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YOUR 10 BIGGEST FINANCIAL MISTAKES...... AND HOW TO CORRECT THEM

Mistake No. 1

    25 YEAR MORTGAGE: why? You pay $540,000 for each $200,000 of mortgage at 10% interest.

    CORRECTION: get a 15 year mortgage and increase you payments by only 18%.

    RESULT: You pay $382,240 for each $200,000 of mortgage. You save $154,760.

Mistake No. 2

    BUYING WHOLE LIFE INSURANCE POLICIES: why? The most expensive type of life insurance.

    CORRECTION: Buy level premium term insurance.

    RESULTS: Save up to 70% on premiums.

Mistake No. 3

    BUYING ENDOWMENT INSURANCE AS AN INVESTMENT: why? Poor investment returns due to high charges and poor tax efficiency.

    CORRECTION: Keep life insurance seperate from savings and investments.

    Results: Save on life insurance premiums and improve returns.

Mistake No. 4

    BUYING NEW CARS: why? Car's depreciate 30% to 50% in the first two years.

    CORRECTION: Buy a 2-3 year old car. Result: Save thousends of dollars.

Mistake No. 5

    NO RETIREMENT PLANNING: why? Over reliance on government pension.

    CORRECTION: Join your company scheme after a thorough check. Or set up a private pension scheme after taking advise.

    RESULT: Because pensions have more tax advantages than any other investment, the government is subsidizing your retirement. Contributions are tax deductible and investment profits are free of tax.

Mistake No. 6

    PAYING ALLOWANCES TO CHILDREN FROM AFTER TAX INCOME: why? Allowances are taxed at the parents tax rate.

    CORRECTION: Pay children wages from your small business, subject to hours and age limits.

    RESULT: Save up to 40% of every $2,000 of allowances

Mistake No. 7

    NON DEDUCTIBLE COMPUTER AND CAR: Why? Its an expense. Used in a small business,it can be deducted.

    CORRECTION: Depreciate within the small business.

    RESULT: Assets for business are deductible over time.

Mistake No. 8

    BUYING INDERVIDUAL SHARES, GILTS, PRECIOUS METALS OR COMMODITIES: why? Risky.

    CORRECTION: Invest in equities or gilts through Unit Trusts to ensure spread of risk.

    RESULT: Lower risk investments and ability to switch between cash equities or gilts to match economic cycle. Benifit from professional management.

Mistake No. 9

    NO ACCESSIBLE CASH: why? Urgent cash requirements can interrupt investment or require expensive borrowing against investments.

    CORRECTION: Build up cash reserve of 3 months income in a TESSA or building society.

    RESULT: Avoid forced liquidation of investments or higher interest loans.

Mistake No. 10

    SURPLUS SAVINGS IN BUILDING SOCIETY: why? Low return.

    CORRECTION: Beyond 3 month's cash reserve, invest additional funds according to Flexible Investment Strategy. RESULT: Gain reliable long term returns on your funds.