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How to Read a Fund Fact-Sheet

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Has your adviser given you a factsheet on a recommended fund, and you need to understand what the terms mean? If so, read on … The fund factsheet is an essential document for the private investor. Unfortunately, the information contained in a factsheet - and the way it is presented - is not controlled in the same way as it is in a fund prospectus (a prospectus is a legal document). In essence a factsheet is marketing literature. Only a tiny fraction of investors ever read the formal prospectus for a fund, that’s why it’s especially important to be able to read a fund factsheet correctly, and if necessary to read between the lines. Key Contents Of A Factsheet Most fund factsheets will contain some or all of the following: Fund Name Many funds are commonly referred to by a short or abbreviated version of the full fund name. Hence it’s important to make use of the identifying codes (see below). Fund Management Company & Domicile The fund management company is structured and reg
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Understanding Compound and Annualised Growth

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Across fund manager houses, there is little standardisation of how performance figures are presented on fact sheets. Percentage returns are usually presented as either (i) discrete (or calendar) annual, (ii) cumulative (for example a total return figure for 3 years or 5 years) or (iii) annualised (the equivalent annualised return for a period such as 3 or 5 years, sometimes called compound annual return). This tutorial shows you how to convert from discrete annual performance figures, to cumulative or annualised figures, over a period of your choice. As an example, we’ll look at some USD fund performance data presented in an October 2010 factsheet. The performance data are presented to us in a very clear way, but may not be the complete picture we are looking for. The table directly above shows the discrete annual returns - ie. net of fees the fund delivered 7.46% in 2009, -4.90% in 2008, 9.82% in 2007, etc. But let’s suppose you ask yourself (or your advisor) “What was the total growt
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Tax Free Savings Plans for Australians?

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Question: How can returning Australians (and expats moving to Australia) make MASSIVE tax savings by using offshore investment bonds and investment-linked life policy wrappers? Answer: Set it up while you’re an expat working abroad, and keep it running at least ten years (even if you go back home) for maximum tax benefits. (Note: this article is relevant to expatriate Australians working in Singapore and other overseas locations, as well as other nationalities who may be moving to Australia in the future.) Click to download a copy of this information in PDF format. Background - Repeal of Foreign Investment Fund legislation For several years the Australian Tax Office (ATO) had very defined, and perhaps harsh, rules for how foreign insurance bonds were treated in respect of capital gains for tax residents in Australia. In effect, these tax wrappers were treated in a ‘look through’ manner and holders were liable for tax on actual gains made or at a deemed rate set by the authorities
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Should UK Expats Pay National Insurance Contributions?

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I live outside the UK - should I make voluntary National Insurance contributions? The decision on whether to make voluntary NI contributions depends on your own specific circumstances. National Insurance contributions for British expats? First a quick reminder. National Insurance (NI) contributions go principally to fund the National Health Service (NHS), the state pension, unemployment benefits, and sickness and disability allowances. Anyone employed in the UK will have an NI number, and make NI contributions via PAYE (pay-as-you-earn) deduction from salary. These are known Class 1 NI contributions (NICs). If you’re self-employed in the UK, you pay Class 2 NICs at a flat weekly rate, and annually Class 4 NICs based on taxable profits. If you are working abroad for up to two years and for a UK-based employer, you will likely be required to continue paying Class 1 NICs.  Alternatively, you can choose to pay voluntary contributions, Class 2 or Class 3. Depending on your circumstances, vo
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British Expat? Here are the Huge UK Tax Benefits of an Offshore Investment Plan...

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Would you like to maximise the tax planning benefits of being a British expat abroad? Read on for a summary of some key reliefs and allowances available from the HMRC tax man… (Note: this article is relevant to British expatriates working in Singapore and other overseas locations, as well as other nationalities who may be moving to UK in the future.) Click to download this information in PDF format. Summary of Tax Benefits of an Offshore Investment Plan Under HMRC tax rules for ‘ foreign ’ investment bonds and investment-linked life policies have additional tax planning benefits compared with their domestic equivalents. The purpose of this article is to briefly highlight the most important. The content is not intended to be specific tax advice of any kind, and rules can change at any time. Everyone’s tax situation is unique and you should consult a qualified tax accountant regarding your own circumstances. 5% withdrawal allowance Time apportionment reduction Top slicing relief
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Mobile Phone Screens Are Getting SMALLER!

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If you bought a “6-inch” screen phone this year, it will have a SMALLER screen than the “6-inch” screen phone you bought two years ago.  Here’s why. Call me old-fashioned (or just old), but I spend a lot of time reading stuff – articles, charts, and data – on my phone.  And I mean actually reading it – not ‘skimming’ through an article while my thumb is continually scrolling the page upwards. A ‘Full HD’ screen is 1920 x 1080 pixels – which is nice for movies, and gives an eye-friendly ‘book page’ ratio of 16:9.   This has been the standard screen ratio of mobile phones for several years, up to the last year or so, when suddenly manufacturers have switched to a 18:9 ratio  (which is 2:1 by the way… no idea why they call it 18:9, duh).   For me, 16:9 is perfect for reading text.  2:1 isn’t – it’s too thin and narrow.   Supposedly, manufacturers have switched to this format because phones with skinnier screens fit into our pockets better, and are more easily used with one hand.   They h
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Key Interest Rate Definitions

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Definitions of the various types of interest rate Central bank rate - is the one most generally referred to in the financial press when they talk about the ‘bank rate’ or ‘interest rate’ without further specification (except for the USA, see below). Set by policymakers and usually the key rate upon which others are based. Also called the ‘base rate’ in the UK, ‘cash rate’ in Australia and New Zealand, and ‘discount rate’ in the USA. It’s the rate at which the central bank lends money overnight to commercial banks. Federal funds rate - specifically in the USA, policymakers at the Federal Reserve use a slightly different mechanism for influencing the nation’s interest rates. The federal funds rate is the overnight rate at which banks lend reserve balances to each other. The Federal Reserve Open Market Committee (FOMC) sets a target for this rate and implements monetary policy through ‘open market operations’ - buying or selling government securities (Treasury bills and bonds) in the op
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Warren Buffet on Hamburgers

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Source: Warren Buffett, the most successful investor in the world in the Berkshire Hathaway Chairman’s Letter 1997 I’m saving for the long term - should I be worried if share prices fall? “A short quiz: If you plan to eat hamburgers throughout your life and are not a cattle producer, should you wish for higher or lower prices for beef? Likewise, if you are going to buy a car from time to time but are not an auto manufacturer, should you prefer higher or lower car prices? These questions, of course, answer themselves. “But now for the final exam: If you expect to be a net saver during the next five years, should you hope for a higher or lower stock market during that period? “Many investors get this one wrong. Even though they are going to be net buyers of stocks for many years to come, they are elated when stock prices rise and depressed when they fall. In effect, they rejoice because prices have risen for the ‘hamburgers’ they will soon be buying. “This reaction makes no sense. Only
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Why You Almost Certainly Need Critical Illness Cover

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If you have an accident and become disabled so cannot work, or are diagnosed with a serious critical illness, … how will you survive financially? How will you live? Who will take care of you? Now, it’s self-evident that if your family relies on our income, then you need life insurance. What’s not so obvious is the other types of financial protection that are available, and why you might need them. Have no dependents and think you don’t need insurance? Think again… What’s The Point of Critical Illness Cover? People are living longer. The average lifespan of men and women is steadily increasing as a result of numerous factors - healthier lifestyles, nuturitional factors, and even simple genetics. Also, of course, the incredible advances in medical fields such as diagnostices, pharmaceticals, and surgical techniques amongst many others. Diseases and conditions that two decades were a death sentence are now quite survivable. But staying alive does not necessarily mean recovery or return to
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