Your 10 Biggest Financial Mistakes And How To Correct Them

Mistake No. 1

25 YEAR MORTGAGE: why? You pay $270,000 for

each $100,000 of mortgage at 10% interest.

CORRECTION: get a 15 year mortgage and

increase you payments by only 18%.

RESULT: You pay $192,240 for each $100,000 of

mortgage. You save $77,760.

Mistake No. 2

BUYING WHOLE LIFE INSURANCE POLICIES: why?

The most expensive type of life insurance.

CORRECTION: Buy level premium term insurance.

RESULTS: Save up to 70% on premiums.

Mistake No. 3

BUYING ENDOWMENT INSURANCE AS AN INVESTMENT:

why? Poor investment returns due to high

charges and poor tax efficiency.

CORRECTION: Keep life insurance separate from

savings and investments.

Results: Save on life insurance premiums and

improve returns.

Mistake No. 4

BUYING NEW CARS: why? Car's depreciate 30% to 50%

in the first two years.

CORRECTION: Buy a 2-3 year old car.

Result: Save thousands of pounds.

Mistake No. 5

NO RETIREMENT PLANNING: why? Over reliance on

government pension.

CORRECTION: Join your company scheme after a

thorough check. Or set up a private pension

scheme after taking advise.

RESULT: Because pensions have more tax advantages

than any other investment, the government is

subsidizing your retirement. Contributions are

tax deductible and investment profits are free of

tax.

Mistake No. 6

PAYING ALLOWANCES TO CHILDREN FROM AFTER TAX

INCOME: why? Allowances are taxed at the parents

tax rate.

CORRECTION: Pay children wages from your small

business, subject to hours and age limits.

RESULT: Save up to 40% of every $1,000 of

allowances

Mistake No. 7

NON DEDUCTIBLE COMPUTER AND CAR: Why? Its an

expense. Used in a small business, it can be

deducted.

CORRECTION: Depreciate within the small business.

RESULT: Assets for business are deductible over

time.

Mistake No. 8

BUYING INDIVIDUAL SHARES, GILTS, PRECIOUS METALS

OR COMMODITIES: why? Risky.

                   

CORRECTION: Invest in equities or gilts through

Unit Trusts to ensure spread of risk.

RESULT: Lower risk investments and ability to

switch between cash equities or gilts to match

economic cycle. Benefit from professional

management.

Mistake No. 9

NO ACCESSIBLE CASH: why? Urgent cash requirements

can interrupt investment or require expensive

borrowing against investments.

CORRECTION: Build up cash reserve of 3 months

income in a TESSA or building society.

RESULT: Avoid forced liquidation of investments

or higher interest loans.

Mistake No. 10

SURPLUS SAVINGS IN BUILDING SOCIETY: why? Low

return.

CORRECTION: Beyond 3 month's cash reserve, invest

additional funds according to Flexible Investment

Strategy.

RESULT: Gain reliable long term returns on your

funds.