How Can You Save Tax with Mutual Funds?

Investing in mutual funds results in the higher availability of capital, which is vital for the success of businesses. Therefore, the government provides various incentives when you invest in Equity Linked Savings Scheme (ELSS). Under section 80C of the Income Tax (IT) Act, you are allowed to claim deductions from your taxable income on these investments.

Before discussing the tax benefits that are available on ELSS investments, let us understand these plans.

Equity-linked savings schemes (ELSS)

So, what are ELSS funds? They are a type of equity diversified fund where you enjoy both capital appreciation and tax benefits. While an investment in ELSS funds does not guarantee returns, the best-performing funds have earned huge returns over the long term. Fixed income tax saving investments like Public Provident Fund (PPF) and Fixed Deposit (FD) are unable to provide such effective earnings.

You may invest in an ELSS either as a lump sum or as a systematic investment plan (SIP). An SIP enables cost averaging and prevents from investing during market highs. However, you must remember that each SIP installment is considered as a new investment. This is crucial when you calculate your tax liability at the time of redemption.

Tax benefits of investing in mutual funds

• ELSS are also known as tax saving mutual funds. This is because you can claim deductions from your taxable income on your investment as well as earn tax-free returns. Under section 80C of the Income Tax Act,you may claim up to INR 1.5 lakh per annum as a deduction from your gross income during the financial year.

• ELSS funds’ investments are principally in diversified equities and thus the returns are closely tied to the performance of the markets. This is a type of mutual fund with a lock-in period of three years from the date of investment. In case you start an SIP in an ELSS, then each of your investments will be locked in for three years from the respective investment date. The returns on the investment made in ELSS funds are also tax exempted after the completion of the three-year lock-in period.

ELSS funds, the best option for tax saving

• As compared to other tax saving instruments such as PPF, which has a lock-in of 15 years, National Savings Certificate (NSC)and FDs; the lock-in period in ELSS is lower.

• Since ELSS is an investment in equity markets, staying invested in the same over a long term earns better returns as compared to other fixed-income instruments.

Things to avoid when investing in ELSS

1. Starting tax planning late and making hasty decisions

The detail working of mutual funds is complex and requires a lot of research on past performance, fund managers, and investment approach. There are several mutual fund schemes available in the market, ranging from high-earning funds to high-security funds. Give yourself sufficient time to analyze the options and complete tax planning because you cannot exit your investment for at least three years in case of an inaccurate choice.

2. Relying on short-term performance and returns

When analyzing past performance, look at a minimum period of five years. Furthermore, while returns are important, it is not the only deciding factor. You must determine if the fund philosophy matches your goals. Take the time to understand all the different factors before making your decision.

3. Investing only for tax savings

ELSS plans offer several tax advantages but these are still equity-oriented funds. Therefore, investing in these plans is risky though rewarding. You must consider the risk and return profile and not focus only on the tax benefits while making an investment decision.

4. Redeeming your holdings after the lock-in period

ELSS investments have a minimum lock-in period of three years. You must not immediately redeem your holdings at the end of this time. If the fund performance continues to be healthy, it is better to remain invested. It is recommended you have an investment horizon of five to seven years at the time of investing to maximize your returns.

5. Switching between funds every three years

You must never switch from one ELSS plan to another at the end of three years as a habit. This is often done when the other fund performs better than your plan. Before making the switch, analyze the reasons for the performance. If the fund continues to under perform even in a positive market, you may consider switching.

ELSS has several benefits. It not only offers better returns but provides tax benefits. However, accumulating too many investments in the product is cumbersome and makes portfolio management difficult in the longer period. It may result in over-diversification and monitoring becomes difficult. Gain a balance to maximize tax benefits while ensuring your portfolio is easy to manage and monitor.

Could You be Sitting on Lost Cash?

In the United States alone, there is approximately $32 billion of unclaimed assets that have been forgotten by their rightful owners, or in some cases, their owners aren’t even aware exist! That’s just the tip of the iceberg when it comes to lost cash that could be reclaimed, and whether you’re in dire straits, dealing with debt, or not, it has to be worth checking if any of this cash could rightfully be yours...

Check Out the Government Savings Bond Database

A good place to find lost cash is the federal government’s E Savings Bonds database, of which around $17 billion worth has not been claimed. These E Bonds were available between 1941 and 1980 as a safe, government-backed form of saving, If you were around back then and there’s any chance you could have bought bonds or had them gifted to you, it’s worth checking out.

Look Into Compensation

There are millions of people out there who have been injured or ill-treated and could be entitled to compensation ranging from a few hundred to millions of dollars. So, contacting a personal injury claim solicitors, employment lawyer, or whichever legal representative is most appropriate for your situation could result in you getting the lost cash you need. Obviously, this will only be appropriate for those of you who have actually had an issue that you could litigate against.

Check the NAUPA Website

The National Association of Unclaimed Property Administrators is a fantastic resource for those of you who may have once opened a bank account, perhaps a savings account for your kids, or an account grandma set up for the kids, that you somehow forgot to cash out. Check it out if you want to know if you have any money that is rightfully yours sitting doing nothing.

Go to the IRS

Perhaps, this is the idea that is most likely to bear fruit. If you go to the IRS website, you will be able to find all kinds of information about tax refunds that are available and how you can get them. There is a good chance that you’ll find some sort of refund that you’re eligible for and it’s your money, so go ahead and do it! Just click on the “Where’s My Refund?” enter some basic information, and you’re good to go. Good Luck!

Check Your Drawers

You might think that you can account for every single cent of cash you have, and maybe you can, but what about that gift card that your aunt gave you for Christmas or those gift certificates you won a few years back and never used? It’s always worth checking for gift cards that you haven’t used because, even if you don’t want to use them, you can sell them off at a slight discount to people who do, and since it’s estimated that $6.8 billion worth of gift cards go unredeemed each year, it has to be worth a try.

I hope this helps you finally get what you’re owed!

Freedom Financial Helps You Protect Yourself During the Equifax Hack

If you've spent any time online in the past week, you've probably already heard about the Equifax security breach that took place the week of September 8th. Equifax, a credit risk assessment company with access to the personal data of over 800 million consumers, experienced a cybercrime identity theft attack; this security breach gave criminals access to the full name, social security number, birth date, addresses, and in some cases drivers licenses, of an estimated 143 million Americans. There is a high likelihood that your credit information has been compromised- Freedom Financial is here with the steps you need to take to ensure that your sensitive information isn't used by criminals.

Check your credit

You may not know that the actual cyber attack on Equifax offices actually took place in early May- Equifax employees did not become aware of the issue until late July. This means that there's already a good chance that someone has been using your credit without your knowledge. Freedom Financial urges you to check your credit report as soon as possible, and to dispute any frequent items you see. The early you dispute these claims, the easier they will be to get resolved.

Freeze your credit.

After you check your credit and dispute any charges or items that you believe are fraudulent, Freedom Financial also advises you to freeze your credit account. Freezing your credit will give you a special PIN unique to you that anyone who attempts to open an account with your information will need. If you don't plan on opening any new accounts or making any major purchases in the near future, freezing your credit is a great way to ensure that your information is not remotely hackable.

Set up a 90 day fraud alert

A fraud alert is a temporary hold on your account that will require any company attempting to open an account in your name to first verify your identity. You can set a fraud alert on your account by calling one of the major credit monitoring agencies like TransUnion or Equifax and requesting a 90 day fraud alert be set on your account. Setting up a fraud alert might seem like a hassle, but it's another preventative measure that you can take to make sure your personal identity isn't being used for nefarious purposes.

Watch your taxes

Freedom Financial anticipates that a number of identity thieves may try to use consumers personal info to file a tax return this year in order to claim a refund that isn't theirs. If you get a notice after filing your taxes that says that your taxes have already been filed, this is a pretty good indicator that a thief has used your information, and you should report it immediately.

In order to protect yourself, try your hardest to file your taxes as early as possible this year to avoid the situation.

Consider Enrolling in TrustedID

TrustedID is a credit monitoring program by Equifax that “includes 3-Bureau credit monitoring of Equifax, Experian and TransUnion credit reports; copies of Equifax credit reports; the ability to lock and unlock Equifax credit reports; identity theft insurance; and Internet scanning for Social Security numbers.” In light of the hack, Equifax is opting to provide a year of free access to TrustedID to everyone.

Keep in mind that Equifax faced a bit of backlash when it introduced the free year of access because a clause on the sign-up seemingly required you to waive your right to sue the company for the hack. However, Freedom Financial has found that following complaints, the company added an opt-out feature which allows you to retain your right to sue the company by sending a letter. This is something to keep in mind should you be considering legal options.

If you've been affected by the hack, don't panic- take action to protect your credit today.

5 Tips for Balancing Business and Personal Finances

When you own a business, you become responsible for the management of both company and personal finances. In the early years, there’s a risk of overextending personal funds to successfully establish your business. It can be tempting to take home a small salary, borrow against your personal credit and work very long hours just to keep the business afloat. According to USA Today, around just 20% of businesses make it past their first year. If you’re lucky enough to be one of the 20% and your business begins to generate regular profits, you might need to resist the urge to lean on your business so that it can support the cost of your personal life. Dipping into financial reserves, that should really be left in your company account to cover future and unexpected business challenges is not a good idea. There are many ways of balancing the scales between business and personal finance needs and these are some of the most effective.

1. Keep saving

Whether just starting out, or with a fairly established business under your belt, it would be foolish to ever stop saving for those rainy days. In your personal life, you never know when you might need to cover unexpected bills for medical treatment, house renovations or car repairs. When it comes to your business, you may need to update equipment, move to a bigger office, make repairs to company buildings or raise staff pay to be in accordance with new wage requirements, for example. Even though taking out a business loan is always a valid option as a way of dealing with unforeseen expenses, it makes sense to have a savings fund to dip into when the need arises.

2. Maintain business and personal funds separate

It’s much easier and safer to keep business and personal funds completely separate. As well as improving the credibility of your business, this simple measure also protects you from becoming personally liable for any kind of problem that occurs as a result of your business in the future. You’ll need to organize your finances so that you have separate bank accounts, separate bill payments and separate taxes.

3. Spend less than what comes in

It requires a conscious, continual effort to keep both personal and business expenses below income. The gist of Parkinson’s Law is that however much you earn (or make), your expenses will increase to match the amount of money coming in. This means that the more we earn, the more we will spend; the more money our businesses make, the more expenses we’ll find to drain ourselves of that income.

The only solution is to actively keep expenditure in line, which can be a little more complicated when running a business; mainly because monthly income tends to be less consistent than that of a contracted employee. The key lies in being prepared and in knowing where you can make cutbacks each month to keep things in check should the need arise.

4. Pay bills automatically

By setting up automatic payments for both personal and business needs, you give yourself one less thing to worry about on a monthly basis. Administrative tasks can really drain the time you have for other more important work or time that you want to devote to family and friends. Automatic payments also remove the risk of having to cover the cost of late payment fees.

5. Get professional tax advice

Tax regulations are prone to change, which means it can be difficult to keep fully on top of all developments affecting your personal income and business taxes. Anyone managing their own business should seek out the professional advice and support of a tax advisor. Apart from helping you to keep your taxes in order, a tax advisor can also offer invaluable information of new tax savings opportunities, as and when they come into action. You’ll be able to find out what kind of deductions you can claim for home office equipment and services, employees against contractors and business expenses.

Small Business Should Employ These Strategies To Reduce Tax

Every small business wants to grow, but it can feel like the government’s policies are biting so hard into profits, that’s hardly worth all the effort. It should be clear for everyone, that tax evasion is wrong, and should anyone be caught doing it, they will be taken up by the law. However, smart tax strategies are totally legal. Small businesses can struggle when managing their finances against their larger competitors, and any kind of global slowdown will affect them more so than the large corporations. Being tax-wise is being wise in general, because, you shouldn’t be paying more than you have to. After all, you’re going to use the profits you make, to research and find better solutions to your products. You may also want to expand and hire more staff, but it can feel like you’re being punished for becoming a successful business. 

S-corporation status

You should make an s-election application on your LLC and have it ready for the new tax year, ready to be used in all your business ventures. However, you’ll be vouching for a level 1 corporate status, putting you in the lower bracket of taxes. It’s simple and affordable to file the proper paperwork. However, since you’re applying to the government, via the IRS, it may take some time. They will need large amounts of information and require the relevant payroll details that are taken out of the company. You must also take some payroll for yourself if you want to make the election. You should use the right tax attorney who cares for your needs, so you can apply for your business to be seen as a corporation. The services of such a legal instrument are needed, especially when dealing with the IRS, so you are protecting your business from unforeseen errors, however innocent they may be.

Set yourself a payroll

Newly elected owners of an s-corporations must also complete their payroll forms before the tax year is over in order to qualify. Don’t wait until the end of the fourth quarter because the IRS will need prior warning to your application. A late payroll confirmation will potentially trigger an IRS audit, which will take precedence over your s-election. Valuable time will be lost, and a somewhat intrusive inspection of all your legalities will be done by the government. This is to stop many business owners from avoiding tax, while also paying themselves a salary from their business. In a sense, some people use their own business as a cushion to avoid paying the proper business owner’s tax. By setting yourself a payroll, you clearly indicate that you personally profit from your business, therefore the correct tax rate can be set after a successful s-election application. 

Pay less by paying more

If a spouse works for you, you should be putting them on the payroll too. The more money you technically ‘lose’ by paying out a salary from the profits you make, the less corporation tax you will pay. Although you may be applying to go onto a level 1 status of the tax bracket, this is subject to change, hence the stringent IRS rules. You should also put your children on the payroll for any service they provide your business. This way, the money stays within the family, helping you with household bills and general life expenditures. Yet, you will pay less tax, because your spouse and children, will be counted as employees.

A vehicle purchase

Purchasing a vehicle, under business expenses will reduce the tax you’ll pay for the year. A business with a truck, or SUV, should be over a certain threshold, subject to your state or regional laws. If you’re in need of a new vehicle, buying a car, under the pretence of a business vehicle, the purchasing price will factor in a deduction. Discuss this option with your tax advisor, or business consultant to get a wider picture of your options. The vehicle will need to be shown with visual evidence and documentation. The vehicle should have stickers and decals of your business to make it look professional and more convincing when proving the evidence to the tax man. 

Keep records

Keep a record of all your expenses and the amount of tax you paid per year. Should you need to reconsider a spending strategy, it’s crucial to make changes based on evidence of your own business workings. Make informed decisions so you can have the best year-end tactic to implement. Bookkeeping is a great way to keep tabs on all spending and studying where you’re overspending.

It’s perfectly sound, to pay as little tax as you are required by the law. Small businesses need all the help they can get, and sometimes, only you can provide that help to your business. Do not veer away from proper legal practice. There’s a fine line between tax avoidance and tax evasion. Morally speaking, make sure any money you save from paying low taxes, goes back into your business, creating more wealth and providing the economy with more jobs.

GST Return – How to file it properly

GST is going to be live soon and all traders, manufacturers, service providers are worrying about the invoicing, accounting changes. GST is a big reform and will require to change the way of working and managing the business. 

The most horrifying provision in GST is the number of GST returns a person has to file. A registered person has to file 12 monthly returns and also an annual return. Besides this the monthly return has 3 statements having different due dates. A person under composition return has to file quarterly return and an annual return.

The three statements in a monthly return are

1. Details of outward supplies

2. Details of Inward supplies

3. The return statement

Details of Outwards Supplies

This is the statement which contains details of all the sales made by the person. Due date for filing this statement is 10th of the next month. Details are to be provided in following manner:

1. Invoice wise details of sales made to registered persons whether intra state sales or interstate sales.

2. State wise details of sales made to unregistered person in inter state sales. Although consolidated information is to be furnished.

3. For intra state sales made to unregistered persons and general public, consolidated details are to be given. The sales is to be bifurcated according to different GST rates applicable.

4. Invoice wise details of inter-State supplies with invoice value more than two and a half lakh rupees made to unregistered persons

The form for filing details of outward supplies is GSTR-1. The details filed by a registered person in this form is make available to recipient person in Form GSTR-2A. Then the recipient person can modify, delete or add the details. Such changes will again make available to the seller in form GSTR-1A. If the seller accepts such changes then his GSTR-1 will amend accordingly.

Details of Inward Supplies

This is a statement containing details of all purchases made by a registered person. Due date for fling this statement is 15th day from the end of the month. 

The information from the details of outward supplies is made available to respective registered persons from the 11th day from the end of month in Form GSTR-2A. If the recipient founds the details to be correct, then he has to just accept the details. If there is some mistake or an addition or deletion is required then he can do in such statement. Such changes are then made available to seller as discussed earlier.

This form is a major change in manner of filing indirect tax return. In current regime of taxation, every person has to file his sales and purchase statement and matching of sales and purchases is made thereafter. But in GST if the seller has not filed details of sales and also not accepted changes, then the purchase can not claim input tax credit at that point.

The return statement

This is the statement for filing the main return part and to be filed in Form GSTR-3. Due date for fling this statement is 20th of the succeeding month. 

Part A of GSTR-3 will contain information furnished through returns in Form GSTR-1, GSTR-2, electronic cash ledger, electronic credit ledger and details based on other liabilities of preceding tax periods.

Liability of tax, interest, penalty or any other amount payable is to be paid by debiting the electronic cash ledger or electronic credit ledger and these details is to be included in Part B of Form GSTR-3.

Pre requisites for filing return

GST return can not be filed unless you make payment of all dues other than which are pending in the appellate tribunal or court. Also GST return for a month/quarter can be filed only after filing of all previous month/quarter’s return. For eg: You can file return for month of August 2017 only after filing of return of July 2017.

Annual Return

The registered persons are also required to file an annual return in form GSTR-9. For persons registered under composition scheme the form for annual return is form GSTR-9A. Person who are required to get their accounts audited under GST are required to file a copy of audited accounts and a reconciliation statement along with annual return.

Late fees for delay in Filing GST return

Late fee of Rs. 100 per day is liable to be paid if any monthly/quarterly return is not submitted within due date. Maximum penalty would be of Rs. 5,000.

In case of Annual return penalty is payable at Rs. 100 per day. Maximum penalty in such case is 0.25% of the turnover in the state or union territory.

Revision of GST Return

If the taxable person finds any omission or incorrect particulars he can rectify it in the month/quarter’s return in which such error is noticed. The rectification can not be done in following cases

1.Error is found as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities.

2.After any of the following dates

(a) due date of return of month of September or quarter July to September of following year

(b) actual date of furnishing annual return of relevant year

How To Responsibly Plan And Write Your Last Will And Testament

No one wants to think about his or her death, but we all know that it’s going to happen one day.You would be so lucky, to die of natural causes after a long fulfilled life surrounded by parents, but that possibility is essentially out of our hands. You may die at the hands of another such as a car crash, so you can't afford to not think about your own death and start preparing. If you want to be protected and also take care of loved ones once you’re gone, you must start thinking of writing your will. It’s a way for you to sort out your end-of-life financial requirements and gifts, so what you have, is distributed to those who you cared for the most. Avoid common will writing mistakes and make sure your possessions and money are correctly handled after the funeral ceremony is over.

The process

There are many things you need to consider when forming a watertight estate plan. It’s a good idea to sit down with a legal expert such as a probate litigation attorney so you can avoid any estate dispute from happening. Every state has different rules and what makes a will legally binding with regards to who can write and legitimize it. It’s important you use the legal papers of the property you intend to pass one, you must know the legal authority over it, detailed in the paperwork such as the owner, date bought, what land it’s on, what the estimated price is and who much of it can be taxed, etc. Respect the local government, and inform them of your intentions before writing the will so that any surprises can be dealt with, with the help of the attorney. 

Include your services

Most of your large assets such as a home, bank account, cars, real estate, businesses will automatically need to have their transition to someone else’s ownership, automatically involve the bank and insurance companies. Savings accounts and life insurance policies have a beneficiary attached to them so as long as your assets are assigned to the people whom you wish to inherit them, your obligations won’t have been broken upon your departure. Consider establishing a trust, where your sentimental belongings fall into state inheritance laws, so the tax burden is less on your loved ones. These preventative measures are put in place so that they prevent fighting among family members about what you intended as it leaves nothing up to interpretation.

Witnesses 

It’s a good idea to have backup witnessed in case those attending the finalizing of the will may die suddenly or move abroad where they’re unable to attend the reading. You’ll need to think about who is going to be there when you sign the will and make it official. The people that know your will’s contents must be in agreement that your testament must be carried out to the letter, after your death. Trust plays a huge part in this process because you will be putting a burden on them, to go through with legal issues and staying true to any heirs.

Legal Assistance: Top 3 Reasons You Might Have To Call The Experts

All business owners will become involved in legal battles at some point. There is no getting away from the fact that you will have to pay experts for assistance. However, knowing the threats you face ahead of time could make the process easier. With that in mind, there are three common instances mentioned in this article. The chances are you will encounter them somewhere along the line. So, reading about them now and increasing your understanding will only benefit your success in the future. If you prepare for these situations in advice, you will find it much easier to weather the storm. 

Employment issues 

You never know when an employee will do something wrong and you have to remove them from your business. Maybe they turned up late over and over again? Perhaps they did something that damaged your operation? Either way, you will have to get in touch with lawyers who focus on that niche. Court battles over employment disputes can take a long time and cost a lot of money. You still need to concentrate on running your company. So, you will need specialists in your corner fighting the battle on your behalf. Just make sure you read as many testimonials as possible before selecting the lawyer. You need to ensure you’re working with someone who has a good track record. 

Tax investigations

The IRS can become a real pain if you make any honest mistakes when reporting your income. That can happen to people who don’t have much experience in the business world. An investigation could disrupt your operation and leave you unable to complete orders. Considering that, you’ll want the best legal assistance available. So, make sure you factor the cost of lawyer fees into your annual budget. Failure to do that could mean you don’t have enough cash to get the best representation. That could result in you getting the raw end of the deal and having to pay lots of fines. Nobody wants that to happen.

Patent disputes 

If your company designs and sells original products, you must apply for patent protection. In theory, that should stop other businesses from copying your ideas. However, it doesn’t mean they won’t try somewhere along the line. When that happens, you need a lawyer who can take them to court and present your case. With a bit of luck, their assistance would mean the other brand has to cease and desist. You might even end up with monetary compensation from the guilty party. Still, that is never going to happen if you don’t have the right expert working in your corner. 

Now you know about the three most common reasons you might have to pay for legal assistance, you should find yourself in a better position to plan. At the end of the day, most law firms will offer payment plans if you don’t have enough cash in your accounts. Still, it’s better to have the money there and not use it. So, pay attention to the points made on this page before creating your budget for the next twelve months.

Why Overseas Markets Will Make You Money

If you are looking to create wealth, protect assets or add real value to your retirement income the you should be seriously considering investment overseas as a viable option for increasing your financial portfolio.

There are a number of reasons an investment abroad is so attractive at the moment, here are just three of them for you to consider.

Diversification

Markets can and do change and so any smart investor will ensure that they haven’t got all of their money tied up in any one market or asset just in case the worse really does happen.

Real estate is still one of the safest investment options available on the market but just as you would vary your investment portfolio for stocks and shares, to protect your wealth and provide options for generating a lot more you are better of varying the markets in which you invest in property too. Otherwise your real estate investment is at the mercy of a fluctuating market and interest rates, with no protection if that market collapses. If you want to diversify with some degree of certainty you need to look outside of the US for real estate investment opportunities. 

When buying abroad it’s important to take the long-term view. Often to get the best deals you will want to look at countries that are still developing their infrastructure so that you can buy real estate at a low price and enjoy the benefits as the value of the area grows through regeneration. Although this significantly increases your chances of a return it also increases the time in which that return might be made. 

If you can’t wait for your investment to mature and want to start seeing a return immediately then you could consider buying property to rent out. Buying a condo for rent in an already popular and cosmopolitan city such as Singapore is a very different prospect than buying to make money on the resale in a country like Grenada. If you choose the right area for a buy to let you could make a significant annual income on the rent alone. If both of these idea appeal why not mix your portfolio up - you will see the dividends in the long-run as you can insulate yourself to some degree from local and global economic fluctuations.

If you are going to diversify in order to protect and grow your assets then you will need to have your finger on the pulse of changing foreign markets, political stability and economic environments and be ready to snap up a bargain as soon as the time is right. Buying overseas doesn’t come without its challenges. You have different legal and economic structures to navigate on top of any language barriers and currency exchange. Employing a really good real estate attorney that has considerable international investment experience is a must if you want to get this right first time.

Investing for your retirement

Saving for your retirement can be scary as you are unsure where to place your money for the best return. Everyone should be making some provision for their retirement and there is no substitute for a high interest savings account. However if you can afford a little more investment in your future, adding international real estate to your retirement portfolio can be a very positive step to financial freedom when you are older.

This is because if you invest right you can add thousands of dollars in a matter of months to your retirement pot without doing a thing. If you buy a property in a country like Colombia, where real estate is still relatively cheap but that has vast regeneration plans in the pipeline you might see that property increase in value by 50% without you spending another dime of your own cash. No matter how high the interest rate is on your savings account it can’t match this opportunity. However this is just an opportunity and nothing is guaranteed in investment. By its very nature it is a gamble, a risk. However with the right homework and expert advice it can be a calculated risk that will not only protect your retirement nest egg but help it to substantially grow. 

Retirement income

Increasing property value is only one way international investment can help you build your retirement portfolio. As previously discussed you can choose to buy real estate not for the resale value but for the income it could provide from tourists and businesses looking to relocate.

Rental income in popular tourist destinations such as Belize, Portugal and Italy can be substantial if you find a property that matches the needs of its tourists. If you are going to take this punt then you need to know why people vacation in those areas and then look for property that offer those facilities. You might want to do some research into popular vacation destinations and match this to those that have real estate markets that still haven’t caught up with this popularity. Or better still buy somewhere off the beaten track and help make it popular again with tourists - overseas investment can do wonders for a city’s infrastructure development plans! Buying to let also gives you the option to spend part of your time there in retirement so whilst you are looking for a destination that you think could make you a decent monthly income you should also consider if it is somewhere you would like to spend time in - after all why not retire in style!

Tax protection

Investing in real estate overseas can also provide some tax benefits depending on how you are going to use the property. Most property investments are not intended to be lived in by the investor but if you do plan to live in the home then you can deduct mortgage interest and property taxes. The most tax efficient however is if you plan to use the property as a rental income. Then you can deduct as above but you can also deduct property and liability insurance, repair and maintenance costs and anything else related to maintaining the property.

Tackling Professional Paperwork

There are some things that we love doing such as playing with our kids, walking the dog on a lovely spring day and treating ourselves to a well-earned holiday. Then there are tasks that we prefer to put off doing such as mowing the lawn, ironing piles of laundry and sitting down at the kitchen table to fill in yearly tax returns.

Writing A Will

While we don’t like to think about how our family would cope if the worst happened writing your will doesn’t need to be a morbid task. Most adults over the age of 21 should have a basic will that indicates their final wishes such as any funeral requests, personal bequests and who they’d like to assume control over any outstanding affairs. A will can also help to snuff out any legal disputes before they’ve risen their ugly heads, as well as ensuring that your spouse, children or pets are cared for once you’re gone. Writing a will also means your family avoiding a hefty inheritance tax bill as well as being able to ease the pain of having to make difficult financial decisions at an emotional time.

Personal Injury Claim

You’re walking back to the office having made yourself a coffee when all of a sudden you feel yourself falling on the wet floor. Despite a clear ceiling leak no one’s bothered to call a builder or even put up a wet floor sign. A trip to the ER reveals second-degree burns, a broken leg and a severely sprained wrist all of which require immediate medical attention. While you may already possess health insurance, not all firms payout on workplace accidents which is why you'll often do better consulting a personal injury services specialist who’ll be able to advise if you have a claim or not. Corporations have a duty of care towards their employees, and if your injury lawyer can show evidence of negligence, then you may be entitled to a substantial amount of compensation. Your attorney can also assist with your impact statement, a letter that details how your life has changed since the accident occurred.

Filling Out Your Taxes

There’s a common saying which you may have heard that states there’s only two things you can be certain of in this life and that’s death and taxes! However, it isn’t as painful as people like to make out and if you’ve got the right information to hand it’s a relatively straightforward process. Firstly, you’ll need a pad of paper, pen and calculator to work out any sums as well as your laptop to check anything legal as well as your previous tax return. It’s also worth having your blank Form 1040 beside you to look through the sections before starting. Remember it needs to have been sent off by 15th April, unless it’s a weekend otherwise you could incur a late payment fine. To fill out the form you need to have identification i.e. Driver's license or passport to hand, your residency status and all occupants social security details, any wage statements and bank correspondence plus your bank details.

4 Basic Personal Finance Facts People Constantly Get Wrong

Very often, the so-called “universal truths” that people believe about personal finance are completely wrong. Myths circulate, grow, and persist because people have the facts wrong and don’t bother finding out the real truth.

Here are four facts that people always seem to get wrong. Inaccurate assumptions get repeated year after year and are even passed down through the generations. It’s time to put a stop to the nonsense, right now.

1. You Don’t Have to Be Worried About Moving Into a Higher Tax Bracket

“Be careful- that’ll put you into a higher tax bracket!”. There’s a particularly annoying and persistent myth out there and it has to do with what happens when you earn more income, thereby pushing you into a higher tax bracket.

It’s true: we have what’s called a progressive tax system, where higher incomes are taxed at higher rates. But what most people don’t get is that not all of your income is taxed at the same rate. Only the portion of your income that puts you into a higher bracket is taxed at the higher rate. The rest is taxed as it always was, in the lower brackets.

2. Individual Investors Rarely Clean Up on the Stock Market

In general, a do-it-yourself approach to life’s tasks can save you a lot of money and turn you into a very resourceful person. Usually, all it takes is a little know-how and a lot of energy.

However, one area where this philosophy doesn’t apply is investing in stocks. When it comes to the stock market, a little bit of knowledge is actually worse than no knowledge at all. That’s because people with no knowledge of the stock market will either consult a financial advisor or they’ll invest in no-brainer low-cost index mutual funds.

But the person with just a little knowledge is in danger of thinking he or she can DIY it with stocks and get rich. Not usually the case. There’s a reason why financial professionals have to complete training courses in trading and/or get certified to do their jobs. This is not easy stuff and the little guy who goes in with just a little knowledge can make a lot of bad decisions.

3. Getting as Huge Income Tax Refund is NOT Reason to Celebrate

Every year at tax time, people get excited about their tax refunds. The bigger the better, they think, and even go onto social media to brag about how excited they are and how much they’re getting back.

But they shouldn’t be excited. Rather, they should be embarrassed for not understanding what a tax refund really is. It’s really just your own money that you’ve allowed the U.S. Department of Treasury to hold onto. Meanwhile, you may be struggling to make ends meet. Call it what it is: a loan to the federal government… a tax-free loan!

This misconception about tax refunds is so rampant that retailers have noticed. Starting around February, they start aiming their marketing campaigns at these misguided taxpayers, hoping they’ll spend their “windfalls” in their stores. Don’t fall for this one and have your withholding adjusted so not too much is taken out next year.

4. You Need to Start Saving When You’re in Your 20’s

No joke- the power of compounded interest makes such a difference that the money you sock away in your 20’s can bring more value than money saved at any other time in your life.

In your 20’s, you have so many investment years ahead of you that even just a tiny bit invested during that decade can make a huge difference by the time you’re 65.

Finally, the key to mastering personal finance is learning the facts and avoiding hearsay. Learning the four facts you’ve just read about is a great way to start making your own smart decisions.

Simple Steps For Stabler Finances

Bad financial management is one of the biggest sources of stress in countless people’s lives. When you have a loose grip on your money, it can strain your time, your disposable income and most of all your nerves! If money issues are constantly creeping up on you and causing you stress, here are some simple ways to regain control.

Have Emergency Savings

Although no one wants to have to tap into an emergency cash reserve, life isn’t a bed of roses, and when chance pulls a fast one, having this cash cushion to fall back on can be exceedingly useful. If you were put out of work tomorrow, or your washing machine decided to flood your house, would you be able to cover the gap in your finances quickly and easily? If the answer is no, then it’s time to start an emergency fund and have a plan for building it. Most financial advisors say that you should have enough to cover your living expenses for at least three months stashed away in a separate account.

Start Investing Now!

I know, this may not sound like the simplest way to help your cash flow. However, investing is now more accessible than it’s ever been before, and getting an early start can pay off massively in the future. The sooner you start, the more time you’ll have to watch your investments grow, the more flexibility you’ll have for taking risks, and the more you’ll learn about any given market. Do a little research, and gauge how easy it would be to learn how to do binary options trading or get a good handle on another accessible form of investing. You may be pleasantly surprised by what you find!

Dodge “Laziness Tax”

You may not know it, but we’re all being taxed for our laziness. You could be paying significantly less for things such as car insurance, electricity, internet service and so on simply by shopping around for longer. Even calling up your current supplier and telling them you’re not happy with the deal you’re receiving can be enough for them to offer you something much cheaper. These companies know that the bulk of their customers won’t bother pushing for a better deal, so if you’re in that small demographic who drives a hard bargain, you can bank some incredible savings. Aside from that, using comparison sites when you’re sourcing something new can make a big difference.

Ditch Your Cards

If you have a store card, credit card and backup credit card, you’re in big trouble. Firstly, you’re opening yourself up to a lot of fees and charges. Second, you’ll have easy access to a lot of credit which you may not necessarily need. Unless you’ve got airtight self-discipline, this can easily lead to snowballing debt. Take a good look at the cards you currently own, try to rationalize each one, and then cancel the ones you really don’t need. This simple change can do a lot to keep your head above water in the future.

Property Valuation: The DIY Route

Although some are going to be more accurate than others, any kind of valuation of a property is an estimate. Even when you get a professional appraisal, it’s going to be nothing more than an opinion, albeit an educated one. What I’m getting at here is that you shouldn’t be too intimidated by the prospect of estimating the market price of your own property. You may not have the education and experience of a home inspector, but if you know what to look for, you can still come up with a pretty close estimate of the value of your home. Here’s a guide to this DIY route.

Dig Out a Recent Property Tax Bill

Your most recent bill will list the tax-assessed value of your home. After noting this down, you should look for an assessment rate. This varies from state to state, but generally falls somewhere between 80 and 90 percent. If you weren’t aware, property taxes are a given percentage of the tax assessed value, and this value is a given percentage of the fair market value. When you work out both of these, you’ll be able to calculate the fair market value. Let’s say, for example, that your property’s tax assessed value is $160,000. If your state’s assessment rate is 80%, then your home’s fair market value will be $200,000, as $160,000 is 80% of $200,000. Of course, there are many more factors that will determine the market price when you actually come to find a home investor. However, this is one of the most fool-proof ways to get a ball-park figure.

Look at a Recent Sales in the Neighbourhood

By “recent”, I mean real estate recent. Take a note of any nearby sales that have happened in the past year, and whether these properties were similar to yours. Select a few that are the closest matches, then write down their addresses and take them to your county assesor’s office. Ask the office how much each of these homes sold for. You may feel a little out of line doing this, but this information is in the public domain, and you have every right to access it. You can always go online, but this information may not be as comprehensive, as many municipalities manage to lag behind a few months when updating their digital records. Still, the date of sale will be listed for each property, so you’ll know whether or not it’s of any value to you. After looking at a few records, you’ll be able to come up with a rough price for your home, adding or subtracting value depending on any renovations or difference in size.

Use an Online Calculator

There are now countless real estate websites out there which contain a free assessor tool. While there’s a fair amount of scatter between the prices they’ll come up with, once you use enough of them it will be fairly easy to find a rough median. These online calculators will draw on information from a wide range of sources, including public databases and the company’s own private records. With these, you’ll have to answer quite a few questions about your home, so it may be worth taking some notes beforehand. Things like the home’s square footage, the number of bedrooms and bathrooms, and the date of construction will typically come into play. After entering information in all its fields, the calculator will come back with an estimated fair market value. Some of these programs will also list similar properties in your area, along with their current or most recent asking price. Be aware that they operate on the assumption that all those other properties have already calculated their own fair market value using the same tool in order to set their asking prices.

Location, Location, Location!

If you’ve been pulling up blogs on real estate for a while, you’re probably sick to death of reading this old saying. Still, there’s a reason why it keeps coming up; it’s true! The location of any given property is going to have a massive impact on the fair value of your home, and it’s important to consider when you’re adjusting the estimates you get. If your home is in a quiet, residential area, it’s always going to score more points with buyers than one in a high-traffic commercial street. There are a range of things that go into this old adage of “location, location, location”, but there are only two main ones you need to concern yourself with. First of all, how close is the property to public transport links? People who have to commute regularly will go much higher for a property that’s close to their train line, and therefore more convenient for their commute, than a buyer who rarely uses public transport. The next big thing to think about is the concentration of schools in the area. Education is a major concern for any parent, and if the place is big enough for a family, the selection of local schools is going to be a big selling point.

Finally, Consider Going to an Agent

If you’re certain you want to sell your home, but you’re not prepared to fork out for a professional property appraiser, then you may just want to cut to the chase and ask a real estate agent for their input. Estate agents will have access to all kinds of private industry data that can be used for honing in on a more accurate estimate for your home. Just make sure you do your research, and find an agent that’s got a good, long-running reputation. These people get paid on commission, and some more inexperienced ones may go over a reasonable mark, meaning that your sale will be dragged out. Furthermore, only approach an agent if you’re dead set on selling. Again, because they get paid by commission, it’s highly unethical to ask for this kind of information if they don’t have some view to a paycheque!

If you were curious about the market value of your home, I hope this guide has been a big help!

5 Financial Resolutions for 2017

Is it time to get your finances in order? Start the New Year on a positive note with these five financial resolutions from Portico London estate agents.

1. Consider increasing your mortgage payments

With interest rates at record lows, now is the perfect time to reduce the amount you owe on your mortgage. If you can afford to make over payments - even if it’s an extra £50 a month - you’ll pay off your mortgage quicker and reduce your overall interest payments. This could potentially save you thousands in the long-run.

2. Beat the buy-to-let tax changes

This year, buy-to-let landlords will no longer be able to deduct the cost of their mortgage interest from their rental income when they calculate a profit on which to pay tax.

While these tax changes will make life a little harder for landlords, it’s important to note that landlords who are basic rate tax payers or those without a mortgage will not be affected.

Furthermore, there are ways in which landlords can cut their interest costs - such as re-mortgaging. Buy-to-let mortgage interest rates have dropped dramatically in the last few years, so you’re likely to be able to get a much better deal in today’s market.

As London property prices have increased at such a rate in recent years, another money-saver would be to get your rental property re-valued. This will ensure your lender recalculates your LTV, and a lower LTV translates into a better interest rate and a wider choice of lenders.

3. Invest smartly

If you’re considering investing your property in property this year, make sure you buy in a hotspot area that is undergoing redevelopment or infrastructure investment. That way, even in a weak market it’s likely you will profit from strong rental yields and capital appreciation. We predict that areas in the outer Zones are likely to experience the best property price growth in 2017.

4. Create a new income stream

If you have a vacant property or room within a property, Airbnb can be a great way of generating a passive income. Short-term rentals are also a good idea if you’re a landlord with a gap between tenancies, or if you’re away a lot and your home is often empty.

Hosting on Airbnb does take time and effort, so we recommend using an Airbnb management service that provides a range of host services such as cleaning, laundry, guest communication and allowing for round the clock check-ins. That way you can just sit back and watch the money roll in!

5. Save!

Are you currently saving for a deposit, a car or a holiday? If the answer is yes, it’s a smart idea to make a saving plan to ensure you reach your goal.

Firstly, take a look at your monthly budget and then subtract your necessary expenses like rent or mortgage repayments, food, travel and household bills. This will enable you to assess how much you can save each month - and where you can make cutbacks.

3 Financial Mistakes Too Many Contractors Are Making

Take it from a professional blogger, contractors and freelancers can be an odd bunch! While more conventional entrepreneurs generally have a rich history of experience in managerial positions, and an intimate understanding of what makes a business tick, a lot of contractors and freelancers simply start with a skill, and a drive to succeed. While this can get you some of the way towards success, you’re going to run into some massive problems if you make these common financial mistakes…

First of all, being too blasé about the accuracy of the financial information that you’re getting. Talk to any accountant specializing in contractors, and they’ll have had countless times where they’ve gone through a contractor’s books and statements, and had to mark various figures which weren’t correct. They’ve probably also had a lot of clients that knew there were discrepancies, but thought they were in the right area and took that as an excuse not to worry about it. If there’s one thing in your financial records which you certainly should be worrying about, then it’s inaccuracies in your books! This kind of slip-up can stem from a number of different areas. Your take-home expenses may not match your revenue figures, and depreciation expenses may not be entered often enough. Revenue, materials and direct labour can also slip through the net.

Next, taking care of every little facet of your finances yourself. While this is certainly understandable, it’s not something I can condone if you want your books to remain as consistent and manageable as possible. You have an entrepreneur’s mindset, and as such you’ll probably want to stay as independent as possible in everything to do with your business. However, an extra pair of eyes can be extremely useful for lot of things, and managing your finances is certainly one of them. If you don’t run everything through an accountant, you could end up missing out on some very substantial tax-deductible expenses, or even worse unknowingly commit a crime! Look for some firms such as Taxup accountants, and find a service that will help you steer clear of these mishaps.

Finally, failing to compare your current financials to your previous budgets and periods. It may be time to take out your latest financial spreadsheet and consider whether or not it has enough columns. If you don’t have a ‘percentage of sales’ column, a prior-year comparison or a comparison to budget, then you’re never going to have financial records that are quite what they should be. Although the present is obviously the most pressing issue or your business, a keen understanding of your past business is integral for success in the near future! You need to be able to see whether your business is getting better or worse, and the causes behind this trend. Are your sales going up or down compared to previous years? Are your overhead expenses fluctuating often? These are the kinds of questions you need to be asking to get a good handle on your business’s finances; past, present and future.

Uni Education: A Necessity Priced Like a Luxury?

A university degree is widely considered a necessity these days if one is to hope to make a decent living. Yet increasingly higher education is becoming a luxury many people simply cannot afford. The jump in tuition fees over the past few years – and talk of further increases in the years to come – have made funding a real problem for many. Although the situation is not yet as severe in the UK as it is in the US it is significant nevertheless. Recent budgetary changes may have only exacerbated the problem. But it’s not all bad news.

The lament of the “working poor”

The recent announcement of decisions to cut tax credits was quite a blow for the working poor. In London alone, the number of employed people who fall below the poverty line has risen by 70 percent. In October 2015 Chancellor George Osborne announced plans to take £1,300 a year or £108.33 a month – that’s a little over £25 a week – away from low-income families. A 37-year-old single working mum named Maria Roberts, writing in the Telegraph, says, “…a mere £25 is what Osborne might spend on a single bottle of wine. But when you are strapped for cash, like I am, £25 is equivalent to a week’s worth of vegetables, milk and eggs.” Ms. Roberts worries that despite his high marks and scholarship to a top independent school, her 17-year-old son won’t be able to attend university because it is beyond their means. “University,” she says, “is a luxury we simply cannot afford… and I need him to start contributing to the household bills.” She laments that social mobility is becoming out of reach for her family.

Class wars: bad news and good

The UK has a long way to go before becoming a truly pluralist and tolerant society. Class wars still exist, though arguably we’ve traded older forms of elitism for newer ones. Sociology professor Mike Savage has referred to the problem as the “class ceiling”, equivalent to the “glass ceiling” that women in the workforce have been battling for decades. And indeed, studies and reports on social mobility in the UK seem to offer some fairly discouraging news, which can basically be summed up by the observation that one still has a much better chance of succeeding if one was born into privilege. Universities are very much a part of this narrative. Analysis from a 2013 BBC “Great British Class Survey”, in which Professor Savage participated, suggested that those who graduate from a very few elite universities earn substantially more than those who graduate from other top-tier “Russell Group” universities. (Study results were published online under BBC/Science on 3 April 2013.) Those born to privilege are generally more likely to attend these elite universities and go on to enter elite professions, passing the traditions down to the next generation. But there’s more to this story. Greater social mobility would go a long way towards shattering the “class ceiling”, and there may be some encouraging news on that front. To begin with, there are flaws in some of the older studies from the early 2000s that emphasised Britain’s relatively low social mobility, according to experts such as John Goldthorpe, a University of Oxford scholar of the issue. Professor Goldthorpe says one of the problems lies in poor data sets used in most studies, and analysis that conflates absolute and relative changes. That’s not to say we should stop worrying about poverty, social inequality or stagnant social mobility. And the very real experiences of struggling single mums or uni students can’t be dismissed. At the risk of stating the painfully obvious, overall one is still better off if born into a world of wealth and privilege. But the larger picture is more complex than most of the studies, and certainly most of the political rhetoric, would have us believe. And as new generations and more innovative technology emerge, there’s good reason to believe there will be new routes to success – including paths to higher education – that are reachable even for those in less privileged circumstances.

Sometimes you have to run away from home to find yourself.

Meanwhile, though, there is the matter of funding that still-necessary university education, and this can be a huge source of stress for prospective uni students and their parents. Even though tuition loans and maintenance loans are available for those who qualify, they are often not enough to cover all expenses. (Moreover the prospect of starting out one’s working life with a heavy load of debt – even if all of it doesn’t have to be paid back – is hardly a cheery one.) Money to fill in the gaps has to come from somewhere, and for many uni students life is a continual struggle to make up for the shortfall. But some students are finding creative solutions to these problems – and they’re doing it by running away from home, in a manner of speaking. They are choosing to live and/or study in another country, in some cases saving thousands of pounds on tuition and accommodation. Several European countries are offering very cheap or even free tuition; Germany, for instance, has abandoned its university tuition fees for German and international students alike. Although language and cultural barriers might pose a problem for some students, those who can overcome these obstacles may find the experience to be very rewarding on many levels. As long as university education remains a necessity that is, under conventional terms anyway, priced like a luxury, young people will continue to seek out creative alternatives. It’s encouraging to know that there is more than one way to get the education and earn the credentials needed to give one a fighting chance at a successful and productive life.