Electronic Commerce Taxation and Pakistan

Assume a buyer in Pakistan downloads software from the Internet for a 30-day trial. If he likes the software, he submits his credit card information and receives an authorization code that allows him unrestricted use of the software. Assume the software in this case was developed by a company in UK, and is available for download from servers located in fifteen countries. The buyer in this case happened to download the software from a server located in Singapore. The buyer found the software while browsing the Internet using Internet Explorer, a software program produced by Microsoft. The buyer gained access to the Internet using an Internet service provider (ISP) based in Lahore. Is there a taxable transaction? If so, what was sold and where was it sold? When is the transaction taxable? Who has the right to tax the transaction? The questions presented by this example are not conveniently answered by existing tax laws.

The basic legal Issues of E-Commerce Taxation Following are issues described below, which I perceive, are basic issues, which are hampering the collection of e-commerce taxation.

I. Non-Existent and inadequate Substantive laws Following are substantive laws, which have failed to meet needs of technological advancement for e-commerce taxation.

1. Tax Laws There is no as legislative provisions are available either in sale Tax or in Central Excise duties for collection of taxation of transaction conducted in Internet. The Legislation of any kind with having attempt to Levy Tax without requisite Tax System, which could combat technological advancement, would be of no avail.

Currently the e-commerce taxation administration requires efficient Internet Network system to Monitor the Encryption database, configure IP address and facility to hack the system for getting access to record keeping. 2. Internet and ISP Laws There is no Internet and ISP laws have yet legislated which could regulate the cyberspace. We need to regulate Internet contents, either these Submit forms for conducting E-Commerce or of intellectual property rights. Further more we need Internet Services provider (ISP) laws to regulate to create Hacking rights and to have access to Database for the purpose of levying Taxes.

What types of Internet and ISP laws should be implemented in Pakistan for the purpose of efficient collection of e-commerce taxation in Pakistan, it is still big question mark for the government? 3. Digital Signature Laws Article of 78-A of Qunun-e-Shahadat, proof of Electronic signature has been amended by promulgation Electronic Transaction Ordinance 2002, but complex issues can not resolved by amendment in one article, we need to have detail Digital Signature laws for adjudication of e-commerce taxation.

All transaction in e-commerce is made by acceptance of terms and conditions by Client imposed by Website operators by pressing acceptance button, by doing that he undergoes legal obligation by accepting terms and conditions imposed on him. The aim of Digital signature laws to regulate website terms and conditions of contract and to impose restrict on any terms which are void or illegal according to the contract laws. Further more the by SIGN IN to website arise contractual obligation both parties which should be backed by prevailing substantive and procedural laws, unless and until Digital Signature are not legalized, it would be out of question to impose any e-commerce tax.

4. Security and Privacy Laws The cyber crimes cannot be control without having appropriate security checks and to protect these networks from intruder, we need to have security laws. Security and Privacy laws regulate the powers of Network operators to maintain level of security and privacy of database and also allowing authorized hacking on part of Tax Officers.

For Smooth running of system we need to promulgate security and tax laws so that the authorized hacking be legalized.

II. Qunun-e-Shahadat Although the Electronic transaction ordinance 20002 has made amendments in Qunun-e-Shahadat to meet basic criteria of evidence regarding electronic transaction like Article 2 regarding admission; Article 49-A acceptance of relevance of information generated by automated information system; Article 59 Expert opinion of information technology officer; Article 73 regarding acceptance of primary evidence of any information received and transmitted in computer based form out of automatic generated transaction and also Article 78-A prove of digital signature.

Beside these amendment the article 184 of Qunun-e-Shahadat has also widened the definition evidence to include scientific devices a legal evidence produced thereby modern devices, although the definition of modern device has been extended to video films but no adjudication has been made regarding for extension of evidential definition to include e-commerce transaction.

Despite these amendments it different to suppose, it rather these will lead to smooth running of legal system. How the automated generated information will be place before court, either server side or client side response? Who is going to be an Expert? Rather the power of expert has been defined; rather he has been granted the right to hack the security rights of system? What is a basic standard and criteria to be an expert? III. Procedural Laws' flaws Electronic Transaction ordinance 2002 has settled the matter that every court not below the session has right to trial the suit but jurisdictional issues is too complicated in electronic transaction. The physical establishment business is a often regarded as criterion for imposition of e-commerce but what about the e-commerce transaction which has no location of transaction? The Procedure regarding the summons to defendant whose presence is not known, rather Civil Procedure Code of 1908, recognizes any such summons, which is communicated through electronic means, here we need to make amendment Order V and also orders related with Order IX, XI, XII, XII, XVI, XXI etc to adjudicate the procedural deficiency to meet the requirement of electronic commerce.

IV. Jurisdiction issues The section 3 of sale Tax Act described the jurisdiction parameter for imposition of the sale tax, but the principle enunciated in said section would not be applicable, as sale don't fulfill the type of sale conducted in e-commerce. There emerge following jurisdictional issues, and before imposing sale tax we must keep following issues under consideration.

1. Place of Establishment The place of establishment of business could be a criterion for imposition of tax. If the home based company operating her business on net, Central Board of Revenues should impose tax as the place of establishment of business in Pakistan irrespective of fact that the website e-commerce transaction has taken place out side of Pakistan.

If the sale is of Multinational companies, the part of sale, which is transported in Pakistan, could be subject to taxation, and then the jurisdiction provision of section 3 of Sale Tax can be invoked.

If scattered individuals conduct the e-commerce transaction without having any locus point of establishment or run across globe, then right to impose tax could be exercised on those individual who reside within the jurisdiction Pakistan.

2. Data Encryption Place Where the encryption of data has taken place, the right to impose tax to be vested there, but this legal argument is not supported by e-commerce jurists as it could lead to evasion of taxation by giving the indignant companies to upload their website outside of Pakistan.

V. Remote Operation of Web Server There is another crucial issue, which hampers the smooth running of the system, how to regulate the remote operation of web server whose establishment is not within the jurisdiction of the Pakistan? How the Tax machinery can get access to remote Web Server for monitoring of database of transaction overruling the security and privacy issues of system? The tax machinery suppose have legal right to get access but these are not possible without signing international tax treaties, unless and until we don't have security and privacy laws, we can not negotiate other countries for getting authorized system hacking.

VI. Intangible Record The record which generated by electronic commerce is intangible record unless it is required to be produced in form of paper based form, this issues make the tax collection difficult as the record can be transmitted to any web server located any where in this world within fraction of times. For effective tax collect we need to constant vigilance of record with authorized system hacking and also making compulsory requirement of maintenance database in paper-based form.

The registration of ISP, Web hosting sites and web sites Here we need to have registration of Internet Service provider and Hosting sight site, and the principle of the registration should be the home based establishment of individual, companies etc. but the issues will arise of ISP and web hosting site that have also their physical establishment and Web Hosting in or out side of Pakistan.

The establishment of Surveillance Authority For controlling tax evasion, we need to establish Surveillance authority for constant monitoring of the website' database by giving power of system hacking. Unless and until the surveillance authority is not established, it would not easy to verify the record keeping requirement of sellers and tax compliance of the website whom database is not hosted in Pakistan. Furthermore while defining the power the surveillance authority we to need to promulgate security and privacy laws to limit the power of authorized system hacking by surveillance authority.

There is a need for appropriate co-ordination of the surveillance authority with Tax officer for smooth running of Tax machinery.

Record-Keeping Requirements The electronic recording keeping requirement and its issues runs as under.

I. Electronic Record Keeping Under section 22 of Sales Tax Act, it is required that all receipt of sale of good record be maintained by seller, the record keeping of the database generated by e-commerce transaction requires different legal procedure for acceptance of authenticated document as evidence. Once the e-commerce transaction has been taken place and record of purchase of good has been transmitted to database. The electronic record should be transformed into paper-based form for as an evidence of transaction.

The surveillance authority should be given power to authenticate the paper record of database, and to maintain constant vigilance by using their power to hack the system.

II. Retention of Record The record should be required to maintained by the tax payee in appropriate manner either in electronic form or in the paper based form, with detail of times, place, name of the purchaser in prescribed form, but the manipulation database in computer based form is too easy to be tampered by computer software. Here we need to give comprehensive policy to regulate the computer software.

III. Access to Electronic Record Keeping and Authorized Hacking The tax and surveillance authority should be empower to hack any system and its database for the purpose of getting direct access to the database of the website. The authorized hacking arises legal issues, which require legislation of database and security laws to adjudicate the issues of limitation of powers of hacking; contractual obligation of Web Server for maintenance of security and privacy of websites and their database.

Secondly, the authorization of the hacking of global website server, CBR need to sign international treaties for getting permission for hacking of network to get access to database of transaction.

Thirdly, how the discretionary power of the tax payee surveillance authority can be checked, what remedies the tax payee have against a minute recording of evidence of seller' record of transaction, rather the authorized hacking of the Networking systems can be accepted as primary or secondary document? Rather the Electronic hacking can be legalized for purpose of collection of E-commerce taxation, what will be the limit of hacking? And how to give the hacking the legal backing? We need to statutory provision to resolve this legal issue.

Tax Compliance Tax compliance e-commerce is also tricky problem, which is exposed to following considerations.

I. Tax Compliance of Registered and non-registered Websites The registered and non-registered Website should be subject to tax compliance to rate prescribed by CBR by both registered and non-registered with incentive for registered websites.

II. Tax Compliance of Foreign Companies hosting their Website in Pakistan Jurisdiction There is another very important issue regarding the hosting of the Foreign Company Website in Pakistan, rather the CBR can impose tax as the data Encryption has been taken place within the jurisdiction of the Pakistan. Unless we don't have any ISP and Web Server laws, we could not in position to impose Sale Tax, for resolving this problem we need to sign international tax treaties. The section 3 of the Sales Tax Act that authorizes the CBR to levy all tax duties on sale conducted in within the jurisdiction of the Pakistan. But scope of imposition of sales tax will not be justified, if the buyer and seller are not residing within Jurisdiction of Pakistan.

III. Tax Compliance of Pakistan based Companies hosting their Website outside of Pakistan Jurisdiction The scope of imposition of sales Tax cannot be negated on the fact the data encryption as well as the hosting of the website is not located within the jurisdiction of Pakistan. The presence of establishment must be the primary principle of imposition of Tax. But legislative rule must clear the fact that the purchaser should be residing within the jurisdiction of the Pakistan, otherwise any transaction which has been taken place would be subject to dual taxation in form of sale tax and Custom duties.

These principles are not regarded as final in determining the tax compliance issues in ever changing e-commerce technological world.

Amending Procedural Laws for Collection of E-taxation

The electronic transaction regulation defines the certificated transcripts in which are to be presented for adjudication. Where any law necessitates or licenses the production of certified transcripts of any records, such as as demand or permission shall widen to publish outs or other word forms of show of electronic written written documents where, in improver to fulfilment of the demands as may be specified in such law relating to certification, it is verified in the mode laid down by the appropriate authority.

The codification of civil process should be amended to oblige the tribunal to accept the blurb regulation as enunciated in the regulation 4 and 5 Order eleven of the Code of Civil Procedure Act 1908 as defined in subdivision 12 of Electronic Transaction Regulation 2002.

The powerfulness to summons as defined in subdivision (1) of subdivision 94 of Cr.P.C (Act Volt of 1898) should be extended so as to add the powerfulness of police force to summons all people who have committed offense under electronic transaction regulation 2002.

My recommendations are that amendments should be made in subdivision 95 of the Cr.P.C.( Act Volt of 1898) in mode as to add dictions of ‘electronic document’ and powerfulness of enfranchisement services supplier defined in electronic transaction regulation 2002, parallel with the powerfulness of ownership of documents held by postal and telegraphic government and the similar types of amendments are recommended in subdivision (1) of subdivision 96 and in clause (a) to (e) of subdivision (1) of subdivision 99.

The subdivision 510 of Cr.P.C. (Act Volt of 1898) should be amended for acceptance of the report of Certification council issued under subdivision 21 of electronic transaction regulation 2002.

Trading The Betting Exchanges

The numbers of people working from home utilising the endowments of the Internet goes on to turn at breakneck gait and one of the largest countries of growing in United Kingdom is Online Trading, both in athletics and miscellaneous markets.

There are numerous advantages of setting up and running a athletics or miscellaneous trading operation from home. Firstly operating expenses are kept to a minimum, there is no need for expensive office adjustment or expensive staff, and there is no demand to purchase stock or any possibility of bad debts. Secondly, any and all net income are completely tax free (in United Kingdom presently at least, though you would need to check that stat in your area.)

The markets that you can merchandise from home are far too numerous to advert here, but are not confined solely to sports. Political appointments and results, stock markets, even world television show consequences are avidly followed by the growth regular army of online traders.

So what is the difference between online trading and gambling? Simple, in gaming you back a horse or a squad in the hope that it wins. In online trading you purchase a stake because you believe it to be of good value, and then you can sell it to person else for more than money if you wish, thus locking in a guaranteed net income regardless of the result of the race or event or whatever it is. Alternatively if you believe a stake to be overvalued you can sell it first, with the thought of purchasing it back at less money later on to do your profit. This operation was totally impossible with a traditional bookmaker prior to the innovation of betting exchanges.

So what is the difference between trading the Dow Mother Jones shutting terms on the stock market, to trading the same thing on a betting exchange? In my view, absolutely nil at all, except of course of study the pathetic advantage I previously mentioned that all your net income on the betting exchanges are untaxed. Little wonderment then that serious businesses and serious money have got been pouring into the betting exchanges in the past few years.

They also offer a hedge vehicle to balance existent trading in more than traditional markets and here too the inflow of business have been heavy and sustained.

Already there are infinite books and courses of study available supposedly to state you and learn you how to effectively merchandise these exchanges. As with all business books and manuals, some are superb and rapidly go bibles, while others need leaving in the nighest populace convenience poste haste.

All this interest in online trading have brought a huge surge in liquidness that brands it so much easier to trade. On one exchange alone during a recent cricket lucifer in extra of 40 million lbs was matched, that’s about 70 million dollars. On one game!That’s A stat that is jump to do anyone believe seriously about online trading.

Incidentally you can still get a free thirty-dollar stake with Betfair.com, the London based exchange, if you come in the codification 6CHE3VPWJ when prompted. Take a expression too at Betdaq.com, Associate in Nursing Irish exchange based in Irish Capital that is going from strength. They have got a very nice website packed with interesting markets and a comprehensive aid section.

Betting exchanges are gaining acceptance and influence all the clip and with each calendar month that bases on balls seemingly another country legalises the full operation, and it would look that it is only a matter of clip before the large exchanges are completely legalised and accepted worldwide. The exponential function growing in this sector is certain to continue, governmental intervention being the lone possible obstruction to their onward worldwide popularity. Little wonderment then that this is one of the largest growing sectors for new start-up businesses, a fact that is jump to attract even greater interest as it goes on to grow.

If you are thinking of starting a new online business from home, and if you have got a endowment for maths, you could make a batch worse than check out the whole business of online trading. Best of luck.

Individual Taxpayer Identification Number (ITIN)

What is an ITIN?

Individual Taxpayer Designation Number (ITIN) is a tax processing number issued by the Internal Gross Service. Individuals who are required to have got got got a U.S. taxpayer designation number but who make not have, and are not eligible to obtain a Sociable Security Number (SSN) from the Sociable Security Administration (SSA), may apply and obtain ITIN issued by the IRS.

ITINs are issued regardless of in-migration status because both occupant and nonresident foreigners may have U.S. tax tax return and payment duties under the Internal Gross Code. To be eligible for ITIN, Individuals must have got a filing demand and register a valid federal income tax return

What is the formatting of ITIN?

It is a nine-digit number that always gets with the number 9 and have a 7 or 8 in the 4th digit, illustration 9XX-7X-XXXX.

What is an ITIN used for?

ITINs are for tax reporting only, and are not intended to function any other purpose. ITIN makes not authorise work in the U.S. Oregon supply eligibility for Sociable Security benefits or the Earned Income Tax Credit

Who needs an ITIN?

IRS issues ITINs to non-US-residents (foreign nationals) and others who have got federal tax reporting or filing demands and make not measure up for SSNs. These cases may include the following scenarios:

• Non-resident foreign filing a U.S. tax tax tax return and not eligible for an SSN

• Non-resident foreign member of a U.S. LLC (Limited Liability Company)

• U.S. occupant foreigner (based on years present in the United States) filing a U.S. tax return and not eligible for an SSN

• Dependent or partner of a U.S. citizen/resident alien

• Dependent or partner of a non-resident foreigner visa holder

Tax Idaho Number - How To Apply?

1. Print the word word form at the following nexus (one for each household member for which you are asking tax Idaho number):
http://www.irs.gov/pub/irs-pdf/fw7.pdf

If you are requesting a tax Idaho number for a kid - check box "d" in the ground for submitting the form. If you are requesting a tax Idaho number for a partner - check box "e" in the ground for submitting the form. In both cases come in your name and societal security in the right side of this section.

Fill out all the personal information, day of the month and mark the form.

2. Brand a transcript of your passport and the applicant's passport (spouse or child) (copy the first page, any extension page and the visa page) notarized it by a populace notary (go to any bank - they should have got one).

Attach the filled out word form and the notarized transcript of the passport TO YOUR TAX tax return and mail it via certified mail to:

INTERNAL gross SERVICE
Philadelphia SERVICE CENTER
ITIN UNIT
polonium box 447
BENSALEM, dad 19020

3. The Internal Revenue Service will process your word form within 6-8 weeks, and will direct you a notice with the new numbers.

Who Wants To be A Millionaire?

How many people search Google, Yokel and MSN each twenty-four hours for the terms - do fast money online, get rich quick, or do money online? Or how about Who desires to be a millionaire?

Thousands! Thousands upon thousands, each and every day.

I inquire why?

Well, I’ll allow you in on a spot of personal material here. When I bought my first computing machine 5 old age ago, the first word I typed into a search box was money … yep, that’s all, just “money”… and in Google search, there are 230,000,000 consequences - (that’s 230 million)

And so began my geographic expedition of 10s of thousands of money making websites on investing schemes, scams, frauds, HYIP’s, bank debentures, loan programs and, well, you name it… if it’s out there, I’ve establish it, and likely tested it.

Occasionally I made some money, but more than often I lost. However, I have got never once complained about losing money to a HYIP. I was brought up in a gaming family, and I learnt to chance at a immature age. In fact I’ve made a life out of betting on horses and domestic dogs from clip to time.

Since being online I’ve learnt to recognise a scam. It’s not easy, and the people who develop and advance them get more than sophisticated every year.

One of the craziest online money games I took portion in was called E-Biz Ventures or e-bizz. You gave them your E-Gold, and 4 day’s later they gave it back to you plus 100%… yeppers, that was fast money, they doubled it in 4 days. And this went on from sometime in late September 2000 until just 2 day’s before Christmastide the same year. It lasted three months.

Three calendar calendar months of doubling investings every 4 day’s Oregon so. And this all took topographic point virtually without a glitch. It states as much for e-gold’s automation as anything else.

By early December there were Audio chatrooms filled to capacity 24 hours a day, with people telling their story, answering questions, helping new people get started, all the piece drive the frenzy… then the government stepped in and arrested the geezer running the show. It have been estimated that there was over $10 million rotating through E-Gold every 5 to 6 years by that time.

If you wanted to get involved in E-Biz, the most of import individual in your life was an E-currency Merchant… A market maker.

E-currency merchants convert your hard currency, like Dollars and Euro's, into E-currency’s like E-Gold, eBullion, Netpay and Intgold. These people are the middle-men World Health Organization monetary fund your e-currency accounts for you, so you can take portion in online commercialism without a credit card. If you desire to set $100 into your E-Gold account, you give them about $105. They put $100 worthy of e-currency into your account, and bull the $5 for their effort.

Likewise, if you desire to cash out of your e-currency account, you give the e-currency merchant about $102 worth of E-Gold, e-Bullion Oregon whatever, and he cut’s A check for you for $100, keeping $2 for himself… sol he made money both way’s. About 7% on a unit of ammunition trip in and out of your e-currency account. If you were using a credit card to fund your account, they charge around 15%!

OK now… how would you like to get a spot of that action?

Well you can… but it’s not easy, unless you have got person to lead you through your first few trades.

The e-currency exchange seminar is specifically designed to learn you how to get started and take you through procedure from start to finish… and you can get a share of this unbelievable business from as small as $50. Not much huh? But conceive of doubling that $50 every few months, with no hazard of losing it.

The Convenience of Online Debt Consolidation

Virtually any need can be dealt with online these years including arranging debt consolidation. Whether you are seeking to consolidate your debts via a home equity loan, a simple debt consolidation loan or by renegotiating your measures through a debt service, the internet can assist happen the debt consolidation company that’s right for you. Shopping for information online can do debt consolidation relatively quick and enormously convenient.

As with any credit related question, tracking your credit history is always the first topographic point to start. Many people are not aware that the authorities have recently passed statute law mandating that a free credit report be made available annually to all consumers. It should come up as no surprise, however, that these free reports are easily accessed online. Before applying for any kind of debt consolidation you should draw your credit history from all three credit reporting agencies and check them all for errors. Any errors should be immediately reported to all three agencies since they make not merchandise information.

You can also obtain your credit (FICO) score online for a nominal charge. The interest rates you pay for all types of credit are based largely on your FICO score. A score of 720 or better entitles you to the best rates. Scores of less than 580 and, in some cases, 600 are considered only just or even sub par. People with scores below this grade will probably have got higher interest rates on their online debt consolidation loans. If you are applying for a home equity loan as a method of debt consolidation other factors such as as your income and the equity available in your home will also impact the interest rate you will pay.

Once you have got determined your credit state of affairs it is clip to do a preliminary search for online debt consolidation sources. Filter your search according to the type of debt consolidation you have got decided to seek. Choosing your search terms carefully will eliminate companies which make not ran into your demands or whose criteria you make not fulfill.

Subject the online debt consolidation companies to the same examination you would bricks and howitzer companies. Most will have got online applications which will determine if you are eligible for their programs. Other land sites may function as brokers who will submit your application to respective companies which in bend will e-mail you with offers. Be selective about the companies to which you apply. Having a large numbers of petitions for your credit information may sometimes be perceived negatively by the credit reporting agencies.

One of the advantages of making your applications for debt consolidation online is that you automatically have all offers in writing. Print them out and travel over each proposal line by line. Compare to each other the responses you like most like. Brand certain you are always comparing apples to apples. Also, black and white out and read carefully any revelation statements which are referenced by the companies.

If you are not completely satisfied with any of the offers contact the companies either by phone or e-mail. Let them cognize that you are dealing with respective companies. They may then feed back their proposals for online debt consolidation to you with adjusted terms. Continue the dialogue procedure until you have an offer that rans into your needs. Be firm but also be willing to modify your stance if necessary.

After you have got completed the give and take procedure you will be required to subscribe your debt consolidation paperwork. Companies manage this in different ways. You may be asked to subscribe the document in presence of a notary public and mail them back. Some online debt consolidation companies will have got got got local representatives who will come up to your home or office and manage the paperwork.

Once you have completed the online debt consolidation procedure, it is then up to you to utilize your credit in such as a manner that you don’t have to consolidate a second time.

Online Stock Trading

Online stock trading is a recent manner of purchasing and merchandising stocks. Now you can purchase and sell any stock over the Internet for a low terms and you don’t need to name up a broker.

You can purchase any stock and sell any stock and it doesn’t take much to get started.

All you need is a brokerage account. A broker that I utilize is Scottrade http://www.scottrade.com/ and you can begin an account with them for $500 and their committees are only $7, so they are not expensive at all.

Once you have got apparatus a brokerage account you then need to take an investing method and then research different companies and then purchase stock in the 1s that you experience will travel up because they are good sound companies.

So as you can see there are respective benefits to online stock trading but let’s recap.

With online stock trading all you need is $500 to unfastened up a brokerage account, the brokerage committees are low at Scottrade they’re only $7 and you can purchase and sell your pillory from your home computing machine anytime that the stock market is open.

Well now that you cognize that you can make online stock trading with a minimum investing you should get started today and then begin learning about the stock market and take the pillory you desire to put in.

The Stock Market - How Just One Question Will Tell You All You Need To Know About Your Stock Broker

Last clip we looked at the existent public presentation of the stock market (we used the Dow Mother Jones as a mention point) and the evident public presentation that brands the newspaper headlines and can be seen by a insouciant expression at a chart or "ballpark" figs - briefly; the Dow went up, for example, less than 50 points between April 1999 and April 2005 - essentially 6 old age with no growth!

But behind that seemingly "becalmed" Dow there were at least 10 important moves each and every twelvemonth totalling many thousands of points!

But did the Wall Street Moguls, the so-called "Masters of the Universe" do you any money from those huge movements?

No.

Of course of study they didn't!

Here's how I know...

The web is a goldmine of information. Knowledge that was just not available to the private investor or bargainer is now there at the fourth estate of a mouse button.

Forget the Freedom of Information Act - the Internet go forths it standing.

Foremost amongst websites offering information about the financial facts of life (the things that affect you directly - Mutual Fund public presentation etc) is Morningstar.com.

And amongst other things, morningstar.com prints a conference tabular array of common finances on a weekly, monthly and annual basis.

If you check out the tabular array that I have got got provided at my website (www.TriggerSystem.com - full nexus at the underside of the article), you'll see the public presentation of the top 20 or so common finances over the last 10 years.

I've chosen the 10 twelvemonth chart because common finances are essentially long term "investments", and which most people look to maintain almost for ever (the chart on my website is by it's very nature a small spot out of date, but things haven't improved too much since that silver screen shot was taken. If you desire the up to day of the month figs just travel to www.morningstar.com and search their information alkali for the 10 twelvemonth public presentation of common funds)

Take a look...

You'll see that the top rated fund, over 10 years, have shown a sum growing of 23% - which at first sight looks fairly impressive; 23%; wow!

But the problem is, that 23% is entire growing over 10 years, not growing per annum.

So the 23% sum growing starts to look like a less than impressive 1.7% per annum compounded (hey, even the banks are giving more than than that on deposit).

I'll be honest, I didn't believe it either - so I sent off an electronic mail to morningstar.com and they confirmed my worst fearfulnesses - 23% is the sum growing over 10 years.

Sheesh!

And the average growing of all 1304 funds? A less than impressive 7.3% over 10 old age (less than 1 one-half of one percent)!

Check out that concealment topographic point under your mattress - at least you don't have got got to pay exhorbitant fees to maintain your money there.

The one certainty is that the Fund Managers will not, personally, have fared so badly - they will still pull their large wages and enjoy all the benefits of charging you fat fees for their "professional expertise"

As Seth Thomas Sowell wrote:

"It is hard to conceive of a more than than stupid or more dangerous manner of making determinations than by putting those determinations in the custody of people who pay no terms for being wrong"

OK, I cognize not everybody have money "tied up" in Mutual Funds and some people prefer the higher tax returns of the Stock Market.

So what about the analysts and stock brokers?

Well, we all cognize about Enron and the others - the pillory in the early 90s that crippled so many of America's biggest pension funds.

Use the TriggerSystem nexus (shown below) to see the Enron chart screenshot, which is lower down the page (below the Morningstar.com silver screen shot).

You'll see that on 20 November 2000 there was a "technical sell signal" flagged for Enron when it was trading at just over $80 per share (don't worry about the term "technical sell signal" - it just intends a sophisticated trading programme told it's owner that he should SELL).

Over the adjacent 2.5 months, Enron's terms fluctuated up and down without really going anywhere, until the center of February 01 when it really started to skid (just as it appeared to have got stabilized at $80).

As they say, a image is deserving a thousand words, and to salvage my typing fingers - the numbers talk for themselves.

Follow the chart to the right and you'll see that the major stockbroking houses and analysts were still saying "BUY" as the market lost 75% of it's value over the adjacent 9 months.

It was only on October 19th 2001 - just 11 calendar calendar calendar calendar months after our "technical sell signal" that the first warning appeared from the Brokers and Analysts - and even then there was a additional major bargain reccommendation before Enron slipped again to be deserving less than 40 cents on 30 November 2001 - A diminution from $80 per share to $0.26 per share in 12 months!

And all the clip the major brokers and analysts were telling their ordinary clients to either Buy or Hold.

And as we later establish out, the Brokers and Analysts were telling their biggest corporate clients a totally different story.

So, whilst the Stock Market is your best friend (trust me on this one, or expression for my former article) - the people who operate it may simply be their ain best friend, and from your point of view, any advice you have from them should be taken with a very large pinch of salt.

And if you still believe you can swear the advice they give you, here's the simple "5 word question" I mentioned at the beginning of this article...
Ring them and ask: "What Guarantee Make You Give"? Just pick up the phone and inquire them about the warrant they give you regarding their advice.

Once they've stopped coughing and sputtering and picked themselves up from the floor, you may hear this well worn mantra: "the value of pillory can fall as well as rise" etc etc.

If they're not prepared to vouch their advice, then frankly their advice is not to be trusted.

More next time...