the valuation of stocks and bonds.

Valuation is probably not the most exciting topic on the saving and investing channel - and also to some extent affected by arguments in favour of market efficiency - nonetheless it is worth knowing what the terms refer to.

Best regards - Michael

New Video: V8. What is Yield?

2008-09-20T04:10:00.000-07:00

We have uploaded a new video introducing the concept of yield which is so often spoken about. We hope you like it.

Learning about the Treasury

2008-08-25T05:18:00.000-07:00

When it comes to knowledge, always better to go to the source - as far as the Treasury goes, they have a part of their site dedicated just to this.

http://www.treas.gov/education

and a section for kids.

http://www.treas.gov/education

Clearly they have expended some effort to set this up - very interesting - and straight from the source!

Government spending is the key to tax costs

2008-08-24T08:39:00.000-07:00

There is a very interesting article this weekend in Barron's magazine (subscriber or purchase at newsstand) on tax cuts entitled 'When Is a Tax Cut Really a Tax Hike? Usually' by Gene Epstein which highlights how tax cuts are not really tax cuts if they are accompanied by a rise in inflation-adjusted spending (which is what we currently have) - that spending will have to be recaptured by the government at some point through higher taxes. In other words, although tax cuts at first glance might be popular, the ultimate tax burden might be rising at the same time because of the more fundamental driver: spending. Makes sense - but so important to bear in mind especially with populist tax cuts that can be proposed at a time when the US governments budget situation is poor - and spending is the real item to watch.

The Trickle-Down Effect

2008-08-21T08:30:00.000-07:00

As the housing crisis becomes more pervasive in the US and UK, unfortunately it trickles through a large part of the economy. The banks have taken a big hit in their sub-prime investments, which in some cases have meant significant layoffs and certainly lower compensation. As homeowner equity declines, equity refinancing and desire to spend both decline affecting consumption. For homeowners that have high leverage, in some cases bankruptcy is the only option, meaning that it will take a while for their spending to come back - for those that decide to hang on and try to continue to make the mortgage payments, spending on other things declines. Less house purchases and less moving is bad for home retailers (as is less spending). These are some of the reasons why this might take a while as the overall issue trickles down through other parts of the economy.

UK: How to Beat the Credit Crunch

2008-08-09T05:57:00.001-07:00

We thought you may be interested to know that TaxCafe has just published a brand new tax guide called How to Beat the Credit Crunch, by Toby Hone.

This new guide is packed with practical ideas and tips to help you survive and make money during the Credit Crunch. To learn more click on title of post or use link below.

www.taxcafebooks.co.uk/product.php?prodid=cru&id=11195

Overview

This unique new guide is packed with practical ideas and tips to help you survive and make money during the Credit Crunch.

Itís essential reading for ALL property investors and landlords.

The advice and strategies contained in this timely publication will help you drastically increase your rental income, slash your expenses and turn your property portfolio into a well-oiled cash generating machine!

The author also reveals his secrets for making lucrative new investments in the current climate.

What Information is Contained in the Guide

The guide contains numerous real-life examples from the authorís extensive experience in buying, selling, renovating, developing and managing a big portfolio of investment properties.

Subjects covered include:

Creative ways to boost your rental income by over 50%.
How to overcome the mortgage drought and find the best deals.
18 practical ways to slash ALL your property expenses.
...some of these tips will save you £100s, others will save you £1,000s!
How to tap into the fastest growing rental market with the highest rental yields.
6 ways you can seriously improve the health of your property portfolio.
How to protect yourself from rising interest rates.
How to improve your credit record and keep it squeaky clean.
The biggest threats to your property portfolio NOW and how to handle them.
Ways to boost your emergency cash reserves and shield yourself from the Credit Crunch.
How to virtually eliminate losses through effective deposit management.
How to avoid giving away up to 32% of your rental income without even knowing it.
Practical ways to eliminate void periods completely.
Ways to rent out problem properties quickly.
The outlook for the UK property market and a comparison with the US mark
The 1990s crash... will it be as bad this time round?
A detailed look at the benefits and drawbacks of selling property now.
How to source property at a 25% discount.
Innovative money-making strategies that work in the current climate.
... including buying below market value properties and
... creating potential goldmines within your portfolio.

About the Author

The Author of How to Beat the Credit Crunch is Toby Hone. Toby Hone is a professional property investor. Over the last 10 years he has built a portfolio of 30 properties worth around £3 million. He is also an active property developer, specializing in sourcing below market value properties, as well as properties requiring refurbishment and also development projects, and adding value to them using various techniques revealed in this book.

Realistic Expectations

2008-08-03T07:46:00.001-07:00

There was a story on Barron's website last Friday by Randall Forsyth entitled 'Finance Has Become The Business of America' which was very interesting and thought provoking. An illustration of this would be that the financial sector as a percentage of the broad stock market indices has been rising over multiple decades. Furthermore, clearly the economy has been moving from a product and manufacturing one to a services (including financial services) one. That is a real risk of course when financial markets turn sour - and it makes a case for making sure that markets are functioning - sometimes at a high cost.

For us as savers and investors, what is important to remember is that saving and investing is a complement to working and making money (and not a replacement) - as ultimately it should provide a means of setting aside money, perhaps and ideally even tax free, and letting it grow. It is not about getting rich quickly in most cases - and taking on too much risk with this short-term goal in mind, as opposed to the facts about saving and investing definitely a bad idea with potentially very bad consequences, as market corrections like the one in housing right now can demonstrate.

38. Getting Started

2008-06-22T20:34:00.001-07:00

If you have gone through the videos here, read the book and really delved into the subject and you understand risk, time horizon - what is sure and what is total gambling, and you have a long-term view and understand how investing works - then prudently beginning is the next step.

37. Transaction Costs

2008-06-21T04:13:00.001-07:00

One of the things that can damage our returns is transaction costs - a brief video on this subject.

36. Following the Crowd and the Role of Expectations

2008-06-19T23:36:00.001-07:00

Blindly following the crowd can lead to some of the worst investment decisions - something everyone is expecting in the future is also often already reflected today.
Often one can read headlines like 'this market is expected to rise strongly for the coming year' or 'this stock will perform strongly'. If everyone, or a very large percentage of the market participants expect the same thing, then often all of the future expectation is already priced in today.
Smart investors spend a lot of time trying to figure out things that might not be expected or priced in - that is also a reason why financial literacy and therefore not having to believe everything you hear are so important.

35. Diversification - savingandinvesting.com

2008-06-19T03:22:00.001-07:00

Diversification - or not putting all your eggs in one basket - has a solid foundation in math. In fact there are some really good reasons to always bear them in mind.