Investing

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cottage uk

There’s been a lot going on in the last few months, and 2016 wasn’t exactly a walk in the park either. So where has this left things for property?

Well, some experts are saying that the house prices are going to be flat for a couple of years. However, when you look into what flat means it’s just not rising quite so astronomically as they have been but still on the incline.

The other negative news to have but a dampener on things is the changes to stamp duty taxes that have had a huge impact on the number of transactions in the housing market. From April 1st 2016, Stamp Duty increased by an additional 3% on properties going up the scale, increasing the top band to 15%. The rates only affect people who are buying an additional property, such as buy-to-let properties and landlords.

However, amid the negativity, property developers and investors are still in a prosperous position. No matter what happens with Brexit or how cautious buyers are being, the fact remains the same: Britain needs more homes and where there is a demand, there is a market.

The area that has been most heavily impacted with a drop in prices and far less transactions is London. Since Brexit, it is reported that the capital has been the hardest hit with some places showing negative growth overall and being dragged lower by the most expensive boroughs.

Although London isn’t looking like the best opportunity at the moment, there are other areas in the UK that are thriving. The houses that are vanishing off the market the fastest can be found in Northampton, Milton Keynes, Edinburgh, Glasgow, Bristol and Southampton, to name a few.

According to Prime Location, Northampton is attracting people who have been forced out of London’s price hike and in 2014, Northampton was voted the best place in the UK to start and run a business by credit reference agency Experian. Prime Location also suggests that development is thriving in Northampton with plenty of opportunities for investment in rental properties as well as buying off plan plots.

If you’re looking for property investment solutions outside of London, it may be best to organise your thoughts and speak to a professional. Daniel Goldberg, First Urban’s director and shareholder, would be able to provide plentiful advice on the current housing market, where works best for you as an investment and how you can still make a profitable business out of property investment.

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events affecting stocks

There are many things that can have an influence on the global stock market, from a controversial change in political leader to a natural disaster. One thing can start a wave of change and before you know it, the stock market can have changed in the blink of an eye.

When something happens on the international stage, good or bad, there is never a doubt that it will have an effect on the stock market. In this piece, I have looked back at some of the top world events that shook up the stock market in 2016…

1. THE TRUMP ELECTION

Yes, I thought we ought to get the most controversial out of the way first! While stock markets were expected to tumble on election night, surprisingly Wall Street reacted quite positively to the shock election of President Trump. In fact, in currency markets the US dollar hit a high against the Japanese Yen for the first time in several months!

2. THE BREXIT VOTE

Brexit shook up the UK stock markets something rotten in June last year and we saw the British pound drop to its lowest value in more than 30 years, a significant depreciation against other major currencies. Unsurprisingly stock markets across Europe declined significantly in the initial aftermath of the referendum.

3. HURRICANE MATTHEW

Natural disasters can have a crippling effect on a country’s economy; Hurricane Matthew in September 2016 was no different and has been recorded as the costliest hurricane since Sandy in 2012. Before Matthew hit, stocks for Florida based insurance companies fell by up to 15%. Investors began to retreat from companies deemed most at risk and shares suffered steep declines.

4. CHINESE MARKET CRASH

In January 2016 the Chinese market plummeted into unforeseen chaos and saw investors fight to sell off their assets – ultimately they saw a sharp decline in the Shanghai Composite Index by 6.9%. This rippled across the global stock markets and around the world stock markets lost more than $4 trillion.

5. OPEC OIL CUT

Oil prices have remained low as a result of over production and producers have been receiving low sales revenue over the recent years. In November 2016 Organisation of the Pertroleum Exporting Countries (OPEC) announced that its 14 member countries would work to reduce their oil production for the first time since the financial crisis in 2008. After this announcement Brent crude prices rose by approximately 8% and trade prices began to increase.

What We Can Learn…

Where possible, we should be on the lookout for key events and dates that are likely shake our investments. However, not all of these will be highlighted in the mainstream media; we can take a more structured approach to monitoring such dates by utilising an economic calendar. The new Economic Calendar from CMC Markets certainly deserves a mention here and a tool such as this can increase your awareness of major changes to the market that may affect your investment decisions.

The CMC tool is an easy to understand live market calendar which gives you access to key economic announcements that will affect price swings in major index, currency and commodity markets. A really helpful tool to help you to identify stock market fluctuations and influencers.

Do you take world events into consideration when planning your investment choices? and how do you keep track of them?

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whether to invest in a property

Imagine the scene: you have decided to become a property investor and are now excited about what looks like an exciting future of buying, letting out and, ultimately, making money from property. However, you have just hit something of a wall: you can’t make your mind up about which property you should buy first.

Here are a few factors to weigh up as you mull over buying a specific property.

Do you need to make money quickly?

If so, you should probably completely forget about investing in property. It not only requires significant financial outlay right from the start, but also doesn’t tend to bring returns that can be accessed quickly. You can allow people to rent your property – an arrangement which would give you an additional, regular supply of income. However, you would need to first find tenants.

As demand for property – whether to buy or rent – can fluctuate, property investment should be treated as a long-term investment. That way, when the market is depressed, you can simply wait for it to recover before you sell. However, the process of selling a property will itself take a while; therefore, you won’t necessarily make a lot of money quickly even when the market is flourishing.

Will you be able to pay all of the necessary costs?

Various charges to consider on your property investment journey include the fees you might need to pay estate agents, surveyors and solicitors. Any additional costs associated with maintaining and managing your properties should also be factored in.

Those costs could include, should the freehold not be outright yours, extending the lease; the Money Advice Service cautions that negotiating this could be time-consuming. Will you have enough time free for taking care of this?

Would you be able to afford the mortgage?

Mortgage lenders should enable you to calculate the monthly costs of a mortgage, money.co.uk states. If those costs outweigh what you know you would have coming in each month, you might have to turn your back on property investment – or, at least, investing in the particular property or area that you are currently eyeing up.

If you are letting out, will the rent be sufficiently high to help meet your costs?

While letting out properties could, of course, bring in money to help you with upkeep, you should carefully look over the probable outgoings to make sure that the rent would be high enough. This isn’t necessarily to say that the rent should pay for absolutely every aspect of looking after the property. However, it might be unlikely to cover the repayments on your buy to let mortgage.

While raising the rent is an option, this could ultimately bring the rental costs above what the property is genuinely worth – and so leave you without any willing tenants. Therefore, limiting your investment to properties likely to deliver the best return on that investment would be a wise strategy – and consultants at Flambard Williams can help you to identify the best opportunities.

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zero hour contract mortgages

Unfortunately in the past, zero hour contract workers have found it very difficult to be able to secure themselves with a mortgage as they are unable to meet the lender criteria – as there is no guarantee of regular hours to be worked and therefore no fixed income for a lender to review. 

The Statistics

According to the office of national statistics, in 2016 more than 900,000 people in the UK held a zero hour contract. Almost 34% of them worked regular full time hours and 41% had been in the same employment for more than 2 years. In fact, 9% of them have been in the same employment for more than 10 years!

Nearly a fifth of zero hour contract workers are at the age of purchasing their first property, but they face being judged by the flexibility of their work contract and declined a mortgage.

The Mortgage Misfit No More!

Zero hour contract workers have long been considered one of the ‘Mortgage Misfits’. However Ipswich Building Society have very recently confirmed that as of the 1st March 2017 they have changed their lending criteria to be able to help zero hour contract workers to secure a mortgage!

They will be taking personal circumstances into account through a manual underwriting process rather than automatically hitting ‘computer says no’.  Ipswich Building Society have said:

“Zero hour contract workers have limited choices for mortgage borrowing. We are continuing to improve our products and introduce new programmes to help those who are creditworthy, yet marginalised by mainstream mortgage lenders. We believe that ‘mortgage misfits’, such as those who are on a zero hour contract and can demonstrate a consistent income, should have the same level of options and access to the mortgage market as any other applicant.”

What Do You Need To Be Able To Apply For A Mortgage On A Zero Hours Contract?

  • Evidence of the past 18 months of your employment history & a P60
  • 3 month’s worth of payslips
  • A letter from your employer estimating the minimum and maximum hours available for you to work per month can also be considered
  • The usual lending criteria applies also

This is such great news for those on zero hour contracts and its a highly important shift as more companies are recruiting via zero contracts and more workers are forced down this route.

If you are currently working on a zero hour contract have you previously had a mortgage declined in the past based on your contract and will this tempt you to re-apply?

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binary options trading

Binary options are also called digital options and as their name implies, have only two possible outcomes for each trade.  A position can either expire in-the-money and you win that particular trade gaining as high as 80% returns or expire out-of-the-money and you lose the entire money invested on that particular trade.

If you are looking to understand the concept of risk to reward ratio as a beginner, it can be defined in simple terms as the potential return versus the probable loss for every single trade executed by you. For instance, a 1:2 risk to reward ratio means that if you succeed the trade you can earn double the amount of money when compared to the amount you may lose if your trade is unsuccessful.

The Growth of Binary Options Trading

Binary options trading is a relatively new investment method which has grown by leaps and bounds in the last few years due to its overwhelming returns and limited risk. In other trading methods like spread betting, futures contracts or spot forex trading which support leveraging, the risk/reward ratio can vary based on the potential returns, leverage factor and borrowed amount.In margin trading, the returns can be much higher but at the same time risks are also substantial and traders use techniques like stop-loss orders to limit their risk.Ideally, professional investors will advise you to look for investment options which offer a risk to reward ratio of 1:2.

The biggest advantage of binary options is the fixed risk/reward ratio which means you will know how much money you can earn or lose before placing the trade. The important reason for the popularity of binary options is the limited risk, which means you can never lose more than the amount you had invested in a particular trade. Also, you can make profits with binary options trading even if the market is bearish and your assets are having a downtrend by choosing “Put” option.

The payout percentage promised by your broker is important to determine the risk/reward ratio as it can vary between different brokers.Hence you should always choose a reliable and trusted who offers high payouts of at least 80% like anyoption UK. For example, let’s assume you invest £100 in a trade where you bet against GBP/USD currency pair and the payout offered by your broker is 70%. Then it means you will get £70 profit if you win that trade and lose £100 if your option expires out-of-the-money. In this case, the risk/reward ratio for that particular trade is 1/0.70.

The Win/Loss Ratio

Apart from risk to reward ratio, you should also understand the concept of win-loss ratio or success rate which refers to the chance of winning a particular trade. Success rate is usually calculated based on past performance and expressed in terms of percentage. In simple terms, it is calculated as the number of winning trades divided by the total number of trades taken over certain fixed time period. If your success rate is 60%, then it means you are expected to win 6 out of 10 trades you execute.

So as a binary options trader you should consider both your success rate and payout offered by your broker in order to determine the exact risk to reward ratio. Most of the binary options brokers try to attract traders by promising unrealistic payouts and quoting high returns in terms of percentage which highlight only the positive side of these options contracts.

But in reality, if a trader loses 50% of the trades he executes, then he will lose 100% of his investment in all these trades unless the broker offers any refunds for lost trades. Hence the potential risk is 100% of your investment while returns can range from 60% to 90% depending on the payout offered by your broker. To explain in simple terms, binary options don’t even guarantee a risk to reward ratio of 1:1.  Some brokers may offer refunds up to 25% depending on the type of trade you execute. You should choose such a broker who offers guaranteed refunds for lost trades as well in order to improve your risk to reward ratio.

An Example In Action

Let’s take a simple example to understand the risk-to-reward ratio of binary options. Let’s consider your broker is offering a payout of 80% for every trade you win and your success rate is 50%. For simplicity, let’s assume that you are investing £100 in each trade and you are executing 100 trades in a month.  So, you would have invested an overall amount of £10,000 in a month and you have lost 50% of the trades which means you have lost £5,000 from your capital. For every successful trade, you would have got £80 as a return which means you have won £4,000 (Assuming you won 50 trades out of 100, each offering a return of £80 = 50 * 80 dollars).

After consolidating both, you will be surprised to know that you have lost £5,000 from your investment capital of £10,000 and your returns for successful trades are only £4,000. So overall in this example, you have lost £1, 000 from your capital and you don’t have any positive returns.  In reality, a success rate of 50% is even considered high in binary options trading as most traders are known to lose 80% of the time. Since the payouts are fixed, you can only focus on increasing your success ratio in order to maximise your returns.

It is important to understand the risk to reward ratio in any form of trading to come up effective trading strategies. You should consider all the factors including your success rate, trading strategies, payouts and rebates offered by your broker etc. to have a clear picture of the risk to reward ratio. Understanding risk/reward profile of binary options is very crucial in formulating your trading plan and to become a successful investor. 

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