Financial independence might seem like an impossible dream for many, but if you put in place a set saving-and-spending plan, and stick to it, you will be surprised how quickly financial independence can become a realistic goal.

A strict budget and savings plan is the first stage of building your wealth. The next step is investing to make your money work harder for you.

The great thing about investing is that your money can work for you even when you're asleep. Your earnings ability will no longer be constrained by your working hours. Instead, you'll be able to benefit from the profits of other companies and other workers.

Dividends and dividend stocks play a crucial role here. Many studies have shown that dividends provide the bulk of investment returns for investors over the long term and by reinvesting your dividends you can achieve investment returns that are far greater than the market average.

For example, if you have a 1,000 investment in a company that yields 5% per year, you would receive 50 per annum in dividends, much more than the current level of interest available on most savings accounts. If the dividend payout remained unchanged for 10years, and for argument's sake, the share price also remained unchanged, without reinvestment you would receive a total of 500 over the life of the investment, a return of 50%.

However, if you were to reinvest these funds at the end of the period, your investment would have grown to 1,551, an extra profit of 51.

This basic example illustrates just how powerful the strengthof dividend reinvestment can be. To add to the example, let's say the value of the share in question rose by 5% every year. This capital growth combined with dividend reinvestment makes a super-potent combination. According to my figures, in this example, if the dividend is paid only once a year, within a decade the combination of capital gains and income will have turned theinitial 1,000 investment into 2,236. Most companies don't pay out the same dividend every year. They try to increase the per-share dividend by at least the rate of inflation.

So, let's assume that the company in our example increases its dividend payout by 5% per annum. In this scenario, assuming dividends are reinvested, a steady share price growth rate of 5% per annum and dividend growth, 1,000 will become 2,407 by the end of the decade sample period, almost 1,000 more than the example with no dividend reinvestment.

These are only simple examples but they clearly illustrate how important dividends are and how easy it is to build wealth by concentrating on the power of dividends and dividend reinvestment. If you're looking to achieve financial independence, this is one shortcut that you definitely shouldn't avoid. You should try to take as much advantage of the power of dividends as possible.

Dividends are essential if you want to achieve financial independence. If you're looking for more tips on how to improve your financial position, the Motley Fool is here to help withthis brand new free report titled The Foolish Guide To Financial Independence,

The report is packed full of wealth creating tips and,to help on your way, isentirely free and available for download today.

So if you're interested in exiting the rat race and achieving financial independence, click here to download the report.

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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The easy way to financial independence - AOL UK Money - AOL.co.uk - AOL UK

For the history buff and obedient American patriot Independence Day means commemorating the adoption of the Declaration of Independence on July 4, 1776. For many, Independence Day means the start of summer season. Whether that is met with joy because the kids are being sent off to camp, or whether its cause for celebration because you get to relocate to a bungalow colony full of summer friends and memories; or whether you get a little bit of reprieve from your normal all year-round working schedule it is certainly a time that is appreciated by many.. Independence is certainly something that everyone can appreciate.

It is also a milestone in the calendar where one can realize that half the year has gone by, and its a good time to revisit financial considerations that one might be trying to achieve. When it comes to finances however, there is no unanimous definition of what financial independence is. For some, financial independence is achieved when your passive income streams cover all your living expenses. For others, it means not having to work another day of their life. Some, wont feel financially independent until they are completely free from the constraints of debts. For many, financial independence might simply mean having the ability to make life decisions with money not being a determining factor. As you can see, it means to different things to different people - and certainly becomes a moving target with the different stages of ones life.

When it comes to homeownership, the resounding consensus that I hear from almost all my clients is that their goal of owning a home is to have no mortgage whatsoever. A lofty goal indeed. People assume that I am biased because I am in the mortgage business, but I quickly explain that I receive no financial benefit whether someone maintains or pays off their mortgage whatsoever. In fact, when I further discuss financial considerations, debts, income, cash flow analysis, retirement goals, life plans, investment strategies, reserve funds, and the like most people are shocked to learn that a mortgage is perhaps the safest, cheapest, and most lucrative debt out there.

There are many examples that support this theory, but for the purposes of this short article I will touch on a few core items. First, the a very common misconception of Building Equity. Everyone wants to build equity, and thats typically the main financial reason that drives renters to buy a new house. By definition, having a big mortgage is counter to the premise of building equity because the bigger the mortgage, the lower the equity. Ric Edelman, a financial advisor whose principals of finance I very much agree with and concur, has much to say on the topic of mortgage debt. Edelman is widely regarded as one of the nations top financial advisors, having been named in 2016 among the countrys Top 10 Wealth Advisors by many acclaimed publications and organizations.

Ric has a great illustration that speaks to the core misconception of equity building. Lets say someone were to buy a house for $300,000, and get a $250,000 mortgage at 4% fixed over 30 years. By making regular mortgage payments, the loans balance in 20 years will be just $117,886. The theory is, that equity grows as you pay off the mortgage and thereby the faster you pay off the mortgage, the faster your equity will grow. But this logic fails to acknowledge that this is not the only way you will build equity in your house. Thats because your house is almost certain to grow in value through appreciation. If that house rises in value at a modest rate of 3% per year, it will be worth $541,833 in 20 years! Youll have nearly a quarter million dollars in new equity even if your principal balance didnt budge. That is the real objection as to why renting is a waste of money.

Another common misconception about the financial independence of mortgages is that borrowers are always looking to minimize interest expenses. Obviously no debt whatsoever is a remarkable goal for everybody, but not very likely for the average citizen. As many know, a mortgage interest is tax-deductible, and thereby tax-favorable, as Edelman likes to say. Specifically, if youre in the 35% tax bracket, every dollar you pay in mortgage interest saves you 35 cents in federal income taxes. Many of the savings and deductions apply on state income taxes level as well. Say youre in the 33% tax bracket and you get a 5% mortgage, the true interest rate on that loan is really 3.35% after taxes. To put that into a visual perspective, if you invest money and earn 5%, your profits are taxed at only 20%, and your after-tax profit is 4.00%. Thus, even if your investments earn no more than what you pay for your loan, youre still making a profit!

It is very challenging to truly relate fully how a mortgage does not impact financial independence, and in fact will more often than not if utilized properly will be able to assist someone to achieve their financial objectives much faster and more lucratively if utilized properly. I love watching peoples faces when I am able to show them how so it truly brings great satisfaction to my work. Its certainly worth a phone call. Special shout out to the Ciment Family!

By Shmuel Shayowitz

Shmuel Shayowitz (NMLS#19871) is President and Chief Lending Officer at Approved Funding, a privately held local mortgage banker and direct lender. Approved Funding is a mortgage company offering competitive interest rates as well specialty niche programs on all types of Residential and Commercial properties. Shmuel has over 20 years of industry experience including licenses and certifications as certified mortgage underwriter, residential review appraiser, licensed real estate agent, and direct FHA specialized underwriter. He can be reached via email at [emailprotected]

Continued here:

Celebrating Independence - Jewish Link of New Jersey

Investing in companies with the ability to deliver rising dividends over many years can be a powerful way to build wealth. Share price gains often follow dividend growth, creating impressive total returns.

What's more difficult is to find companies with high yields that still have growth potential. In today's articleI'm going to take a look at two very different dividend growth stocks, each of which offers a dividend yield of about 5%.

Pub group Greene King (LSE: GNK) appears to be making a decent job of running a fairly traditional business. Sales rose by 6.9% to 2,073m last year, while the group's underlying operating profit climbed 4.9% to 392.2m.

Adjusted earnings per share were 1.3% higher at 69.9p, while the dividend was lifted 3.6% to 32.05p per share for a yield of 4.7%. Return on capital employed, a useful measure of profit for a business with lots of fixed assets, was unchanged at 9.4%. That's respectable, if not spectacular.

Greene King shares have traded unchanged since the figures were released this morning, but there was some bad news. The group's operating margin fell by 0.3% to 18.6%, due to cost pressures and the brand conversion costs resulting from the acquisition of Spirit pubs.

The firm was also forced to book an impairment charge of 58.6m against the book value of its pubs, due to "changes in the local trading environment". A further 34.9m of impairment was recorded against sites that were closed or sold last year. These suggest to me that market conditions remain tough for pubs.

However, Greene King's underlying business appears to be trading well and delivering fairly stable profits. For investors seeking income, I think that the forecast P/E of 9.7 and prospective yield of 4.8% could be an attractive long-term entry point.

Air Partner (LSE: AIR) may not be a name you're familiar with. It's a specialist aviation services company which provides charter services to governments, corporate customers and high net worth individuals. The group also includes an aircraft re-marketing business and consultancy services.

The firm is listed in the FTSE Fledgling index and currently has a market cap of just 61m. But it's not a fly-by-night newcomer as it was founded in 1970 and has been public since 1989.

Recent performance has been strong. Underlying pre-tax profit rose by 17% to 5.1m last year, while underlying earnings rose by 10% to 6.5p per share. Shareholders enjoyed a 7.2% dividend hike last year, giving a total payout of 5.2p per share. That's equivalent to a 4.6% yield at the current share price of 114p.

Air Partner has made several acquisitions over the last few years. These are helping to broaden the range of related services it offers and may deliver more stable profit growth. Although the company's profits are likely to slump during recessions, its long history suggests to me that this business has staying power.

Analysts covering the stock expect underlying earnings to rise by 20% to 7.8p per share this year, putting the stock on a forecast P/E of 15 with a prospective yield of 4.7%. I believe this business could be a long-term growth story, and is worth a closer look.

Investing in stocks such as Air Partner and Greene King could help you build a stock portfolio to fund your retirement. But if you really want to beat the market and retire early, I believe you need a clear plan.

In The Foolish Guide To Financial Independence, our investment expert Mark Bishop explains how he believes you shouldinvest to maximise your chance of an early retirement. Mark's tips include stock suggestions and ideas to help boost your saving power.

This exclusive report is free and without obligation. To download your copy today, click here now.

Roland Head owns shares of Air Partner. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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These 5% dividend yields could help you win financial independence - AOL UK

Wealth begins with a choice. A choice requires a commitment, and a commitment leads to actions.

The most powerful words in the English language are I am.What follows those words are critical. I am thin. I am healthy. I am wealthy. I am powerful. I bring joy and energy to people around me. I am a great leader to my team facilitating growth and opportunity. I am worthy. I am powerful. I am a great dad.

Once you decide I am wealthy, in that moment you are, in fact, not more wealthy, but the path will clear ahead of you. The how you will get there will become apparent, and the obstacles that stopped you will have less power.

Use the power of affirmations. Write down the ones that empower you. Put them next to your bed and read them before you fall asleep and when you wake up. Train your brain, and it will take care of you.

If you make the decision to be wealthy, then it doesnt matter what career you have. There is a janitor mentioned in our book, Wealth Cant Wait, who gave away 8 million dollars at his death.

So the question becomes: what are the actions required to build wealth in your particular career?

The answer could be live to live below your means, save every penny and invest in index funds, or something that grows over time. But there are three other important commitments you can make.

Work hard to serve others. The habitat of being the best you can at your vocation will serve you for a lifetime. It will also lead to increased compensation, which is useful in building wealth.

Even if you dont love it, take pride in it and do your best. If this position is not for you, work hard at it, and the next door will open. Take pride in everything you do, and your next job will find you.

Ask these questions: 1. What is wealth to me? 2. What wealth do Iwant in mylife? Carefully answer those questions and be as specific as you possibly can.

For example, one important aspect of wealth is to achieve financial independence.But thatis just the beginning of the inquiry. Go deeper: what, specifically, is financial independence to you? What does it look like? How would you know if you had it?

For us, the first step to financial independence is having enough income to offset all of your living expenses with passive income.This means that money coming in from your investments dividends, rents, etc. pay for your current lifestyle.

To create more motivation and mindset to achieve your goal, ask yourself: why specifically is this important to me? What, specifically, do I get out of this? This is an emotional impact and intrinsic motivational question. You might be surprised to find that often different people have very different reasons or intrinsic motivations to achieve the same goal.

Realize that if you are successful in building wealth, eventually your entire job becomes managing your wealth. So begin now by laying out a plan toward your financial freedom.Say your goal is $10 million net worthin 20 years. Break that down to a present number and work toward your goal.

Find the thing that you love to do: play disguised at work. The more you align your career with your natural calling, the more success you will have.

Ask yourself: is work hard if you love it? Who would truly want to succeed if it required sacrifice (giving up something that is vital to you)?

Yes, you might have to limit drinking beer with your buddies to only one or two nights a week if you want to be a great student and get into a great school. Being the best at a job might require you to put in the extra effort and dive into what others shy away from. But, if you love what you do and you are passionate about the project (even if you dont love every aspect of work), then you can achieve greatness. And, if you are doing what you love to do, what are you sacrificing?

We know lots of people who work so hard that they dont have time for family, friends, or being healthy. But, we know that this is not necessary to achieve great success. Having a thoughtful, purposeful plan and staying on it sixhours a day, with zero interruptions or distractions would lead most of us to accomplish more every day that someone who works more than 10-hour days sixor sevendays a week.

If you are in a career that you dont love, know that it takes effort just to get to work. It takes effort, lots of it, just to get started each day. It takes effort to focus.

If you do something you love and are passionate about,there is no effort in getting started; the effort goes to execution. That is why we are so much more productive and successful when we do what we love. Wealth will follow.

David Osborn is Operating Partner at Keller Williams andManaging Partner Align Capital. Follow him on Twitter. Paul Morris is CEO of a RealTrends top 50 brokerage and Regional Director ofKeller Williams.Follow him on Twitter. They are the authors ofWealth Cant Wait: Avoid the 7 Wealth Traps, Implement the 7 Business Pillars, and Complete a Life Audit Today!

David Osborn and Paul Morris are the authors of Wealth Can't Wait: Avoid the 6 Wealth Traps, Implement the 7 Business Pillars, and Complete a Life Audit Today!

Continued here:

3 steps to become wealthier and more successful - Ladders

It is not often that people become financially independent a mere 15 years after starting their career.

Although he didnt know it right away, Jim Collins did just that. In 1989, he became financially independent, only a decade and a half into his profession.

Jim Collins is now the author of A Simple Path to Wealth and also has his own financial blog, jlcollinsnh. He began his blog as a way to share different financial strategies with his daughter, family, and friends, that may help them become financially independent as well.

Through the past six years that Jim has had his blog, he has met hundreds of like-minded people. He has also expanded his blog to an annual trip to Ecuador, which he likes to call a Chautauqua a place where people come together to share ideas, concepts, and companionship.

In todays podcast, I will be talking to him about how he did it, his blog, and his new book, A Simple Path to Wealth. I also ask him for some tips on how we can all achieve financial independence.

Heres the podcast audio, followed by a transcript of the interview:

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JL Collins' Tips for Achieving Financial Independence - The Dough Roller

Birmingham Business Journal

Alabama one of the least financially independent states in the country Birmingham Business Journal A study by WalletHub looked at various factors of financial independence among all 50 states and ranked them from most independent to the least. Unfortunately for Alabama residents, the state finished among the least independent states in the country.

Excerpt from:

Alabama one of the least financially independent states in the country - Birmingham Business Journal

For federal employees accustomed to elected leaders focused on firing feds faster and bashing their benefits, heres a little something to cheer.

Bipartisan legislation in the House and Senate would update the Thrift Savings Plan (TSP), a 401(k)-type program for federal employees, by allowing them greater flexibility in withdrawing their funds.

This might not sound like much compared to news about federal retirement cuts in President Trumps proposed fiscal 2018 budget and the movement to undermine civil service protections. Yet this little something could make life easier for the 5 million people with TSP investments worth $490 billion.

Meanwhile, Democrats have escalated opposition to the planned cuts, with more than 100 House members opposing President Trumps proposal to gut pensions. Then Trump described workplace protections as outdated laws, at a White House East Room signing ceremony Friday for legislation that now restricts civil service safeguards for Department of Veterans Affairs employees.

Currently, participants reaching the age of 59 are allowed only one TSP withdrawal while actively employed in the government. When they leave federal service, they can withdraw a portion of their balance, but only once. After that, only full withdrawals are permitted.

The TSP Modernization Act introduced Friday by Reps. Elijah E. Cummings (D-Md.) and Mark Meadows (R-N.C.), and earlier in the Senate, would eliminate those restrictions. Investors could make multiple withdrawals at age 59 and after leaving the government.

Its huge, Kim Weaver, a TSP spokesperson, said of the legislation. It is supported by the Federal Retirement Thrift Investment Board, which administers the TSP.

In a memo to the board two years ago, Greg Long, then the executive director, said changes like those in the legislative proposals will allow us to favorably respond to participant demand and move closer to typical plan design found in private and public sector plans. This set of changes will be a win for participants.

The bill would encourage participants to keep their TSP accounts to take advantage of low administrative fees even after they retire or separate from federal service, Cummings said. The legislation would give TSP participants what they want: greater flexibility to withdraw money from their accounts to address unexpected life events.

Its a win for the TSP too, which would keep more money longer.

Restrictive rules pushed many investors to transfer their balances to other financial institutions with more lenient policies but with higher fees.

Meadows called the bill common-sense reform It will give TSP recipients more access to their own funds and, over the long term, allow them the opportunity to continue taking advantage of benefits similar to those available throughout the private sector after federal service.

Sens. Rob Portman (R-Ohio) and Thomas R. Carper (D-Del.) introduced similar Senate legislation in April.

The proposals put federal employee leaders in the relatively rare position of having something from Capitol Hill to praise, as they did in letters to Congress.

Richard G. Thissen, president of the National Active and Retired Federal Employees Association, said the legislation would create opportunities for participants before and during retirement, provide greater financial independence and encourage participants to keep their money in the TSP.

Although TSP provides federal employees with extremely low administrative and investment fees, pretax and after-tax withdrawal options and an employer contribution, Thomas S. Kahn, legislative affairs director of the American Federation of Government Employees, said it does not provide sufficient options for withdrawals while in federal service, or much flexibility involving annuity payments.

National Treasury Employees Union President Tony Reardon welcomed the legislation, saying I have heard from many NTEU members over the years about the stringent withdrawal rules of the TSP the withdrawal rules have not been changed since the TSP was established in 1986 and are outdated.

While the TSP legislation gives feds reason to smile, Trumps budget plan turns that smile upside down. His proposal for a 1.9 percent pay raise for fiscal 2018 is more than offset by his effort to reduce retirement income for federal workers.

Trumps budget would increase individual out-of-pocket contributions to the Federal Employees Retirement System (FERS), base future retirement benefits on the high five years of salary instead of the high three, kill FERS cost-of-living adjustments (COLA), reduce the COLAfor those in the Civil Service Retirement System and eliminate retirement supplements for FERS participants who retire beginning in 2018.

Since 2010, federal employees have had $182 billion taken from their pay as a result of three years of pay freezes, furloughs, sequestration and increased employee retirement contributions, Kahn said. In addition to these losses in compensation and benefits, the cost of living has continued to rise. Nonetheless, federal employees save for retirement and pay into their TSP accounts.

Federal employee retirement programs are threatened, but their TSP is on the verge of getting better. Thats good, but not much consolation.

Read more:

[New withdrawal options forTSPinvestors proposed]

[New VA law sets stage for government-wide cut in civil-service protections]

[Trumps budget calls for hits on federal employee retirement programs]

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Greater savings options for feds draw praise, while move to cut their retirement looms - Washington Post

Rupert Hargreaves | Saturday, 24th June, 2017

Achieving financial independence is everyone?s goal. The dream of quitting the rat race and being able to live off your savings may seem like an unattainable goal to many but in reality, to achieve this, all you need is a little planning. The key to building wealth is a regular savings plan. If you?re putting away a little every month, over time this savings pot will build up. The best way to ensure that your savings stay untouched, and grow steadily over time is to use a bucket approach. Using buckets Using financial buckets to segregate your wealth is easy way of

Achieving financial independence is everyones goal. The dream of quitting the rat race and being able to live off your savings may seem like an unattainable goal to many but in reality, to achieve this, all you need is a little planning.

The key to building wealth is a regular savings plan. If youre putting away a little every month, over time this savings pot will build up. The best way to ensure that your savings stay untouched, and grow steadily over time is to use a bucket approach.

Using financial buckets to segregate your wealth is easy way of making sure that your money works as hard as possible. It doesnt require much effort and youll soon reap the rewards.

How you plan your buckets will obviously depend on your current financial situation, savings goals and position in life. But no matter how you divide your wealth, you should be better off for it.

A simple bucket approach would be to divide your wealth between current and long-term savings. Depending on your current financial situation you may believe it is prudent to put aside enough cash to meet three months of spending obligations as protection against unforeseen occurrences.

With this cash cushion in place, you can devote the rest of your wealth to savings products with a longer horizon, with the intention of locking these funds away. Inside this bucket you may then choose to have two more buckets, one of which carries more risk but a higher potential long-term return such as equities. The other would be low risk but offer a steady return bonds might be appropriate.

The great thing about the bucket approach is that, as well as encouraging saving and making sure that you dont dip into your savings to meet near-term costs, it provides a psychological benefit.

Equities have generated a historic return of around 10% per annum, much more thanoffered by fixed interest. Nonetheless, this higher return comes with increased volatility, which may scare off some savers. But by using buckets theres no need to fret about volatility.

Research has shown that investors tend to panic when the market falls and sell at any cost, a destructive strategy. However, if you have your near-term cash requirements satisfied in the lower-risk savings buckets described above, the chances of you deciding to sell at the market bottom are greatly reduced as you can afford to wait for equities to recover.

Shares in companies such as Royal Dutch Shell and GlaxoSmithKline may fall significantly during periods of market turbulence but these companies have a long history of producing returns for investors and due to their size, they are unlikely to go out of business any time soon. Whats more, these two companies both support dividend yields that are several percentage points above the income offered by most savings accounts.

Overall, if you want to achieve financial independence, a disciplined approach to saving is required. Andthe best way to ensure that you get the most from your money is to separate your funds into different buckets, with different levels of risk and reward based on your own financial circumstances. Job done.

A long-term approach is essential for building wealth. If financial independence is your goal, the Motley Fool is here to help. Our analysts have recently put together this brand new free report titled The Foolish Guide To Financial Independence, which is packed full of wealth creating tips.

The report is entirely free and available for download todaywith no further obligation.

So if you're interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?

Rupert Hargreaves owns shares of GlaxoSmithKline and Royal Dutch Shell B. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Royal Dutch Shell B. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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You can achieve financial independence easily by using buckets ... - Motley Fool UK

Achieving financial independence is everyone's goal. The dream of quitting the rat race and being able to live off your savings may seem like an unattainable goal to many but in reality, to achieve this, all you need is a little planning.

The key to building wealth is a regular savings plan. If you're putting away a little every month, over time this savings pot will build up. The best way to ensure that your savings stay untouched, and grow steadily over time is to use a bucket approach.

Using financial buckets to segregate your wealth is easy way of making sure that your money works as hard as possible. It doesn't require much effort and you'll soon reap the rewards.

How you plan your buckets will obviously depend on your current financial situation, savings goals and position in life. But no matter how you divide your wealth, you should be better off for it.

A simple bucket approach would be to divide your wealth between current and long-term savings. Depending on your current financial situation you may believe it is prudent to put aside enough cash to meet three months of spending obligations as protection against unforeseen occurrences.

With this cash cushion in place, you can devote the rest of your wealth to savings products with a longer horizon, with the intention of locking these funds away. Inside this bucket you may then choose to have two more buckets, one of which carries more risk but a higher potential long-term return such as equities. The other would be low risk but offer a steady return -- bonds might be appropriate.

The great thing about the bucket approach is that, as well as encouraging saving and making sure that you don't dip into your savings to meet near-term costs, it provides a psychological benefit.

Equities have generated a historic return of around 10% per annum, much more thanoffered by fixed interest. Nonetheless, this higher return comes with increased volatility, which may scare off some savers. But by using buckets there's no need to fret about volatility.

Research has shown that investors tend to panic when the market falls and sell at any cost, a destructive strategy. However, if you have your near-term cash requirements satisfied in the lower-risk savings buckets described above, the chances of you deciding to sell at the market bottom are greatly reduced as you can afford to wait for equities to recover.

Shares in companies such as Royal Dutch Shell and GlaxoSmithKline may fall significantly during periods of market turbulence but these companies have a long history of producing returns for investors and due to their size, they are unlikely to go out of business any time soon. What's more, these two companies both support dividend yields that are several percentage points above the income offered by most savings accounts.

Overall, if you want to achieve financial independence, a disciplined approach to saving is required. Andthe best way to ensure that you get the most from your money is to separate your funds into different buckets, with different levels of risk and reward based on your own financial circumstances. Job done.

A long-term approach is essential for building wealth. If financial independence is your goal, the Motley Fool is here to help. Our analysts have recently put together this brand new free report titled The Foolish Guide To Financial Independence, which is packed full of wealth creating tips.

The report is entirely free and available for download todaywith no further obligation.

So if you're interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?

Rupert Hargreaves owns shares of GlaxoSmithKline and Royal Dutch Shell B. The Motley Fool UK owns shares of and has recommended GlaxoSmithKline. The Motley Fool UK has recommended Royal Dutch Shell B. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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You can achieve financial independence easily by using buckets ... - AOL UK

We're big advocates of a bottom-up approach here at The Motley Fool. We invest in individual companies instead of betting on sectors. This approach can help us ignore the relentless 'noise' of the market, but taking this approach too far can be dangerous too.

Companies do not exist in isolation and do not have complete control over their destiny. It is therefore important to consider the impact market forces could have on an investment candidate. Michael Porter, a professor at Harvard, has designed a model of analysis that helps us investigate how a company functions inside its industry.

Porter's Five Forces provides insightsinto how the competitive picture may impact sales and profitability at a given company in the future.

Force number one asks: How easily can another company enter this industry"

Industries with relatively few players often boast outsized returns on capital. Investors will always be drawn to such industries, but unless a company has a wide economic moat (or durable competitive advantage) new competitors will inevitably emerge, vying for a cut of the juicy profits. This increased competition erodes margins until return on capital reverts to the mean. Investors who bought in at its zenith will be left nursing nasty losses.

To avoid this fate, don't be drawn in by big margins. Instead ask yourself how easy would it be to recreate this business if money was no object. If you could create a viable rival without in-house knowledge, hard-earned customer relationships, regulatory approval, brand-building, patent approval or any other differentiator, the company in question likely has a weak competitive position.

The force of substitution is the threat of customers choosing a different product over yours. Driverless cars might substitute taxi drivers. One engine part may be interchangeable with a competing product. When analysing a product, ask: what might be substituted for this? If a service or product is differentiated and strong enough that it has few threats of substitution, it could have the potential for outperformance.

In industries where competition is rife, the balance of power often shifts towards the customer base. This can result in price-sensitive consumers, minimal brand loyalty or even open the doors to price negotiations, thus reducing profitability.

When there is both bountiful supply and suppliers, a company can tend to source its inputs more cheaply because of increased competition. However, if a company must buy a special chemical that is only made by one supplier, it has little scope to negotiate on price if there are few or no viable substitutes.

Who are the other big players in the candidate's industry? What are they good at? Where do they fall down? Do they have any distinct differentiators? Can they threaten the candidate in the future? Understanding how your candidate compares to peers is or paramount importance to forming an opinion on its future.

Understanding these forces could help you track down the not-so-obvious big winners of the future. Our analysts often use this approach to find growth candidates that can compound outsized returns over the long run. We've found a company that ticks all the boxes.

People will pay top dollar for its world-renowned brand, its raw materials are plentiful and cheap and it has a wonderful growth record. This British growth story has doubled profits since 2012and shows no sign of letting up yet. To read the investment thesis in full, click here.

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Porter's Five Forces can help you achieve financial independence ... - AOL UK

Allstate agency owner Bill Baker recently secured a $1,000 Allstate Foundation Helping Hands in the Community grant to support Personal Energy Transportation of Southwest Missouris efforts to provide the gift of mobility to thousands of mobility challenged people around the world.

As a volunteer with PET, Baker joins thousands of Allstate agency owners and financial specialists around the country who aim to improve their communities by supporting important local causes, such as raising money for domestic violence programs and empowering youth to reach their full potential.

As a small business owner in Aurora, I see firsthand the opportunities and challenges facing our area, Baker said. Giving back is tremendously rewarding and gives me a sense of purpose. I believe that when we help others, we can be a positive force for change in our communities, which is why Im proud to support PETs work.

PET is one of thousands of organizations this year that will receive Allstate Foundation Helping Hands in the Community grants secured by agency owners and financial specialists on behalf of the nonprofit where they volunteer. The grants support organizations addressing domestic violence, youth empowerment, disaster preparedness, hunger and other causes.

The Helping Hands in the Community grants are one example of The Allstate Foundations legacy of service and giving.

Since The Allstate Foundation was founded in 1952, it has contributed $400 million to support community nonprofits.

In 2016, The Allstate Foundation gave more than $25 million to charitable causes.

About the Allstate Foundation

Established in 1952, The Allstate Foundation is an independent, charitable organization made possible by subsidiaries of The Allstate Corporation (NYSE: ALL). Through partnerships with nonprofit organizations across the country, The Allstate Foundation brings the relationships, reputation and resources of Allstate to support innovative and lasting solutions that enhance peoples well-being and prosperity. With a focus on building financial independence for domestic violence survivors, empowering youth and celebrating the charitable community involvement of Allstate agency owners and employees, The Allstate Foundation works to bring out the good in peoples lives. For more information, visit http://www.AllstateFoundation.org.

View original post here:

Baker awarded Helping Hands grant - Devil's Lake Daily Journal

Allstate agency owner Bill Baker recently secured a $1,000 Allstate Foundation Helping Hands in the Community grant to support Personal Energy Transportation of Southwest Missouris efforts to provide the gift of mobility to thousands of mobility challenged people around the world.

As a volunteer with PET, Baker joins thousands of Allstate agency owners and financial specialists around the country who aim to improve their communities by supporting important local causes, such as raising money for domestic violence programs and empowering youth to reach their full potential.

As a small business owner in Aurora, I see firsthand the opportunities and challenges facing our area, Baker said. Giving back is tremendously rewarding and gives me a sense of purpose. I believe that when we help others, we can be a positive force for change in our communities, which is why Im proud to support PETs work.

PET is one of thousands of organizations this year that will receive Allstate Foundation Helping Hands in the Community grants secured by agency owners and financial specialists on behalf of the nonprofit where they volunteer. The grants support organizations addressing domestic violence, youth empowerment, disaster preparedness, hunger and other causes.

The Helping Hands in the Community grants are one example of The Allstate Foundations legacy of service and giving.

Since The Allstate Foundation was founded in 1952, it has contributed $400 million to support community nonprofits.

In 2016, The Allstate Foundation gave more than $25 million to charitable causes.

About the Allstate Foundation

Established in 1952, The Allstate Foundation is an independent, charitable organization made possible by subsidiaries of The Allstate Corporation (NYSE: ALL). Through partnerships with nonprofit organizations across the country, The Allstate Foundation brings the relationships, reputation and resources of Allstate to support innovative and lasting solutions that enhance peoples well-being and prosperity. With a focus on building financial independence for domestic violence survivors, empowering youth and celebrating the charitable community involvement of Allstate agency owners and employees, The Allstate Foundation works to bring out the good in peoples lives. For more information, visit http://www.AllstateFoundation.org.

Original post:

Baker awarded Helping Hands grant - Columbia Daily Tribune

General News of Monday, 19 June 2017

Source: classfmonline.com

Chief Justice, Sophia Akuffo

Chief Justice Sophia Akuffo has said that one of the legacies she would like to leave after retiring from office is establishing a financially independent judiciary.

In a speech at her induction into office on Monday June 19, Justice Akuffo said she was passionate about integrity, the delivery of quality justice, and the development and stability of our nation and will strive to demonstrate such actions throughout my tenure

She emphasised: The judiciary has diligently worked for and obtained a large measure of independence. This is however made incomplete by the lack of financial independence and that is an objective I would like to achieve during my tenure as Chief Justice.

Meanwhile, President Nana Akufo-Addo has charged her to prove herself in her new role as the Chief Justice of Ghana.

Mr Akufo-Addo said Justice Akuffo has proved herself and did not disappoint after she was elevated to be a Supreme Court judge by former President Jerry John Rawlings some 22 years ago.

He emphasised that it was now time to prove herself as an effective Chief Justice who will advance the frontiers of justice delivery in Ghana.

She has justified the confidence reposed in her by President Rawlings. She has now to justify the confidence I am reposing in her as Chief Justice, he said

Mr Akufo-Addo described her as a shining light of Ghanas court who is capable of advancing the judiciary in Ghana.

She becomes the fifth Chief Justice under the Fourth Republic.

Justice Akuffo holds a Masters in Law (LLM) degree from Harvard University in the United States.

She has been a member of the Governing Committee of the Commonwealth Judicial Education Institute and the Chairperson of the Alternative Dispute Resolution Task Force.

In January 2006, she was elected one of the first judges of the African Court on Human and Peoples Rights. Initially elected for two years, she was subsequently re-elected until 2014 and is at present serving as Vice-President of the Court.

She has written The Application of Information & Communication Technology in the Judicial Process the Ghanaian Experience, a presentation to the African Judicial Network Ghana (2002).

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I'll pursue financial independence for judiciary - Akuffo - GhanaWeb

Unless you suddenly win the lottery, achieving financial independence is not an easy task. It takes time to save and build a suitable nest egg, as well as building the experience required to manage that nest egg before you can quit the rat race and live off your savings.

Investing is the best way to grow your wealth. With interest rates at theirlowest level in history, equities are one of the few remaining places where you can achieve an attractive return on your money without having to take on excessive risk.

To build a substantial savings nest egg, all you need to do is save more than you spend and put in place a regular savings plan. The earlier you start to save the better as, over time, the power of compounding will do all of the heavy lifting. And just like saving, tobe a successful investor there's one main rule you need to follow to be able to achieve the best return on your money.

Unfortunately, most investors fail to understand this point, andtheir performances suffer as a result. Indeed, accordingto the latest study from Dalbar, since 1984, the average US equity fund investor has lagged the market by an average of 7.3% per annum as they have jumped in and out of the market.

So what's the answer? Well, studies have overwhelmingly shown that the only way to achieve the maximum returns from investing is to focus on the long term. This means ignoring short-term market bumps and instead concentrating on the estimated long-termgrowth potential of the companies you own.

Concentrating on the long-term performance only might seem like an easy task, but most investors fail to grasp this concept, and as a result, their returns suffer.

For example, over the past 10years, the FTSE 100 has booked bothup and down years. In 2007 the index rose 7.4% before falling 28.3% in 2008. The index went on to increase 27.3% in 2009, and 12.6% in 2010, but then fell 2.2% in 2011. However, if you'd sold at this stage thinking that the index had no further left to run, you would have missed out on a gain of 10% in 2012, 18.7% in 2013, 0.7% in 2014 and 19.1% in 2016 (the index fell 1.3% in 2015).

Even though the FTSE 100 fell in three of the past seven years, during the past decade, it has chalked up a total return of around 80%. This example shows clearly that focusing on the long viewis the best course of action for most investors. If you'd sold out in any of the down years, you would have not only crystallised losses but also you would miss out on the market's recovery.

So overall, investing is the best way to build your nest egg but without a pateint investment horizon, you're unlikely to unlock the full potential of your money.

A long-term approach is essential for building wealth. If financial independence is your goal, the Motley Fool is here to help. Our analysts have recently put together this brand new free report titled The Foolish Guide To Financial Independence, which is packed full of wealth creating tips.

The report is entirely free and available for download todaywith no further obligation.

So if you're interested in exiting the rat race and achieving financial independence, click here to download the report. What have you got to lose?

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

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Achieve financial independence with stocks by following this one ... - AOL UK

Photo by Rhys Buccat

In 2012, Sun Life Financial launched five short films, starring the likes of Angel Aquino, Ketchup Eusebio, and the late Lilia Cuntapay.

At that time, the country's leading life insurance company had one purpose in mind-- to boost people's financial literacy and encourage them to invest money.

Little did they know that these films would be recognized abroad. In fact, one went as far as the New York Festivals.

So, as the company celebrates Financial Independence Month this June, they are launching short films titled "Waves" by Zig Marasigan, "She said, She said" by Nic Reyes, and "Sayaw" by Mihk Vergara.

Dubbed "Sun Shorts," these films revolved around three stories love, hope, and commitment that are inspired by real-life stories of Sun Life clients.

Sun Life Brand Ambassadors and Sun Shorts directors. Photo by Rhys Buccat

Each film is accompanied by a reaction video from Sun Life brand ambassadors Matteo Guidicelli, Judy Ann Santos, and Piolo Pascual.

Charo Santos was also present during the launch at the Makati Shangri-la on Wednesday. According to the 61-year-old showbiz veteran, she is proud to have gone through the different stages of life for these taught her many lessons.

"I've gone through the "kilig" of young love. As a mother, I've struggled between raising my children and building a career. And I've experienced what it's like to build a relationship amidst the many trials and challenges of life," she said.

Santos added that she continues to learn a lot of things every day. But above all, she realized that the best things we have are the relationships we build through time.

"The people we love inspire us. They give us courage. They give us purpose. They give us a reason for living, and they made us better versions of ourselves. And so it is very important and it's imperative that we learn to nurture and build these relationships every way we can. These relationships are the ones that will define us as a people," she added.

"And in this Financial Independence Month, this is the message we wish to convey that we should be free to express our love and care for the people we truly love in the best way we can, and make sure that we will secure a bright future for our loved ones and be there for them every step of the way, and Sun Life will help us in making that happen. "

Sun Life's chief marketing officer Mylene Lopa. Photo by Rhys Buccat

According to Sun Life's chief marketing officer Mylene Lopa, Sun Life continues to advocate financial literacy by utilizing the digital platform to reach more Filipinos. Short films, she added, are effective media in conveying powerful messages.

"Through short films you can convey a very beautiful story. It doesn't take too much time. It's not very imposing on our audience. Mga four minutes lang, we can already impart a very important message to them," Lopa said.

On Wednesday night, Sun Life launched the short film "Waves," which instantly garnered millions of views on social media. The films "She said, She said" and "Sayaw" will be launched on June 14 and 21, respectively.

You can watch the video by visiting http://www.sunshorts2.com or following Sun Life Financial Philippines on Facebook.

NOTE: BrandNews articles are promotional features from our sponsors and not news articles from our editorial staff.

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Sun Life kicks off Financial Independence Month with beautifully crafted short films - ABS-CBN News

Those who are on track to be "financially independent and retiring early" -- or "FIRE" -- are.

You'd need to be fired up to sock away enough money to quit your job and retire in just five years. But it's not impossible.

Some people, like Claudia and Garrett Pennington take extreme measures like saving 67% of their income and making big lifestyle choices. They almost never eat out, have no cable subscriptions and even dramatically downsized their home.

While that's probably too much sacrifice for most people, see if you're on track to make it to financial freedom in 10, 15 or 20 years.

This couple is on track to retire -- before they turn 40

Being financially independent means that income from your investments alone is enough to cover all your expenses.

So how do you get there?

The sunshine that makes most retirement funds grow is compound interest. And it takes time to grow. But if you plan to retire early, you might not have as much time as someone targeting a traditional retirement.

As a result, the most important accelerant when working to be on "FIRE" is your savings rate. Most people targeting FIRE are living well below their means and saving more than half their income.

Identifying the percentage of your after-tax income that you're saving to get to your retirement target is key. Finding the right savings rate will get you to financial independence whether you're earning $50,000, $100,000 or $200,000 a year.

In order to make simplified calculation, we'll start with your after-tax income. We'll also assume you have nothing saved right now. You're starting from zero. And we'll assume that your investments earn a rate of return of 5%, and that you'll take 4% a year from your investments to cover your expenses.

You can also use an early retirement calculator like the one at Networthify to fill in your own numbers.

But given our assumptions, here are your target savings rates and a simplified financial picture of what it would take to retire in 5, 10, 15 and 20 years.

To retire 5 years from now

In order to be financially independent in five years, you're going to need to ratchet your savings rate all the way up to 82% of your income.

It's a pretty spartan life if you're earning $50,000 after taxes. Your annual expenses will need to squeeze in under $9,000. Yes, that's for the whole year. It is the sacrifice you'd need to make so that you can bank the other $41,000. Out of your monthly income, about $3,500 will go to savings. You'll need to have a sharp plan to get by on just $750 a month.

Even if you earn closer to $100,000 after taxes, you'll still be living a fairly basic existence on $18,000 a year while pocketing $82,000. Start thinking of creative living arrangements to stretch that monthly living budget of $1,500.

No matter your income, this savings rate is going to be possible only for those people with virtually no debts. That's why many people working toward FIRE start by paying off their mortgage first, or live a car-free life.

To retire 10 years from now

If you want to give yourself a little more breathing room and still become financially independent 10 years from now, you're going to need to boost your savings rate to 66.5% of your income.

That means if you're earning $50,000, your annual expenses will need to clock in under $16,750 a year so that you can sock away the other $33,250.

Out of your monthly income, $2,771 will go to savings and you'll have $1,396 to live on.

Again, housing costs will cut significantly into that money. But if you have incredibly low-cost or subsidized housing, you may be able make this work.

If you make $100,000 it gets a little easier. You'll have $33,500 for living expenses because the remaining $66,500 is going toward your future. You'll need to manage your expenses so you can live on $2,800 month.

To retire 15 years from now

You're up for saving hard to be financially independent, but maybe you have other debts you're carrying or aren't willing to make the extreme adjustments needed to save at a higher rate. Financial independence 15 years from now may be a reasonable goal. You're still saving over half your income, but only just. Your savings rate is 53.7%.

For those earning $50,000, your annual expenses will need to be under $23,150 a year so that you can save the other $26,850.

Out of your monthly income, $2,200 will go to savings. You'll have $2,000 to live on.

If you're earning closer to $100,000, you'll be living on $46,300 a year. You're saving a slightly larger portion: $53,700.

That means you're living on $3,858 a month and pocketing $4,475.

To retire 20 years from now

If you've got a little more time and want to set your sights at being financially independent 20 years from now, you can drop your savings rate to under half of your income and land at 43%.

If you're earning around $50,000, you're going to need to live on $28,500 a year. You'll pocket the other $21,500.

Out of your monthly income, $1,792 will go to savings and you'll keep the larger portion, $2,375, to live on.

For people earning closer to $100,000, this savings rate will leave you with $57,000 for living expenses annually, while you put $43,000 away for later. You'll have $4,750 for monthly living expenses.

This may be the most manageable savings rate of these options, but even this plan, if started early enough will put you on FIRE.

Are you working toward FIRE? Already there? Tell us about it and share your monthly budget, and you could be featured in an upcoming story on CNNMoney.

CNNMoney (New York) First published June 6, 2017: 11:50 AM ET

See the article here:

How to become financially independent in 5 years - CNNMoney

Being able to achieve financial independence is the goal of almost every investor. Without a doubt, dividends are crucial to meeting this target. Research has shown that dividends will double your investment returns over the long term, and the higher the yield is, the better.

Kcom(LSE: KCOM) has all the hallmarks of an excellent dividend stock and at the time of writing shares in the telecommunications company support a dividend yield of 6.5%.

Over the past few years, Kcom has struggled with rising customer churn thanks to increasing competition, two factors that have weighed heavily on the company's share price. Management has also been investing heavily in the group's offering. For the year to the end of March, the company reported a pre-tax profit of 30.5m, down from 88.7m in the year-ago period as operating costs rose to 299m from 257m.

This restructuring is expected to simplify the group and improve profit margins. Management has aligned all of Kcom's businesses under one brand and is focusing on the operational performance of two segments, Hull & East Yorkshire and Enterprise. In these two markets, the company has almost no competition. Itis now focused on investing in its fibre network within these two regions which should drive long-term growth for both the company and shareholders, without distractions.

Excluding last year's poor performance, between year-end 31 March 2013 and 31 March 2016, the company generated an average annual pre-tax profit of 51m compared to a total dividend cost of around 30m. If the company can return to this historic level of profitability, it looks as if the group's highly attractive dividend yield is here to stay.

Insurance services provider Redde(LSE: REDD) also appears to be a top dividend stock. At the time of writing, shares in the company support a dividend yield of 6.3%. For the year ending 30 June, analysts have pencilled-in earnings per share of 10.5p, the same level as the dividend payout, giving a dividend cover of just one. These figures may not suggest that Redde's dividend is really all that sustainable but just like Kcom, looking at the company's cash figures gives a different picture.

Cash flow from operations is a more reliable indicator of dividend strength than earnings per share, as the latter metric is easily manipulated. If a company does not have the cash to fund a dividend, no matter how strong its earnings are, the payout is not sustainable. For the six months to the end of December, Redde earned cash from operations of 22.3m; dividends paid cost the group just under 15m, easily covered by operational cash flows.

Based on these figures then, Redde's 6.3% dividend yield looks safe and highly attractive in the current low-interest rate environment.

Dividends are essential for building wealth over the long term and thanks to the miracle of compounding,they can significantly increase your chances of being able to retire early and achieve financial independence.

And if financial independence is your goal, the Motley Fool is here to help. Our analysts have recently put together this brand new free report titled The Foolish Guide To Financial Independence, which is packed full of wealth-creating tips. The report is entirely free and available for download today

Click here to download the report. What have you got to lose?

Rupert Hargreaves has no position in any shares mentioned. The Motley Fool UK has no position in any of the shares mentioned. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.

See the article here:

Two 6% dividends to help you achieve financial independence ... - AOL UK

There are no short cuts to attaining financial independence; it requires discipline and limitation of wasteful spending, especially on non-essential items.

Ester Ochse, Channel Head of FNB Financial Advisory, says Financial independence is the ability to live a financially independent life that neither relies solely on debt as a form of survival or living expenses. The main reason most people grapple with the concept of financial independence is because of a lack of discipline. The National Savings Rate shows that South Africans prefer to spend rather than save and people over extend themselves in as far as credit is concerned.

Theres no truth in the belief that you can only achieve financial independence when you are wealthy, it all depends on developing good money management skills.

In order to see the full worth of your money, you must manage whatever little you have prudently on a consistent basis. Achieving financial independence is an ongoing process; its a behaviour pattern that must be practised consistently.

Here are some tips for achieving financial freedom:

Avoid using debt to fund your lifestyle

Never use debt to fund your lifestyle; the use of credit to fund a particular lifestyle will only move you backwards. Only fall on debt when you absolutely have to and also make sure you understand the impact of the debt on your finances over the long-term. Make both medium and long-term commitments to rid yourself of debt.

Cut expenses

Conduct a careful analysis of where most of your money is spent and you may notice there are expenditures that are unnecessary and can be removed from your list. This is all about gauging whats important enough for you to spend your money on. If you are spending money on things that have no direct benefit to your financial wellness then you will never realise financial freedom.

Save and Invest

Start a savings and investment plan that will cater for your financial needs both over the short and long term. By putting money aside you are letting your money work for you instead of just spending it compulsively.

Examine your financial decisions carefully

Before making any financial commitments look at your financial situation holistically, for example, instead of buying something you really want on credit, rather save for it. Remember that if interest rates increase you may end up paying more to settle that debt. Its better to save for the items you want to buy, its delayed gratification but much cheaper.

Remain consistent

Staying financially independent is an ongoing process, even after you have realised your goal of financial freedom, you need to ensure it stays that way. Ensure that you stay abreast with economic conditions and how they affect you personally. Your financial needs will change according to your life stage; ensure that your finances are also modelled according to the stage of your life.

A mind-set change is the first step, you must change the way you perceive money and what you aim to achieve with whatever amount you earn, adds Ochse.

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Top 5 tips to achieve financial independence | Mpumalanga News - Mpumalanga News

Auditor independence can be defined as a reference to the independence of internal or external auditors from parties that might have a financial interest in the business being audited.

Independence requires:

- Independence of mind: The state of mind that permits the provision of an opinion without being affected by influences that compromise professional judgment, allowing an individual to act with integrity, and exercise objectivity and professional scepticism.

- Independence in appearance: The avoidance of facts and circumstances that are so significant that a reasonable and informed third party, having knowledge of all relevant information, including safeguards applied, would reasonably conclude a firms, or a member of the assurance teams, integrity, objectivity or professional scepticism had been compromised.

The use of the word independence on its own may create misunderstandings. Standing alone, the word may lead observers to suppose that a person exercising professional judgment ought to be free from all economic, financial and other relationships. This is impossible, as every member of society has relationships with others. Therefore, the significance of economic, financial and other relationships should also be evaluated in the light of what a reasonable and informed third party having knowledge of all relevant information would reasonably conclude to be unacceptable.

Example

AU section 220 of the American Institute of Certified Public Accountants (AICPA) states that for auditor independence the auditor "must be without bias with respect to the client since otherwise he [or she] would lack that impartiality necessary for the dependability of his [or her] findings, however excellent his [or her] technical proficiency may be."

The International Federation of Accountants (IFAC) provides a framework of principles that members of assurance teams, firms and network firms should use to identify threats to independence, evaluate the significance of those threats, and, if the threats are other than clearly insignificant, identify and apply safeguards to eliminate the threats or reduce them to an acceptable level, such that independence of mind and independence in appearance are not compromised.

In situations when no safeguards are available to reduce the threat to an acceptable level, the only possible actions are to eliminate the activities or interest creating the threat, or to refuse to accept or continue the assurance engagement.

In the US context independency is governed by the SEC, PCAOB and AICPA.

In the case of Enron collapse in 2001, auditors independence was violatedand Arthur and Andersonfell alongwith its client, leaving us with only big four audit firms,'the big four',rather thanfive, as previously. [1]

Originally posted here:

Auditor Independence Definition from Financial Times Lexicon

House Republicans voted 233-186 Thursday to repeal large parts of the 2010 Dodd-Frank financial overhaul, just one month short of the seventh anniversary of the landmark laws enactment.

The measure would unwind much of the financial structure put in place in the wake of the financial crisis. One of the biggest pieces of legislation enacted during the two terms of President Barack Obama, Dodd-Frank was designed to prevent the type of practices that led to the 2008 financial crisis and the recession it caused. Republicans have long complained that the law stifled the economy because it put too large a regulatory burden on business.

All of the promises of Dodd-Frank were broken, said Rep. Jeb Hensarling, the Texan who is chairman of the House Financial Services Committee and who authored the bill. It promised us it would lift the economy, but we are stymied in the weakest and slowest recovery in the post-war era.

The vote to repeal was more partisan than the House vote on the law in 2010. Walter B. Jones of North Carolina was the only Republican to vote against the bill Thursday and no Democrats voted for it. Three House Republicans voted for Dodd-Frank in 2010 and 19 Democrats voted against it.

Dodd-Frank provisions reached deep into U.S. business and financial life, setting up a new agency to monitor financial products, a multi-agency supervisory body to identify risks to the financial system, and tougher disclosure and other regulatory standards for financial institutions.

Republicans forget that Dodd-Frank was passed in response to a crisis that pushed the unemployment rate to 10 percent, spurred 11 million home foreclosures and caused the evaporation of $13 trillion in private wealth, House Minority Leader Nancy Pelosi said Thursday.

Today House Republicans are pushing a dangerous Wall Street first bill that will drag us straight back into the days of the Great Recession, the California Democrat said, calling the measure dastardly and malicious.

Republicans say Dodd-Frank provisions made it harder for banks to provide loans to business. They complain that small bankers in particular have been handicapped by the cost of complying with the many regulations that emerged from Dodd-Frank.

The House bill is rife with provisions that drew veto threats last year from Obama, including a repeal of the Labor Departments so-called fiduciary rule and an overhaul of the Consumer Financial Protection Bureau, an agency established by Dodd-Frank..

Democrats say it would end protections put in place after the 2008-9 financial crisis, intimidate regulators by removing their financial independence, and effectively kill a dozen bipartisan provisions by putting them in a bill that Senate Democrats are expected to block because of its objectionable provisions.

I believe it will lead to the next financial crisis, said Rep. Stephen F. Lynch, D-Mass., a member of the Financial Services Committee. This is an awful bill. This is a real stinker.

The bill would repeal many key parts of Dodd-Frank:

The bill would also make changes to the financial regulatory structure that pre-dated Dodd-Frank. It would put the Federal Reserves bank supervisory function and the Federal Deposit Insurance Corporation into the appropriations process. And it would require an annual audit of the Fed.

The Congressional Budget Office said last month that Hensarlings bill would deliver more than $24 billion in deficit reduction over 10 years, including $14.5 billion from the elimination of the Orderly Liquidation Authority. Most of the rest of the savings would come from cuts to the CFPBs budget.

The House bill isnt expected to be taken up in the Senate.

Sen. Michael D. Crapo, chairman of the Senate Banking Committee, held a hearing Thursday on the importance of smaller, local banks. These community banks have been the targets of bipartisan, regulatory relief bills in recent years, such as a provision to lengthen the time between bank examinations by regulators.

The Idaho Republican promised more hearings in the coming months on regulatory reforms that would spur the economy with the goal of ultimately passing a meaningful and bipartisan reform package.

Among the specific changes he mentioned were measures to lessen paperwork and lift certain mortgage restrictions for community banks.

The House bill would likely have its greatest impact on the big banks. Dodd-Frank required banks with $50 billion or more in assets to adopt so-called living wills describing how they would be unwound if they failed, and subjecting them to enhanced, prudential regulation.

Smaller banks were exempted from Dodd-Franks main features, but stricter mortgage rules, compliance with the Volcker Rule, and what critics call a Dodd-Frank trickle-down effect are seen by Republicans and some Democrats as overly, and unnecessarily, burdensome on community banks.

House Speaker Paul D. Ryan, R-Wisc., told House members that our community banks are in trouble. They are being crushed by the costly rules imposed on them by the Dodd-Frank Act.

Smaller, local banks historically have lent heavily to small, local businesses. But rules requiring a more statistical approach to lending, as opposed to community banks strength of often actually knowing their borrowers, are blamed for community banks losing much of the small business lending market.

Republicans see economic harm because small businesses have created fewer jobs than in past recoveries.

But Rep. Gwen Moore, D-Wisc., said the Republican talk about the bill helping community banks is not fooling anyone.

This legislation unleashes every bloodthirsty, greedy Wall Street super-predator back to the American people to feast on our misery like they did pre-Dodd-Frank, she said.

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House Republicans Vote to Strip Away Post-Financial Crisis Safeguards - Roll Call