Why Investing in Property is Perfect for Long Term Savings

Property investment is a wise choice for those looking for a long term saving strategy. With a combination of the monthly rent you receive and the potentially huge increase in value of your property, it can be a great asset to consider. Long term savings, like a pension or a property investment, are all about thinking far ahead and being able to weather the storms of the changing economy. However, unlike other investments, at the end of the day, you still own a house. Or a flat, or an apartment, any property really. So, what makes property so good for a long-term investment?

Capital Appreciation
Capital appreciation is the aspect of property investment everyone knows about. The heady heights and plummeting lows of the property market have long been dinner time conversation. Like with any investment, wise property investors can make significant amounts of money by buying a property cheap and selling when it’s at its highest price. There are some impressive examples of UK house prices rocketing, showing that when investors get it right, they really can make incredible profits. House prices in Stevenage grew from £181,475 to £287,692, a massive 58.5% increase from 2007 to 2017. In Hackney, property prices increased by an incredible 936% between 1995 and 2015.

Better with Time
You will notice that the biggest gains are over the longest period of time, which is why a property investment is worth holding on to. Of course, like any asset, property prices can go down as well as up, however the general trend is that property values are likely to go up. This is especially true in areas receiving substantial investment, like Manchester and Liverpool.

Rental Returns
The steady income of a buy to let property is the main reason why property investment is so popular. When leasing a property, the owner has access to regular payments from the tenant which can often pay the mortgage, or if you brought the property in cash, pay off the purchase price. Potential investors need to factor in tax implications, charges like ground rent and rental regulations to make sure their investment is worthwhile. However, with rental yields of over 9% with property investment specialists like RW Invest, investors can earn significant returns. With the UK’s population increasingly choosing to live in rental accommodation, there is demand for rental property more than ever before. Because of this, there has also been a significant rise in rental income across the country.

Tangibility
Property investment is often chosen by those who prefer tangible assets they can look at and touch, rather than stock and shares or online currency. No matter what the property market does, you still own the bricks and windows and land. From brand new apartments to old converted townhouses, owning an investment property has always had a certain appeal.

Access to Money
Property investment can also be a great way to make sure your savings aren’t touched. Unlike a savings account, you can’t dip in and out of your property investment. If you want access to your money, you’ll have to sell the property. This can be a negative when you need money fast so it’s worth making sure you can definitely afford to invest in property. You need to know that you might have to wait, and it will cost you solicitors and estate agents fees to access your money. But for reluctant savers, this can be a great way to make sure you don’t spend your savings and keep it until property prices go up and you’re making a significant profit.

from Finance Girl http://www.financegirl.co.uk/why-investing-in-property-is-perfect-for-long-term-savings/

Six Ways You Can Get Smarter About Your Finances

A person’s finances are one of those topics that can often cause stress, anxiety, and frustration. Not many people walk around feeling secure in their finances, thinking they’ve really got everything together and have more money than they need. The thing about it is that finances don’t have to cause that sick feeling in your stomach or that sense of worry. In fact, there are all kinds of ways you can start getting smarter about your finances and feel more secure where your financial portfolio is concerned.

So, for those looking to take control of their finances and put an end to the constant worry they so often cause, here are six ways you can get smarter about your money.

Create a Budget for Yourself

There are all kinds of tips you’ll find that will help you get smarter about your finances, but few tips are as important as this one. Creating a budget for yourself allows you to lay out all your expenses and your income. You are bound to be surprised by the results, as creating a budget can show you areas that you are over-spending in and areas where you could be spending more.

For example, you may find that you’re spending a whole lot on entertainment each month, but only the minimum on debt repayment. You can pay off your debt a whole lot faster if you shift things around and take some of that money out of entertainment expenses and put it into debt repayment instead.

Track All Expenses for at Least a Few Months

After setting up a budget that you can follow on a monthly basis, the next step should be to track everything for at least a few months. Today, you can find all kinds of free apps that will allow you to create a budget and track all expenses. This is a great way to stay on track and ensure you don’t veer out of your budget.

Start Saving – Even If It’s a Small Amount

Savings are one of those things that every person should be aiming to do. It doesn’t matter how much or how little you make, savings can end up coming in extremely handy, whether it be for an emergency, a big ticket purchase, or even retirement down the road.

The earlier you are able to start your savings, the better it will be for you in the long run, but often people put it off because they figure they don’t have enough to save. Even if it’s just a small amount each week that you put away, it will add up over time. So don’t get hung up on the fact you’re only putting a small amount into your savings; with a decent interest rate, that is going to grow and grow.

Educate Yourself and Enrol in Financial Courses

Of course, if you’re looking to get really serious about your finances, and possibly pursue a career in it, then the best idea is to educate yourself in a formal way. You can enrol in finance courses that not only go over the basics but provide you with the foundations you need to pursue a career in the field.

The field of finance is one that is always robust and always seems to be growing, so it truly could end up being a rewarding career path for you.

Work On Paying Off Debt

Another priority should be to focus on paying off your debt as soon as possible. This could mean things such as credit card debt, student loans, personal loans, a car loan, etc. The faster you can get out of debt, the less you will pay in the long run since you will save on interest, and you’ll have that much more cash left in your budget.

Consider Downsizing if It Will Help

The final tip involves taking a close look at your life and looking for areas that you may be able to downsize. Sometimes downsizing is the best and only way that you can make significant savings where your expenses are concerned. This includes big moves like getting rid of your car and using public transportation instead and moving to a house or flat that is smaller and, therefore, more affordable.

Granted these are pretty drastic moves and not necessarily ones you look forward to doing, but at the end of the day, it can add up to significant savings and help you get your finances back on track.

Take a Logical and Methodical Approach

Getting smarter about your finances doesn’t just involve one or two steps, and it’s not a one-time thing. It’s about taking a logical and methodical approach to your life and making lifestyle changes that are long-term choices.

from Finance Girl http://www.financegirl.co.uk/six-ways-you-can-get-smarter-about-your-finances/

Commercial property: What can we expect from this asset class?

Ready for a bun fight? Commercial property is a controversial asset class, even among passive investors.

Okay, we’re not talking the “Let’s take this outside!” fury of the gold bugs, or the evangelism of a Bitcoin absolutist.

But it’s surprising how much controversy an out-of-town office park with easy access to the M4 can inspire.

• Yea! Commercial property fans say it offers diversification away from shares, without giving up as much potential return as cash and bonds. Property gets its own allocation in several popular model portfolios.

• Nay! Detractors say the diversification benefits are not proven, that most of us already have exposure to property through other shares and even our own homes, and that the assets themselves – big buildings that are expensive and time-consuming to sell – are ill-suited to retail funds. Many model portfolios skip property altogether.

Who’s right? Let’s consider the pros and cons of commercial property and you can make up your own mind.

Characteristics of commercial property as an asset class

Academics place commercial property somewhere between shares and fixed income in terms of risk and return.

This makes sense if we think about the bricks and mortar reality of property.

While the specifics vary, a commercial property – an office, hotel, warehouse, or apartment block – is basically a building that is let to tenants. Out of these rents, the building usually pays its owner an income. This cash flow is roughly akin to the coupon you get with fixed interest such as a bond.

Think more a riskier corporate or high-yield bond than a government bond, though. The rent from a property is not guaranteed, and the future value of the property is not certain.

The sort of tenants you have may determine how confident you can be as a property owner that they’re going to pay you on time. You may even agree a lower rent with a higher quality tenant. Government bodies or blue chip firms on long leases are safer. Properties let to them are akin to better quality bonds.

Alternatively, you might gamble on risky tenants for a higher income. If they do default you can replace them, after some disruption – unless your property is in a worsening part of town or there’s some other reason why it’s become less desirable, such as rising crime or even a war (possible on a global view.)

Here your property looks more like a very high-yielding, riskier, corporate bond.

We should consider, too, the upkeep of property.

Buildings don’t repair themselves. If you own your own home, you already know property can be a money sink. It’s not just the maintenance and repair. There’s also the cost of keeping up with technological advances and fashion.

Walk around the oldest part of your town. There are no outdoor toilets. Central heating and mains plumping will be universal, even in 200-year old buildings, as will be insulation and glazing, lifts and escalators, communications cabling, and so on.

All those upgrades took money. Keeping your property modern and competitive is an ongoing business.

This is the more business-minded, equity-like aspect to property. Landlords spend to maintain or increase their properties’ value. Such outgoings are another claim on the cash flows coming from rent. What to best spend money on is a judgement call.

That’s very different to a bond. From the investor’s point of view, a bond just sits there paying out cash until it’s redeemed.¹ It is a more straightforward investment.

On the other hand, compared to most equities, a property is a pretty stable asset. Many companies strive to reinvent themselves just to keep their customers. The property sector does change, but the pace is slower.

Property is also a real asset, like shares, gold, and ‘valuable stuff’ like antique chairs.

Real assets can increase in value with inflation, unlike paper assets such as banknotes or most bonds. The latter² are redeemed at a pre-set face value, which means their spending power will be shrunk by inflation.

Boil it all down and you see property is a real asset that is a bit of a bond/share hybrid.

No surprise then that the risk versus return profile sits between shares and bonds.

Note that some listed property companies (including some REITs) do a lot of development work. This involves planning and building properties, and perhaps trying to let them out before selling them on. Where development makes up a significant portion of their business (as opposed to letting out finished buildings) I’d say such REITs should be thought of as even more like equities than bonds in terms of risks, rewards, and volatility.

You always need to look under the hood of any property investment, be it a passive fund or an actively managed trust, to see exactly what you’re getting.

An off-the-shelf property empire

I’ve gone into this granular level of discussing single buildings with leaky roofs and dodgy tenants to explain the fundamentals of the asset class.

Fear not – as private investors we won’t be haggling over factories or running office blocks ourselves.

Instead we pool our money into funds. This way we can own a bit of many buildings or developments.

Diversification across an asset class like this reduces the risks compared to buying your own entry-level commercial property, such as a newsagent or a commercial lock-up.

Property funds enable you to get exposure to the underlying asset class with a single purchase. Many pay out a fairly high income, too, reflecting the income-generating nature of most non-speculative³ property investment.

But funds come with their own difficulties, too. We’ll get into them in a follow-up post.

Returns from commercial property

So far I’ve described commercial property through my lens as an active investor.

I just can’t help thinking about how underlying businesses work!

But if I were my sensible passive investing co-blogger, I’d focus on property’s historical returns. There’d be nary a mention of leaky roofs or unreliable tenants.

You say, toe-may-toe, I say, tom-ah-toe – let’s do it his way before he calls the whole thing off.

The Financial Conduct Authority (FCA) recently published historical nominal⁴ returns for commercial property from 1990.

It also gave the return expectations that it was comfortable with pension funds and advisors using in their forecasts.

Quoting data from the Investment Property Databank, the FCA says:

• The average annual nominal total return from commercial property from 2001 to 2016 was 7.7%.

• The median annual nominal return was 9.9%.

These returns are at the property ownership level – that is, as if you owned the building yourself. They exclude the impact of development costs and transactions.

Now, huge pension funds and life insurers do own some property directly, as well as using funds.

But private investors like us will struggle to scrape together the money for a tower block in Docklands. We’re interested in the return from the property funds, ETFs, and listed company shares that we use to gain exposure. And you can be sure we will have to pay some costs.

To get closer to this, the FCA looks to the historical returns of the AREF/IPD UK Property Fund Index.⁵ The index includes:

“… the impact of development costs and transactions as well as the returns from other assets (such as cash and indirect property investments), the impact of leverage, fund-level management fees and other non-property outgoings.”

Costs reduce the return seen by private investors. On this basis, over that same 2001-2016 timescale, the AREF/IDP index has:

• The average yearly nominal total return for property at 6.3%.

• The median yearly nominal return at 9.4%.

Interestingly, the AREF data also goes further back, to 1990. Over this longer time period, which will dilute the impact of the financial crisis:

• The average and the median returns were 6.5% and 10.1%, respectively.

These returns came with huge volatility, especially during the financial crisis.

Look at the following graph:

(Click to enlarge)

Source: FCA/AREF/Datastream

If you owned property in 2007 to soften the impact of equity market falls, you might have asked for your money back.

An aside about income

That graph shows us another important characteristic of commercial property – in many years, income (the red portion of the bar) is a sizeable portion of the return you get from property.

The income component of the return is also far more stable than the feast and famine of capital gains.

Be sure to hold your property assets in a tax shelter such as an ISA or SIPP where possible, to avoid this income being scythed away by taxes.

Also note, the income paid out by a REIT looks like a dividend but most of it is technically a Property Income Distribution.⁶

This may present tax issues outside of tax shelters. See this handy explainer from British Land.

The REIT stuff

As we’ll see next time, many private investors get their property exposure by investing in a particular kind of investment trust called a REIT.⁷

The FCA gives nominal returns for the FTSE 350 index of these REITs as follows:

Source: FCA / Bloomberg

Total returns since 2005 look lousy – especially given the accompanying high volatility. (A downside of stock market-listed property funds is you get at least some of the volatility of shares but also the lower expected returns of property.)

It’s clear the financial crisis of 2007-2009 clobbered returns, as we also saw in the graph.

Over the shorter period since 2010, returns have been good. But half a dozen good years is a thin track record to hang your hat on, even if you believe the financial crisis was a once-a-generation event.

Some property skeptics such as Lars Kroijer argue that we simply don’t have enough long run data to justify investing in this asset class specifically⁸ – at least not as private investors.

To that point, the specific REIT structure has only been going in the UK for a little over a decade! (Previously what became the first REITs were more traditional property companies with a less attractive tax profile.)

You may retort that individuals have made famous fortunes wheeling and dealing in property directly. But this experience may not prove to be very analogous to owning a stock market-listed REIT in an ISA.

On the other hand, Tim Hale of Smarter Investing fame believes the (short-run) data is good enough to justify adding a global REIT to a passive portfolio.

After voicing reservations about traditional property funds that locked up investor money during the financial crisis⁹, Hale says:

“Holding a global REIT passive fund makes sense from a diversification perspective […]

Property tends to have a low correlation to equities, providing diversification benefit, as property performance is usually linked to rental value, in turn linked to economic growth, unlike the earnings of non-property companies that are less correlated to economic growth.

This is borne out in a correlation of 0.5 that is exhibited between UK equities and global property. This diversification is achieved without the substantial return give-up of holding bonds or cash.”

While I broadly agree, I’d caution that Hale’s correlation data does not seem hugely extensive. It’s unclear from his book, but as best I can tell it seems to be drawn from the 20-year period from the 1990 to around 2009.

Also, given that interest rates mostly fell throughout those years – eventually to near zero – I wouldn’t describe it as a wide range of environments to draw conclusions from.

I’m also unclear as to whether Hale has backed out currency swings when he compares a global REIT to UK equities.

Again, over such a short time frame, currency risk could be a meaningful contribution to relative returns.

Future returns from commercial property

Summing up, property valuations can be almost as volatile as equities, but the income is generally much more stable, giving us a mix of the characteristics of equities and bonds.

In addition, property itself tends to be illiquid, due to the expense of buying and selling.

This may or may not be the case for your chosen investment in the short-term¹⁰ but it stands to reason that long-term, property holders will probably get an additional return for putting up with this illiquidity with their risk capital.

What’s it all worth, in terms of expected returns? Finger in the air – probably a bit more than owning very liquid bonds, but a bit less than owning very volatile equities.

The FCA report agrees, and estimates an expected real return on property that’s somewhere between the expected returns from equities and from bonds:

We assume a spread over government bonds of 3% to 4%, over a 10-15 year time period.

This implies a real return on property of 2.5% to 3.5%, based on the midpoint of real government bond returns of -0.5% and nominal returns of 5% to 6% based on a GDP deflator assumption of 2.5%.

This expected return guidance from the FCA is lower than it recommended just a few years ago in 2012, incidentally.

The reduction follows a corresponding drop in its projected real returns from government bonds. As I’ve mentioned many times, you can’t just look at rock bottom government bond yields and presume everything else is that much more attractive – at least not if you believe in classical economy theory.

Government bond yields underpin expectations elsewhere; they are the ‘gravity’ of financial markets, as Warren Buffett puts it.

If forward returns from government bonds are low, then the market has its reasons (it fears recession, or doubts we’ll see inflation, for example). Those reasons will often affect what we can expect to see from other asset classes, too.

On the other hand, while expected returns are a key part of passive portfolio construction, I wouldn’t bet my life on them. Forecasting is fraught with difficulty.

Property, especially, seems to me an asset class in limbo. It’s been struck by a deep crisis within the past decade while also being boosted afterwards by ultra-cheap money.

In addition, the world’s property estates face a secular upheaval from the shift to online shopping, socializing, and business, which could permanently impair the demand for some property, or at least force more refurbishment and regeneration.

Don’t get me wrong, I think the asset class has its attractions – and UK REITs focused on London seem to me a potential bargain right now. But I’d suggest a modest allocation of about 5-10% is about right for most passive and active investors, given the risks, prices, and economic backdrop.

In a follow up article I’ll look at how you can buy into property without dealing with a single suited geezer or donning a hard hat. Subscribe to make sure you get it!

1. A professional bond investor will look into the viability of the company or government behind the bond. But the actual security itself is just an IOU with a known income attached.
2. That is, not inflation-linked bonds
3. i.e. Development.
4. That is, without adjusting for inflation.
5. This is based on the performance of members of the UK Association of Real Estate Funds (AREF) and published by IDP.
6. In short, the letting income is paid out as a PID, whereas money made from other activities can be paid out as a dividend.
7. Real Estate Investment Trust.
8. Global index funds as favoured by Lars will include a small percentage of property companies.
9. Some also did this again after the Brexit vote correction.
10. A REIT can be sold at any time, but potentially at a discount to underlying value, a non-listed fund may be ‘gated’, locking up your capital, which stops panic selling but is no good if you need the money.

from Monevator http://monevator.com/commercial-property-what-can-we-expect-from-this-asset-class/

Weekend reading: What is your reason for being?

What caught my eye this week.

There are some things you have to experience to fully understand. Losing your virginity is famously touted as one. Parents say bringing up a child is another. I haven’t had that pleasure and I am more than happy to take their word for it.

One I would add to the list though is reaching what I suppose we must call ‘middle age’ (excuse me while I pop off to shout into a pillow… okay, back now, that’s better) and looking back at the various ways your life to-date has fallen short of what might have been.

Sometimes you didn’t realize why at the time. Perhaps you were being paid a fair whack not to think about it. Occasionally you were having a blast. Sometimes you had an inkling. Sometimes you couldn’t pay the rent so it was pretty obvious.

Maybe the Japanese explain it best with this phrase and associated image, as shared by Rachel page on Twitter:

Looking at this diagram, I feel like I’ve lurked in the outer suburbs for most of my life, like some frustrated Home Counties adolescent poet – certainly not on the isolated fringes, so comfortable enough, but never in the thick of everything and completely fulfilled.

If I have achieved Ikigai then it was only fleetingly, and I’m not sure I noticed in the moment.

Many seekers after financial freedom, such as my co-blogger, don’t seem to believe they can ever achieve Ikigai through work, so they best opt-out ASAP. I’ve said many times I believe there’s a risk of swapping one dissatisfaction for another by bailing out entirely – not to mention the pain of getting there – but plenty disagree.

I like this diagram because it suggests a wonderful balance is possible. But I’d agree that like a Zen koan it’s probably more something to be than achieved by most of us.

From Monevator

10 things you can do today to reset your life – Monevator

From the archive-ator: Admit it, you miss the market meltdown – Monevator

News

Note: Some links are Google search results – in PC/desktop view you can click to read the piece without being a paid subscriber. Try privacy/incognito mode to avoid cookies. Consider subscribing if you read them a lot!¹

Some landlords face a tax rate of up to 66% on rental profits – ThisIsMoney

Asset managers ‘have something to hide’ from pension trustees [Search result] – FT

House prices grow at the fastest rate in a year, says Halifax – Guardian

UK homeowners opt for five-year mortgages amid economic worries [Search result] – FT

Waterstones buys rival Foyles as ‘real bookshops’ strive to survive Amazon – ThisIsMoney

Thinktank calls for major overhaul of Britain’s economy to achieve ‘economic justice’ – Guardian

Products and services

New app AirWayBill enables you to turn courier to save money on flights – ThisIsMoney

Energy bills to be cut by around £75 for more than 11m households – Guardian

How high street banks reward premier customers [Search result] – FT

Downstairs bathrooms can wipe £13.5k off the value of an average property – ThisIsMoney

Ratesetter will pay you £100 [and me a cash bonus] if you invest £1,000 for a year – Ratesetter

An overview of Monzo, Starling, Revolut and the other fintech darlings – ThisIsMoney

Terry Smith launches global smaller companies trust – CityWire

More: Trust launches show potential and — for once — fairer fees [Search result] – FT

Cryptocurrencies slump amid fears regulatory uncertainty will deter finance giants – ThisIsMoney

A look into the underbelly of the cryptocurrency markets – Nic Carter

Comment and opinion

Why you should calculate imputed rent – My Deliberate Life

The misjudged Lifetime Isa works only for those most able to save [Search result] – FT

It’s not time to hit the ejector seat on emerging markets – Bloomberg

Gold, what’s it good for? – The Irrelevant Investor

Merryn S-W: The Bank of Mum and Dad risks going out of business [Search result] – FT

That’s rich – The Humble Dollar

How to run out of life before you run out of money [Search result] – FT

Small investors shouldn’t bother with factor investing – Dan Solin

Value investing in the Third Reich – Jamie Catherwood

Why you shouldn’t retire super-early, even if you can – MarketWatch

What really goes on at Mr Money Mustache headquarters – Mr Money Mustache

Why I sold Senior PLC after recent share price gains – UK Value Investor

Revisting the melt-up scenario – A Wealth of Common Sense

The cereal entrepreneur – Seth’s Blog

What if? [Provocative macro-economic speculation] – Dr Yardeni

Kindle book bargains

The $100 Startup: Fire Your Boss, Do What You Love and Work Better To Live More by Chris Guillebeau – £0.99 on Kindle

My Fight to the Top by Michelle Mone – £1.19 on Kindle

Your Money or Your Life: A Practical Guide to Getting – and Staying – on Top of Your Finances by Alvin Hall – £0.99 on Kindle

Small Change: Money Mishaps and How to Avoid Them by Dan Ariely – £0.99 on Kindle

Off our beat

The way forward on immigration to the West – The Economist

Josh Rogan interviews Elon Musk [Video] – YouTube

Have the Famous Five got into boiler room fraud? – via Twitter

BBC admits it got climate change coverage wrong. No more deniers for ‘balance’- BBC

And finally…

“[Rural Indian] women who recently got cable TV were significantly less willing to tolerate wife-beating, less likely to admit to having a son preference, and more likely to exercise personal autonomy. TV somehow seemed to be empowering women in a way that government interventions had not.”
– Steven Levitt, Stephen Dubner, Superfreakonomics

Like these links? Subscribe to get them every Friday!

1. Note some articles can only be accessed through the search results if you’re using PC/desktop view (from mobile/tablet view they bring up the firewall/subscription page). To circumvent, switch your mobile browser to use the desktop view. On Chrome for Android: press the menu button followed by “Request Desktop Site”.

from Monevator http://monevator.com/weekend-reading-what-is-your-reason-for-being/

How to keep up with your business finances

Many people think that running a successful business is as easy as spotting a gap in the market and then filling it. While this is definitely important, it is not the only thing you need to think about. Much of what separates businesses that fail from those that don’t is good financial management.

This is not always as simple as it sounds though, especially for smaller businesses or start-ups. You may be doing everything as a one-man band but not be in love with financial reporting. How can you keep on top of your company finances in the simplest way?

Great ways to keep up with business finance

If you are one of those entrepreneurs who doesn’t love numbers, then it can seem a hassle doing the books. Here are some amazing ways to make it better and always stay up to date on how your business is doing:

• Outsource your accounts – if you really don’t like looking after the financial side of your business, then why bother at all? Instead, you could outsource your tax, accounts and payroll to a professional accountancy firm to do for you. This will not cost lots and will actually give you more time to bring in new business. The superb small business accountants that you can find online now give the perfect mixture of value for money, expertise and online access to your accounts when you need to view them.

• Keep an eye on incomings and outgoings – even if you do outsource your accounts, you still need to look at them regularly. This will allow you to gauge the health of your business and deal with any issues in advance. One area to keep an eye on is your incomings and outgoings. On the incoming side, it is vital to track invoices and make sure that you have been paid for all work done. When it comes to outgoings, track exactly what you are spending money on and if it is necessary or can be reduced.

• Save for the future – another great tip for keeping on top of your business finances is to assess what you have in reserve for future plans or emergencies. All businesses can hit rocky patches now and then, so you need to always make sure that you have some cash aside to help ride them out.

• Create a schedule – any good accountant knows that control is key to managing business finance. With this in mind, you need to work out what needs paying or reporting when and set up a schedule to remind you. This will ensure that nothing is missed and you do not fall foul of any fines for being late with information. This is critical if you or in-house staff are the ones keeping your finances in check.

If you run a small business, then finding a way to keep up to date with your finances is vital. In doing so, you will have full peace of mind to not only plan for the future but also see where you are at the moment.

from Finance Girl http://www.financegirl.co.uk/how-to-keep-up-with-your-business-finances/

Choosing office chairs that are the right fit for your company

From complementing your design scheme and reflecting your brand to ensuring you and your colleagues can work in comfort, office chairs undoubtedly play an important role in workplaces. If you’re about to buy new seating for your office, keep reading. Here are some top tips that will help ensure your chairs are the right fit for your company.

Get the look

In its recent infographic ‘My Chair: Get the celebrity look in your office’, Furniture At Work, which supplies everything from storage solutions to chairs and desks, offered some useful pointers when it comes to selecting the right style of seating. It noted that if you want to make a statement and come across as strong, leather chairs could be just what you need. These models can help you to assert your dominance and create an air of professionalism.

If you’d prefer to showcase your more fun, playful side, colourful seating could be perfect. From lime green, to sunset orange, to pillar box red, there are a host of vibrant hues that can reflect your company’s character. To add a contemporary edge, why not select colourful chairs in modern looking mesh designs?

Alternatively, for a more understated effect, you could opt for simple operator chairs in neutral colours such as cream or grey. These seating solutions can help you to showcase your firm’s no nonsense, straightforward approach and they can create a calming atmosphere in your office.

Don’t compromise on comfort

As well as taking appearance into account, it’s essential to think carefully about the practicalities of your new chairs. For maximum user comfort, your chairs should offer impressive lumbar support and they should feature padded seats, ideally with waterfall fronts. Height adjustability and back tilt are useful features to have too, and you might want to think about getting models with adjustable arms.

By paying attention to these features, you can help to keep bad backs and sore necks at bay.

Ensure they’re good value for money

Last but not least, make sure the seating you go for represents good value for money. By shopping around, you should be able to find competitively priced solutions, so it’s well worth doing your research. Also, bear in mind that cheapest isn’t always best. As well as seeking out low prices, make sure you opt for seating that is robust and built to last. These products will offer you better value over the long term.

from Finance Girl http://www.financegirl.co.uk/choosing-office-chairs-that-are-the-right-fit-for-your-company/

10 things you can do today to reset your life

This is a guest post by David Sawyer, author of the brand new UK-focused financial freedom book: RESET: How to Restart Your Life and Get F.U. Money. David suggests you don’t do any of the steps below while operating heavy machinery.

I have been on a journey, which led me – via my discovery of the largely US financial independence movement – to reset my life.

In my first book RESET, I draw on my family’s experience – and that of myriad academics, athletes, self-help authors, and philosophers – to present a programme for midlife professionals to, within a year, take stock of their lives and transform their futures.

The plan is multi-faceted but The Investor asked me to cut through the 373 pages, 511 Notes and 15-page index to give his readers (that’s you) – my top ten tips.

Here is my best shot. If you want the full bhuna, buy the book!

1. Find what matters to you

Life’s about being happy, right? Well, if it were as simple as that we’d all be eating junk food, glued to our smartphones…

What we’re really chasing is the meaningful happiness that comes through accomplishments, putting one foot in front of the other, deciding what you stand for and against, stepping up to the crease and showing folk what you’ve got.

People on their deathbeds regret unfulfilled dreams, missing their kids growing up, working too hard, not saying what they thought, not spending enough time nurturing friendships, and not realising there is another way.

Don’t be those people! Nail a clear vision of where you want to be when you’re financially independent (mine involves Andalusia) and work out what exactly you’re going to do to get there.

A measurable family mission statement pinned on the corkboard works well.

2. Go digital to future-proof your life

The increase in broadband speed this past ten years has changed the world and we’re all struggling to catch up. For many midlife professionals, going digital has become a stick to beat us with, as we fight to juggle the competing priorities of family, work, our God-given right to drink two overpriced giant coffees a day and that old dear who’s driving 20 in a 40 zone.

Working out a way to increase your profile by grasping the digital nettle is one of the best ways of enhancing your career prospects and getting more money in. Read blogs, set up your own, start an email list, buy a giant bulldog clip and index cards to record and work out your worldview.

Commit to lifelong learning – or at least have a dabble for Pete’s sake. It’ll help your money, and your life.

3. Declutter

One of the best ways to do meaningful work, accomplish things, to struggle every day to make yourself happy, is to declutter your life: digitally, mentally and physically.

The Internet is amazing, but when it comes to social media, it’s messing with our minds. Turn off your notifications, charge your phone overnight anywhere but your bedroom and ween yourself off those dirty dopamine hits (Ding, ping, whoosh: where’s my phone, someone’s contacted me, someone likes me. I’m going to get a doggie treat. Give. Me. That. Phone…).

Be mindful, offload on a friend, try adopting the Morning Pages habit. Marie Kondo your house. There’s a life-changing magic in tidying.

4. We’re rolling in it

As midlifers who always feel completely skint, it’s hard to believe that we’re rolling in it.

But say you’re a primary teacher on £30,000. That £30,000 turns into £23,780 after-tax. Did you know that places you in the top 1.18% richest people in the world?

Or how about the findings of Danko and Stanley in their unrivaled The Millionaire Next Door? Many people they interviewed with a net worth of $2m or even $3m got there on a joint pre-tax annual household income of $80,000 (that’s £56,000).

Our best chance of FIRE (financial independence or early retirement) is not winning the lottery (odds of £45m to one) but protecting the money we have and making it work harder.

Achieving financial independence is tantalisingly within our grasp. We just need someone to shine a light for us.

5. Do your stash maths

Maths, man. How did you find it at school? The biggest thing holding back financial independence in the UK is overwhelming fear of the morass of pensions, shares, windfalls and long-dead great aunty inheritances that comprise most people’s financial future until – in their mid-50s, often too late – they realise they better start thinking about these things.

All this becomes simpler when you do your stash maths (Mr Money Mustache devotees like you and me will be familiar with this concept).

Simply establish how much you need to live on per year after-tax when you achieve FIRE. Find what size stash you need to get you there. See what you already have. Then – based on stash-size required, frugality/efficiency of your family, target FIRE date, and budget – identify how much you need to save every month.

Okay, it’s not quite as simple as all that, but working out these figures with your partner is fundamental to resetting your family’s life, and will give you great heart that your lucid vision will one day become reality.

6. Budgeting

No-one runs a business without doing the numbers once in a while, so why do most midlife professionals have little clue how much ‘life energy’ is slipping through their fingers every day?

Why is our work more important than our one and only life? I calculated last year that every latte I buy adds 10 minutes on to my working week; I buy a lot less coffee now.

Let’s get something straight: this is not an anti-work manifesto. I love my job. But I’d much rather be doing it because I want to be doing it, not because, like most people, I need the money.

Budgeting is easy. Use Money Dashboard and a spreadsheet (I use Martin Lewis’s Budget Planner). Like Kiyosaki, track every pound that goes in and out of your pocket. You’ll soon be marvelling at your previous twice-weekly meals out at the kid-friendly posh café, because you were too worn out from your day’s work to go home and cook your family a nutritious meal.

7. Frugality and efficiency

I’m a PR consultant, my wife’s a social work manager. We live comfortably in an upmarket suburb of Glasgow. Partway through our RESET, we slashed £900 off our monthly spending. We allocated an extra £100 to our holiday pot, and invest the rest.

We’re not living on mung beans: we both work full-time, holiday six weeks every year and spend more time with of our kids. This makes us happier.

Efficiency is a mindset. Once you reset, people who drive Range Rover Evoques will cease to provoke feelings of envy. Embracing efficiency will run through your life like a sinuous automatic muscle, affecting everything from where you place your shoes when you get in from work to where you shop. I recommend The LAHs (Lidl, Aldi and Home Bargains).

8. Indexing

What to do with your stash? Consider investing in a globally diversified portfolio of super-low-cost index funds and ETFs. Do so within your work-defined contribution pension, or when it comes to workplaces you left long ago consolidate them into your own SIPP.

Dabble if you must – some people are only human – but never invest more than 5% of your stash directly in individual shares.

Remember, when working out your appetite for risk, that your net worth is different from your stash – your net worth includes your house equity and any final salary pension, if you choose to leave it where it is (or can’t transfer it out). If you have, say, a final salary pension, house equity, and a mishmash of investments and pensions, split in equal measure, you may feel a little more comfortable investing 100% of your stash in index funds.

Always keep a disaster fund (accessible money, say in an ISA) that’ll cover at least six months of family living expenses.

And I assume, as a Monevator reader, your only debt is your mortgage.

9. Your legacy

Secure your legacy by sorting your life insurance, making a will, setting up a Power of Attorney, and ensuring that your partner is the beneficiary of any big money pots you have.

Teach your kids the magic of compound interest by transferring their child trust funds to junior ISAs and investing a la you, setting them up with a cloud-based tracker.

Did you know that a couple can pass on up to £1m to their children tax-free when the last man/woman standing dies? Your kids could be set for life at an age (averaging 61) when they still have time to enjoy it.

Crucially, there’s usually one partner who does the money and one who has absolutely no interest in all things investments. So make sure you take a leaf out of Mr Buffett’s book and, on your death, transfer your stash into something that doesn’t need any manual intervention from the surviving spouse.

For us in the UK, I suggest Vanguard’s globally diversified, reduced-UK-weighting, 0.22%-fund-management-charge LifeStrategy 80 fund.

10. Live a principled life

RESET is a coherent, super-detailed programme, backed up by more sources than you can shake a lightsaber at.

We all feel our own force: we are all made from a different kit parts. But there are a few common principles to living a good, meaningful and happy life. Never give a monkey’s what other people think about you, make time for deep work, be boring to be creative, work hard, act on enthusiasm and see where it takes you.

Use negative motivation to propel yourself and find somewhere you can test your developing worldview to see whether what you believe actually works in practice (my experimentation ground is running).

Resetting your life can be as long or short or complicated as you want, but do, please, consider it.

Never, ever, despite your outwardly successful appearance, accept that the hopes and dreams you had as a kid are gone forever.

Never accept that this is it, and just live for your family. It is never too late to RESET, even without the external force that commonly prompts a reassessment of what we were put on this earth to be.

Last, I leave you with William Ernest Henley’s fine words in Invictus:

“It matters not how strait the gate, or charged with punishments the scroll. You are the master of your fate. You are the captain of your soul.”

David Sawyer is an award-winning PR man and 2:40 marathoner. He lives in Glasgow with his family and hamster. RESET is his first book. Jacob Fisker of Early Retirement Extreme fame describes RESET as: “A comprehensive introduction to things you didn’t learn in school but should have.” The Kindle version costs just £2.95 this week. Or you can invest £10.95 in the paperback.

from Monevator http://monevator.com/10-things-you-can-do-today-to-reset-your-life/