1. The higher the investment returns, the higher the risks involved with the investment — this is true virtually 100% of the time. If an investment seems too good to be true, it probably is.

2. Diversification of your investments across a broad spectrum is usually a good investment strategy.

3. It’s important to be patient and stick to your plan. Refer to rules #1 and #2 if you begin to feel impatient and want to try and make a quick buck.

4. Don’t let emotion guide your decisions. When investing, your emotions are usually your greatest enemy and can easily derail you from your long-term investment plan if you’re not careful. Don’t succumb to fear when the market is dropping and don’t become greedy when prices are rising.

5. Consult with people you trust to get opinions and information that you may not have considered yourself, but ultimately you should be the one to make your own financial decisions. It’s down to you in the end.

6. Don’t invest in things you don’t fully understand. Always read the prospectus. If you can’t understand the risks, costs and liquidity of the investments, don’t invest until you do. If you can’t understand an investment fully, get help and do more research until you do.

7. Make clear investing goals. It’s important to take in your personal factors when making these goals. You need to know

• Your current resources that you can put toward investments
• Your investment risk tolerance
• The time scale for the investments
• The ultimate investment goal you’re trying to reach.

Design your investment plan taking into account all these factors as they apply to you, monitor your results over time and make adjustments when needed.

Cost Averaging is the act of investing a set amount of money at regular intervals with the intention of averaging the cost of shares purchased, evening out the market’s peaks and troughs. Your money purchases fewer shares when the market is up and buy more when it’s down.

You will not achieve the magic results of buying at the market’s low point and selling at its high point, though you will not suffer the consequences of doing the opposite. In a generally rising market, you have the opportunity to accumulate wealth over time in a systematic, organized way.

In the long run, it doesn’t matter when you start, just that you start. In the scope of years it makes little difference whether the market was up or down when you began. The market has averaged almost 10% growth since 1929, even when you include the sustained decline of 2000 and the dozen or so bear markets.

The more frequently you invest and the longer you keep investing, the smoother the average-share-cost line becomes.

A market decline can mean bargain prices on your favorite stocks. Unless you are selling shares, a fund’s price quote in the daily paper is not relevant to you so don’t panic if it is down. In fact, a downturn provides the opportunity to buy more shares at attractive prices - shares that have the potential to grow in value when the market returns to an upward growth pattern. In order for cost averaging to work, you have got to be prepared to commit the financial resources and have the resolve to make the contributions on each appointed date.

Since you don’t know what the markets will do in the future, cost averaging protects your assets by buying into the market at regular intervals. Regular investing does not ensure a profit and does not protect against loss in declining markets, it is an investment technique to help you accumulate wealth over a long period of time.

Investors should consider their ability to invest continuously during periods of fluctuating price levels and their tolerance for risk before deciding on an investment strategy.

* Spending without a budget.

* Carrying a balance on credit cards.

* Ignoring interest rates.

* Failing to see how little purchases add up.

* Paying everyone else, saving “what’s left.”

* Not managing your investments.

* Getting emotional about your investments.

Spending without a budget
Many times when people think of financial planning, they think only in terms of investments But if you have income and bills, you also need a budget. Too many times, “there is more outgoing than income,” he says.

The cost: Your financial peace of mind and the ability to plan long-term. People misstate what they think they are spending by every bit of 15% to 20%.

Instead: Keep track of what you spend to get an idea of where your money is going. The key is to account for those things that aren’t regular bills — groceries, entertainment etc.

And set a little aside for one-time emergencies, like car repairs, a broken washing machine. People tend to leave those kinds of expenses out of a budget because they tend to be one-offs. What people don’t realise, is that there are always one-time expenses.

Carrying a balance on credit cards
Interest rates can be 18% to 21% or more. People making minimum payments never get the thing paid off.

Another way to think of it: Treat yourself to a nice dinner, and 20 years from now you’ll still be paying for it. In general, carrying a balance on your cards is a terrible idea.

Instead: Pay balances in full each month. If you need to use a credit card to handle an emergency (medical bills and car repairs, not a quickie vacation), use it, then stop using credit until you have that bill paid.

Ignoring interest rates
Whether it’s your money market rate or what you could get on a mortgage re-financing loan, it pays to keep up with the current prices of borrowing and lending money.

The cost: Lost income if you could have been getting a higher rate of return on your account. Higher mortgage payments if you don’t take advantage of lower mortgage rates.

Instead: Stay abreast of the interest trends that impact your personal finances.

Failing to recognise how much little purchases add up
Small amounts, like small leaks, can really drain your wallet. Analyse everything from those nonessential snacks to out-of-network ATM charges to those extra phone plan minutes you’re not using.

The cost: If you’re like most people, this costs a good chunk of your paycheck.

Instead: Take the records of your cash purchases and lay them side-by-side with your debit and credit card statements to get a complete picture of where you’re spending The questions to ask is: “Where are you spending that money, and does it make sense?”

Paying everyone else then saving ‘whatever is left’

The cost: If all you’ve saved is scraps here and there, that’s what you’ll have at retirement.

Instead: Pay yourself first. Take at least 5% to 10% of your pay to max out your retirement plan, she says. After that, save outside the retirement plan.

Not managing your investments

You’re saving the money. But you also want to make sure your nest egg is diversified and that you have earning goals for various aspects of your portfolio. Everyone’s target is going to be different. The problem is that too many people aren’t making the attempt.

The cost: Balancing and managing your investments can mean the difference between a good year and a bad year.

Instead: Look at your holdings like the pieces of a puzzle. Why do you have various assets, and what purpose do they serve toward your goal? What are your goals for each asset, as well as your investments as a whole? Is your portfolio meeting those expectations?

Getting emotional about your investments

Two big mistakes: People fall in love with their investments and hang onto them “beyond the point where they should,” or, when the investment starts going down in value, “greed kicks in” and they want to hang on until it bounces back. Neither strategy is smart.

Instead: When it comes to timing the market, nobody can do it. The smart thing is to invest in a very diversified way. It isn’t sexy, but it works.

In case you are too lazy to read the rest of this important item, the gist of the message is

Your friend might get the idea that you sent him a message with some kind of virus in it. This is one of those instances that resulted from someone sending you an email message with dozens of people CCed - but not using the BCC (Blind Carbon/Complimentary Copy) option.

When a message is sent with everyones email address visible (they DIDNT use the BCC method), then any one of those visible addresses can be used by someone who eventually gets a copy of the message. It could be that they deliberately use it - or it could be that it was used automatically, unknowingly.

For example, Bob sends a message to 40 friends; one of those friends is Al. Al forwards the message (all the addresses are still visible) to 40 friends; one of those is Jane. Jane sends the message to 40 of her friends (all of those 40 addresses are visible, plus the first 40 that came from Al). One of Janes 40 friends is Steve. Steve reads and keeps the message. Later (even years later), Steve gets a virus and the virus is designed to send a copy of itself to every address in every e-mail message that Steve still has on his computer. The virus sees a message with the 120 addresses (Bobs 40 addresses, followed by Als 40 addresses and, finally, Janes 40 addresses all of those addresses are visible).

The virus picks one address out of the first 40 addresses (the ones from Bob). It then creates a message with a copy of itself and fakes the From: part of the new message with the address that it picked (this is easy to do). It then sends the message to the other 39 addresses. Then, it does the same thing with the other two groups of 40 addresses The viruss advantages for doing this are: (1) the address that it picked and used when faking the From: part of the message is most likely in the other 39 peoples address books. Anti-spam programs will allow it through because that address is a known good guy (its in their owners address book). (2) all of the addresses in each group are probably good addresses.

This, of course, is why we should all be using the BCC option when we send messages to several family members (simultaneously) and/or other larger email groups - the addresses wont be visible and can’t be used by anybody else. The other thing that we should all be doing in addition to using the BCC method of addressing messages is:before forwarding a message, delete all of the other addresses in the message (the ones that are visible because other people didn’t use the BCC method) so that only the basic message is left. That way, we are cutting the line and no one after us will ever be affected because of our actions (or lack thereof).
Some people say this about deleting all of the visible addresses: That will take too much time or Thats a lot of work. In that case, the polite thing to do that shows great manners is to NOT forward the message, no matter how wonderful the content might seem.

If it’s a holiday home that you rent out for some of the year you will pay local taxes on any letting income in the country where you own the property.

If you are “resident” in Britain, you must still include overseas income on your UK tax return. Where the overseas taxes are lower than their British equivalent you may have to make up the difference, but if the foreign country levies higher taxes you cannot reclaim the balance.

If you go abroad permanently, you can become a UK non-resident. Then you will no longer be liable to UK tax on any overseas income but will pay that solely to your new country instead.

To be non-resident you must spend less than 183 days in Britain or visit the UK 90 days or less a year over four years. The Revenue may demand evidence that you have left the UK for good or intend to live outside Britain for three years or more.

You could still have to pay British tax on your UK income, including pension, and may be charged tax on the same income by your new country. However, where Britain has a double- taxation arrangement, you may be able to avoid UK taxes.

Revenue & Customs has a list of countries with which Britain has agreements.

If you intend to retire overseas it might make sense to transfer your fund to a pension scheme in your new country, although it can be a costly and difficult process.

Will there be UK capital-gains tax?

If you are non-resident you will pay local rates on your worldwide profits in your new country. If you are still resident in Britain, however, you will have to declare profits from the sale of your holiday home on your UK tax return and pay capital-gains tax at 40% above £8,800 if you are a higher-rate taxpayer. But you may qualify for a discount if you have already paid foreign tax on the gains.

And what about inheritance tax?
It is extremely difficult to dodge UK inheritance tax (IHT), even if you have moved abroad permanently.

British inheritance tax, which is levied at 40% on assets above £285,000, applies to your worldwide assets, including your home, for as long as you remain domiciled in the UK.

The law says a child normally takes the domicile of his or her father. This is known as the domicile of origin, and it is hard to change. It is possible to acquire a new domicile of choice, but you need to convince the tax people that you no longer regard the UK as your home.

You would probably have to sell all UK property, close your bank accounts over here and even arrange to be buried overseas.

Even then there is no guarantee the manoeuvre would work. The Revenue will not confirm or deny that your domicile has changed until a taxable event occurs — in other words, until you die.

Britain has double-taxation arrangements with some countries, such as France, South Africa, India and Pakistan, to ensure you don’t pay the tax twice. But if the overseas taxes are lower than the British equivalent you may have to make up the difference.

There is a further complication if your spouse or civil partner is non-domiciled. Normally, gifts between husbands and wives are exempt from IHT in the UK. But a non-domiciled spouse or partner has to pay the tax on the value of the estate above £55,000.

If I’m retiring abroad and will no longer be UK resident, which country has the lowest taxes?

Accountants say Dubai is the best bet. Six-and-a-half hours away from London by plane, there are no personal taxes, it is relatively easy to buy an apartment and get a resident’s visa.

But it does have its downsides. Properties are fairly expensive: up to £250,000 for a one-bedroom, shoreline apartment. And then there’s the heat. In summer, temperatures can reach nearly 50 degrees Celsius.

Panama was recently voted the world’s top retirement haven by International Living magazine. Perks to foreign retirees with a minimum monthly pension of $500 (£267) include a tax exemption to import a new car every two years, money off airline tickets, entertainment and medical consultations.

But if Panama is too far, Currencies Direct, a foreign-exchange trader, suggests Cyprus, because tax on pensions is only 5% and capital-gains tax on property is 20% with a C£50,000 (£60,000) exemption.

This is powerful because as the interest that is earned by the initial capital also earns interest, the value of the account grows at a geometric (ever-increasing) rate, rather than an arithmetic (straight-line) rate.

An Example Of How Compounding Works

Let’s look at two investors who each have £1,000 to invest every year. They will leave any dividends in the account to compound. Investor A’s fund has a 7.9% annual return, while Investor B’s fund returns a mere 4.1%. While Investor A’s rate of return is twice that of Investor B’s, over time the increase is significantly more than twice as much. After 10 years, Investor A’s gain is 2.2 times greater, and after 20 years, it is 2.6 times greater.

• Gains                Investor A        Investor B 
  Rate of Return     7.9%                 4.1% 
  10 Year Gain      44.9%               20.1% 
  20 Year Gain      128.8%             48.9%

Remember that examples are for illustrative purposes only. A  fund’s investment return and share value will fluctuate.

Put Compounding To Work For You

Reinvest Dividends: Rather than taking your dividend distributions in cash, give instructions to let them remain in your account to purchase additional shares. Most companies will allow you to do this without any additional sales charges.

Invest Regularly: Add to your portfolio on a regular basis such as monthly or quarterly. You may be able to have this done automatically by setting up a systematic investment plan. By investing regularly you take advantage of a strategy called pound-cost averaging.

Make Time Your Ally: The longer your money can work for you, the better compounding works. Consider this illustration: £1,000 invested at 8% earns £80. Left to compound, the original £1,000, plus accumulated interest, will earn £160 in the 10th year, £507 in the 25th year, and £1,609 in the 40th year — returns of 16%, 51%, and 161%, respectively, on the original £1,000. The longer your money works for you, the more you will have later.

• Work out how much mortgage you can afford.
• Decide what you can afford to spend.
  No matter how much you can borrow, having borrowed too much you may have to cut back on other expenses such as holidays or entertainment. Consider how your day-to-day cash flow will be affected.
• Make your wish list.
  Consider what features you would like, what you don’t like, and what you would find useful or more comfortable. Determine your housing needs and wants to determine what types of houses you should be considering. Consider the general location.
• Begin house-hunting.
  Start with the Internet.  Read the estate agents sections of your local newspaper. Visit the area . Don’t just drive around. Get out of your car and walk.

Costs of home ownership 
Sales tax
Legal Fees
Moving Costs
Repairs and renovation
Survey fees
Sales tax
Mortgage payments
Property taxes
Utilities: gas, water, cable television, telephone
Insurance
Gardening etc.

House
Age of House, Square footage, Type of Construction
Practicality of floorplan
Ability to Expand/Enlarge House
Interior walls condition
Age of Heating System
Age of Water Heater
Age of Electrical Wiring
Estimated Water Bill
Estimated Heating Bill
Oil Heat
Gas Heat
Electric Heat
Hot Water Heat
Estimated Electric Bill
Number of Stories
Number of Bathrooms 
Number of Bedrooms
Roof Condition
Foundation Condition 
Energy-Conservation Features
Plumbing condition
Kitchen Eating Area
Overall Exterior Condition
Garage Size 
Fence
Landscaping

Neighbourhood
Environment 
Near Churches
Near Doctors/Dentists
Near Industry
Near Public Transport
Near Schools
Near Shopping
Near Work
Noise Levels
Parking
Parks
Pet restrictions
Police
Restaurants/entertainment
Safety/Security
Shopping
Streets
Street Lights
Supermarket
The Neighbourhood
Traffic Volume

In the last four months, prices in Chelsea – where Hugh Grant and Jemima Khan are understood to have just bought a £12m house – are up by 11.8 per cent.

A typical two-bed flat in the area, now £500,000, has spiralled in value by £15,000 a month since Christmas, according to research by agents Knight Frank.

The balance of supply and demand for London’s most upmarket homes is now at its most lopsided for a decade, the agency says. Supply has fallen by 21 per cent in the last year while demand has soared 43 per cent.

The boom in central London helped lift the average price of a UK home by 2 per cent last month – 8 per cent ahead of a year ago – according to the Halifax, Britain’s biggest lender.

“A fair amount of that growth has come from London and the south-east; people are investing substantial sums in that market,” said Martin Ellis, chief economist at the group.

• Elsewhere in the UK, though, the market has been far weaker, with prices up by just 1 per cent in Scotland since the New Year and 2 per cent in the north-west, Yorkshire and the south-west.

Many experts believe central London is booming because it saw more subdued growth in the last four years than elsewhere.

Liam Bailey, head of residential research at Knight Frank, said the central London boom was “unsustainable” in the medium term, but prices showed little sign of waning because of international demand and a strong City bonus season.

If agencies hype the importance of branding campaigns for public companies to enhance their image among investors, why is it that Interpublic, Omnicom, Publicis and WPP don’t support their brand images on Wall Street?

According to Nielsen Monitor-Plus, the four holding companies spent a total of $3.7 million to promote themselves in the U.S. in 2005, down 15% from the $4.4 million they spent in 2004.

Considering that agencies recommend their clients spend 10% of their revenues on marketing, the big four are spending .01% of their combined $29.3 billion in global revenue. Mull that for a second or two.

Kinda makes you wonder if the advertising agencies know something about the value of advertising, doesn’t it?

It reminds me of the old saying - why is there only one Competition Authority?

In response, ISP Biscit is offering a phone and free broadband package from £19.99 a month for the first six months of an 18 month contract, and £21.75 after that.

Biscit is also charging a £29.99 set-up fee. Its package eliminates BT landline rental charges, includes 720 minutes anytime calls to national landlines each month, offers unlimited free calls to other freeMAX or Biscit broadband users, and includes an up to 8Mbps broadband connection with a 2GB monthly cap – enough to download 500 MP3 files.

Nathan Relevy, Biscit’s chief executive officer, said: “The launch of freeMAX today is a key date in the history of broadband Britain.
“Unlike other phone-talk packages which will eventually include free superfast broadband, biscit’s is available now and nationwide.”

Chris Williams, broadband product manager at comparison and switching service uSwitch.com, said: “This is the opening salvo in the broadband price war sparked by Talk Talk’s recent offer. [Consumers] should be aware that they will be locked into an 18 month contract. This compares to Talk Talk’s £20.99 a month offer which also has an 18 month tie-in however TalkTalk’s includes inclusive calls to 28 international destinations.

“It will be interesting to see how long these offers can be sustained as inevitably companies will be making initial losses in their battle to sign up customers. We predict that other providers will have no choice but to slash their prices over the coming months in order to remain competitive.”