Investing

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Airbnb insurance

The idea of being an Airbnb host has always appealed to me but the logistics of the platform bring up many questions, one of which being  -“What if a guest damages my property?”

If you’re thinking of opening up your home to the Airbnb community, these 4 tips from Bought By Many will help you understand the Airbnb terms and ensure you are covered:

1. You do need to tell your home insurance company if you’re an Airbnb host

Home insurance companies are rather old-fashioned. They don’t have much awareness of how popular Airbnb has become, and they’ve done almost nothing to adapt their policies. As a result, they think of Airbnb hosting as being the same as running an actual B&B…

If you don’t tell them you have Airbnb guests occasionally staying at your house, they may refuse to pay out on an insurance claim you make – even if the claim has nothing to do with an Airbnb guest. Their justification would be that you had withheld an important piece of information that affected the risk they were taking in insuring your property (their jargon for this is “non disclosure”).

Alternatively, you could switch to a specialist company who cover Airbnb hosts as standard. Home Protect is the only home insurance company we are aware of from our research who state specifically that they cover Airbnb hosting.

2. Airbnb’s Host Guarantee is not the same as home insurance, and there are lots of things it doesn’t cover

Airbnb offers £600,000 of insurance to hosts through its Host Guarantee (sometimes referred to as the “1m guarantee”, as that’s the amount of the cover in US dollars). This is intended to cover damage to your property caused by an Airbnb guest.

But it has some important limitations and exclusions:

  • The Airbnb Host Guarantee doesn’t cover cash, valuables, or pets – so if a guest stole money from you, damaged your Macbook, or injured your dog, Airbnb would not pay out.
  • The Host Guaruntee doesn’t cover damage caused to shared or communal areas – such as common entrance halls or bike stores in blocks of flats.

If you want to be insured for these risks, you will need to arrange it with your current home insurance company, or switch to a specialist.

3. Having Airbnb guests to stay can make you liable for things that happen to them

There is no personal liability insurance included as part of the Airbnb Host Guarantee. So, if a guest sued you for harming them in some way, or because they hurt themselves in your property and believed you were responsible, the Airbnb guarantee would not cover you.

You guessed it – you’d need to contact your home insurer if you wanted to be covered for this risk.

4. All the same issues exist with other short-term property and room rental sites

Wimdu has a similar guarantee to Airbnb, but with a slightly lower total amount of cover (500,000 Euros).

One Fine Stay claims to have gone further than other sites, but doesn’t provide information about its insurance policy online.

Housetrip, meanwhile, appears to provide no insurance – its terms and conditions simply state “We recommend that Hosts obtain appropriate insurance for their rental properties listed on the Site”

Surely the insurance industry will change its approach soon?

I think that’s unlikely. In the US, where Airbnb is longer-established, some insurance companies have withdrawn cover from Airbnb hosts, while others won’t state clearly that Airbnb hosting is covered. In December, the New York times reported that one home insurer had insisted that their customer of 25 years install fire escapes from every bedroom if she wanted to continue being covered!

Have you hosted with AirBnb before? Tell me more about your experiences in the comments below!

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AThePoint

Got some extra cash that you are looking to invest? Here are 15 things to do with your funds!

The Investor

warren buffetImage Source – Isobel Ramona Holmes

1. Put it into an Instant Access Cash ISA

These tend to return around 1.75% pa so you would get an annual return of £87.50. This is a low-risk and low return investment; it would be a good place to hold your emergency fund or to build up some savings for a large investment. Click here for one of many cash instant access ISAs you can choose from.

 

2. Lock it Away in a Fixed-Rate Bond for 5 Years

You can generate around 3.25% on your savings in here. This would give you £867.06 after the 5 year period. This is a safe option to ensure some increased income for the future but remember, if interest rates increase during this time you may be missing out on some big opportunities!

 

3. Invest in Mutual Funds.

You are trusting your money with the decisions of an investment company here so it is important to know that your return can be negative. That being said mutual funds are often a safe option for a passive investor and you could expect returns of around 5% from many UK mutual fund companies.

 

4. Actively Invest your Capital.

Do you research on the stock market. Read some books, talk with other investors and diversify your investment portfolio over a number of stocks and shares. Your return capability here is unlimited. It’s worth noting that you should only be actively investing if you’re sure you know what you are doing as there is a greater possibility of loss.

 

5. Lend through Peer to Peer Lending

Peer to peer lending is where you use a third party to lend your money to a borrower for an agreed rate. This used to be a little risky as your money isn’t insured like it is with banks and ISAs. But now companies like Zopa can guarantee a fixed rate that has a legal safeguard for your cash. You can get a guaranteed yearly return of 4.9% on your investment if you can lock it away for 5 years and if you reinvest your interest for compounding you can gain £1054.87 after tax by dropping the £5000 in here.

 

The Entrepreneur

bransonImage source – Edward Murphy

6. Buy Some Land

Okay, well maybe only a small piece of land. You could turn this into an outdoor car park, a small storage facility, a golf course or any number of outlets. Maybe even somewhere to build your home at a later day? Check out these 49 acres for £5000 per acre!

 

7. Buy a Website

Online real estate has seen enormous growth with many high authority sites providing enough active income for webmasters to quit their jobs. If you are handy with web design and can tell a good backlink profile from a poor one you can often pick up one of these high authority sites for around £5000. Flippa is a great place for you to find these deals.

 

8. Put a 5% Deposit on a Mortgage

With £5000 you can now get a deposit on a £100,000 house through the Help to Buy scheme. This could be your first home or a potential rental property. I certainly do not advocate 5% mortgages due to the HUGE interest that comes with them but maybe you can find a real deal out there on the property market.

 

9. Create A Garden Service Business

A rake, a shovel, some shears, a wheelbarrow and some printed fliers. £10 to the boy next door to deliver the fliers around your neighborhood and there you have it; you’ve built a new garden service business. This is a very quick and easy business to start up where there is always demand from those busy folk with their overgrown gardens. Requires minimum investment and can provide you with a great return if you put the legwork in.

 

10. Become a Business Angel

Make a mix of your investment knowledge and entrepreneurial flair. If you feel you can spot a good business in it’s early stages you can make enormous returns on investment by buying equity in a startup. There are a number of online platforms where you can find new businesses to invest in, some of which offer moneyback guarantee. You would typically invest a little more than £5000 to get a good amount of equity in a company. However, if you keep your eyes peeled I imagine you could probably gain 5% equity in a small profitable start up with a £5000 investment. Check out some examples of funded campaigns here.

The Explorer

explorerImage Source – childofthewhimsical

11. Backpack Across the US

See Chicago, be dazzled by the Grand Canyon and admire Miami. The states has a vast landscape and once you’re there you can get around for some time on the cheap. If you plan in advance, tickets to the states can cost you around £300 and with a strict budget you could be looking at just $60 a day including transport and accommodation. See Nomadic Matt’s Guide to backpacking across USA. The disciplined budgetters out there could probably survive for almost 4 months providing they could grab a temporary visa.

 

12. Buy a Boat

Embrace the sailor in you! Granted, you may not be able to find yourself Captain of the Flying Dutchman at this price but you could get yourself a good deal on a secondhand yacht. Pimp it into a party boat or take it for a quiet weekend fishing trip.

 

13. Travel Australia

Take a walk on the wild side! A little more costly than a trip to the states, tickets to Australia will set you back around £500 if you plan well in advance. Unless you have friends or family out there, expect to be paying around $130 a day on accommodation, food and entertainment. Click here to find out a little more about the cost of traveling oz.

The Big Spender

big spenderImage Source – Aubs Photos

14. Drink one bottle of Perrier-Jouet Champagne

Retailing at $7000 per bottle; this is speedy way to guzzle your small fortune!

 

15. Spend 4 Nights at ‘The Point, Saranac Lake Hotel’ in New York

the_point_new_york_l

At just $1848 per night, you could have an expensive break in a ranch hidden away in New York. A cosy option for our overpaid popstars or those with a little more money than sense.

What about me?

A couple of years back I had a cash sum of £5000. I took three months out and booked tickets to New York with 3 friends. We spent a few days seeing the amazing landmarks of NY and experiencing a culture that is beautifully different to the UK. We flew to Miami and found a reasonably priced house share near Miami Beach where we lived for three months with two pugs and a french bulldog. Amazing weather, fantastic food and a beautiful beach; once you’ve had a taste of luxury you don’t stop searching for a way to have this forever.

This was a quick way to turn £5000 into £0, but I wouldn’t change it for the world. Travelling for that period of time gave me a real taste of what I’d love to do in the future. If I could become financially independent or even just work from my laptop I would love to spend time travelling from country to country (especially the states!).

There are million other options out there for you to invest or splurge your capital on. What would you do if you had an extra £5000 spare?

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Forex

It’s time to turn your Forex trading around. If the Euro wasn’t good to you last year or you found yourself on the wrong side of the GBP/USD then this article is for you. Here are my top tips to make the most out of Forex this year:

Pick A System and Stick to It

There’s a huge number of trading platforms out there and as budding Forex traders we’re spoilt for choice.

But the important thing to remember is it is our trading decisions, our comprehension and our research that determine a great deal of our success not the broker we’re with or the system we use.

Changing system can be like learning a new language. And I’m not sure about you but I wouldn’t be comfortable making big decisions if I had to make them in a foreign language.

If there’s one textbook error out there when it comes to trading it’s that traders jump ship too early and at the wrong time out of fear. A trader should develop their own methodology, make well researched decisions and learn from their mistakes. If you’re a system hopper it’s all too easy to blame the system.

Make your decision on your trading system this year and rise to the challenge to master it.

 

Become a Student of Forex

Let’s face it, the Forex game isn’t simple. Only the smartest survive and you don’t want to survive, you want to win.

You’ve chosen your system and now it’s time to learn the methods, do your research and put in the chart time. Trading Forex is a specialist area, other types of specialists like accountants or lawyers spend a great deal of time studying before earning and you should too.

With this in mind, make 2015 the year of comprehension. Think Forex has a fantastic university you can use to hone your skills.

Keep A Journal

journal

Not necessarily to keep track of your trades, your winnings or losses – you have a system for that. To broaden your understanding and become a highly skilled trader you’ll need to make yourself aware of the lessons you’ve learned.

Note down your successes and what led you to make each all important decision.

Note down your mistakes as you make them and exactly what you’re planning on learning from them.

Note down the emotions you’ve felt and how this affected your choices. Were you feeling, impulsive, excited, frustrated? These are all factors that influence your decisions and therefore your success.

Aim for Long Term Gains

When planning a trade, it’s all too easy to think about how likely you are to make winnings in the next 1-2 months.

What’s important to note is Forex quotes fluctuate greatly in the short term but in the long term it is much much easier to see trends that could lead to well informed decisions.

In short, plan your investments for 2015 not for January-March.

All the best for your trading this year!

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Trading from Home

Last year I wrote my review of the stocks and shares guide by Robbie Burns – The Naked Trader. In this post we’re going to be looking at the other side of the trading coin – Forex.

For those that aren’t familiar, Forex stands for ‘FOReign EXchange’ and the Forex Market is where traders change one currency by simultaneously buying another. Your profit or losses as a Forex trader are entirely reliant on the fluctuating exchange rate between two of your chosen currencies.

Buying and Selling

As an aspiring Forex trader it is crucial that you understand how buying and selling works in the Forex game. Let’s take a look at some examples:

First up, you will need to research and decide on a currency pair. For the sake of familiarity let’s use GBP (£) and USD ($):

Buying – If I were to buy the GBP/USD currency pair, I would essentially be buying GBP and selling USD with the educated guess that the cross rate price between the two of these will increase therefore resulting in profits for me. This would also be known as a ‘long position’.

Selling – On the flipside if I anticipated that the cross rate price between these two would reduce then I would want to sell GBP/USD in order to profit. Selling a pair essentially buys the second item of the pair and sells the first. Also known as a ‘short position’.

GBP/USD = Base Currency/Quote Currency

The Bid Price, Ask Price and The Spread

Next up is pricing, you’ll need to know whether you’ll be getting a good deal and therefore you’ll need to know about bid prices and ask prices:

Bid Prices – The bid is the best price that you’re going to sell your quote currency on the market.

Ask Prices – The ask price is therefore the best available price that you’re willing to buy currency from the market.

The spread? This is the difference between the ask price and the bid price.

Bid prices and ask prices can be seen on a Forex quote – check out the following link for some live examples and click through to see the bid and ask prices:

http://www.investing.com/quotes/

Bid Ask

You’ll Need A Brokerage Account and a Platform for Analysis

There are a number of brokerages out there but be sure to check that whichever account you choose is regulated by a governing body such as the FCA (Financial Conduct Authority). Be aware there may be some paperwork involved in setting up your brokerage account.

Deciding on which trade to make and when to make it is tough, especially at the beginning. A trading platform such as Sucden can be a useful tool to provide a live stream of prices, some research tools and easy access to make a trade when you feel the time is right.

Risk

This is important. Unlike trading shares, you need be aware that losing in Forex can result in losses that exceed your deposits. This is the same for CFDs and spreadbetting. This level of loss is rare but it’s important to understand that it can happen.

Trading on Forex requires a level of detailed decision making, good research, time investment and persistence to succeed. If you’re thinking about investing in Forex but are still unsure, I’d highly recommend ‘paper trading’ for some time before taking the plunge.

Paper trading is where you give yourself an allocated figure and decide where and when you will invest it, you make a trade but only on paper not with real money and track your investment to see if you’re making a profit or loss. This will tell you:

  • Whether you have the interest and commitment to stick with your investment
  • Whether you know enough about Forex to take the plunge or if you need to do more research

Traded in Forex before or thinking about taking the plunge? Let me know in the comments below…

Stocks
FEATURED: The Balanced Investor - Creating & Enjoying Wealth

The wealthy man spends less than he earns and invests the difference. The investments make more money and that money is reinvested. All is well as long as temptation doesn’t kick in; you consistently avoid buying luxuries, don’t buy a liability like a new car and steer clear of any unwise mortgages.

But the reality is there will always be a point in your life when you are tempted to ‘invest’ in luxuries or purchase something now that you should wait for. This is where you might consider the way of the balanced investor.

The balanced investor understands the need for savings and security, he understands the potential for big gains from high risk investments. The balanced investor also wants to enjoy the time and the money that he access to right now.

Asset Allocation

You’ve cut down on your expenses, increased your income, you have filled your emergency fund and now you are spending less than you earn. Congratulations – you can now set aside a percentage of your earnings each month to save and invest. The question you should be asking yourself now is, where do you allocate these savings? The balanced investor allocates his assets into three buckets…

1. The Security Bucket

Your security bucket is very important for the long term growth of your wealth. Your security budget grows slowly and steadily over time. This can be in bonds, cash ISAs and savings accounts. Investments into your security bucket provide an almost certain return on investment at a specified period of time. For example, if you put money into a bond you can lock it away for a set number of years and gain around 4% each year. You have a fixed rate of interest and a fixed period of time. This is a slow incline but it is safe and guaranteed.

2.The Growth Bucket

Your growth bucket is your allowance to invest money into higher risk investments for a greater and faster rate of return. This can be in stocks or shares. You could even decide to invest in real estate or into business ventures. Decisions made in the growth bucket should be tactical, calculated and well researched due to the risk of loss; you should be prepared to lose money here and you should be even more prepared to learn some lessons along the way. Ensure you can utilise compounding growth here by reinvesting any earnings back into your growth bucket.

3. The Dream Bucket

This is the exciting bucket; the treat bucket, the ‘do I deserve it?’ bucket. You can put money aside each month to save for a vacation, a meal at your favorite restaurant, a new car, a holiday home or a private jet. You can put as much or as little in your dream bucket; by placing money in here you are highlighting that this is money you will enjoy and will enjoy and will not regret spending.

So there you have it, this is the asset allocation of a balanced investor. Depending on your age, your goals and your financial awareness you can decide to allocate as much or as little to each bucket. The important consideration is that you are active in learning to benefit from growth investments whilst protecting yourself with an ever-increasing security fund. To hear a little more about asset allocation, check out Tony Robbins’ talk on Financial Freedom.

How are you currently allocating your savings? Do you feel guilty enjoying your money?

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