5 Investment Strategies to Avoid in 2014

Investing in nothing at all has few advantages; it certainly can’t help you get ahead financially. However, one of the reasons people put off investing is the fear of losing money. This fear is logical and very sensible – you work hard for your money so you should think carefully before committing to an investment strategy which you feel to be high risk, but how do you tell? Doing something with your money is far better than doing nothing – but how do you choose the right something? Some investment strategies to avoid are listed below.

investment

You work hard for your money so you should think carefully before committing to an investment strategy.

The Sure Thing

Whenever you hear you can’t lose, or it’s completely risk-free regarding an investment, listen for the alarm bells too. You hear the same sort of claims at the race track. Any investment that claims to be a sure thing is, at best, misrepresented and at worst, a scam. No investment returns consistently high yields every year. If the investment doesn’t show any poor returns at all then the sales information may be questionable.

Ostrich Farms

Believe it or not, these are still offered as legitimate investments. The promised returns (in some cases over 200%) are highly suspect. Like any pastoral enterprise, there are risks associated with this type of investment. While ostriches are known to be hardy and long-lived birds they are also prone to pests and disease, just like cows or chickens, and the farms are just as vulnerable to drought and weather damage as any other. Unlike most other farming enterprises however, there is little demand for the product and this, couples with the capital-intensive nature of the investment means the promised returns are unlikely to materialise.

Movies

Investments in film sound glamorous but – contrary to popular Hollywood myth – movies rarely make money. While it has never been cheaper to shoot a film than it is now, the costs of distribution and promotion remain high – and the support of critics and/or the public remains capricious.

Art

Like film investments above, the value of art is highly subjective. Investors who choose art as a wealth creation vehicle are taking a big risk. Should fame in any large measure elude their artist of choice, the money spent on their work will likely never be recouped. If the painter were to die, their work could well increase in value but there is no guarantee of this, or that another investor won’t sell their collection at the same time, thereby flooding the market and reducing returns for everyone concerned. The associated costs of investing in such a high-risk enterprise (storage, insurance, etc.) are also high and will impact any potential return.

Timeshares

Timeshares may be a great way to holiday cheaply but as an investment there is no resale value. They are also quite time intensive. To get the best out of this sort of investment, you will likely be doing a lot of trades. These investments offer no capital growth – you’re unlikely to sell for more than you bought, and it doesn’t deliver any sort of income. It may save you money, as you can holiday less expensively but that’s about all it gives you.

Learning to tell the difference between a sound investment strategy and those you ought to avoid is all about developing your own financial intelligence. For more ways to enhance your knowledge of sound investment strategies, financial planning companies like My Wealth Solutions offer informative blogs. With the right guidance you’ll jettison fear and make the smart money decisions.

What’s the riskiest investment strategy you’ve ever heard? Share your comments below.

The information provided in this article has been provided as general advice only. We have not considered your financial circumstances, needs or objectives and you should seek the assistance of your GPS Wealth Limited (GPS) Adviser before you make any decision regarding any products mentioned in this communication. Whilst all care has been taken in the preparation of this material, no warranty is given in respect of the information provided and accordingly neither GPS nor its related entities, employees or agents shall be liable on any ground whatsoever with respect to decisions or actions taken as a result of you acting upon such information.

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Year-end Business Financial Planning

Just because the year is almost over does not mean that you should sit back and watch all the results of your efforts during the year come flowing in. Things will not fall into place all by themselves. Running a business involves keeping an eye on all aspects of your operations no matter what time of the year it is. Lest you be mistaken in thinking that the year end is time to wind down, it’s actually one of the busiest times of the year when it comes to our business financial planning.

business financial planning

It might be wise for you to start advancing your
payments now so you can enjoy savings on
your year-end business financial planning.

Whether or not you meet all the goals you set out for your business at the start of the year, you have to sit down and start pushing your year-end figures. It’s too late to reforecast your production or sales goals. It’s not too late, however, to look for ways to improve your bottomline and to minimize your tax accountability. If you don’t have a financial expert on-board, it’s time for you to hire a good accountant and financial analyst to help you close your year’s books and project your next year’s cash flow.

The most urgent concern now should be your year-end taxes for both your business and personal returns. You have to be responsible enough to pay your taxes, but you don’t have to pay more than you actually have to. There are legal ways of reducing the amount of taxes that you pay so that you can put more of your money into your business. Some of the things you should consider in your year-end business financial planning include:

Capital Expenditures – you can draw money from your books for capital expenditures like equipment purchase and software upgrades. You can continue to amortize such an expense in the coming year. In the meantime, you prevent the money from being eroded by taxes by pulling the expense forward when you purchase the equipment and software that you need before the end of the year.

Employee Benefits and Bonuses – giving money away to your employees will considerably bring down your taxes since you can log it as expense. Also in the same category are health and life insurance contributions, giving meal and transportation subsidies, moving expense benefits, and employee loans. These can all go down as fringe benefits on your W-2s and will thus not be computed as part of your taxable income.

Advance Payments – looking at your payables once the New Year rolls in should give you a chance to get a little more money out of your taxable income. You’re going to pay for them anyway, it might be wise for you to start advancing your payments now so you can enjoy savings on your year-end business financial planning.

Image Credit:
Worradmu – FreeDigitaPhotos.Net

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