Archive | March, 2014

My Reaction To The Budget

20 Mar

From my point of view this was a budget that supported investors. In July we see the introduction of a new ISA account – called NISA – which combines the current stocks and shares isa with the cash isa allowing tax free investing up to £15,000 per year. I regularly write about the benefit of investing in high yielding shares providing good cashflow. The more you can invest the more dividends earned and the quicker you can achieve your income goals.

P2P (Peer-to-Peer) lending can be brought under the ISA allowance so income earned will be tax free for the first time, but is part of the £15,000 per year investment limit. P2P lending provides a very important role to borrowers where banks have restricted lending to general public. (note. P2P lending should not be confused with payday loans – P2P lending is a sound responsible format supporting businesses, general borrowers and investors)

Children’s ISA – JISA – has also had an increase in the amount you can save this is now up to £4000 per year.

Extension of the Help-to-Buy scheme will allow more people onto the property ladder and with the financial support for increasing the number of houses built it looks like a property recovery is underway. The announcements should hopefully support more stable house prices with steady growth and continued low mortgage rates. So there is plenty of scope available to the property investor.

Business has not missed out either with direct lending from the government to support export companies. There are reductions in costs associated with employing people. Additional support through enterprise zones along with the promised corporation tax cuts should help encourage business to grow and be able to afford to employ more.

Employees have an increase to £10500 before paying tax, higher income bracket has increased and will increase again the following year. This should provide more disposable income. The benefits are more money to invest.

Beneficiaries will have further caps put on their income. For them the difficult part is the transition to working life but throughout this website there are many opportunities to help take the first steps towards independence.

I encourage building businesses and reinvesting profits into passive and residual income assets. It was very encouraging to see a budget that fully supports those philosophies.

Karen Newton is an entrepreneur, investor and author.  Many of her books can be found on this site.  For more information visit www.karennewton.co.uk

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The Answer is Yes….

13 Mar

Can anyone become rich?  The answer is yes.

We all have the ability to become wealthy.  There is enough money in the world for everyone to be rich so why do we have the poor, the middle class and the rich?  Lack of Financial Education is the number one reason.  The second is that many people won’t do what is necessary to achieve wealth.

We live in a world of ‘must have now’ mentality.  I must have a new car now.  I must have the gadget.  I must have … now, now, now.   The sad reality is ‘the must have now’ don’t have any money and borrow money to buy whatever they want.  They get deeper into debt and start a vicious cycle of borrowing, repaying loans, borrowing etc.

If you have financial education you will understand that building income producing assets which provide the cash needed to make all the purchases you want without being in debt is the only way forward.

 Is there a simple formula to becoming rich?  The answer is yes.

Study the rich list each year and you’ll be surprised at how people have got their wealth.  A large proportion of them inherit it.  The remainder have built businesses and invested the income and/or profit into securities.

So our simple formula to becoming rich is: BPR – Business – Portfolio – Residual.

Business – Many people don’t think of a business as investing but a business is one of the most important types of investments an investor can make.  Think about if you buy shares.  You need to understand business to make sound decisions on which companies are worth investing in.  A lot of the experience and knowledge comes from running your own business.  You don’t need to become the next Richard Branson (Virgin) and have over 400 companies.  There are simple cash rich businesses that anyone can run.  Many business owners started out either because they were fed up with their job and thought they could do a better job or with a hobby that became a business.  These people have gone on to build successful businesses.  For those who don’t want the hassle or stress of building a conventional type of business there is Network Marketing.  This type of business model provides all the training and support necessary to get you started and to help you build a business.  If you are shy they will help you overcome that shyness and build your confidence to succeed.  So there really is no excuse for anyone not to run a business.

Once you have your business you start using profit from the business to buy securities which provide Portfolio Income or Residual Income.  (If you build a network marketing business you are building Residual Income)

Portfolio Income – is income generated from Shares or paper assets.  These are purchased using profits from your business.  All you do is keep purchasing more and more.  Reinvest the dividends, returns etc. and over time compounding interest will work its magic and substantial wealth and income can be created.

Residual Income –  usually refers to property and network marketing businesses.  When buying property each piece of real estate is its own business and produces regular income when rented along with capital growth over time.  With a network marketing business, a regular amount of work is needed say, 1 hour a week, and over time this will build into a business that can produce unlimited incomes.

So we come back to our questions.  Can anyone be rich?  The answer is yes.  Is there a secret formula?  The answer is yes. Its BPR.