Tax advisers are normally reluctant to discuss real instances of tax planning. This page shares a real client problem that I solved in 1978. I was so excited by solving this problem that I have never forgotten it. It illustrates how creative tax advisers need to be. It also shows how tax advisers are able to save their clients large amounts of money, which is the reason they are well paid. I recommend the page to young people considering career options.
The UK has seen many recent audit failures. I have experience of auditing from both the auditor's perspective and the client's perspective. In my view the most fundamental problem is that companies choose their auditor. In practice, company managements have a major influence over auditor selection. The best solution is to take the power to appoint auditors away from companies.
I recently used Excel's =IRR() function to calculate my internal rate of return on an investment. The result I received was completely incorrect. This was not user error. After some effort and discussion with one of my sons, I discovered that Excel's IRR function treats blank cells differently from cells containing zero cash flow. Blank cells are treated as if that row did not exist, causing Excel to assume the actual cash flows occur on different dates than when they actually arise. If using IRR, it is essential that cells where there is no cash flow contain the number "0" (zero).
Investment trusts are closed ended investment companies which are listed on a stock exchange. Their shares often trade at a discount. Share buybacks at a price above the quoted price but below net asset value benefit both selling shareholders and continuing shareholders. That is why I normally support them. This page contains my article "Why you should encourage share buybacks by investment trusts" published in "The Private Investor" using material from my page "Why I always vote against trading company share repurchases."
It has become increasingly common for listed UK companies to repurchase their shares on the stock market. There is a clear rationale for such repurchases in the case of investment trusts trading at a discount. In the case of trading companies, I consider that the arguments put forward for stock market share repurchases instead of paying special dividends do not hold water. I illustrate the point with some detailed calculations. Accordingly I have now started voting against giving trading companies' managements the authority to make market purchases of shares.
Capital markets cannot function without reliable published financial information. In turn that requires independent auditors. The European Union sets out rules regarding listed company audits as part of overseeing an EU-wide capital market. While the detailed rules are primarily of interest to audit firms and the companies which engage them, private shareholders need to understand the factors that can impair effective auditing.
Why do so many investors, including investment professionals, perform poorly? The author contends that it is due to poor psychology, in other words behavioural errors. The book is clearly written, easy to read, and makes its case in detail. The author also shows us how behavioural mistakes can be minimised. Reading and applying it should improve the performance of all investors.
Public company shareholders cannot run companies themselves, or even choose executive management. Instead, they require intermediaries in the form of non-executive directors. However there are structural weaknesses in our present corporate governance rules. Furthermore, in my view the most important reason for governance failure is not structural; it is human nature.
A UK state pension is paid for life. However the pension can be deferred in exchange for a higher pension later or for a lump sum. Any decision needs to take into account your time preference for money, your tax profile, and your life expectancy. I carried out some modelling for myself and have shared that for educational purposes only. The approach used of building a spreadsheet to model changing the assumptions can be applied to many financial questions. However my spreadsheet model cannot be relied upon by anyone else and you must do your own calculations for yourself.
Warren Buffett is one of the world's richest men, and almost certainly its most famous investor. This 838 page authorised biography paints a very moving picture of the man, as well as recounting his business successes and philosophy.
Deciding what types of investment you should hold matters far more than your specific investment selections. Your decision depends on your investment objectives and your attitude to risk. This short book teaches you about the issue in a methodical but entertaining way.
If you have a drawdown pension, how is the fund treated when you die? If you have a drawdown pension and a free estate, and want some money to go to charity and some to your heirs, what is the most tax efficient way? I have written a short explanation with some illustrative examples.
An explanation of my view that the euro was created to increase the cross-border integration of European business and an analysis of what has gone wrong and what needs to be done. I forecast that all current members, even Greece, will remain within the eurozone.
Pete Comley wrote this free book to share what he learned about why investors underperform the stock market index. In it he explains in very simple language why investors go wrong and recommends how they should change their behaviour.
This book is based upon detailed interviews with 12 private investors. Two are identified, while the others use pseudonyms. The anonymity allows them to speak frankly about how they became full time investors. Everyone will learn something from this book, regardless of the extent of their previous involvement with investing.
Fellowship is the top level of membership in the CIOT. For years I could not think of a subject. In 1996 I signed up to write about the new loan relationships rules. Most of the thesis has been superseded by legislative change, but the introductory parts are still worth reading. The editing process was very instructive.