VAT Rate Increase - What This Means !

The immediate consequences of VAT increase are:

1. Prices are likely to rise. The pressure to remain competitive may lead to businesses absorbing part or all of VAT cost so that prices are not affected, therefore affecting their profitability.

If businesses pass full cost on to customers, a given sum of money will buy less goods or services than before by the 2.5% VAT increase.

2. The rise in VAT will lead to higher inflation and cause a fall in real disposable incomes – this might cause a slowdown in GDP growth and rising unemployment.

3. The introduced registration threshold and expansion of the list of basic food items is a great improvement. This will help manage the burden on the poor. Overtime, more products considered as basic food items by the masses may be included.

4. The jump in VAT rate by 50% would increase tax revenue for the government and help to lower the fiscal deficit and eventually contribute to a lower level of national debt. It will also help the government fund the proposed minimum wage.

5. Finally, there will be increase in VAT cost for businesses whose goods or services are VAT exempt because they are not able to claim input VAT incurred since their products are exempt.

Things You Can Do When The Market Is Bullish

A bull market or a bull run refers to a stock market that is characterized by a sustained rise in share prices with most counters trending upwards.

Bull runs normally occur when investors believe the positive trend will continue for the long term.

Bull runs present an opportunity for investors to take advantage of rising prices by buying early in the trend and then selling when stocks have reached their peak.

At times, a company may simply be doing well and investors want a piece of the pie and they buy stocks and hang on tight to watch the money come in.

The supply of shares, then, is low no one wants to give up their piece of the pie.

The competition to acquire those much-coveted shares becomes fierce, which drives the prices up even higher. In such circumstances, the best strategy is to recognize the trend early and make smart buys.

This means that timing is of utmost importance.

However, knowing exactly when stocks are at the bottom or the peak is impossible but investors need to closely follow market reports, results releases and trading updates in order to get it right in terms of timing. The trick is in buying low and selling high.

As you start to add shares to your portfolio, first analyze your situation to make sure that you have diversification. Some shares are more aggressive choices than others.

This choice reflects your risk tolerance as well. Figure out whether you want to invest in a small-cap stock with phenomenal growth prospects (and commensurate risk) or a large-cap stock that’s a tried-and-true market leader.

 Look at industries that are poised to rebound as the economy picks up and individuals and organizations begin to spend again.

One of the most basic strategies in investing is the process of buying a particular security and holding onto it, potentially to sell it at a later date.

This strategy necessarily involves confidence on the part of the investor: why hold onto a security unless you expect its price to rise?

For this reason, the optimism that comes along with bull markets helps to fuel the buy and hold approach.

Evaluate your personal goals. No matter how good the market and the foreseeable prospects for growth are, stock investing is a personal matter that should serve your unique needs.

For example, how old are you, and how many years away is your retirement? All things being equal, a 35-year-old should have predominately growth stocks, while a 65-year-old requires a more proven, stable performance with large-cap market leaders.

For any investor, safety is as important as growth. Prudent risk management therefore requires that one addresses the possibility that a “Bull” market could turn “Bearish” at any time. One’s portfolio needs to be prepared should unfriendly market conditions occur.

For more detailed information you need to physically visit a stockbroker or any capital market participant for interaction about your Investment choice or decisions.

Have a wonderful day.