Insurance Bonds - Their Role in Financial Planning
Article Abstract:
Insurance bonds are gaining in popularity for investors. This bond is a whole life policy offered by insurance companies with a single premium that the insurance company then invests. Insurance companies have been working to make these more attractive. They are flexible so they can be cashed in part when spendable income is needed or the investment can be added to without increases in tax liability. These are a new investment vehicle. But, many companies have achieved a return of ten per cent per annum compounded over ten years for a basic rate taxpayer in the United Kingdom. Tax situations include: 1) no personal capital gains tax liability, 2) no basic rate income tax liability, 3) up to five per cent per year can be withdrawn free of taxes until original investment is withdrawn, 4) unused five per cent allowances are carried forward. Calculation of taxes after original investment is withdrawn is illustrated and discussed. There are four events that cause tax charges. Investment in insurance bonds is an effective tax shelter with tax deferral until income tax brackets are lower (as on retirement). An advantage this has over a capital conversion plan is that it can be 'topped up' with additional funds. There is room for both investment schemes in financial planning.
Publication Name: The Accountant
Subject: Business
ISSN: 0001-4710
Year: 1983
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Microcomputer-Based Systems
Article Abstract:
Most small businesses initially purchase microcomputers for accounting tasks and word processing. However, they are valuable planning tools performing a range of tasks including scheduling, personnel requirements and planning sales demand. A computer novice is capable of handling a spreadsheet system. They are inexpensive. Most packages range between one hundred and fifty and two hundred pounds. They all virtually provide the same range of facilities, including financial planning and projections of cash flow. The purchaser should be consious of the quality of the manual and instruction booklets. They should be clearly written. By examing them, one can determine the range of options allowed. The Lotus 1-2-3, by Lotus Corporation, is expected to start the new trend. It is a package that links a financial planning spreadsheet directly with a graphics and a database system. It was introduced in January 1983, and is priced at approximately five hundred dollars.
Publication Name: The Accountant
Subject: Business
ISSN: 0001-4710
Year: 1983
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The Powerful Systems
Article Abstract:
The spreadsheet system is new and easy to use, but the more powerful financial planning systems, based on procedural modeling languages, can accomplish much more. They can handle complex multi-dimensional models and adapt them as a large company would require. These languages are expensive and the necessary support level is high. They are out-of-reach for small businesses. However, the microcomputer is forcing change on the supplier. Even large companies are not using the systems to their best advantages particularly because the languages are in the hands of the data processing experts. The supplier should continue assisting customers in increasing use. When suppliers have designed a computer system with artificial intelligence, we will have a truly flexible and powerful planning system for the novice.
Publication Name: The Accountant
Subject: Business
ISSN: 0001-4710
Year: 1983
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