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FINANCE
Regardless of how event of significant changes such as time to perform their own market
someone is smart, change of the job position, dismissal, analyses. Investment counseling can
professional and childbirth, death of a spouse, inheri- be performed by individual owners,
capable, the yield of tance, change of tax rates, significant consultant houses, departments of
the capital markets change of the value or your invest- personal finance in banks, brokers,
(especially the high ments etc. portfolio managers etc. Licensing of
yield) depends on these people is performed in different
numerous factors Transaction costs. One should con- countries in a different way, however
beyond our control. sider that both the purchase and the the very license only represents a con-
For this reason, no sale of securities and real estate regu- firmation that appropriate lectures
one can predict or larly entail payment of commissions, have been attended and that the re-
promise specific yield which may be high in some cases (sev- quired examinations are passed. One
rates. It is considered eral percent of the asset’s value). Con- should consider that the license is not
unethical (it is not sidering that fees are paid when both a magic stick and that the results of
prohibited) in the sale and purchase is performed, the fre- their advices may vary a lot within a
financial world to quent trade significantly increases this large range – from great gains to great
promise a specific amount and for this reason the capital losses. Still, their everyday engage-
yield rate (unless this gain can be quite lost in case of a slight ment and monitoring of information
is quite certain, as in increase of shares’ prices. In investors usually provide better results than the
the bank deposits or who suffer of “shortsighted aversion independent investments of the “ran-
the bonds). to losses” i.e. the ones who sell their dom” investors.
shares immediately after a slight fall of
56 prices, this further multiplies the loss. Beware of investment scams. We
will finish this part with a warning.
Taxes. One must never forget that Through the media, through the inter-
the earnings from the investments are net or through personal contacts, we
susceptible to tax payment. The divi- regularly receive “fantastic offers for
dends are immediately taxed, during very profitable investment of our mon-
the payment, while the capital gains ey. Even software is offered that can
should be registered in the Public Reve- provide us some secure profit. Be very
nue Office, and after this it issues a de- careful for a simple reason: regardless
cision for tax payment. From this point of how someone is smart, professional
of view, the savings and capital gains and capable, the yield of the capital
are more favorable, while property tax markets (especially the high yield) de-
is paid for the real estate property ev- pends on numerous factors beyond our
ery year, as well as tax for the rents if control. For this reason, no one can
the real estate is being rented. A bene- predict or promise specific yield rates.
fit of capital gains is that the tax can be It is considered unethical (it is not pro-
postponed until the asset is sold, while hibited) in the financial world to prom-
the excessively frequent trade has a ise a specific yield rate (unless this is
disadvantage that the realized transac- quite certain, as in the bank deposits
tions should be constantly registered. or the bonds). You will recognize such
One should consider that both the real- situations according to the follow-
ized capital gains, as well as the capi- ing characteristics. They promise you
tal losses, are reported, because these quick gains and most probably high
are deducted from the future gains gains, “internal” information is of-
and therefore the amount of tax that fered, the bidder of the opportunity to
should be paid, can be reduced. For this invest does not have a registered com-
purpose, the documentation from all pany in the country, you should hando-
performed transactions should be kept. ver the money or put them on a bank
account whose owner you do not know,
Services by investment advisors. you are offered an investment scheme
The services of the investment advi- and you are not allowed to share this
sors are available to everyone who information with others etc.”
doesn’t have sufficient knowledge and
self-confidence, or do not have enough
May 2016
