Investments – Focus Mag (original) (raw)

Making financial decisions is often difficult yet necessary. Many people have various issues with their finances, whether they struggle to manage their funds daily or want to save up for a big goal. Financial health is the general state of your capital and your relationship with money. To be financially healthy, you do not necessarily need to earn tons of money. It is all about how you manage your finances and spend funds on different objectives. In this article, you will find convenient and accessible ways of improving your financial health.

About Financial Health

What does it mean to be financially healthy? This means controlling your money instead of letting the money control you. Living without debts, earning enough for living a comfortable life, and having enough money left to save up for everything you need, from small purchases to buying a house, all of this demonstrates your financial health.

Planning is crucial for being financially healthy. It is impossible to deal with your money efficiently without having a plan. Making impulsive purchases once in a while is normal, although it is essential to have a general financial plan and stick to it. You should always track your income and expenses, as well as save up in an organized way. Here are some of the main areas you need to focus on for your financial health.

Paying off All Debts

It is definitely important to avoid getting into debt and pay off any existing debts quickly to improve your financial health. Debt is one of the biggest regular expenses that drain your money. It becomes nearly impossible to save up money when you have an unpaid debt. To earn more than you spend and be able to save funds for a variety of goals, it is important to concentrate on eliminating debts first. If you have one debt, focus on paying it off as soon as possible and start saving up money afterward. With multiple debts, you can either work on one of them until you pay it off completely before moving to the next one or gradually pay all of them off.

Gaining Extra Money

When it seems that there is not enough money for something, people often think that they have to cut back their expenses and put down various restrictions. While cutting unnecessary expenses is great, it is also recommended to look for sources of additional money. Not many people realize that you can actually make passive income quite easily today. One of the common solutions is to invest money online. An accessible option for beginner investors is joining an alternative investment fund that offer a fully automate investments. One such platform is Quanloop, and it is possible to start investing there even if you have one euro to spare. If you were searching for where to invest money online, try an alternative investment fund.

Cut Unnecessary Expenses

People make tons of small and often unnecessary purchases without even realizing it. Whenever you are making a small purchase, you do not feel like this is bad as you are only spending a small sum of money. However, if you put together all your expenses throughout the month and even a year, you will see how much you are spending excessively.

Some people think that to lower expenses, it is necessary to restrict yourself and avoid buying treats and nice things. This is not the case. However, you need to monitor your daily expenses and see if there are truly unnecessary spendings. As soon as you start writing down all your spendings, you will see that there are definitely things that you can live without.

Saving Funds

Saving up is crucial for everyone’s financial health. Create a list of all your money-related objectives to see what you are working with. Set a deadline for each goal and see how much money you need. This way, you will be able to calculate how much you need to save up every month. Here are some of the most common financial objectives:

Retirement support

College

Housing

Wedding

Traveling, etc.

Everyone has their own goals. It is important to determine your personal objectives and stick to them. The sooner you start saving up, the quicker you will achieve all your goals.

Choosing a financial advisor to manage your finances can be challenging when you’re not an expert in money matters. Moreover, it’s almost impossible to know every area well enough because they’re so specialised and different from each other. It is essential to choose a financial advisor that you can trust. However, with so many options available, it can be challenging to know where to start. If you’re looking for a financial planning advisor to work with, here are eight reasons why you should work with one.

1. Protect your family’s financial future

Your financial planner will work with you to develop a comprehensive plan that considers your current situation, financial goals and risk tolerance. If you reside in South West England, sound financial planning advice in Bristol crafted by a seasoned professional will help you achieve your financial goals and protect your family’s future.

1. Simplify your financial life

A chartered financial planner can help you take a big-picture view of your financial life and make recommendations that can make it simpler. This might include helping you consolidate accounts, automating bill payments or recommending ways to reduce expenses.

1. Save money on taxes

A financial planner can help you take advantage of tax-saving opportunities. For example, if you’re a higher-rate taxpayer, your financial planner can recommend investments that offer tax breaks, such as ISAs and pension contributions.

1. Help plan your spending and saving

If you’re not sure how much you should be spending and saving each month, a chartered financial planner can help. They can review your income and expenditure to see where your money is going and recommend how much you should set aside each month.

1. Get an objective view of financial decisions

It can be challenging to be objective about financial decisions, especially if they involve emotional issues such as whether to sell a family home. A chartered financial planner can help you see the pros and cons of different options so you can make an informed decision.

1. Provide peace of mind

Working with a financial planner can give you peace of mind that your financial affairs are in order. This is especially important if you have complex financial matters or are going through a life-changing event, such as getting married or having a baby.

1. Keep you on track

A financial planner can help you stay on track with your financial goals by reviewing your progress and recommending changes to your plan. They can also help you stay disciplined with your spending and saving by providing regular feedback.

1. Prepare you for retirement

If you’re approaching retirement, a financial planner can help you plan your finances so you would have enough money to support yourself. They can also help you decide when to start taking your pension and how to invest it, so it lasts as long as possible.

Final thoughts

Working with a chartered financial planner is a smart move if you’re looking for financial planning advice. They can provide the guidance and support you need to make sound financial decisions and achieve your financial goals.

Bitcoin is something that a lot of people are talking about these days. It is a confusing thing for many as it is a currency in name but does exist in real terms and so it can be difficult to understand how it can work as an investment tool. However, we do hear about lots of people investing in it and doing well and therefore it can be tempting to consider investing ourselves. However, it is very important to have a really good understanding of how it works before you invest.

Risks of all Investments

Many people get confused about the difference between savings and investments and this is not surprising as they are similar but not the same. With savings, we put our money in an account and it stays there. We get paid interest on it and will always be able to get our money back (unless we are extremely unfortunate and put it into a bank that goes out of business). Many savings accounts have guarantees backed by the government so even if the bank goes bust you will get up to a certain sum of money back. This sum is an amount determined by the overseeing financial body and can change. It is worth checking what protection you get, but essentially, most savings are safe.

With investments you actually buy something with your money. In some cases, this can be a physical item such as art or antiques but often it is something that is not tangible such as a share of a company. The fact that you are buying something means that you have spent the money and the only way that you can get it back is by selling the item again. Whether you get your money back and how much you get back, will therefore depend on the demand for the item. So, if you buy a painting for a young new artist, then you might get a good deal price wise, but you could be taking a risk as their work may not rise in value as they may not become sought after. Also, art can go up and down in price depending on what is trending so you risk losing your money. This could be the case with any investment. It is often said that you need to hold onto investments for at least a decade to be sure you make money from them. This is because there are often costs to having one or it may take time for the value to go up. This is easily demonstrated by buying an investment property. If you buy a house, then you may just have to spend the cost of the house plus pay a solicitor. You will therefore need the price to rise at least the cost of the solicitor for you to break even, but you may also need to pay capital gains tax on the increase in value (as you will with any investment), an agent to sell the house for you, a solicitor and you may have to decorate or even renovate to make it saleable. There might be extra costs like this for all investments, depending on what you buy and sell.

Risks of Bitcoin Investment

With bitcoin you will find that there could be costs of holding the coins. You will need an ewallet to store your currency in and you may pay a fee for this. You may also have fees when you sell as well as capital gains tax. There are also people who lose their passwords to their wallets and find that they then cannot access their bitcoins to be able to sell them. The price of bitcoins is very volatile as well. Like any currency the value can go up and down and this is determined by demand and supply. With a foreign currency, it can be a little more predictable as it will depend on the economy of the country and some world events, however bitcoin is not tied to a country and so it can be more difficult to predict how the value might change. It is therefore a good idea to make sure that you are very aware of this before you invest.

How to Reduce Risks

There are some ways that you can reduce the risks of all investing and these can also apply to bitcoins as well. It is always the case that you should be buying when it is cheap and selling when it is expensive and then you will make a profit. Although this seems like common sense, there are people that will panic as the value drops and will sell before they sink any lower, thinking that they are cutting their losses. However, this can be detrimental if the value rises again in the future and so it is well worth trying not to do this and trusting the value will eventually go up again. Of course, there will be some investments that will never go back up in value and this is the risk you take when you buy one and so it is well worth doing lots of research first.

Follow the market and track the selling and buying price. You may be able to look at historical data rather than following it day to day and that should help you to look at the trends and to consider whether you think that the bitcoins are likely to increase in value during the time that you plan on investing your money. As mentioned earlier, you should be prepared to invest for at least a decade so track this sort of timescale. Also make sure that you only invest money that you can afford to lose. This will mean that you will not need to suddenly cash in the investments, which could risk you losing money if you have to do this at a time when the selling price is low. It also means that if you do lose some or all of the money, you will not struggle to manage your personal finances.

There are many people that do not have a pension or just pay into the state pension. However, if you have a job, then you have to be offered the opportunity to pay into the work pension scheme. This is something that some people will choose to opt out of. However, there are lots of advantages of paying in and it is good to be aware of those so that you can decide whether you do want to opt out or not.

More Money for Retirement

It is important to plan for your retirement and make sure that you have enough money. Although we should all be entitled to a government pension, if we have been working and paying in or some benefits to live off, these will just be a small amount and are likely to be very much less than you will be used to having income wise, compared to when you are working. You may feel your income can be less on retirement and you will probably spend less on travel as you will not be commuting and you will not need work clothing and hopefully will not need to support your children. However, you may need to heat the house more, as you will be there more often if you normally work outside of the home as you may want it warmer. You will also have more leisure time and need to fund that if you want to go out and about to places or have holidays. You may also still want to buy things for your children and you may have grandchildren to buy for as well.

It can be easy to assume that we will not need so much money in retirement, but in reality, if we want to have a pleasurable retirement, we may find that we will need the same amount of money or perhaps even more. It can be worth thinking about how much you think you will need and then you can more easily decide whether you will need to think harder about getting a pension.

Employee Pays in Too

When you have a work pension, your employer will pay money into it as well. This means that the pension pot will accumulate more quickly compared to a private pension or a savings account. The amount they put it will vary depending on your employer but it is a good idea to find out more about the scheme that they offer and how much you could have. The fact that they pay in will mean that you will not only have a bigger pot, it will mean that when it comes to your retirement you will have bigger pension payments or be able to draw out a larger lump sum of money.

They are Transferable

If you think it is unlikely you will stay with the same employer for a long time, then you might think it is not worth bothering with their pension. However, the money you pay in, will stay in the fund and so you can still draw it out in retirement even if you are not working for them. You can also transfer it, so that all of your pension fund is in one place, if you wish to. It is wise to get advice from an independent financial advisor before doing this though, as you might find that you will lose out if you move the money as there could be costs associated with this. However, what is important to consider now, is that you will not lose the money you have paid in, even if you are only with that employer for a short amount of time.

Tax Break

When you pay into a pension you reduce the tax you pay. This is because employer pension payments are taken from your salary before it is taxed. Therefore, you will pay less tax on the salary that you get. However, you will pay tax when you retire and start taking your pension, if your income is above the taxable threshold for income tax. You may find that it will not be that much anyway though. If you are high earner and pay a lot of tax, then this could make quite a significant difference and it is a completely legal way to avoid paying tax which many people take advantage of.

Better Than Private Pension

A private pension can be an alternative to a work pension. However, as your employer pays into the work pension, there is a huge likelihood that the work pension will be better as you will have a larger pot of money in it to invest. There will be a limit to how much you can pay in, so some people might choose to have a private pension as well, but it is normally better not to have a private pension instead of a work pension.

Gives an Additional Income

You may feel that as you are paying your National Insurance, you will get a government pension and that will be enough. However, the government pension is not that high, which means that you may not find that it is enough. There are also fears that the pension age may be made even later in years to come or that the pension may be means tested and not paid to everyone. Although nothing is certain, it is wise to have an alternative plan just in case and having extra money for your future is not a bad thing.

You no Longer have to Draw it as Pension

It is also worth noting that the rules around pensions have changed fairly recently. It used to be the case that you had to use your pension pot to buy an annuity and draw it as pension. These days you can draw a lump sum from your pension pot and that means that you have a bit more freedom with regards to what you do with the money when you do retire. Therefore, if you are concerned that you will not get much back from your pension, then look at the rules and see how things work.