Investment options for the self-employed

As a self-employed person, finding a suitable option for a financial pension is indispensable. Government and corporate funds offer a wealth of choice. Here are some other investment options you can consider.

Stocks are the star of the market

This security is the best known in the market. Blue chips are suitable as a beginner-entry and long-term investment option.

Stocks also offer dividends. This is distributed annually. Stocks could be used to generate a passive additional income. Careful adherence to principles and strategies can minimise risk and generate profits. Particular attention should be paid to IPO’s something of a double edged sword a company’s Initial Public Offering is often an incredible opportunity but one fraught with risk, the until now private company has clearly been doing well enough that it anticipates a positive reception however it is not uncommon for bounces early as the market has no historic trend data making technical analysis impossible.

Stock CFDs

With CFDs, (contracts for difference), you take a position on the value of the underlying asset such as a stock, currency pair or commodity.

When you trade CFDs, you do not physically own the underlying instrument. You only speculate on whether the financial instrument you are investing in will rise or fall. For this reason, CFDs are generally free from Stamp Duty. As a rule, CFDs are traded off-exchange.

CFDs can be a superb opportunity for the self-employed investor as they require only a small start up fund to make large trades due to the power of leverage, simply put you can keep the bulk of your money in your savings or other investments and still use it to trade. However it should be noted that with the potential for big risk there is also a potentially huge reward. If you’re left holding a bet when the market moves against you you can end up losing far more than your initial holding deposit.

Diversifying your portfolio: funds

Funds have the advantage of diversification. Many investors put their money in a variety of securities. A distinction must be made between active and passive funds. With active funds, your portfolio will actively be managed by a fund manager who will be able to respond appropriately to the prevailing economic climate. Passive funds on the other hand, have the advantage of lower costs and the chance of a long-term high return.

Exchange-traded funds

Exchange-traded funds (ETFs), for example, invest the collected assets in a specific index, such as the DAX, Dow Jones or Nikkei 225. This purchases the stocks that are in the corresponding index, ie the performance of the ETF is equal to that of the index. Savings plans make it possible to pay a fixed amount at regular intervals.

The ups and downs of the stock market are important in determining your profit. At low prices, the investor buys more shares for the same money than at high prices. If the index or market should collapse, there is the opportunity of a manual purchase at favourable prices. Nevertheless, risk cannot be switched off, and losses are always possible.

Bonds are an alternative to credit

Companies use investment bonds when they need capital and the sum cannot be borne by a single financial institution. The money needed is divided into many small bonds and offered for sale to the public in the market. In addition to annual interest gains, price gains are possible upon payment of the debt at the end of the term.

Creditworthy companies with an attractive interest yield are viewed by many as a potential investment opportunity, especially when market interest rates are low.

Finding the right product

Ultimately the level of risk steps up in hand with the level of reward, for a self employed person you may find that you’re asset rich, but cash poor for this reason margin products often look attractive, however these are inherently risky, other product fads such as cryptocurrency trading carry even more risk.

Continue Reading

Curb Your Spending With These Simple Tips

cash-coins
(Source)

In this consumerist society, it can be extremely easy to get carried away with your disposable income each month. It can even be easy to get carried away with money which you don’t have. It is incredibly easy to get items on finance nowadays, and banks are all too happy to offer out loans with interest so high it can only be described as extortion. You may have fallen into this trap in the past and be looking at options like consolidate payday loans just to climb back up the credit score ladder and above the red line. Everyone either knows someone that has been ins this position or has been in the same position themselves – and it is extremely common nowadays. Even though we know it’s not worth it, through constant encouragement to spend, and being told we need luxury items – which incidentally we don’t need – we are led to the financial hole that many people don’t realise they’re in until they hit the bottom. Saving and paying debts off is not easy – if it was the banks wouldn’t have so many loan options, and no one would need them due to the extensive amount of money in their bank accounts. Alas, that is not the case, and we are encouraged to spend, spend, spend. Here are a few tips to help you keep on top of your spending and take back control of your finances.

Declutter

One of the best ways of not spending money is to throw things that you don’t need away. It opens your eyes to how much junk you had in the first place and shows you the extent of how money is wasted by spontaneous purchases. Yes, the sorting hat from Harry Potter World was severely overpriced, yet you said you’d treasure it forever, and now it is collecting dust. It happens to everyone. Your eyes become bigger than your wallet and before you know it you’re travelling home with three full bags of things you really didn’t need. Those three bags have now become bin bags – and it really gives you a new perspective on purchasing – a perspective that will be invaluable to your savings account.You already have enough things you didn’t need – you don’t need more.

Change Your Mindset

When it comes to thinking about your money, how do you measure it? By the amount that is in your bank? The amount of your monthly income that is disposable? The amount you owe to debt companies? Whichever way you think of it, it may be time to take on a new perspective. Whenever you’re out shopping, think of the price of an item as the number of hours you had to work to earn the amount of money. If you had to work all those hours again just for this item, would you still want it at the end of the shift? If the answer is no, then the item is not worth it. If yes, it still doesn’t mean you take it to the counter straight away. You then have to ask yourself if it is something you need or just something you desperately want that is going to collect dust like the previously mentioned Harry Potter souvenir? If it is the latter, you need to put it back on the shelf and walk away. Though out of your comfort zone, you will feel good for doing it. If you are still thinking about it in a few days time, you may be able to justify going back and buying it. But, the chances are that the impulse to buy would have worn out by then, and you will have forgotten all about it. When you are addicted to spending it is not the item that matters, it is the act of paying for something that is so addictive. Controlling that urge is the only thing that is going to help you to start breaking the habit.

Are Sales Actually Bargains?

Sales can be an extreme money grabber for people who like to spend because it is driven into you that you are getting a really good deal. However, at the end of the day, how good is the deal you are getting? You will also save more money by not spending any at all, no matter what the percentage off. Rarely items in sales are things you actually want or need; it is just the excitement of saving a bit of money that people radiate towards. It is important when shopping in a sale to go back to the mindset previously mentioned. The item may have 20% off, but may still cost you two full days at work – is the little bit of money you’re saving really worth it? Probably not.

Hopefully, this has given you some food for thought on how best to go about curbing your urge to spend and helping you to keep your pennies in your wallet, rather than in the hands of the commercial world.

Continue Reading

Common Mistakes to Avoid When Buying Insurance

insurance
Image Source

No matter whether you are looking to buy car insurance or a life insurance policy, there is no denying that the process can be somewhat overwhelming. After all, there are so many different options to choose from, and there is the industry jargon to contend with too. Irrespective of the type of insurance you are interested in, it is vital to approach the process with care. This involves avoiding the common mistakes made by others, which are explained in further detail.

Choosing the wrong type of insurance policy – Nowadays, there are so many different types of insurance policies to choose from. This can lead people to be confused when determining what type of policy is right for them. One good example of this is choosing between critical illness cover and income protection policies. A lot of people assume that these are the same thing, but that is not the case. Critical illness cover will only cover you for a number of serious conditions, which will be outlined in your policy. Every plan is different, though, so you need to read your contract to determine the exact list of illnesses that are covered. With income protection, you will be covered if you are out of work for a valid reason for a set period of time. For example, your policy may pay out after four weeks of being out of work if you have broken your leg while scaffolding. A broken leg is likely to be something that isn’t covered in a critical insurance plan.

Continue Reading

Elf-Employed? The Freelancer Struggle During The Holiday Season

santa-claus
Image Credit

One thing that self-employed people struggle with at the best of times is the holiday season, regardless of whether it is Christmas time, Easter, or you just need a break, the difficulty in taking time off, whether self-imposed or not, is that you don’t get paid for it. So, the self-employed group of workers needs the same amount of time off like everybody else, but because of the nature of the work, this is seldom the case. And as nice as it would be to give yourself those four weeks off, you know deep down that it’s not plausible. So, what can you do to lessen the burden of not being paid, but while also having a good time yourself?

Plan Ahead

Yes, this is, unfortunately, the most sensible solution. You know your working patterns, and you know when you are liable to burn out, so you should structure your finances accordingly. Lots of people make the mistake of taking one job after another, and before they know it, they have worked 6 months straight without a break. While you may be rolling in the monies, your health reserves are very likely at an all-time low. You may have thought instead it’s worth taking a loan out to help cover those free dates in the calendar that you have set aside, but if you get into the habit of taking a loan out so you can enjoy yourself, the burden of debt will very likely rear its ugly head. But while there are resources online on how to deal with debt, the best approach is to plan your finances accordingly. If you’ve been self-employed for some time, you know the peak and off-peak seasons so you can plan your breaks around those.

Holiday With The Family

This may not sound like a great sounding option, but the one thing about taking a vacation back at your parents’ house, or in your hometown, is that it will be a lot cheaper than going to the Algarve for two weeks. And besides, your parents would be happy to see you, even if they didn’t show it! And, time it around peak holiday seasons, like Christmas, and you will get fed! This means that minimal money will be spent on your part and you get a decent break. If this doesn’t appeal, then it’s a Netflix box set, your pajamas, and some chocolates for a week. Again, cheap and cheerful, and it achieves the desired effect!

Being A Social Butterfly

Wild nights out are incredibly expensive, instead, why don’t you propose to have a gathering at your home, or someone else’s? Dinner parties, parties, or any type of social gathering which doesn’t require you to go anywhere, is very cheap, and you will be grateful for the break away from your self-employed life. No doubt, you have been slaving away, day in and day out, for months on end. So, make the most of your time off, and socialize!

Being self-employed doesn’t mean constant vacations where you have no money, but if you find yourself in these trappings consistently, not only should you have a reassessment of how you tackle self-employment during the holiday season, but also how you tackle your finances.

Continue Reading

Are Your Debts Your Age?

Debt has become the cross to bear almost all adults have to live with these days. Answering why would be like trying to make sense of anything Jaqen H’ghar has ever said (a little Game of Thrones reference for you there), which is nigh on impossible. At the more innocent end of the scale it has a lot to do with unexpected circumstances popping up in your life, at the more sinister end of proceedings it is to do with the lack of any formal education on money matters, and somewhere in the middle, it is to do with the cost of living.

Whatever the case, debt is something most adolescents don’t think about, getting help with paying debt down is something all middle-aged Americans have to focus on and enjoying a debt-free retirement is something more and more retirees are seeing as a pipedream.

To break this epidemic down a little more, we’re going to delve into the circumstance of each age group, something that will help you know you’re not alone and hopefully motivate you to change your fortunes, literally.

young-adult
Image Source

Under The Age Of 35

The average debt for a household whereby the main breadwinner is under the age of 35 is a staggering $82,764. That is quite terrifying because most people won’t have started accumulating debt until they were eighteen, which makes that a dozen years of heavy spending. Of course, not all households that fall within this age bracket have debt, which is why this is simply an average based on those that do. It also worth pointing out that a mortgage is a big chunk of this – the average mortgage debt at this age is $143,890.

woman-35
Image Source

Between 35 And 44

No surprises for guessing what happens here because, with more years to accumulate date and upsize a home, the debt increases with those that fall within this age group. In fact, the people residing in this bracket have the highest average debt of all at $153,239, with the average mortgage debt being closer to $190,000. This is a terrifying number if your debt is made up of personal loans and credit cards and not a mortgage and just one of the reasons why staying out of debt needs to be of the utmost importance to people growing up.

man-45
Image Source

Between 45 And 64

This is where the debts a household has accumulated starts to decline, which will have a lot to do with the sudden rise in average salaries at the age too. More money means less financial burden when paying off debts. For those closer to the 44 -ear marker, debts will stand at around $150,000, with this figure slipping away to $131,000 in that twenty year period as they start to focus on the kind of retirement they want to enjoy. They may well have assets that are worth a lot more than this figure or they may have a negative net worth. It i a flip of a coin at this age.

old-couple
Image Source

Between 65 And 74

Most people hold the same dream: to be debt free by the time they retire. Unfortunately, though, this is becoming less and less realistic, especially for us Americans, and by unrealistic we mean carrying the burden of $108,765 with us. That is quite substantial. It is also worth pointing out that many of these secured debts are held against an average mortgage of $130,400.

Continue Reading