Financial Independence Compilation

Welcome to the November 7, 2010 edition of financial independence.

Your Financial Independence Articles

Top 10 money tips to become debt free - One of the purposes of this blog is to help myself to learn more about money in order to help me to become debt free and, hopefully, financially independent.

Being debt free is almost a dream for me at moment, with the power of compounding interest working against me I keep on paying my credit card debt every month and it doesn’t seem to go down no matter what I do.

This post is a result of my own research around the internet on 10 strategies to help me to become debt free.

The Australian interest rate is up, the average bloke and the Australian prosperity -  Yesterday the Reserve Bank of Australia decided to increase the interest rates by 0.25% once again. The banks already started to move with the Commonwealth Bank increasing their rate by almost twice as much as the RBA increase.

The government then starts to make a lot of noise, the shadow treasurer continues to blame the government and the average bloke feels the pinch…

Organise your finances with online banking - Using online banking can be a quick way to take control of your finances. These days online banking offers many tools that can actually hep you to save money. Here are some ways online banking can help you.

A few tips to save money - Do you want to save some money? When times are tight and you are struggling to make ends meet you will face the inevitable decision to cut back in some expenses. Here are some ideas to help you to cut back on those expenses without sacrificing too many of life’s pleasures.

Reader’s Articles

Khaleef @ KNS Financial presents 5 Things You Can Still Do To Increase Your Tax Refund! posted at Faithful With A Few, saying, "Here are 5 things that you can still do in 2010 to reduce your tax liability and hopefully increase the size of your tax return."

BackTaxesHelp.com presents Ever Hear of the Inflation Tax – Your Taxes Could be Raised Indirectly posted at Back Taxes Help.

Tax Debt Help presents Home Prices Falling but Property Taxes Going Up posted at Tax Debt Help.

debt kid presents Real Costs of a Car posted at DebtKid.

Alexander Peter presents Applying For Tax Credits posted at UTR.org.uk, saying, "Information on what tax credits are and how to apply for them."

Aaron Durant presents Chocolate company posted at uba-blog.co.uk, saying, "make money by starting a chocolate company"

David de Souza presents What Everybody Ought To Know About Capital Gains Tax posted at UK Tax Blog, saying, "Guide to what Capital Gains Tax is and how it works"

Sam presents NEW !! The Best Stocks to Buy from the S&P 500 Index posted at Surfer Sam and Friends, saying, "Thanks for including my article on the best stocks to buy. Here's an excerpt... Bypass all the hype and noise you hear about the best stocks to buy. Go right to the facts. Here are 25 stocks from the S&P 500 with the best price increase over the past 12 months. The S&P 500 is a broad index of stock market performance. If you want to find the best stocks to buy from the S&P 500 Index, this table is a good place to start. It shows which were the best stocks, that is, the stocks with the largest price appreciation during the past 12 months. In addition to price appreciation, buyers of some stocks also receive dividends as part of their total return. The table includes companies from diverse industries like Internet Information Providers, Travel, Titanium, Engines, Cars and Trucks, Communications, Software, Auto Parts, Mining, Real Estate, Hospitality, and Retail, to name just a few. Of course, past performance is not a guarantee of future performance. But the numbers show you how much money these stocks made for the investors who bought them."

CardWisdom presents Minimize Credit Card Interest on Holiday Purchases posted at Card Wisdom, saying, "If you need to take on new credit card debt during the holidays, use a 0% credit card to reduce your interest expenses."

Susan Howe presents Can You Really Be Murdered for Insurance Money? posted at Insure, saying, "Although murder-for-life-insurance plots in movies typically end with the culprit being marched off to prison, real-life incidents are not often black and white."

Mike Piper presents 401(k) or IRA? What to Do If Your 401(k) Stinks posted at The Oblivious Investor, saying, "If your 401k has high fees and expensive funds, should you contribute to it or to an IRA?"

CreditShout Kevin presents Dealing With Credit Card Debt From a Spouse posted at CreditShout.

FIRE Getters presents 15 Financial Failings That Will Prevent An Early Retirement! posted at FIRE Finance, saying, "For those of us who want to retire comfortably and do so while we still have the energy to enjoy our free time, personal vices must be kept to a minimum. Eliminate or at least put off indulging in bad habits that will cost you money in both the short and long term, and you will reach your goal of a relaxing retirement that much sooner ..."

FMF presents Free Money Finance: How to Buy and Sell Physical Gold and Silver, Part 1 posted at Free Money Finance, saying, "Ever want to know the specifics of how to buy physical gold and silver? This interview with a gold/silver expert will give you all the details!"

Jim Nariel presents How you can trust an Internet Master and earn money by online marketing fast posted at Point and Click Program Revealed, saying, "blog post showing how to pick the right internet teacher for making money online"

MoneyNing presents Should We Shield Our Kids From The Economic Reality? posted at Money Ning, saying, "Would you want to talk to your kids about your financial situation, or should you hide everything from them so they can have a happy upbringing?"

BWL presents Tax Treatment for Inherited IRAs posted at Christian Personal Finance, saying, "Everyone is going to leave this earth some day and, yes, everyone will pay taxes – but, we can try to prolong facing these two guarantees as long as possible. A Stretch IRA is a way to prolong your tax payments when you receive an inherited IRA. So let’s take a look at the tax treatment of Inherited IRAs and what a Stretch IRA actually does…"

Thursday Bram presents Friendly Financial Advice: Get Educated, and Get Experienced posted at Currency.

Jeff Weber presents How Much Can You Save with a 0% APR for 21 Months posted at Smart Balance Transfers, saying, "A person with $3000 of credit card debt who pays $60 a month can save just over $400 with a 0% balance transfer for 21 months. A person who pays $150 a month can save a similar amount and be debt free before the rate expires."

Neal Frankle presents Find A High Paying 2nd Job Using Craigslist posted at Wealth Pilgrim: Money Management Advice, Financial Stess Management, Addiction Recovery Plan & Resources, saying, "You Can Find A High Paying 2nd Job Using Craigs List If you’re looking for high paying 2nd jobs, look no further than your computer screen. You can create your own 2nd job using Craigs List."

Silicon Valley Blogger presents Sony Discount Code, Sony Promotion Code: Electronics For Less posted at The Digerati Life, saying, "You can pay less for goods and electronics by using discount codes."

PT presents If You Can Earn $5, You Can Change Your Life posted at Prime Time Money.

freefrombroke presents Five Ways to Invest Without Buying Stocks posted at Free From Broke, saying, "Buying stocks has been seen as risky for many these days. No worry, there are other ways to invest besides stocks."

presents Printable Calendar 2011 posted at Home Life Weekly, saying, "Help get your finances in order for next year with this free printable calendar"

Youdondour torres presents Apply now for a 1 hour payday advance loan! posted at Pay Day Loans For You Today!.

Youdondour torres presents Get approved now for a no hassle payday advance loan posted at Quick and easy payday loan!.

Youdondour torres presents Bad credit, no credit payday advance loans posted at Quick and easy payday loan!.

Youdondour torres presents Cash in advance loans, apply now! posted at Pay Day Loans For You Today!.

That concludes this edition. Submit your blog article to the next edition of financial independence using our carnival submission form. Past posts and future hosts can be found on our blog carnival index page.

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Technorati Tags: mortgage,credit card,recession,financial independence money blog carnival

Financial Independence Compilation

Welcome to the August 4, 2010 edition of financial independence.

Your free gift - We are offering you a free gift that we are sure that it will inspire you on your road to success. The book the Science of getting rich has inspired me and started me on my road to financial independence. I encourage you to download the book and join the SOGR network. You have nothing to lose. Click here to download your free book.

 Your Financial Independence Articles

The most important money advice - There is only one rule that should direct your personal finances. If you are able to understand and apply this rule you have mastered all that you need to achieve financial independence.

Investing in shares - learning from the financial press - In this article, we discuss how to read the financial newspapers and look at other areas of the media that can provide you with information on share market investment.

The science of getting rich - acting in a certain way - Do not bother as to whether yesterday’s work was well done or ill done, do today’s work well. Do not try to do tomorrow’s work now, there will be plenty of time to do that when you get to it.

Do not wait for a change of environment, before you act, get a change of environment by action. Cause your environment to change. You can so act upon the environment in which you are now, as to cause yourself to be transferred to a better environment.

Buying and selling shares - The share market can be thought of in terms of its two main functions: The primary market where companies raise money by floating their company and selling shares to investors. Following this Initial Public Offering, the shares are then able to be traded on the share market (the secondary market).

So as an investor there are two distinct points at which you can purchase shares...

Real riches - I am right now on my way to work on a Monday morning. It seems to be a normal Monday morning, however, I have this empty feeling inside of me. This is unusual, as far as I can remember this has never happened to me.


Reader's Sponsored Articles


Charlie Kimball presents 7 Steps To Get Out Of Debt posted at Consumer Credit Guide, saying, "The toughest part is changing your attitude about spending money, using credit cards, and disregarding the future. Nothing is easy, but it is possible to get out. Even small steps make a difference . . . make a plan and attack your debts!"


Ellesse presents Can You Be Financial Independent Before 40? posted at Goal Setting College.


Nissim ziv presents Finding your Dream Career and landing the Job of your Dreams posted at Job Interview Guide, saying, "Here are some tips that you might use:
Make Yourself Competent for your Dream Career, Hone Your Core Competencies"


Mitch Archuleta presents How to Prioritize Multiple Retirement Accounts posted at RothIRA.com's Retirement Planning Blog, saying, "How to decide what order to contribute to retirement investment accounts."


Sam presents Investing in Gold posted at Surfer Sam and Friends, saying, "Thanks for including my article. Here's an excerpt...

When people buy and own gold they consider it as a store of value and a safe haven for wealth in economic crisis. One of gold's important properties is psychological, because it is so closely associated with money. This gives it an immeasurable advantage over other tangible stores of wealth. Most people readily associate gold's distinctive color with wealth, and consider the color of gold beautiful. King Midas of mythology, who could turn everything he touched into gold, had the first fatal case of “gold fever,” the frantic need to seek and hoard gold."


David de Souza presents The Inland Revenue posted at UK Tax Blog, saying, "An interesting article outlining the history of the Inland Revenue and taxation in the UK, dating back to the Roman invasion."


Abbott Efrain presents Fast Cash Loans For The Fastidious! posted at Cheap Payday Loan Blog, saying, "The payday loan industry is popular today this is because it recognizes the need of people.It understands that not everyone wants a big loan or has the time to wait for the advance to get approved."


Daniel M. Wood presents Here is a Method That is Helping People All Over The World to Accomplish Their Goals posted at Looking to Business, saying, "Knowing you goals, knowing where you are going and what you want to achieve makes a huge difference in your life. It gives you lots of motivation, it helps you focus all your efforts towards your goals and moves you towards your goals in a much faster pace."


Rick Todd presents Is retiring abroad actually cheaper? posted at Expat Investing.


Two Becomes One presents Debt Consolidation Company: How To Make The Right Choice « Debt Relief Blog posted at Debt Consolidation Company: How To Make The Right Choice, saying, "Paying off debt is a back breaking exercise. It works like a domino; debt begetting more debt until the entire financial edifice crumbles."


Aileen Black presents Debt Consolidation Company: How To Make The Right Choice « Debt Relief Blog posted at Debt Consolidation Company: How To Make The Right Choice, saying, "Paying off debt is a back breaking exercise. It works like a domino; debt begetting more debt until the entire financial edifice crumbles."


That concludes this edition. Submit your blog article to the next edition of financial independence using our
carnival submission form. Past posts and future hosts can be found on our

blog carnival index page.

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financial independence, blog carnival.

Investing in shares - learning from the financial press

In this article, we discuss how to read the financial newspapers and look at other areas of the media that can provide you with information on share market investment.

The financial press in Australia, and any other country, is a very important and influential source of information in many sectors of the community. Investors rely on it for information about how their shares are performing, stockbrokers read it to see what else is happening in the sharemarket, politicians read it to see how their policies are affecting the market (and in turn, the economy) and business people in general read it to see how their companies are perceived and how other companies are performing.

It is a quick and relatively cheap way for investors to discover what the professionals in the finance industry are thinking and doing each day, and to keep an eye on their investments.

Most newspapers have a range of financial stories in their general news section. However, the majority of stories relating to listed companies will appear in a special finance section of the paper, usually titled 'Business', 'Finance' or 'Money'.

Always remember the financial press is a source of both facts and opinions. Facts are derived from official announcements made by companies, governments, other organisations as well as from the publication's own researchers. Opinions are usually expressed in special columns by regular writers, cartoons and feature stories by guest writers or journalists. Guest writers may include politicians, stockbrokers, advisers or other prominent industry figures.

The newspapers and other publications you select to help keep you informed will depend on your budget and your particular interests and preferences. Are you seeking to achieve a local perspective or a national overview? Do you want brief or detailed information? The answers to these questions will help you to choose publications that are most appropriate for you.

There is also a wealth of specialist finance magazines. Again these are aimed at a range of different markets so spend time to read through a variety of them to find the one that is suitable for you.

Can I base my investment decisions on share market tables?

It is preferable not to. The sharemarket tables in the newspaper contain a lot of useful information, however, it is important to note that they only contain historical figures.

For example, Company X might be showing a dividend yield of 20 per cent. But a chat with your stockbroker may reveal that although last year's dividend was 20 cents, the shares are now trading at $1.00 and brokers are forecasting this year's dividend will be 3 cents - providing a yield of only 3 percent.

Your stockbroker may be able to provide you with very useful forecasts for the future performance of individual companies.

Annual reports

There are numerous facts you should know about a company before you invest in it. What does the company do? Who are the directors and what is their business experience? How is the company currently performing? What are its prospects?

The financial statements included in annual reports are a valuable source of the information you will require to answer these questions. Analysts in stockbroking firms, merchant banks, investment companies and financial institutions rely on them to make major investment recommendations for their organisations.

The contents of most annual reports can be divided into 3 general areas:
   1. Background and highlights,

   2. Review of operations, divisional activities and human resources:

   3. Financial Statements

The content and form of financial statements for public companies which is used for this purpose is prescribed and controlled by:
   • Corporations Law

   • Listing Rules

   • Approved accounting standards (which have the force of law)

   • Statements of accounting concepts, and

   • Accounting Standards.

In summary, there is a wealth of information available to guide the investor to make informed decisions for investing in an organisation.

This article is based on the ASX share course, 2008.

Buying and selling shares

Buying and selling shares

The share market can be thought of in terms of its two main functions: The primary market where companies raise money by floating their company and selling shares to investors. Following this Initial Public Offering, the shares are then able to be traded on the share market (the secondary market).

So as an investor there are two distinct points at which you can purchase shares:

1. From the company itself in the very first instance of the shares being offered in the float.

2. Following the float, shares are bought from other investors via the share market. Shares can only be sold on the secondary market.

Buying shares in a float or Initial Public Offering

The word float is used when a company seeks to raise money by offering its shares to the public for the first time. The company must first submit details of its business and the proposed share issue to the Australian Securities and Investment Commission (ASIC) in a document called a prospectus.

Once the prospectus is lodged with ASIC, it is then available to potential investors for consideration. If you wish to buy shares in a float, you must first review the prospectus, fill in the attached application form, specifying the number of shares you want to buy, and send it with your payment to the company or lodge it with your adviser.

Lodging and/or registering a prospectus with ASIC and listing on the ASX does not guarantee the company will be successful once share trading begins.

Among other things, a prospectus is required to contain all the information that investors and their professional advisers would reasonably require to make an informed assessment.

When assessing a prospectus it may be useful to answer the following questions:

• Who – who is involved? (stockbrokers, underwriters, management, board, others)

• What - what is on offer? (growth, income-yielding, tax-effective or speculative shares)

• When - when does the issue take place? (bull/bear market)

• Why - why are they raising funds? (expansion, retire debt, sell down, takeover)

• How - how to participate in the issue? (public pool, firm share, entitlement, demutualisation)

If there is a great deal of investor interest in a new float, you may be allocated fewer shares than the number you applied for or none at all. With some floats, the initial share price (issue price) is not set until just prior to the first day of trading. You should obtain independent advice from a licensed professional adviser prior to making any final decision.

Following the float the shares are now listed on the share market. From this point shares can only be bought and sold on market through a stockbroker.

Buying and selling shares through a stockbroker

Establishing a relationship with a broker is easy. Each broker will have a slightly different process, but most require you to establish a client account. They may also need bank account details for the lodgement or receipt of trading proceeds.

When you place an order to buy or sell shares, you have a choice of two ways to tell your broker what price you will accept. You can place your order 'at market', meaning you will accept a price at or about the market price of the shares at the time you are placing your order.

Alternatively, you can place your order 'at limit', and inform your broker of the highest price you are prepared to pay or the lowest price at which you will sell. Orders where you set a 'trigger' point are known as conditional orders.

Determining entry and exit prices for shares is important. Investors are very capable of buying shares, however many fail to consider when to sell. Setting a target price to sell is an often overlooked skill.

When placing an order with your adviser, make sure you are fully informed and that your order is confirmed. Ask the current market price and write it down. Then tell your broker the details of your order (i.e. the amount of shares to be bought or sold and the price at limit or at market). They should then repeat the order back to you.

Internet based stockbroking websites provide confirmation screens for you to double check your order before it is processed.

Following a transaction on the share market you will be sent a contract note (confirmation). This outlines the details of your trade, including the number of shares and the amount paid or received for them.

Happy trading!

Evaluating investment opportunities

Evaluating an investment

Evaluating investment opportunities (e.g. shares, property, bonds) is easier if you use a standard set of criteria to measure and compare them. While each investment must be evaluated in the context of your personal goals and objectives, in most cases the following characteristics may be considered:  

•  Return on investment (ROI)

•  Capital and income security

•  Risk

•  Transaction costs

•  Minimum investment amount

•  Liquidity

•  Ease of investment
  
• Taxation

Return on investment

Return on investment will usually be in the form of income (a payment you receive from your investment) or capital growth (where the value of your investment increases over time). Some investments, such as shares, may provide both.

Income

Investment income may include amounts such as interest on bank accounts, dividends from shares, rent from a property and distributions from a trust. As well as the amount of income you are likely to receive, you should consider the likely frequency and regularity of the income payments and the potential for any increases or bonuses. Does the investment pay distributions, weekly, fortnightly, monthly or yearly?

Income from investments is usually subject to income tax at your marginal tax rate.

Frequency of income payments

The frequency of income payments is a key factor in determining the yield for an investment.

Compare three investments of $100,000 each with a 6% interest rate: the first paying annual coupons, the second paying semi-annual coupons and the third paying quarterly coupons.

Even though you receive coupons totalling $6,000 over the year from each investment, when you take into account the timing of the coupon payments the yield can vary. This is because the sooner you receive your income payments the sooner you are able to reinvest that money.

This means that the yield for an investment paying 6% quarterly may be higher than the yield for one paying 6% annually.

Capital growth

Capital growth generally refers to the increase in the value of the amount of money you have invested.

Returns from capital growth can only be realised when you sell an investment for more than its purchase price.

The main benefit of capital growth is that it protects you against inflation. This occurs when the value of your investment grows at a rate faster than the general rise in the price of goods and services. By keeping your capital growth ahead of inflation you are able to prevent inflation from eroding the spending power of your savings.

Capital growth may occur through rising share and unit trust prices on the sharemarket, increased values in the property market and profit on fixed-interest securities if sold before maturity. In Australia, realised capital growth from investments is usually subject to capital gains tax.

Comparing risk and return

Setting realistic expectations is important when determining what level of return you might expect from your investment.

When evaluating the return on investments you may wish to compare their rate against the return on government bonds. This rate of return is often called the 'risk free rate'. An investment in government bonds is generally very secure as there is little chance that the lender (the government) would default and fail to repay the investment.

The risk free rate may be a good guide to use when considering whether the risk is commensurate with the reward of an investment.

You can generally find the government bond rate in the business section of the newspaper.

This article is based on the ASX Share Course. November 2008.

A few strategies to make some extra money

It is always a good idea to make some extra money. It can help you to pay off a debt, save or just buy something that you want.

This article outlines a few ways to generate some extra money. Depending on your commitment and goals, some of these strategies can be turned into significant streams of income.

Making Money on EBay
Think about all the stuff you have around you, do you really need all of that? It is likely that something you don't need anymore may be useful to someone else. There are several stories on the internet about people who have made a few bucks, hundreds or thousands of dollars.

All you need to do is take stock of what you have and sell anything that you don't need anymore.

Blogging

Blogging is a simple and quick way to start your own business. Over time, and with good and relevant content, you may build a loyal readership which may generate you some income through ads, affiliate marketing and other strategies.

It is also fun to be writing and exchanging ideas about a topic that you love.

EBooks

EBooks have the potential of generating significant income. Similarly to blogging, you can write an ebook on something that you are really interested, put it on the internet for sale and make some money.

Taking online surveys

Organisations all over the world need your opinion as a customer. They value your opinion so they can make various different decisions about the product, marketing and other aspects of their product management.

Your opinion is so important that they are willing to pay for it. You can find several online paid surveys. You can take a few each day and make some money from it.

Real estate investment

This strategy requires some start up cash in order to acquire an investment property. It is hard to get started, but once yo do you can make money from rental income and as your property value goes up you also make money.

Many people build a sizable property portfolio which generates passive income.

Invest in the stock market

Investing in the stock market is a common approach to generate income. As I have mentioned in previous posts, you need to learn before you start and you need to do a lot of research to ensure that you are investing in a good company.

You can also get stock market reports to help you to make your decisions. It is important to get the right advice, which can be of great help if you are a beginner investor.

I have recently blogged on the risks and benefits of investing in shares. For more information click here.

This short article is by no means exhaustive. The most important aspect of these strategies is to start. Do something about it , choose one strategy and get going, it may be the best decision you ever make.

Why invest your money

Investing and finances independence means something different to everybody: being able to retire at 50, setting up your own business, paying the mortgage, writing a novel or traveling the world. To achieve your goals consider how much you will need, and then think about how you can invest your money to help you achieve these goals.


There are a few different strategies to invest your money, this article will look at 2, investing for capital growth or investing for an income.

Investing for capital growth

Capital growth occurs when the value of your investment increases. Most people invest for capital growth to build their wealth over time and protect themselves against inflation.

Investing for income

People can seek an income stream from their investments in order to supplement their primary source of income. Many retired people live off the income from their investments (e.g. dividends from shares and rent from property). Fixed interest products such as bonds and hybrids offer a potentially regular income stream.

There are some investment strategies that will give you capital growth and regular income. An example is properties. In the long term property values generally go up in value. If you are investing in properties and you have tenants you will also have rental income. Properties therefore have the potential to give you income and capital growth.

Before investing, think about your short and long term objectives and devise a strategy to support you in achieving your objectives.