YOUR 10 BIGGEST FINANCIAL MISTAKES...... AND HOW TO CORRECT THEM
Mistake No. 1
25 YEAR MORTGAGE: why? You pay $540,000 for
each $200,000 of mortgage at 10% interest.
CORRECTION: get a 15 year mortgage and
increase you payments by only 18%.
RESULT: You pay $382,240 for each $200,000 of
mortgage. You save $154,760.
Mistake No. 2
BUYING WHOLE LIFE INSURANCE POLICIES: why?
The most expensive type of life insurance.
CORRECTION: Buy level premium term insurance.
RESULTS: Save up to 70% on premiums.
Mistake No. 3
BUYING ENDOWMENT INSURANCE AS AN INVESTMENT:
why? Poor investment returns due to high
charges and poor tax efficiency.
CORRECTION: Keep life insurance seperate from
savings and investments.
Results: Save on life insurance premiums and
improve returns.
Mistake No. 4
BUYING NEW CARS: why? Car's depreciate 30% to 50%
in the first two years.
CORRECTION: Buy a 2-3 year old car.
Result: Save thousends of dollars.
Mistake No. 5
NO RETIREMENT PLANNING: why? Over reliance on
government pension.
CORRECTION: Join your company scheme after a
thorough check. Or set up a private pension
scheme after taking advise.
RESULT: Because pensions have more tax advantages
than any other investment, the government is
subsidizing your retirement. Contributions are
tax deductible and investment profits are free of
tax.
Mistake No. 6
PAYING ALLOWANCES TO CHILDREN FROM AFTER TAX
INCOME: why? Allowances are taxed at the parents
tax rate.
CORRECTION: Pay children wages from your small
business, subject to hours and age limits.
RESULT: Save up to 40% of every $2,000 of
allowances
Mistake No. 7
NON DEDUCTIBLE COMPUTER AND CAR: Why? Its an
expense. Used in a small business,it can be
deducted.
CORRECTION: Depreciate within the small business.
RESULT: Assets for business are deductible over
time.
Mistake No. 8
BUYING INDERVIDUAL SHARES, GILTS, PRECIOUS METALS
OR COMMODITIES: why? Risky.
CORRECTION: Invest in equities or gilts through
Unit Trusts to ensure spread of risk.
RESULT: Lower risk investments and ability to
switch between cash equities or gilts to match
economic cycle. Benifit from professional
management.
Mistake No. 9
NO ACCESSIBLE CASH: why? Urgent cash requirements
can interrupt investment or require expensive
borrowing against investments.
CORRECTION: Build up cash reserve of 3 months
income in a TESSA or building society.
RESULT: Avoid forced liquidation of investments
or higher interest loans.
Mistake No. 10
SURPLUS SAVINGS IN BUILDING SOCIETY: why? Low
return.
CORRECTION: Beyond 3 month's cash reserve, invest
additional funds according to Flexible Investment
Strategy.
RESULT: Gain reliable long term returns on your
funds.
