Wednesday 28 March 2012

What Is Your Benchmark?

How do you judge if your investing strategy is working? What do you compare your performance against - what is your benchmark?

If you are a DIY Income Investor, there are several possible answers...

Sunday 25 March 2012

10 Tips to Avoid Inheritance Tax (UK)

Continuing the theme of avoiding tax, let's look in more detail at the UK's Inheritance Tax (IHT). As they say, death and taxes are unavoidable - but you might be able to dodge the tax on death!

On the face of it, the UK's IHT is a 'blunt instrument' - if your estate is valued at more than the personal IHT allowance (or 'Nil Rate Band' is currently £325,000 - and not increased for a couple of years), then wham! - 40% tax on the excess. Yet most of us would like to leave something to kids, relatives or even charity.

Fortunately there are some ways to fend off the Taxman.

Friday 23 March 2012

SIPP vs ISA: Optimise Tax Savings (UK)

Most investors understand the difference between a SIPP (Self-Invested Personal Pension) and an ISA (Individual Savings Account): for SIPPs, like all pensions, you get a tax break when your money goes in; for an ISA any money you take out is tax-free. So both have a role in your tax avoidance strategy.

But how to optimise this strategy? Here's my take on it...

Sunday 18 March 2012

Portfolio Buy: 9% Yield!

There aren't many investments yielding 9% at the moment. And it is probably true to say that there aren't any 'safe' investments yielding this much.

But if you are willing to take a risk, here's one...

Yield? What Yield?

A DIY Income Investor is interested in two main things for any investment: yield and risk, highlighting that greed and fear rule most of our financial decisions!

But sometimes you need to make sure you are looking at the right kind of yield...

Friday 16 March 2012

What To Buy Now?

Leaving it a bit late in the tax year, I have now paid the maximum £2880 into my non-working wife's SIPP (Self-Invested Personal Pension). Through a quirk in the UK tax system, the Taxman will now contribute £720, giving an immediate 25% return. This return is obviously tax-free, making it very hard to beat with any other investment!

Except that this money is now sitting idly as cash in the SIPP and we need to get it working hard generating more tax-free returns. So what to invest it in now?

Saturday 10 March 2012

Ten Tips To Tackle Tax (UK)

Tax. We don't like paying it and we probably don't realise how much we pay overall. Some taxes are direct and obvious, others are indirect and may not be noticed immediately.

However, all tax systems have allowances and exemptions - created to make the tax system 'fair'. So there is nothing morally wrong with making the most of your entitlements, is there?

Here are 10 tips to help you reduce your overall tax bill.

Tuesday 6 March 2012

4%+ Yield Risk-Free and Tax-Free (UK)

New savings bonds have been announced for UK investors, paying over the benchmark 4% interest rate, tax-free - and because of UK government bank guarantees, this is effectively risk-free as well.

The DIY Income Investor approach involves building up your portfolio of savings and investments. This account may be relevant to those investors in the process of building up their portfolio or those who are looking to hold some cash on deposit, tax-free.

Friday 2 March 2012

It Costs How Much?

The basis of the DIY Income Investor approach is to keep firm control of your expenditure. This might not seem like much fun - until you can retire early, that is!

Of course, you should be looking for the best value for all of your purchases - 'comparison shopping' and looking for discounts. Sometimes you just need to control the 'urge to splurge' and hold off the purchase decision. Once you overcome that urge to buy, you may well be innoculated against the spending disease.

So here is a useful mind-trick to help you make a decision about that next purchase.