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The Audit Commission has published Means to an end: joint financing across health and social care. This report reviews the joint financing and integrated care arrangements between NHS bodies and councils with (more…)

As a pastor, I am paid after the last Sunday of the month.  We made this arrangement years ago, when I was working a full-time job outside of the church.  The church set my salary at what they would like to pay me, and then paid me at the end of the month, after the bills were paid.  It was my idea.

If there was money available.

Sometimes I got a full check, and many times I did not.  Over the years, the church has become financially more stable, and the months that I did not receive a full check became less and less.  Now it is a rarity, but it still occurs occasionally.  ( Twice this year, so far. )

I practice what I preach. 

When the income drops, I adjust the family budget for the month.  Need versus want,  is applied as the budget must be adjusted.  Hard decisions about where the money will be used must be made if our monthly budget is to balance.  I am thankful that God has blessed me with a wife who is willing to live within a budget, and who volunteers ways to reduce our spending, that affects her personally.

God provides enough for us, even as I blogged earlier in a post titled “Enough”.  Not only do I practice what I preach; I believe what I preach.  Our church income this month was significantly reduced.  We will adjust.  It will not be without sacrifice, but  it will be enough.

In this post, I will give you just a few everyday things that you may not have known were tax deductible. What are you waiting for? Read on and save some money ! …. (more…)

The main idea behind investing in a growth stock is that the company whose equity you’re buying will show earnings growth that’s much higher than the stock market consensus expects, for much longer than the market expects.

AAPL, MON or COH are recent examples of successful growth companies.  In their day, WMT, CSCO, MSFT, ORCL, even IBM were growth stocks.

Examples of companies that had seemingly good ideas that failed to experience a multi-year period of strong earnings growth also abound.  No one remembers their names, though.

Consensus data less useful for growth stocks

Maybe the most important characteristic of growth companies in my opening sentence is the assumption that the consensus is wrong and has materially underestimated how rapidly the company in question will grow, and for how long.

One practical, straightforward consequence of this is that the kind of computer screening that a value investor routinely uses to find undervalued securities, which uses historical data plus consensus estimates, is of little use.

In consequence, although the growth investor does use historical data and may find the germ of an idea from an industry expert, he most often has to rely on his own research.  Sometimes this comes from his own experience. For example, Peter Lynch of the Fidelity Magellan fund, perhaps the most famous stock investor of the late Seventies and early Eighties, wrote that he became interested in Dunkin’ Donuts, once a growth stock, because he used to buy his coffee there on the way to work.

Qualitative research is important

All research has, in my opinion, a qualitative and a quantitative element.  For value investors, the latter is more important.  For growth investors, though, I think the qualitative description is always the key.  Yes, you have to have spreadsheets that have point estimates of what future revenues and earnings will be.  But for the best growth stocks, there’s always a sense of–the earnings will be up at least 30%, but they could be a lot more than that.  In contrast, the qualitative story–what unique attributes of the company allow it to grow so fast–remain constant.

Rules of thumb for growth investors

There are some historical rules of thumb that you can use in growth investing, however:

1.  the process of establishing itself as a fast grower normally takes several years.   This is a combination of the company developing its operations and of Wall Street gradually coming to recognize the firm for what it is;

2.  as stock market outperformers, growth stocks rarely last more than five years;

3.  the truly great companies, like WMT or MSFT, are able to reinvest themselves and extend the growth period for much longer periods;

4.  growth stocks typically reach their peak of stock market popularity and their highest relative P/E multiple just as growth is beginning to slow;

5.  because of this, when they go ex growth, these stocks often face a protracted period of underperformance;

6.  signs of trouble always, always surface in the qualitative analysis before they make themselves evident in earnings.

Common growth stock errors

1.  selling too soon.  The average yearly return of stocks over very long periods of time is about 10%.  Compared with that, a 30% or 50% return looks good.  Also, from a value stock mindset, 50% may be all that you can expect.  Not so with growth stocks, however.  The key question should be whether the basis growth story for the company is still intact (surprisingly strong growth for a surprisingly long period).  If so, don’t sell.  Remember, too, that good growth stocks don’t come around that often and aren’t that easy to identify.

AAPL is a good recent example.  The qualitative story has been simple:  the iPod would be more successful than most thought;  the retail stores would provide a new, profitable distribution system; and there would be a “halo effect” that would spark new interest in AAPL’s computer offerings.  In the four years from late 2003 to late 2007, the stock rose almost 20x.

2.  missing the signs of “reinvention”. Many–make that: most–growth companies are one-trick ponies.  They have one, admittedly, exceptionally good, idea, but once that is executed, the company has nothing left.  The truly great ones, though, have strong management that recognizes this issue and is actively planning far in advance for what comes next.  AAPL, for example, has the iPhone, which on some measures makes up almost half its current earnings.  AMZN now sells an awful lot more than books, and is a leader in the emerging field of “cloud” computing.  MSFT went from personal computer operating systems, to spreadsheet and word processing software, to the Windows user interface.

3.  missing the signs that the party is ending (the reverse of #2)

a.  focussing solely on earnings. Emphasizing the quantitative over the qualitative can get you into trouble in another way.  Strong earnings growth can be sustained for a number of quarters even as the market for a company’s offerings is nearing saturation or as new competition is preparing to enter the market.  Scanning the competitive environment for threats, or looking a company-specific metrics, like the rate of growth of new orders, or sales growth experience with recently-opened stores, will likely turn up signs of slowing growth before they turn up in reported results.

b.  accepting a stratospheric (30x+) price/earnings multiple as normal. In the early years of a company’s life as a fast grower, a very high multiple is typical and usually well-justified.  But a high multiple  means higher investor expectations, which require high, and accelerating, earnings performance to be maintained.  In, say, year four of rapid expansion, surprisingly high earnings growth becomes more difficult to achieve.

Why?  Any firm (not run by crazy people) attacks its best growth opportunities first.  As it expands, those get used up and the company has to turn to progressively less lucrative possibilities.  At the same time, the increasing size of the company means that a lot of work has to be done just to achieve higher profits than the year before.

At some point, a market reaches saturation–that is, no new customers want or need a product.  A one-idea company shifts from the situation of having more customers than it can service, to dealing only with replacement demand.  Look at the pattern of AAPL’s iPod sales, for example, or SIRI’s satellite radio experience.

A very high P/E isn’t by itself a sell signal.  But it is a warning sign to check growth assumptions extremely carefully.  And the highest multiple often comes just as earnings performance is set to flag.

Income Protection Plans or Permanent Health Insurance as it is sometimes called will pay out a percentage of your monthly income, tax free, until you can return to work. This will allow you to meet your mortgage payments or other liabilities you may have and provide you with an adequate level of income that you may not otherwise have.

for more information visit my website : -
http://www.medicsfs.com/financial-services/income-protection/

                                                                      October 24 2011

                                                                      Day Sixty Four

Kathy’s operation went ok to the point that she got through it,but when the Doctor told me how much the cancer had spread and what they needed to surgically remove,I literally through up,even though I was told to expect it before she went in.Now,they are going to use chemo to stop any further spreading and if that works,we can live a relatively normal life together….only time will tell.

Life is so strange.Just when the worst is happening and you never believe anything good can happen,something did.I got my usual mega millions ticket last Thursday (as every fool needs hope ) and played the normal quick pick.I think the multi state jackpot was some ridiculous number like $125 million .Well,I didn’t win that ,but I did share in the second prize of $250,000 with 10 other people! $25,000 for us in our situation is huge right now and feels like the jackpot.More than that it gives me hope that the tide has turned and all the bad luck we have had might be behind us.Now,we can afford to live in our own place.I can’t wait to tell Kathy when I see her !

See you tomorrow,

David.

Once again, this economic crisis couldn’t seem more contrived than if we sat around a monopoly board and started planning each move.  A lot of banks have failed and went under in 2009.  You’ll never guess how many….. (more…)

A dividend may be ‘illegal’, in that it is contrary to Company Law, when the proper procedures are not followed. If the Taxman examines the paperwork and decides the payment from your company was not a legal dividend he may treat the amount paid as a loan, or even as a bonus payment. (more…)

The Financial Services Authority (FSA) proposals to intervene in the mortgage market could create tax planning problems for the self-employed.

The ban on self-certified mortgages, proposed by the regulator in its Mortgage Market Review, may penalise directors of small limited companies who have minimised their salaries in order to cut personal tax liabilities.

The problem with the self-certified is they had the best of both, paying little or no tax on their accounts then declaring they earned £100,000 to the lenders whilst lenders struggle to understand small businesses and that directors can be paid through dividends.

Accountants and tax advisers, who recommended directors keep profits in the business will now need to find new strategies if their clients want to borrow mortgage money.

For bespoke mortgage advice contact Big Mortgages

We are situated locally to Derby, Leicester, and Nottingham.

Today, I have a meeting with our potentially new financial advisor. All weekend I have been gathering the financial data and thinking about where we want to go financially in 2010. We are well diversified, it will be interesting to see where he thinks we can make the changes in the portfolio.

Bottom line- Where I think we need to continue to make the changes is on the home-front in the small ins and outs. I talked a lot about this last year, at my old blog. The daily cash flow is where the big leaks often occur. We can all rejoice that the stock market is up and running at least temporarily again, but as far our portfolio goes- our long term goals are all set. I am anxious to see what he can really do for us.

Once a year- I usually do a big overhaul. Time to do it again. I discussed last week how I am using Mint.com to actually view the budget. The budget needs some tweaking too. I am convinced that unless you live on a tight budget- no matter what you make, you are never going to be financially successfully. How tight is entirely up to you. I hate stingy, tight people. I think that goes against the very essence of what we believe. There just has to be a fine balance, bathed in generosity. I think when you are generous with your money it comes back to you a million times more. My younger brother is generous- and he is so comfortable to be with. It makes me equally as generous when I am with him- sort of the pay it forward mentality.

We have always had a long term goal to enjoy life now. When we had just two small children, I was awakened one morning by my next door neighbor Rod- who was dying of cancer and heading to an ambulance. I peaked out my window and saw his wife in the wee early mornings mourning in the ambulance next to him. That visual has never left mind. He died weeks later at 64- just a minute from retirement. They had saved and saved and saved for retirement- only to be shortchanged with death and despair. They had waited to travel and enjoy life- now the time was gone.

Lesson learned for me early in life- Enjoy time with family and enjoy your money- it is fleeting. Now this is no excuse not to be saving for retirement, which we certainly do, but I rarely pass up opportunity to experience life, because it is more important to have experiences than things as I have said many times in my writings.

So this month, I am going to be discussing each of the following areas in more detail as we hash and fine tune them at our domicile. We are going to be discussing all of the important aspects of our financial life.

The Home Budget and living within your means
Investing
Where does your money go?
Food Storage
Grocery Shopping and Menus’s *My constant downfall*
Importance of Education
Your financial records, papers, data- how to organize etc.
Humanitarian give back

It is going to be a great month- taking stock and inventory.