by The Investor
on March 17, 2010
I believe cash is king of the asset classes, which might come as a surprise given that I most often talk about investing in equities (by buying shares in companies).
But equities are a necessary evil that come with big downsides:
- There’s relatively high costs involved in buying and trading equities, even in cheap index funds.
- If you buy individual shares you can lose all your investment (though this risk is easily avoided by using an index tracker or an ETF portfolio).
The case for investing in equities is that over long periods in the UK (and even more so in the U.S.), equities have beaten the returns from all other asset classes.
But investing isn’t just about getting the highest returns.
[continue reading…]
{ }
by The Investor
on March 15, 2010
Note: This guide to mitigating capital gains tax in the UK was updated in June 2011.
Most people won’t ever need to consider trying to reduce the hit from capital gains tax, because they’ll never be liable to pay it.
Your home and car are exempt from UK capital gains tax, as are personal belongings worth less than £6,000 when you sell them, and the average person has few other assets outside of cash, pensions, and ISAs – which are all exempt, too.
You also get a personal capital gains tax allowance every tax year (from 6th April to 5th April), which is usually sufficient for avoiding capital gains tax bills.
- The allowance is currently £10,600 in gains a year, where a gain is the increase in the value of the asset between buying and selling it. You subtract capital losses from capital gains to arrive at your total gain for the year. (Note: Gains and losses are only ‘realised’ when you sell).
[continue reading…]
{ }
by The Investor
on March 13, 2010
My regular Saturday musings, plus a roundup of interesting blog posts and money-related articles.
Curiously, we saw two very different market anniversaries this week:
- The new bull market is now a year on from touching those incredible stock market lows back in March 2009.
- A decade ago, the ten-year bear market began as tech stocks started to slide. The NASDAQ is still less than half its peak.
I can remember where I was both times.
[continue reading…]
{ }
by The Investor
on March 12, 2010
You don’t need to own Berkshire Hathaway stock to benefit from the investing wisdom of the world’s richest man.
His annual letter to Berkshire shareholders explains just how to invest like Warren Buffett. (It also includes more jokes than the average CEO manages in a year!)
Here’s five highlights from Buffett’s latest letter to get you started.
1. Always have plenty of cash
[continue reading…]
{ }
