Finance Archives - Small Business Insider

7 ways to make use of your leftover foreign cash currency

Posted on May 28, 2020 Written by Administrator

When you’ve had to cancel long planned holidays or business trips it is can be frustrating to come across leftover currency from your last trip whilst tidying up. I know, I feel your pain!

Perhaps you found the currency at back of a drawer. It’s clear that many people hang on to bits of currency as an estimated £4 billion of currency is sat around in the homes of UK households going to waste.

If you decide to get rid of the spare currency you have what can you actually do with it?

Let me share a sample of very different ways to get something back from that leftover foreign lolly:

GET SOME MONEY BACK

Buy-back

This is where you exchange your unused currency for sterling. Much as when you exchanged it originally, you will be offered an exchange rate. Unfortunately, many providers do not specify on their websites how much they will buy your currency back for. This means you either have to take your chances or spend time investigating, although it may be worth looking at a comparison website such as www.comparetravelcash.co.uk

Also, some providers offer a guaranteed buy back service, where they will buy back your currency sometimes at the rate you bought it. However, be aware that this can come at an extra charge and you would have had to have exchanged it with them initially. Also, there is usually a time limit on this offer, so if it’s been sat in a drawer for a while you may we be too late to take advantage of this. Maybe one to consider for next time but do check the T&Cs!

Bidwedge

Bidwedge offers a very straightforward way to exchange your currency. You simply create a free account, state the amount of currency you have, hit ‘show me the money’ and they will tell you the price they will pay for your currency. If you agree, you post your currency to Bidwedge and the agreed amount will be paid direct into your bank account. There are no additional fees, postage is free, and all transactions are insured.

Bidwedge is a community-based service and their approach means that they don’t need to trade with currency wholesalers and banks, allowing them to offer you competitive sell-back rates – even for very small amounts.

www.bidwedge.com

Sell it privately

If you have friends or family members who have, perhaps, booked for later in the year and it’s looking good for them that they will be able to get away, you could always sell your leftover cash to them and cut out the commissions for both of you. You could perhaps even have a deal to buy their spare currency when they get back for your next trip, and so on.

Donating to charity

Of course, many airlines will take spare coins on your return journey. Not much use to you now but worth considering for future trips!

For now, if you have a favourite charity, it’s worth getting in touch with them and asking if they will accept your currency and how to donate it. Otherwise, when the high street charity stores, such as Oxfam and Mind, are open you can always pop in there. Most will take foreign currency as a donation. Others, such as Retina UK, will accept donations by post.

Donate to a school

It’s well worth getting in touch with your local school and asking whether they can make use of your currency in lessons. Teachers may be able to use coins and notes in geography lessons, to stick to world maps so children can see the different currencies used. If you have any pre-Euro coins you are likely to be even more popular! For older children, they could be used when talking about exchange rates and different currencies.

Make jewellery

If you have a drill, why not make some funky, chunky jewellery with the coins? Do you have two matching coins? Why not turn them into drops for earrings? Or a large coin could be used as a pendant on a necklace. These could make an unusual and interesting gift, while potentially saving you the cost of a birthday present. Or go the whole hog and join all your coins together in a jingly bracelet that will remind you of your holidays whenever you wear it!

In most cases, as long as you don’t attempt to pass of the jewellery as legal tender, there aren’t any rules to stop you making your coin jewellery. But it is worth checking first for the particular currency you intend to use. See: https://coinsblog.ws/2016/04/coin-jewelry-is-not-legal-everywhere.html

Make a souvenir

Instead of sitting ruing your missed holiday, why not get crafty and make a souvenir to remind you of your last foreign trip. Pinterest is flooded with ideas – even going as far as to using it as flooring – but you don’t have to be a DIY expert or talented artist to have some fun. Arm yourself with a glue gun and stick your unused coins to a photo frame, which can then hold your favourite holiday snap. Alternatively, frame the coins themselves, perhaps representing where you went; the shape of Italy in Euro cents or FLORIDA written in nickels, dimes and quarters.

It is so much better to do something with your leftover foreign cash currency than to leave it languishing. It’s doing no good to anyone stuck in a drawer. Whatever you decide; to donate it, to have some creative crafting fun, or change it into sterling – do something with it!

ABOUT THE AUTHOR

Shon Alam is founder of Bidwedge. Bidwedge makes it easy to change your left-over cash currency back into Sterling – at great rates for even the smallest amounts. Just enter the amount, see the rate you’ll be paid, post the cash and watch the money appear in your bank account. It’s easy to do.

Website – www.bidwedge.com

Facebook – https://www.facebook.com/Bidwedgecom-109169113819592/

Twitter – @bidwedge – https://twitter.com/bidwedge

LinkedIn- https://www.linkedin.com/company/bidwedge/

5 whys and 3 ways to keep investors happy

Posted on May 3, 2019 Written by Administrator

The importance of maintaining good investor relations can’t be over-stated; they can be the lifeblood for so many small businesses.

Here are five key reasons why:

Follow-on investments as your company evolves

If somebody had enough faith to invest in your start-up, chances are they will continue to support you as you grow, and therefore fund rounds with cash injections. Avoid making your investor feel like an ATM. If you are forever turning up with a begging bowl, the chances of investors participating in follow-on rounds or investing in a follow-on company (if the first company fails) decrease to zero.

The investment community is small

Neglect your original stakeholder and they’ll be reluctant to fund your next round. The investment community is built on relationships and reputation. Good investor relations (IR) is all about honest communication and it’s crucial to keep these ideals in mind to prevent you from damaging your brand and integrity.

Your biggest champions

Investors can become your biggest champions. Many identify with the brand and its ideology; they are not just investing, they’re joining a brand they care about. If you don’t keep them informed, they will quickly start to feel as though they don’t matter to you.

First in-line to help

A 2018 British Business Bank survey stated that 39% of angels invest in a start-up to contribute their knowledge and experience in that sector. Tony Goodwin, CEO of recruitment giant Antal International, says he only invests in recruitment start-ups, as it’s his sector and he enjoys the mentoring. If your business struggles, don’t hide it from them; chances are, they’ll be able to help.

It prepares your business for exit

When the time comes to exit, potential buyers will conduct due diligence on an unprecedented scale. Providing regular updates to investors with everything about your business in one place – via an IR tool – enables you, and your investors, to be better prepared.

Here are three top tips: if you want to keep investors happy and on your side:

Go digital

The easiest way to look after your investors is to go digital; Envestry for Scale-ups, for example, offers everything you need to keep your investors happy, including a secure data room and a Q&A facility. Even if you decide to go it alone, ensure that you have a dedicated IR section on your website – which can be password protected – having all the relevant information in one place shows how much you value them.

Be upfront, honest and consistent

An investor won’t appreciate having to dig deep to uncover potentially critical information.

Fintech app Revolut, for example, has faced off accusations of fabricating data, money laundering and most recently misplacing a £70,000 money transfer. Pity their investors, however, as they had to read about it in the press. Had they regularly and scrupulously shared everything with them, they might find themselves facing a less uncertain future. Quite simply, investors need regular updates.

It’s easy to make the Shareholder’s Report – particularly if it’s not as healthy as you’d like – less of a blow if you add a personal touch: if you make t shirts, send them a t shirt. If you’re a tech company, give them a discount – anything to keep them happy to be on your team. A small gesture can make a big difference. Ombar send chocolate with their updates – a great way to keep your investors feeling good.

Ombar demonstrating great IR

Reach out to your investors

Good IR enables your investors to help when things are tough – the same goes for the good news: communication enables them to identify possible growth opportunities, partnerships or new business angles. If they’ve given you money, they care and it’s your duty to keep the dialogue ongoing and mutual, so that when you need advice, an opinion, an introduction to new investors or simply to help promote a new product, you just have to ask.

Understanding the whys and ways to building a great relationship with your investors will keep them rooting for you through the good times – and the tough times.

About the Author

Scott Haughton is COO of Envestors. Envestors is a fintech company that connects investors and scale-up companies. With our fundraising platform Envestry for Scale-ups, companies get a personalised site to promote deals, raise finance and engage with their investors 24 hours a day, 365 days a year.

We know first-hand Envestry delivers—we’ve raised £100m+ for over 200 companies through our own private investor network.

Founded in 2004, Envestors is regulated by the FCA and has offices in the UK, the Channel Islands, the UAE and strategic partners across China.

Web: https://www.envestors.co.uk/

LinkedIn: https://www.linkedin.com/company/envestors-llp/

Twitter: @EnvestorsLondon

Facebook: https://www.facebook.com/pg/envestorslondon/posts/

Raising finance? Here’s how to create a killer pitch deck when raising funds

Posted on November 22, 2018 Written by Administrator

This article takes my experience of successfully funding around 50 companies and combines this knowledge with research completed by DocSend to find the perfect formula for an engaging, compelling and ultimately easy to digest deck.

Multiple decks

It’s a misconception is that you should have just one deck, it’s illogical. You engage with investors in a number of different ways, and your pitch decks needs to reflect this. As a bare minimum you should prepare three different documents before you start reaching out to investors:

The Exec Summary – a standalone teaser document that gives them everything they need to decide if they want to spend the time looking into the opportunity further.
The Presentation Deck – a version of your pitch deck that has only images and no words at all, which is designed to be presented over, either in person or on a video conference. Do you remember the last time you saw a TED Talk with a wordy presentation? No, because they ban the use of any words in a presentation, unless to highly emphasise a point. If you put words on a screen, people will read the words rather than listen to you.
The Investor Deck – this is what most people create in an attempt to fit everything into one document. But, of course, if it’s the first thing an investor sees, there is no context, and so the chances of them getting to the core of your opportunity are slim at best. The Investor Deck should be treated as a leave behind only, not something you send out en-masse, or a document you present over (again, they will read the words rather than listen to you presenting).

I have created a handy diagram, showing how and when these different documents are used. If you utilise these documents as they were meant to be used, and if you optimise them for that specific use, it will increase your investor engagement levels. I’ve been told that this approach slows the process down. That’s only true if you try to omit key information from the Exec Summary, or you present your pitch in the wrong order, or rush through it without focusing on the detail.

Order it right

Getting your Investor Deck in the right order is crucial. Rather than employing guesswork, you can build your deck around a DocSend / Harvard Business School study into 200 startups that completed their Seed or Series A rounds. This study tracked the effectiveness of these 200 decks, and arrived at the following as an optimised order in which to put your slides:

The Purpose – i.e. a summary of what you do and why they should care.
The Problem – the problem you’re solving, or more accurately, the market opportunity you’re meeting (since you shouldn’t use negative language in a deck).
The Solution – how your solution is uniquely placed in the market to solve this problem
Why Now? – Why is this urgent now? Was the market not ready before? Did the technology not exist to allow it to happen? Are you an evolution or a revolution? These are all important points – ideas fail to manifest either because they’re bad ideas, or because the market wasn’t ready for them, or because they hadn’t been thought of before. You need to prove to an investor that you don’t fit into the first category. And if you fit in the latter category, you should have a logical argument for why they haven’t been thought of before.
Market – a deeper dive into the size of the market, its trends and your potential penetration.
Competition – who else is tackling this problem? Make sure you do extensive research because if your investor finds a competitor you missed, it’s a surefire way of them exiting the opportunity. In truth, you want some competitors because educating an entire market on your own is expensive, or it’s a sign that the market isn’t ready. And everyone has competition. The competitor to the first motorcar was a horse-drawn carriage.
Product – a deeper dive into the product and any sales you’ve made so far. You need lots of evidence, stats and testimonials here if you can.
Business Model – how do you make money now? How do you make it in the future? How do you market your product/services and how do those costs fit into the overall model?
Team – this could arguably go higher in the deck, however if you’ve produced a good Exec Summary and Presentation Deck, you’d have already told your personal eureka moment and how you brought other people into your journey. Wherever you place it, show how every team member is relevant, and if they don’t add value take them out (of your team and your deck). If your team is weak in any one area, find an advisor or Non-Exec Director to plug the gap.
Financials – a financial summary, not ten pages of your entire financial model. Highlight the key areas of your financials and importantly show how and when the investor is likely to make a return.
It’s about them, not you

Your pitch documents are essentially marketing materials, and even experienced marketers make the mistake of talking from their perspective rather than the customer’s (for clarity, in your case the customer is an investor). Copywriters that get paid the big bucks have spent years refining this skill and still often get it wrong, so it’s not an easy task. However, there are some tips to help you deploy more empathy in your writing.

Visualise your perfect investor and write your documents specifically for them. Even go so far as addressing them in the first person, using the word ‘you’ to get the copy to speak to them directly (stopping short of naming them, of course!).
Read everything you write back out loud. If it sounds like a robot then the reader is less likely to engage with it. If it sounds like you’re having a conversation with them then they’re more likely to absorb themselves in what you’ve written.
And while you’re reading everything back to yourself, ask yourself of every paragraph, ‘why should an investor care?’ If you don’t have an answer you can probably cut down that sentence or delete it entirely.
Also use fewer, better words to get your point across. Strip as much as you can away without losing the meaning. Shorter copy is easier to absorb so it’s more likely the reader will make it all the way through.

Storytelling

Most of the advice out there focuses on the rational decision-making centre in an investor’s brain. However, investors are people, and the final decision as to whether they should invest is ultimately an emotional one. People relate to stories and narratives. These create empathy and build relationships, triggering all sorts of emotions as the investor imagines being in your shoes. Stories have structure – they have a beginning, a middle and an end. They have dramatic moments, and interesting but relatable side anecdotes. They provide so much more flavour and texture to your pitch, which helps the investor form an opinion about you.

Personalise

Finally, do your research on the investor you’re meeting with and personalise your materials accordingly. It’s amazing how much you can find out from LinkedIn. If they seem like the type who invests more on a gut feeling, then put your team slides and backstory at the start. If they come across as more analytical, or are known for having a scoring system for appraising new investment opportunities, focus more on the numbers, statistics and evidence. It’s a simple thing, but even putting their name on the front cover can have a profound effect.

If you follow these five steps, as the fifty or so companies we’ve helped fund did, then your chances of successfully finding an investor will increase.

ABOUT THE AUTHOR

John Auckland is a crowdfunding specialist and founder of TribeFirst, a global crowdfunding communications agency that has helped raise in excess of £14.5m for over 50 companies on platforms such as Crowdcube, Seedrs, Indiegogo and Kickstarter – with a greater than 90% success rate. TribeFirst is the world’s first dedicated marketing communications agency to support equity crowdfunding campaigns and the first in the UK to provide PR and Marketing campaigns on a mainly risk/reward basis. John is also Virgin StartUp’s crowdfunding trainer and consultant, helping them to run branded workshops, webinars and programmes on crowdfunding. John is passionate about working with start-ups and sees crowdfunding as more than just raising funds; it’s an opportunity to build a loyal tribe of lifelong customers.

See: http://www.tribefirst.co.uk

Twitter: @Tribe1st

Asset finance explained

Posted on September 20, 2018 Written by Administrator

“Asset finance” is a term that is broadly used in business.

As a result, it can occasionally mean different things to different people. That, in turn, may cause some misunderstanding, so in what follows we will explore the various sub-themes arising from this term.

Asset finance

Strictly speaking, the term is used to indicate how the acquisition of a new asset is funded.

Let’s say a building company wishes to purchase a new JCB. They may approach a financing company to seek asset finance in order to help them make the purchase.

The actual products offered may vary. Perhaps typically they will include something like Hire Purchase (HP) but there might also be options including finance leasing and operating leasing.

Asset refinance

This term typically implies a company is seeking to raise capital using one of its existing assets, or perhaps more correctly any equity they have in it, as some form of collateral.

To use the same illustration as above, perhaps the building company owns a £100,000 piece of machinery on which they have outstanding finance to settle of £30,000. That gives them a rough figure of £70,000 equity that they can potentially use to borrow against, by discussing the position with a specialist in asset refinance.

Asset financing

This method is normally used in the same fashion as “asset refinance” but might more typically include assets that are 100% owned and which are being offered as some form of collateral for other forms of borrowing.

Asset bookkeeping (including depreciation)

This is an accounting term that essentially describes how the value of an asset reduces over time in the company’s books of accounts and how the costs of acquisition are processed.

The various options here needn’t concern us and neither do the accounting technicalities. What is important to recognise is that the method used to finance the acquisition of an asset may directly influence how depreciation/cost will be handled in your accounting.

This can have an effect on things such as your profit and loss reporting and your balance sheet. There may also be taxation issues.

If you are considering purchasing a major asset for your company, it is always advisable to discuss the position with your accountant in advance. They may be able to give you important advice relating to which method of asset finance might be most suitable for you, at a given time, from an accounting viewpoint.

Asset book value and asset disposal

The asset book value is again an accounting term used to indicate the notional value of your asset at a given time.

Asset disposal is, as the name suggests, simply the mechanism you might use for selling or otherwise disposing of an asset when it is no longer required. This may be linked to asset finance in the sense that if you have an asset that is not 100% owned by you, as is the case with HP agreements where you are still making repayments, you must not sell it without the finance provider’s advance permission.

Assets that you’re still making payments against are not your property. To sell them without due advance permission might be considered to be a prosecutable offence.

Summary

How you finance your assets and account for them can at times be complicated. There may be no absolute right or wrong solution, only what might be most advantageous to your company at a given time.

It would be advisable to speak to your accountant and a specialist provider of asset finance to understand more if you are considering acquiring significant assets for your business.

Could your next property portfolio be virtual?

Posted on September 12, 2018 Written by Administrator

Owning land and property has long been considered a worthy investment. But while land is largely out of reach for most people and property ownership is an unlikely prospect for younger generations, a whole new world of property and land ownership is occurring in a different reality – Virtual Reality (VR).

History

It was Second Life that popularised the monetisation of virtual land and other assets. The Second Life economy allowed users to get a job, run businesses and sell and lease property and other assets via the platform’s marketplace and in-game currency – Linden Dollars.

Eventually, Second Life’s popularity waned as it became outdated. Huge swathes of users looked for new immersive experiences and brands sought other opportunities – in Virtual Reality.

Today

Many investors – particularly early adopters – look to buy virtual land as a commodity, sit on it while virtual land ownership soars in popularity, and eventually hope to sell it at an increased price.

This has been the case with VR platforms such Decentraland and Somnium Space, both of which allow their users to buy plots of virtual land, which they can build upon and potentially monetise.

In Decentraland’s case, digital 1,100-square-foot plots in the platform’s Washington DC-sized Genesis City were selling for as much as $200,000, Bloomberg reported in June.

Back in December 2017, there was a public auction of 45,000 individual parcels of land. Each was priced at 1000 MANA – then around $100 – which raised a massive $28 million for Decentraland’s founders.

This was on top of the $26 million the platform made in 30 seconds during an initial coin offering (ICO) raise earlier in 2017.

Somnium Space has seen an influx of seasoned investors and business-minded people –far exceededing the number of typical VR fans – buying shares in the company in order to own virtual land.

Such investors are aware that virtual land and property are among the most valuable digital assets you can own in a virtual world.

Future

To predict what the future landscape may look like, we can look to the Second Life model to gauge what might happen.

Brands will again utilise the opportunity of a whole new world in which to promote their products, but on a far grander and more immersive scale.

Beyond those who will buy virtual land as a commodity in order to sell it at a higher price, many will develop property and open digital stores – from boutiques to malls.

Other virtual property owners will host popular activities that generate footfall, and may then lease their building space for real life brand adverts (i.e. virtual reality billboards).

Somnium Space recently held a live VR concert with pop singer Kirsa Moonlight. I expect this type of event to become hugely popular as other platforms, brands, artists and VR property owners discover this new way to interact with the world.

Virtual Reality already is, and will continue to have, an impact on the global economy. Already VR worlds like Somnium Space, High Fidelity, AltSpace and others are hiring real people to do work in VR. More and more people will find their daily jobs in VR and will never work in the real world again. Think of it a bit like the way mobile phones leapfrogged landlines in Africa and India – there was never any need to install landlines. The same could happen with young people searching for a job. They will work in VR, managing stores, concerts, events, etc. and will leapfrog ‘real world’ jobs altogether.

Early investors in digital worlds where the amount of available land is finite will therefore need to think very carefully about the locations of the plots they reserve – and may make many of the same considerations that a land owner of property developer would in real life. For example; Is the plot central in the virtual world/city? Is it likely to see a lot of footfall? Will it be big enough to host the property they intend to build?

On the flipside, should a virtual world have an unlimited amount of land on offer, this would naturally decrease the value and could see the forming – and later the bursting – of virtual property bubbles.

This is one of the reasons why worlds like Somnium Space have a finite supply of land. In a world with an infinite supply of land, land ownership would have little value, investors would not have much interest and virtual property developers would find it harder to monetise their land.

As these digital worlds arise, I’m sure we’ll see many real life land hoarders and property tycoons move into VR. Those with real world property skills will be well placed to transfer to the virtual world. But, as building a VR property doesn’t actually require the real world skills of bricklaying, plumbing, electrical installations or even access to large sums of money, it opens the market to many who dream of building something unique but simply don’t have the skills, or the available funds. VR levels the playing field – making imagination, creativity and an entrepreneurial mindset the key skills of the VR future. There are likely to be many more virtual millionaires who will make their successes solely in virtual worlds.

Risks

But, as with almost every investment or new venture, there are risks. Property fraud is always a risk in the real world, but we’re more confident of ownership when our asset is something physical.

To tackle scams in the digital world, we’ll begin to see new legislation drawn-up in order to cement ownership of digital assets and to protect consumers from theft, fake assets and duplicate selling of a single asset.

Emerging as the most powerful and reliable guardian of digital assets is the blockchain. The digital ledger records each and every transaction, makes it fully transparent and unable to modify, therefore mitigating many forms of fraud.

Beyond the use of cryptocurrencies, the blockchain can also be used to verify and protect the sales of digital assets and prevent duplicate transactions. The blockchain-based network can also be used to facilitate the execution of smart contracts, which, like a real life contract, make clear the terms of any deal to ensure fairness for all parties.

Somnium Space joined the VRBA (https://www.vrblockchainalliance.org/) to take on exactly those issues. Among some of the most important goals of the alliance is to secure digital assets transfer, but also digital IDs, which don’t have to be stored by private corporations, but are on the blockchain.

Smart contracts could be used to cement ownership of digital land and property, as well as any other digital asset in a virtual world, such as avatars, possessions, and identities.

So, just as creativity and innovation has allowed for the existence of VR property and land, the same blue sky thinking should be able to overcome the challenges that it may face.

VR has already facilitated wonderful virtual, immersive activities and meaningful interaction between people from across the world. And as the concept progresses, I’m confident that VR land ownership and property development will blossom.

In the near future, I expect that the world’s most successful property developers will have made their millions in VR. So, looking to new opportunities in this world and the many other emerging virtual realities, it’s certainly an exciting time to be alive!

ABOUT THE AUTHOR

Artur Sychov is the Founder of Somnium Space, an open, social, virtual reality world that has its own economy, currency, marketplace, games, social experiences and virtual land ownership. Somnium Space is interconnected, seamless and fully accessible from any device, from 2D mode on a desktop, to fully immersive VR mode on desktop or mobile.

Investors are currently able to buy shares and receive free land parcels via Seeding VR for a limited time. Investors should note that investing puts their capital at risk and investment returns are not guaranteed. Investments are not covered by the Financial Services Compensation Scheme (FSCS). Investors should read the full risk warning available on https://seedingvr.sharein.com/risk before deciding to invest.

Web: http://www.somniumspace.com/

Seeding VR: https://www.seedingvr.co.uk/invest/somnium-space

Facebook: https://www.facebook.com/SomniumSpace/

Twitter: https://twitter.com/somniumspace

LinkedIn: https://www.linkedin.com/company/somnium-space/

Instagram: https://www.instagram.com/somniumspace/

Telegram: https://t.me/somniumspace

Medium: https://medium.com/@SomniumSpace

Citations

Second Life and the monetisation of virtual land and other assets: https://www.forbes.com/sites/omribarzilay/2017/11/30/how-blockchain-is-breathing-new-life-into-virtual-real-estate/#18aa903b511e

Anshe Chung, became the first ‘virtual millionaire’ by selling her digital land, and other assets: https://singularityhub.com/2011/08/23/entrepreneur-anshe-chung-makes-millions-selling-virtual-land-banking-and-fashion/

Decentraland: digital 1,100-square-foot plots were selling for as much as $200,000: https://www.bloomberg.com/news/articles/2018-06-12/making-a-killing-in-virtual-real-estate

Five financial rules that will help you reach your financial dream sooner

Posted on May 14, 2018 Written by Administrator

If you’d like your money to work harder, perhaps with a view to retiring sooner or splashing your cash on your dreams, here are five rules you need to follow. And they are probably not what you’re thinking:

Let the markets do the work:

With more than 98 million trades a day, across the global markets, the probability is miniscule that a committee, sitting in a board room and discussing where to invest your money, will spot a favourable discrepancy in a stock price. It is possible, but it is also highly improbable.

Instead, of buying retail funds selected by a fund manager, buy a diversified basket of global index tracker funds and let the markets work for you. A wide basket of stocks from around the world linked directly to market returns can reduce the risk of trying to outguess the markets or worse, paying somebody else to outguess the markets.

Diversify, Diversify, diversify:

Investment returns are random; they cannot be predicted with any certainty, so don’t let your financial adviser visit you each year moving and changing your funds to justify their existence and their fees. They are wasting your money.

Avoid limiting your investments to a handful of stocks or one stock market. This is a concentrated strategy with high risk implications.

Instead, buy the global market using a diversified basket of index tracker funds and leave the speculation to the gamblers.

Take control of your money:

Conventional wealth management institutions are in business to maximise shareholder value – not your investment returns. Why would they provide you with an opportunity to move your money to a competitor at their expense, even if it was in your best financial interest?

It is therefore essential to take back control of your money and ensure that the ‘hidden’ ongoing portfolio costs are kept to the bare minimum. Aim to keep the costs of managing your portfolio at under 1%. The industry average is in the region of 2.3%, so if you save yourself even 1% a year you will have made a substantial amount of money using compounding interest over the life of your portfolio.

For example; if you invested £100,000 with a traditional financial services company paying a total fee of 2.3%, and you received a 7% return on your money for 25 years, you will have a projected future value of £329,332. As £100,000 was yours to start with you will have made a £229,332 profit. The overall cost to you, to make that profit, will have been £109,912.

If you invested £100,000 in a low fee portfolio, paying a total fee of 1.11% and received a 7% return on your money for 25 years you will have a projected future value of £441,601. As £100,000 was yours to start with you will have made a £341,601 profit. The overall cost to you would be £63,718.

This additional £112,269 can be used by you and your family, rather than just giving it away to an industry that feeds the ‘fat cats’. Remember it’s your money … don’t give it away.

Investments are a long-term strategy:

Market timing cannot be predicted. Taking your money out in falling markets means you lose real cash. Most people don’t reinvest until they get their optimism back, which is often too late; by then the stocks have risen, you’ve missed out on the gains, and you still have your losses to make up.

Manage your emotions by investing in a risk portfolio that is correlated to your capacity for loss. Not one that is based purely on your search for the highest returns. Remember, investing is for the longer term. History shows that you will be rewarded for your bravery – and your patience.

Don’t lose money with the banks:

Capital deposited in a Bank is being eaten by inflation at 2-3% every year. Over the last 10 years, whilst the stock markets have gone up, the buying power of your bank deposited savings has decreased dramatically and will continue to do so for the immediate future.

My advice is to look at investing, rather than ‘saving’ with a bank; diversify your portfolio; let the markets work for you; and ensure you keep your management fees to around 1%. By following these rules you’ll increase your fund faster and the day you can retire (or splash the money on your dream) will arrive much sooner.

ABOUT THE AUTHOR

Hannah Goldsmith is founder of Goldsmiths Financial Solutions and author of ‘Retire Faster’. Hannah specialises in Low Fee Investing and is challenging the way financial services are delivered to consumers in the UK, by enabling each client to understand the nature of investment costs and the impact these costs have on their future lifestyle.

Goldsmiths complimentary ‘Second Opinion Service’ reviews investors’ existing portfolios and makes recommendations on Risk, Diversification, Performance, Cost and Tax efficiency, making investors’ money grow in a more transparent and financially efficient way.

Web: http://goldsmithfs.co.uk

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