What Is Annual Report?

All quoted companies have a legal obligation to send shareholders annual results within six months of their financial year-end. The document,called the annual report and accounts,includes a narrative on company performance and financial results with footnotes. Several components are stipulated either by the listing authority or by accounting standards setters. The company will also have sent out interim results at the half-year stage, or quarterly.

The annual report and accounts typically contains five sections that offer hard information.

• The directors’ report

This tells what the company does, usually broken down by business segment, who its directors are and what their stake in the company is. There is also a remuneration and corporate governance report. The narrative should cover any significant business or financial developments during the year and provides a review of the year’s trading.

• Profit and loss statement (P&L)

This summarizes the result of last year’s trading in figures. It tells what the company sold, what its costs were, how much profit it made, what the tax charge was, what was left for shareholders, how much of this is being paid out to them in dividends and how much ploughed back into the company. It gives comparable figures for the previous year.

• Balance sheet

This provides a snapshot of everything the company owes and owns at the end of the financial year in question.It tells what its assets are and how they are financed. Where the profit and loss account tells you how the company has performed over one year, the balance sheet reveals its fundamental health.

• Cash flow statement

This compares the amount of cash coming into the company from trading profits, investment, more efficient debt collection and so on, with the amount flowing out from trading losses, tax and dividends. Then it adds or subtracts the cash produced by capital raising or spent on capital repayment.

• Auditors’ report

This tells you whether the accounts prepared by management reflect a true and fair view of affairs and meet the legal and regulatory requirements.

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Goods And Services Tax will be borne by the end-user/consumer and is not intended to add burden to businesses. GST is actually a tax to replace our existing sales tax and service tax in Malaysia. The Government has proposed an intial GST rate of 4% which is among the lowest rates in the world. The VAT rate in Britain is 17.5% currently. Some basic necessities such as essential food will be zero-rated (0%) means that the certain items are exempted from GST. Many people believe that they will be heavily burdened by GST and trigger inflation indirectly.

For example, some people will think that when the manufacturer sells goods to the agent, he/she pays 4% GST, then agent sells them to wholesaler, another 4% tax is imposed. When the goods are sold to the retailer, another 4% is added. In the end, when customer buys goods, another 4% is levied again. That means, the consumer is paying 16% tax to the Government.

However, it’s not true at all because of some misconception. The GST system does not work that way, there is no double taxation or butterfly effect will be charged to consumers. To ease the burden of low-income group, the Government will not imposed on certain basic food and properties include rice, sugar, vegetables, eggs, meat, poultry, domestic transportation, residential property, private health, education and Government services.

Conclusion:
GST works based on the affordability concept. You have to pay it if you buy food or services that fall into GST group. Actually, even now you are also paying for sales and service tax which are embedded in the price of goods and services and you may not realise about that. Anyway, we hope Malaysia Government will introduce special measures to help lower-income groups to minimise the adverse impact of GST on them.

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Tips To Building An Emergency Fund

1) Save More Money
- In emergency period, you need an urgent fund to support your daily expenses. Therefore, you need to save more money whenever there is a chance. Spending smart by cutting some unnecessary expenses or doing some part-time work to earn more money. Save more money when you are still young as you still can afford to do more works and earn extra money. Don’t wait till you closer to retirement age because there’s always uncertain things happen which could affect how much money you have at retirement.

2) Regular Investments
- Set up an automatic investments system which enable bank or investment company to withdraw some portion of your salary directly to the selected investment funds from your bank account each month. This method is similar with EPF (Employees Provident Fund ) which is to provide measure of security for old age retirement to its members. Some insurance plans are specially designed to meet this kind or requirement. Try to consult your financial/ insurance consultant to get more information about Regular Investment.

3) Pay Debt
- Do a balance sheet on the debt that you need to pay every month such as house rental, mortgage, car payment, credit card debt. You should aim to pay off the debt before your retirement if possible because less payment means less strain on your retirement savings. At the same time, you can use extra money to invest in high-interest funds to get better returns. Sometimes, it’s not wise to spend your emergency fund’s money to pay off the debt if the interest of debt is low comparing to the investment with higher return. Therefore, be a smart person to evaluate the situation to get the most benefit from investment.

4) Don’t Follow The Market
- When you invested a lot of money in the share market or funds, you are very concerning about the current market prices and always wanting to gain back profits as fast as possible. Don’t use your emergency fund money to invest in share market if you are not understand the risks of investment. Make a right decision to diversify your investments for your age and risk
tolerance. Don’t make the hurry decision to buy or sell the funds as the market will always bounce back on its own.

5) Avoid Relying On Credit Cards
A common mistake that people always make is to treat Credit Cards as their emergency fund resources. Every month, the credit card holders have to pay credit card debt with interest if they carry the credit card balance. Make sure you spend wisely with your credit cards as it actually can help you to cover for unexpected expenses in a certain critical period. However, you still need to build an Emergency Fund that can cover up to 6 months of living expenses.

Conclusion:
Although it may take you months or years to reach your target – Emergency Saving Fund, but when you starting to save money, you are moving closely to have a adequate emergency fund in the future.

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The payment of a regular income by a life company to an annuitant either for
life or shorter periods in exchange for a lump sum. Annuities are typically used for pensions and the individual receiving the annuity is known as an annuitant. In the UK they can broadly be classified into two types:

– A compulsory purchase annuity, which is bought from the proceeds of a pension fund and is taxable as earned income.

– A purchased life annuity, which is bought with an individual’s own capital and taxed at a lower rate than a compulsory purchase annuity.

There are three different types of pension annuities, commonly referred to as
standard annuities, with-profits annuities and unit-linked annuities. Standard pension annuities are the most commonly purchased and account for over ninety per cent of the UK market. The income from a standard pension annuity is guaranteed for the rest of the annuitant’s life whereas the income from a with-profits or unitlinked annuity will fluctuate depending on the investment performance of the underlying assets.

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No Specific Objectives or Goals

Whenever you start doing business or investment, you got to have a special objective or goals to be achieved. Without a clear goals is like a ship without an anchor on the sea. Therefore, you need to think of the main purpose of investment and evaluate your own financial risks whether you are suitable to invest on high risk or low risk investments. Knowing your goal will help you to determine the appropriate steps and investment allocation.

Not Following The Investment Plan

Many investors failed to build wealth due to not sticking to the initial investment plan. They simply invest money on other areas without following the financial plan. Most of time, this sudden act will yield higher risk of losing the money and affecting your investment portfolio.

Do “HomeWork” When Buying Investments

Do your homework first before investing any financial products. Make sure you know the products well and do not easily buy an investment just because someone wants you to buy it. You need to ensure the investment objective and risk tolerance are compatible with your investment goals.

Not Care About Your Investment Portfolio

Many people invest the money but don’t care about their investment after investing. This is a bad habit as current market conditions change very fast each day. As an investor who care about personal finance, you should always staying informed and knowing when to take appropriate actions if something bad happens.

Yesterday’s Investment Are Not Equal To Todays Market

Since the structur of economic market has grown rapidly and complex over the years. There are plenty of new investment products have evolved to meet investors needs. Therefore, you need to be careful when choosing the right investment products.

Stubborn – Insist To Keep Declining Investments

Although investment is a long-term process. Sometimes, when the bad situation happens and it’s not a smart choice to hold the bad performing investment products. You need to have courage and wisdom to sell off those “bad” investments to cut loss.

Get Rich Quick Expectations

Everyone loves to get rich quick and hoping for instance returns from the investments. These people are easily disappointed when their expectations are not fulfilled and always sell off the “Good” investment to earn early profit investments.

Risking In Investing On Products You Do Not Know

Remember to keep your investments simple. Don’t invest if you do not understand the company background and performances. Most of the investors lose their money because they do not know about their own investment products.

Conclusion:

Do not put all eggs in a basket only. Be a smart investor and avoiding all above top 8 common mistakes in investing. I believe you are walking on the right way and able to enjoy better returns for all your investments.

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Investment Strategies For 2010
In my opinion, Asian markets will continue to respond positively to government stimulus spending and the US Federal Reserve is expected to maintain their accommodative monetary policy to support economic activities. Looking at Malaysia Stock market – KLSE, I’m quite positive with it as the estimation of 2010 earnings and a dividend yield are about 3 % which exceeds the 12-month fixed deposit rate of 2.5%.

I believe 2010 is a recovery year for the global economy and the best investment strategy is not to put all eggs in one basket. Do not take high risk but investors are advised to hold diversified portfolios, with investment ranging from equity, bond and commodity funds. However, if you are comfortable with high risk profile, then you can put a higher allocation towards equity and commodity funds. For moderate risk investors, you can opt for balance funds (50% of equity and 50%of Bond fund) while for low risk investors, you can go for Bond funds.

In general, unit trusts provide a great channel for investors to invest stock markets indirectly through the expertise and resources of professional fund managers. Fund managers will manage the funds professionally to earn profits for their investors. Unit trust investors enjoy the convenience of redeeming their investments as and when funds are required.

Conclusion:
I urge investors to practice dollar cost averaging for long term as this method will perform better than individual investor who has limitation of expertise, time and resources to manage their own investments.

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In conjunction with year 2010, I want to announce Ivaluenews.com is now a Do-Follow blog. It means that your comment, pingbacks and trackbacks in this blog will be given precious link juice. I hope by spreading link love to others and at the same time to encourage more people leave their useful comments.

I hope this blog will  educate public about the importance of financial freedom and trying to inculcate people to plan for their retirement life. Kindly comment and give your opinion on the financial topics that you are interested in so that we can learn from each other and together we can achieve financial freedom.

Last but not least, I would like to give these Do-Follow images ( created by me) for free to everyone who will or plan to become parts of Do-Follow blog too. Enjoy!

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How To Survive A Financial Crisis, Economic Crisis

1) Calm Down And Don’t Panic

The most important thing is to calm down and don’t panic while facing with financial emergency. Because panicking will not solve anything and only contribute to additional stress.

2) Re-evaluate Your Expenditures

Try to carefully assess all expenses and determine which are the most important. Once you have identified significant bills, you can start working to cut down unnecessary expenses from your budget. For example, you can unsubscribe satellite TV subscription, eating out at luxury restaurants which can help you save on costs. It might be able to prevent you from slipping into an even deeper financial “black hole”.

3) Mortgage Payments | Credit Card Debts

For those people who having trouble with their credit card debts and mortgage payments to negotiate with credit card bank for a lower interest rate. Most of the bank will give you special monthly mortgage rate to encourage you to pay the mortgage.

4) Generate Additional Income

When economic is bad, companies may start to reduce employee salaries.  Therefore, it is advisable to look for alternative sources of income to help you get through the difficult times. You may also consider to take up a part-time job such as freelance writing. Furthermore, you may consider to sell your unwanted items and earn additional money via eBay.

5) Preparing For Future Crisis

Now you might want to minimise the impact of the future crisis by considering taking up life insurance to act as a safety net to cover your expenses should anything happen to you. Long-term investors are advised to take opportunity to accumulate undervalued blue-chip stocks or mutual funds at discounted prices. Due to economic downturn now, it’s a good time to purchase and hold on to them for the medium to long-term period.

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Personal financial planning is very important to each entity and not just rely on others. Everyone has had a significant life changing event that made her want to handle her financial future. If you haven’t start planning for your financial future, perhaps it’s the perfect time to start planning and it will be a beneficial to you and your family as well.
Here, I would like to give a few examples of financial management based on true stories and I hope these stories will enlighten your mindset and realise the importance of financial planning.

Cash Management

scenario : Amy has 5 credit cards with a total outstanding sum of $50,000. Her monthly net pay is about $5,000 and she needs to pay the house, car loans montly. Now will she able to save some money every month after deducting all the expenses? Don’t forget that the credit cards interest are high and will accumulate very fast if not being paid fully.

Advice: She needs to review the debt holding cost of each credit card and settle the highest interest rate first. She can contact the credit card company and request them to lower the interest rate. Instead of using credit cards to pay for her purchases, she uses cash so she can focus to pay the credit card debt. Besides reviewing her credit cards debt, she needs to change her spending habits and cut down on unneccessary expenses.

Risk Management

scenario: Amy and her husband, Mark do not believe in insurance and healthcare planning. Unfortunately, she was diagnosed with  breast cancer recently and Mark was unable to pay for huge medical cost. Mark had to borrow money from relatives and friends to make sure his wife received the proper treatment.

Advice: Most of us have insurance coverage but how many of us are aware of the details of insurance policies and whether the insurance coverage is what we actually need? Without knowing the details of your insured policies, you end up with too much insurance or under-insured. Therefore, the best way is to call your insurance agent and  require them to explain the details of your policy. Only then you can decide whether you need more or less insurance coverage especially for diseases affecting women like breast cancer and cervical cancer.

Tax Planning

scenario:Amy has been submitting combined tax assessments with her husband because she thought it would be troublesome to open her own income tax account.

Advice: Actually, husband and wife are eligible to claim a higher amount of relief and pay lower tax if elect to submit separate tax assessments. You may seek for advices from certified financial planner if you want to know more about the ways to save money by submitting separate tax assessments.

Investment Planning

scenario: Amy knows that in order to accomplish her ultimate financial goals – financial freedom. She needs to earn at least 8 % annually on her investments over the next 10 years. Besides, she is willing to accept moderate risk in her investments.

Advice: Investment planning is very important to achieve long term financial goals. It’s good to customize the investment portfolio in order to suit your personal financial needs . You must analyse your current and future financial needs, objectives and risk tolerances. Talk to a certified financial planner if you need him/her to plan better investment portfolio.

Retirement Planning

scenario: There’re a lot of people who can live until the age of 70’s and still healthy nowadays, thanks to modern medical technology which enable the longevity runs in whole world. However, how much retirement money should we saved if we are able to live till age of 70? Please be reminded that our retirement age are around age 55 till 60.

Advice: we should sit down and think properly some of the factors which will determine our retirement money are enough or not.
1. What you want at retirement life.
2. What is your current financial retirement resources including EPF.
3. How much money you need to fulfill your retirement needs
4. Review your financial planning strategy from now on in order to meet your retirement goal.

Estate Planning

scenario: Jessy, a housewife was suddenly widowed because her husband died of a heart attack. The house is still under mortgage and the children still young. Her husband died without a will (intestate), so his estate (house) was frozen and distributed under the Distribution Act 1958. The estate administration process take a longer time and Jessy encountered cash flow difficulties at that very critical period.
Advice: Everyone should set up the will (intestate) earlier because we cannot predict how old we will live in this world. Be prepared early and don’t let your loved one suffer afterward.

Conclusion:
Bear in mind that you are the master who in charge of managing your own financial planning in order to achieve financial goals. It’s never too early to start planning your own financial future.

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1) If you are carrying a balance on your credit cards from month to month, put them somewhere other than your wallet. Take them to the bank and store them in a safe-deposit box . The cards are still available if you really need them.

2) With some credit cards, charging large purchases at the beginning of a billing period and then paying off your debt at the end of your grace period allows you to borrow interest-free. A $3000 purchase carried this way over 50 days could earn you $25 in a money-market fund paying 6%.

3) Try putting broken mechanical or electronic devices – even televisions – into storage and doing without them. you may find you don’t miss them.

4) See if you can get the job done with smaller amounts of toiletries. try a dab of toothpaste instead of a three-centimetre bead, and only lather once when you shampoo your hair.

5) About 90% of the cost of washing clothes goes into heating water, and a large load of wash can require 150 to 190 litres. Try cooler temperature settings. With modern detergents you’ll get all but the filthiest clothes clean with the warm/cold cycle. (For laundry such as linens, dish towels and undergarments, the hot/cold cycle should still be used.)

6) Much of the pleasure of dining out is its entertainment value. Try having dinner parties where everyone brings a dish, or get the whole family involved in creating a “restaurant night at home” with special food and decorations.

7) Go over your insurance policies to be sure you are paying for protection only against large or disastrous losses and not against small risks you can afford to pay out-of-pocket. Comparison shop to be sure you are getting the best price for the coverage you want. Don’t overinsure: part of your home’s appraised value is the value of the land, which doesn’t require insurance.
Get a handle on your food expenses first by knowing a good price for commonly used products. (In my experience about a fifth of the items highlighted as supermarket specials are actually listed at regular prices.) Then when you see a real sale, you can stock up.

9) Give your home an energy-efficiency checkup. Turn down your water heater to 46 degrees, which is the temperature recommended by the US department of Energy. when the weather turns hot, cool your home only to 25 degrees, not 20 – you will have substantial savings. If you live in a area affected by cold weather, check your home for leaky windows and caulk them. This will allow you to turn down the heat.

10) The best tip of all. Write this on an index card and post it on your refrigerator door: “Want what you have and you’ll always have what you want.”

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