21.08.2024
FINANCIAL ADVICE FOR YOUTHS - HOW TO INVEST IN YOUR 20S?
For most people, the twenties are an exciting decade with many important decisions to be made, both personally and financially. Follow up, study or work, travel, wedding, first car and maybe even own home.
With so many exciting adventures and changes happening, not many young people think big about the future. Or about the accumulation of wealth when the dreams are big and the salary is still modest.
After reaching adulthood, it's never too early to start sorting out your own finances and making your first investments. It is important for young people to know what to pay attention to when they are "walking through" investing.
The right balance between chance and risk
Myths and (supposedly) safe advice about stocks or the perfect portfolio hover around building wealth at an early age. A portfolio consists of different asset classes. Stocks can generate high returns, but they are also subject to fluctuations. Bonds are considered a relatively stable investment, but in the current market environment they achieve low and sometimes even negative returns. Each asset class has different advantages and disadvantages. That's why it's important to balance between different values to find the asset allocation that fits your financial style and lifestyle.
Many financial advisors recommend portfolios based on the 100 minus age rule. This means that a 20-year-old should invest 80% of his savings in stocks and 20% in bonds. For an 80-year-old, the allocation is reversed: 80% invested in conservative bonds and only 20% in stocks. There is a grain of truth in this rule. Long-term investments are considered less risky because short-term price fluctuations can simply be paid out. And with the compound interest effect, even small sums can turn into a significant fortune over time.
So let time work for you. But even when you're young, you need to differentiate between different investment goals and create different portfolios for them—even in your 20s. Do you have a lot of plans? Then don't put everything on one card when investing.
Young people who are just entering the world of adults at full throttle often do not yet have very concrete plans for life. So how and what precautions should you take? Although each case is unique, there are a few rules of investing and financial advice that always work:
Anyone who falls ill or becomes unemployed gains nothing – but the cost of living continues. Therefore, the most important rule of financial education is to create an emergency fund to protect yourself from the unexpected. The money in it should cover your average expenses for 3 to 6 months.
Invest this amount conservatively and in such a way that you can access it anytime. If you still don't have enough for your 'safety net', you can, for example, save through an exchange-traded fund (ETF) savings plan. It provides an opportunity to save and invest simultaneously with small amounts every month that are invested in mutual funds.
Successful investments often start inefficiently. This is because compound interest takes time for your money to grow. The long investment period is ideal, because even with small initial amounts, a small (and why not a large) fortune develops in the long term.
Those of you who invest time and stay calm will be rewarded with decent stock market gains. Young people are often impatient, but remember that patience pays off. Since your retirement date is more than 40 years in the future, your money has plenty of time to multiply. Take advantage of this and start long-term retirement insurance as early as possible, for example through a passive savings plan on an ETF.
A safety net protects you in the short term, a mutual fund savings plan allows your retirement benefits to grow - but there's more to the grain. Consider your medium-term plans and goals and make provisions with different portfolios.
Set savings goals such as travel, starting a home and family, and determine which strategy will most successfully get you to your goal. It is best to divide your investments into several portfolios - this is the most sensible way to take advantage of the opportunities of the world markets.
You will come across diversification as you learn the basics of investing. There are countless articles that offer advice on how and why to diversify. However, you should also familiarize yourself with the effects of "diworsification," a term coined by Wall Street trader Peter Lynch for the negative consequences of excessive diversification.
It is important to know that diversification does not guarantee profit without loss, it is simply a strategy to balance the risk associated with investing. According to experts, a successful portfolio ideally has between 25 and 30 stocks.
Effective diversification of your portfolio will be achieved by balancing your investments, spreading them among multiple assets. Some asset classes are high risk with high profit potential, while others are low risk with little profit potential. Using a mix of assets gives you relatively good security.
Greater diversification does not always equal minimized risk. In fact, over-diversification limits the potential of your investments so much that it can negatively impact your investments. This is called over-diversification. Success, as usual, lies in the "golden mean".
20.08.2024
ON THE NEW ALTERNATIVE TAX ON THE INCOME OF NATURAL PERSONS, WHO ARE NOT TRADERS, FROM THE COLLECTION OF WILD MUSHROOMS AND BERRIES
Comment from the specialist
Evgeniya Popova, tax expert
From 01.01.2024, a new alternative tax was introduced, with which the income of natural persons who are not traders within the meaning of the Commercial Law from the collection of wild mushrooms and fruits, with the exception of medicinal plants, is taxed.
This is a completely new type of tax, the introduction of which has given rise to various discussions, and there are also many opponents of the idea of its existence, and even a proposal for its abolition. It is a question of income from a specific seasonal activity, which also implies the possession of specific knowledge, but at the same time very profitable, given the prices of certain types of mushrooms such as truffles, the income from the sale of which falls within this scope.
Of course, there is no predictability in the amount of income that could be realized from this activity, since production largely depends on specific factors and atmospheric conditions such as rainfall, drought and other climatic features. Therefore, paying tax as a fixed amount that does not depend on the actual amount of income earned is something subjective, but practice shows that over the years there are other types of similar taxes that replace income tax and their amount is not affected by the amount of the acquired income - for example, the patent tax.
It is very important to note that this tax regime does not apply to persons who act as traders - for example, an individual is not registered as a sole trader, but systematically performs the activity by occupation.
Another important feature of taxation with this type of alternative tax under the Personal Income Tax Act is that the obligation to pay the tax is on another person - the state-owned enterprises under the Forestry Act, and not on the payers of the income - the companies that buy the collected produce.
The new alternative tax is included in the provision of Art. 14, para. 6 of the Law on taxes on the income of natural persons, according to which the income of natural persons, who are not traders within the meaning of the Commercial Law, from the collection of wild mushrooms and fruits, with the exception of those from medicinal plants, is subject to an alternative tax, and in part three of the Personal Income Tax Act there is a new chapter seven "a" with the title "Alternative tax on income from gathering wild mushrooms and fruits".
The basis for taxation of the income from collecting wild mushrooms and fruits is in Art. 41a of the Law on Personal Income Taxes, where in para. 1, it is stated that the income of natural persons, who are not traders within the meaning of the Commercial Law, from the collection of wild mushrooms and fruits, with the exception of those from medicinal plants, are taxed once with an alternative tax in the amount of BGN 30 for each month in which the activity is carried out.
In para. 2 of this provision states that the alternative tax for the income from gathering wild mushrooms and fruits is withheld from the state enterprises under Art. 163, para. 1 of the Law on Forests immediately before the issuance of a permit for carrying out the activity of collecting wild mushrooms and fruits, with the exception of those from medicinal plants, for the relevant month and is submitted within the terms and in accordance with the procedure of Art. 65 and 66 of the Personal Income Tax Act.
Therefore, the alternative tax under Art. 41a of the Law on Personal Income Taxes shall be submitted by state-owned enterprises under Art. 163, para. 1 of the Law on Forests, by the 25th of the month following the month of its withholding in the state budget, at the expense of the competent territorial directorate of the National Revenue Agency under Art. 8 of the Tax and Insurance Procedural Code, i.e. at the place of registration of the person obliged to withhold the alternative tax.
It should be borne in mind that an alternative tax, which taxes the income from collecting wild mushrooms and fruits, with the exception of those from medicinal plants, in the amount of BGN 30 is due only for the month during which the activity is carried out and pay before receiving the permit, i.e. before the start of the activity that will be carried out in the relevant month.
As was specified above, the responsibility for the collection and payment of the alternative tax is the state-owned enterprises - legal entities, with the status of state-owned enterprises under Art. 62, para. 3 of the Commercial Law. The Minister of Agriculture and Food, by order, determines the areas of activity of these state-owned enterprises.
State enterprises under the Law on Forests are:
– North-West State Enterprise;
– North Central State Enterprise;
– Northeast State Enterprise;
– Southeast State Enterprise;
– Southwest State Enterprise;
– South Central State Enterprise.
State enterprises that issue a permit for a specific month withhold, declare and pay both the alternative tax and the mandatory insurance contributions.
For the alternative tax due under Art. 41a of the Law on Personal Income Taxes, state-owned enterprises submit information in the order and manner specified in an ordinance issued by the Minister of Finance, i.e. in accordance with Ordinance H-13 of 17.12.2019 with declaration model No. 1 and No. 6, which is laid down in the provision of Art. 55, para. 3 of the Law on Personal Income Taxes. In practice, state-owned enterprises submit a declaration, but it contains information only about the amount of tax due and mandatory insurance contributions for the specific persons, but not about the amount of income acquired by them - the amount of tax under Art. 41a of the Personal Income Tax Act is indicated in 31.A in declaration form 1, and the code is 41. In declaration form 6 in item 16 "withheld tax under Art. 41a of the Law on Personal Income Taxes" the amount of tax withheld during the relevant month under Art. 41a.
According to the Law on Forests, a permit for the use of non-timber forest products from the forest territories - state and municipal property, is issued by the state enterprise under Art. 163 for each month in the month before the performance of the activity, and its value includes:
And in the Law on Forests, it is explicitly stated that the state enterprise under Art. 163, which issues a permit for a specific month, deducts, declares and pays the mandatory insurance contributions under para. 6, items 2 and 3, as well as the alternative tax under para. 6, item 4;
It is important to keep in mind that this regime does not apply to medicinal plants, within the meaning of § 1, item 64 of the Additional Provisions of the Personal Income Tax Act. These are plants that can be used to make herbs.
For the income from this activity of natural persons who are not merchants within the meaning of the Commercial Law, taxation is reserved in accordance with Art. 29, para. 2, b. "a" of the Law on personal income taxes, whereby 40 percent of legally recognized expenses are deducted when forming the taxable income.
Individuals are not obliged to file an annual tax return when they have only acquired income taxable with an alternative tax from collecting wild mushrooms and fruits, with the exception of those from medicinal plants, according to Art. 52, para. 1, item 6 of the Law on Personal Income Taxes. Even if the persons are obliged to submit an annual tax declaration on another basis, they are not obliged to indicate in it the income from the collection of wild mushrooms and fruits, with the exception of those from the medicinal plants, subject to an alternative tax according to the order of chapter seven "a" .
However, local individuals will be able to declare in their annual tax return under Art. 50 of the Law on personal income taxes for 2024 and the incomes acquired during the year, which are taxable with an alternative tax under chapter seven "a" on the basis of art. 50a, para. 1 of the Law on Personal Income Taxes.
Example: A natural person carries out an activity of picking wild mushrooms in the period from May to October inclusive. For each month of this period, the person pays the due alternative tax in the amount of BGN 30 and the due mandatory insurance contributions to the state forestry enterprise at the beginning of of the month before acquiring the permit to carry out the activity for the corresponding month. The tax thus paid is final.
In this case, the state-owned enterprise declares this tax in accordance with Ordinance No. H-13, submitting model declarations No. 1 and No. 6.
The company that buys the production, that actually pays the income from this activity to the natural persons, has no obligation to determine and pay tax for this income, as well as to submit information with the reference under Art. 73, para. 1 of the Law on personal income taxes for the amount of income paid by him, as he had for income from gathering wild mushrooms and fruits until the end of 2023, i.e. it is no longer intended to submit information on the income thus paid by the payers from the collection of wild mushrooms and fruits.
Regarding the documentation of income, there is also no special obligation to issue a document when paying/acquiring income from collecting wild mushrooms and fruits, as a Bill for paid amounts is no longer issued.
19.08.2024
THE NEW REGULATION ON ENTRY INTO THE EMPLOYMENT REGISTER IS ALREADY A FACT
Comment from the specialist
Larisa Todorova, lawyer
In "State Gazette", no. 65 of 08/02/2024, Decree No. 267 of the Council of Ministers of July 29, 2024 on the adoption of an Ordinance on entry into the employment register (the Ordinance) was promulgated. With the decree, changes are also made to the Ordinance on the work record and work experience.
Legal delegation for the adoption of the regulation are Art. 62, para. 5 of the Labor Code and Art. 120, para. 1 of the Civil Servant Act. With the Law on Amendments and Supplements to the Labor Code, published State Gazette, no. 85 of 2023, significant changes were adopted in the two normative acts related to the regulation of the work and service record. The changes in the Labor Code come into force on June 1, 2025, and in the Civil Servant Law - on June 1, 2026.
Therefore, for labor relations, the Ordinance for entry in the employment register enters into force from June 1, 2025, and for official ones - from June 1, 2026.
The changes to the Ordinance on the employment record and work experience shall enter into force on June 1, 2025.
In order to present the regulations contained in the Ordinance, it is necessary to recall the main changes in the Labor Code and in the Civil Servant Act:
With the changes in the Labor Code, the obligation of employers to issue and make entries in paper work books is removed. It is regulated that when concluding, amending and terminating employment contracts, employers must enter the relevant data in the employment register (the Register). The creation of the Register has been assigned to the executive director of the National Revenue Agency, until June 1, 2025. The Register contains the electronic labor records of employees.
The unified electronic labor record is an electronic document that contains data and circumstances related to the labor activity of the worker or employee, and is an official certification document.
It is important to note that the work book, issued before June 1, 2025, is an official document certifying the circumstances related to the labor activity of the worker or employee entered in it.
The unified electronic labor record contains data on:
Part of the data that will be contained in the Register is data that is entered in the work book of the worker or employee according to Art. 349, para. 1 of the Labor Code (before its amendment) and data contained in the notification submitted to the National Revenue Agency pursuant to Ordinance No. 5 of December 29, 2002 on the content and order of sending the notification under Art. 62, para. 5 of the Labor Code (Ordinance No. 5 of 2002). The register will also contain other data (compensation paid upon termination of the employment relationship on the grounds expressly stated under Art. 222, paras. 2 and 3 of the Labor Code, the agreed paid annual leave and the days of used paid annual leave due for the year of termination of the legal relationship), which have a bearing on the rights of the worker or employee upon his/her employment with a subsequent employer.
With the amendments to the Labor Code, it was determined that access to the Register and the unified electronic labor record is carried out in accordance with Art. 5 of the Law on Electronic Government. Identification is required for the provision of an administrative service through the means regulated in Art. 5 of the law. The administrative bodies enter the means of electronic identification, through which citizens and organizations declare the electronic administrative services provided by them, in the Administrative Register under Art. 61 of the Administration Act.
Access to the data contained in the Register is also provided free of charge in the territorial directorates of the National Revenue Agency in accordance with the procedure determined by the Ordinance.
The processing of personal data in the Register is carried out in accordance with Regulation (EU) 2016/679 of the European Parliament and of the Council of 27 April 2016 on the protection of natural persons in connection with the processing of personal data and on the free movement of such data and for the repeal of Directive 95/46/EC (General Data Protection Regulation) (OB, L 119/1 of May 4, 2016) and the Personal Data Protection Act.
With the creation of the Employment Register, the maintenance of the Register of Employment Contracts is terminated. The initial data in the Employment Register will be filled in by the National Revenue Agency on the basis of the Register of Employment Contracts and, if necessary, on the basis of other sources.
Employers will be obliged to submit notifications for the conclusion, amendment and termination of employment contracts in accordance with Ordinance No. 5 of 2002 until June 1, 2025.
Until June 1, 2025, employers should also fulfill their obligations to enter the relevant data in the work books of employees. Until June 1, 2025, the employer's obligations under Art. 349, para. 2 of the Labor Code to issue a work book to a worker and an employee who enters work for the first time, and under Art. 350, para. 1 of the Labor Code for the entry in the employment book of the data related to the termination of the employment relationship and its transmission to the worker or employee.
The current provisions of the Labor Code regarding the employment record, the Ordinance on the employment record and work experience and Ordinance No. 5 of December 29, 2002 on the content and procedure for sending the notification under Art. 62, para. 5 of the Labor Code will continue to apply until June 1, 2025.
With the changes in the Civil Servant Act, it was envisaged that the data on the employment relationship would be stored as part of the single electronic employment record in the Employment Register. The unified electronic employment record is an official certification document for the entered data and circumstances related to the civil service.
The service book, issued in accordance with the Civil Servant Act before June 1, 2026, is an official certification document for the circumstances related to the civil service entered in it.
The following data about the employment relationship will be entered in the Register:
Within a period of 6 months, starting from January 1, 2026, the appointing authorities for existing employment relationships under the Law on Civil Servants shall enter in the Register all data from the service book issued pursuant to the same law, regardless of the authority that entered them in the booklet.
All data from the official records, issued in accordance with the law on the civil servant of individuals, are also entered in the cases of termination of official legal relations within the above-mentioned period.
All data from the official records issued in accordance with the Civil Servant Act to persons, except for the cases of active or terminated official legal relationships, specified above, are entered by the appointing authority when a subsequent official legal relationship occurs.
III. What does the new Ordinance for entry in the employment register provide
The Ordinance contains 3 sections - "General Provisions", "Employment Register" and "Single Electronic Labor Record", an additional provision and final provisions. There are 5 attachments to it, as follows:
15.08.2024
YOU WILL NOT BECOME A BOSS BY WAITING FOR THE BOSS SPOT
You have arranged an idyll in your head: your boss leaves or is promoted, and you rise to his place. You do not take a particular risk, because you know the work and the team perfectly, you are completely clear about the relations inside the company and with its partners outside. Sounds like an ideal career plan.
This is not a plan at all, but a big mistake, say personal and career development experts. Their arguments are ironclad, but first read a true story.
Nick Caldwell, CEO at Looker, recounts what he remembers hearing from a young man, "I'm going to take a management position until my boss leaves or another manager in the company resigns." You remembered the worst advice you received in your career.
In 2011, he worked at Microsoft and had accumulated 9 years of experience. At that time there were problems in the department. Nick started looking around and found a management position in another department of the software giant. But after 9 years in the same job in the same team, change seemed scary and risky to him.
He shared his intentions with his colleague Paul. "Stay here. There's going to be a power vacuum in the department and a number of open positions, so you'll be moving up the career ladder quickly," Paul advised. "His analysis sounded logical to me, and this option was certainly less risky for me. However, I kept asking myself if this was the way I wanted to move up. After a week of hard thought, I decided to try my luck Nick explains.
As the head of the other department, he had to work a lot, gather a team, give 150% of himself, but in the end he established himself in the position and took more steps up the hierarchy.
"Paul never left our old team. To this day he holds the same position he worked in. We keep in touch and in every conversation he always comes up with the topic of starting something new. He doesn't like the projects he's working on and he's not in a particularly good relationship with his colleagues. When I ask him why he continues in the same position, since nothing keeps him there anymore, Paul always answers me: "I'm waiting for the right opportunity. "You were lucky when you left. Sometimes I wonder what my career would have been like if I had ever followed his advice," says Nick Caldwell.
The first takeaway from this story is that you have to risk to win. "The biggest mistake you can make in your career is not making a decision you may later regret, but passing up multiple opportunities out of fear that you might fail," sums up Nick.
But not he, but Paul is the more interesting and instructive image.
And a good professional can turn out to be a career loser when he waits to take his boss's place. Especially when there are not enough real facts that indicate that this chief will soon vacate his chair for some reason.
It is completely short-sighted to base your career development plans on a coincidence and other people's decisions, experts point out. Even if you are certain that if and when these circumstances arise, you will be the one to be promoted, it is still unwise to sit and wait. Your professional success depends on your personal decisions, be proactive and look for different opportunities instead of imagining yourself in the shoes of your boss.
Waiting for someone to leave in order to ascend to the familiar betrays limited thinking. You'll likely find much better options if you look around with a desire to not just make a step up, but a change. This can put you on a fast track to an even higher and more lucrative position because you will be more creative. In the place of your boss, there is even a danger that you will end up unsuccessful, because you will do things the way you know, and this will not bring breakthrough success.
For this reason, don't be too sure that the wait is worth it, and you will definitely be put in the boss's place when he vacates it. No wonder your higher-ups decide they need someone with a new management style. Even if the company has a policy for the so-called reserves, it does not guarantee that being designated as a chief's reserve will make you the incumbent. Yes, one possible approach is to promote precisely an employee who has gone through all the steps in the hierarchy and is specially prepared for a higher position. But the other approach is to hire an outsider with a fresh view to bring new ideas, to give more speed to the work and to the team.
The plan to wait means you are afraid to step out of your professional comfort zone. It's good to be comfortable in your job, but if you want your career to be successful, you have to force yourself to step out of the comfort of the familiar more than once, personal and career development experts advise.
Especially if your ambitions don't stop at your current boss, but you want to go further, don't get into bad habits. If this is your strategy, after becoming the head of the department, how many more years will it take for the next position in the hierarchy to become vacant?! Patience is a great quality, but it can't be endless, because at some point it will still be time for you to retire.
True, an ancient Chinese wisdom says "If you stand long enough on the bank of the river, sooner or later you will see the corpses of your enemies flowing down the river". But in it, Sun Tzu does not say that you stand and do nothing. Perhaps the wisdom of Albert Einstein is clearer: "Life is like riding a bicycle. To keep your balance, you have to keep moving."
So inject some passion, make a long-term plan of what you want to achieve in your profession, don't be afraid to take on challenges and try every opportunity that opens up.
Leaping into the unknown can be a success, it can be a failure, there is always risk. But if you think it through and it's worth it, take it.
It is no less dangerous to wait - there is a chance that competition will suddenly appear. A colleague may come into your department, roughly at your level in experience and ability, who has taken the risk of starting at a new company. No wonder, in the sublime moment, he is judged to be more suitable than you for a boss, at least because he is more daring and ambitious.
As Abraham Lincoln said, "Good things come to those who wait, but only what is left of those who hurry."
--- The risk of leading the familiar ---
Success is often more certain if you accept a challenge to become the head of another department or company instead of where you worked in a lower position.
One of the pitfalls of familiarity is that you don't realize exactly what's happening to you. And that is that you have not just been promoted, but that you are already doing something completely different.
The step between executive and leader is huge because it implies a complete change in what you do - to think strategically, to set goals, to organize and inspire the team to fulfill them, to control their performance and the result.
You probably know all this in theory, you have the abilities and qualities, you are prepared to do it. In practice, it will be easier for you in a new place, because you will not be weighed down by habits from your previous existence as a rank-and-file employee.
You finally sit down in the boss's chair, but get bogged down in the so-called micromanaging. You take on some of your old duties alone, confident that you can do the job best. You're looking for an error in accounting documents or a bug in a software product, writing an article, or treating patients yourself instead of being the team leader your job requires.
If two positions could be combined into one, it is certain that the superiors would merge them. If they are not, you should focus on your new features and not confuse them with your old ones. Which is always easier in a new place than in an old one.
An advantage of becoming the head of another department or company is that you are not leading colleagues with whom you were equal yesterday. There is usually a slight discomfort from this. And it becomes even more difficult when there are one or two people in the team who do not understand (or pretend not to understand) the current position in the hierarchy and you have to remind them who is who.
14.08.2024
HOW DO I ENSURE EARLY RETIREMENT WITHOUT RELYING ON THE STATE PENSION SYSTEM?
Early retirement is a dream of many people. Everyone has heard stories of people who managed to accumulate wealth before they were 50-60 years old and even before they turned 40 and retired early. However, these stories sound to us more like they were taken out of a movie than from the reality around us.
Under the pressure of a hectic daily life, between the costs of a home, bills, food, children and what not, most people cannot imagine that early retirement is possible. But with a good plan, early retirement beyond what the law provides is not only possible, but even easily achievable.
In order to achieve early retirement, by saving and not paying the pension insurance provided by law, you need to take three very simple steps, advises the economist and lecturer at the Finance Academy, Georgi Vuldjev.
First, you must decide to take your financial future into your own hands.
This means not relying solely on the state pension system to provide for your old age. This decision seems more difficult than it really is. The reality is that our current pension system is not sustainable in the long term. The likelihood of people who are in the early stages of their working careers getting a decent pension from the state is not particularly high.
So anyway, it is highly recommended that everyone save separately, apart from the money that is withdrawn monthly for pension insurance.
Of course, you should be aware that early retirement means a lower state pension. But that shouldn't bother you. First, it's low anyway, and second, if you plan your savings correctly, you'll accumulate enough money that it won't matter.
The second step is to start saving!
This is also the most important step. It is easy to implement with good income and expenditure planning.
Think of your personal life as a business. Because every business and every person has income and expenses. Good businesses are those that make a profit, i.e. whose revenues are higher than costs. And the best invest their profits. These are the businesses that achieve the fastest growth and dominate their sector.
This is exactly what each one of us should do - to make a profit, that is, savings, in our personal life, which we can invest for the purpose of financial growth!
First and foremost, it means doing everything you can to maximize your earnings. This aspect of personal finance is highly individual, depending on what your education and professional qualifications are. Keep in mind that they can always improve! Seek to acquire new knowledge in areas that have direct applicability to your professional life. Second comes the cost.
Maximizing revenue alone will do nothing if we don't control our costs. Appetite does come with eating, and this is especially true in the realm of personal finance. If you don't plan your savings, they won't come by themselves, even if you have a high income. Therefore, first of all, you should start tracking your expenses, prioritize the most important ones and save on the less important ones.
By maximizing income and minimizing expenses, you will begin to accumulate savings. The simple math shows that with an adequate level of savings, early retirement is a completely achievable goal. At a minimum, each of us should save 10% of our net income, and for early retirement purposes, it is highly recommended that the level be 20%, and even more if possible.
By saving 20% of your income and investing that money in such a way that it yields an average of 8% return per year (which is totally achievable) for up to 20 years you will be able to generate a retirement income equal to 80% of your professional income that you have saved from over the years. This is a very high level of income replacement that no pension system can guarantee you.
The stated return is not some unattainable goal. For example, over the past 20 years, the average return on the SP500 stock index has been around 10%. That is, if in 1991 someone started investing 20% of his income, in 2021 he would have reached the goal of retirement after 20 years of savings.
Of course, "early" retirement requires saving early. In investing, the most valuable resource is time, and the more time you have, the more you can achieve as an investor. It is therefore highly recommended that saving for early retirement starts early in one's career – someone in their 50s is not yet in a position to save and invest for early retirement. Someone 25 years old or even 35 years old, however, is.
Early retirement is completely achievable for every single person, as long as he puts in the necessary effort and, of course, has the necessary knowledge. This includes knowledge about how to manage our personal finances and save, and how to invest those savings as wisely as possible.
The investment and personal finance program at Finance Academy Bulgaria is aimed at helping people learn to save and invest effectively, with the aim of achieving long-term financial security.
08.08.2024
SUCCESS DOESN'T LIKE IF. IMAGINE IT IN "TOWEL TIED"
The first condition to win is to enter the game. But the bitter truth of life is that not everyone who plays wins. New research suggests what else you can do to grab the prize.
Big bet - big stress
You have an important project to present or report to your superiors and colleagues. The stake is high - it depends on your persuasiveness whether the work done will be evaluated as a success. From this assessment follows a reward for you - a higher salary, a bonus, a promotion.
Of course you are tense. You are even afraid that you might fail in the performance. Then the enormous efforts you have made for a long time will remain unappreciated and unrewarded. This uncertainty is able to fail even the most capable professional. Especially if he is one of those people who are not very played and charming in public appearances.
Therefore, scientists and specialists in applied psychology do not stop looking for techniques for success - how to make yourself exert maximum effort in the event of a big bet and at the same time control stress so that it does not sabotage you.
An American study gives interesting results, and based on them, psychologists offer useful tips on how to manipulate your mind.
A bird in the hand and an eagle in the sky
Researchers from the Johns Hopkins University School of Medicine observed volunteers who were assigned to solve computer problems. Their success always led to cash prizes, and the situations changed.
In the first round, scientists acted according to a scenario familiar from life. With each subsequent task, the amount to be won increased. And surprise - the tasks did not become more difficult, but nevertheless the performance of the participants worsened. The reason is that the mechanism was involved in which the big bet led to high tension and then to little success.
Similar results are known from a lot of research, and everyone knows from their own experience that overextending to grab the prize often ends in failure.
American researchers, however, turned the point of view. In the second round, when solving each subsequent task, the participants were not supposed to earn more money. The bet was different - to keep what they had already won. After this change in condition, they began to make significantly fewer errors than in the first part of the study with the escalating sums.
After analyzing the achieved results, the researchers organized a new experiment. Its purpose was to test whether participants would achieve better results if they learned to change the way they viewed high stakes.
There was no initial task at all, the solution of which earned a cash prize. The scientists made the volunteers only imagine that they had already won it. Now their only job is to save her.
The results of the experiment were conclusive - and only with suggestion, the participants did significantly better with the tasks than in the situation with the escalating sums.
"Our research shows that you can reduce the negative impact of stress at work by reframing the way you look at high stakes," the scientists commented.
Two psychological factors seem to be involved here. On the one hand, a person feels less tense, thinking that the prize he is trying to win is already his. On the other hand, his will becomes stronger when he can lose something he already has than when he imagines something he can gain. One is real, the other is highly desired but imaginary. Something of that philosophy expressed by the saying "Better a bird in the hand than an eagle in the sky". Some practicality works, but to get there you must first stretch your imagination to self-manipulate.
Self-suggestion with a limit, though
The technique of imagining the prize in order to get excited and put effort into achieving it has been known for a long time. What is new in the American study, however, is that you have to stretch your imagination in a different direction - not to "if" and "when", but to something "tied in a towel".
If you think that the prize you are trying to win is already yours and that it depends on your current efforts to be able to keep it, you will be successful, psychologists assure.
You should notice the key point in this sentence - your self-suggestion should not go so far as to stop you from making an effort. Its purpose is to remove your fears and tensions, to increase your self-confidence, so that it does not prevent you from presenting yourself in the best way. However, if you decide that the victory has really been achieved and start lazing around, there will be no point in your psychological exercise, experts warn.
07.08.2024
PUNISHMENTS IN THE WORKPLACE: REAL EXAMPLES AND LESSONS FROM PRACTICE
In the work process, discipline is essential to maintain order and efficiency. The law in Bulgaria provides for certain violations of labor discipline, for which employers have the right to apply disciplinary penalties.
Unfortunately, the imposition of disciplinary punishments, which are used as a tool to resolve personal conflicts and control unhealthy relationships between employee and employer, is still abused in Bulgaria. In general, this type of punishment has a completely different purpose to be regulated by legislation.
Discipline in the workplace is an essential element for maintaining order and efficiency in the work environment. The imposition of penalties for violations of labor discipline aims to ensure that workers fulfill their duties and comply with the organization's rules and procedures. Strict adherence to work discipline often results in higher productivity and more efficient use of work time. In some theories, it is believed that workers who are accustomed to certain standards and rules are more likely to work more efficiently.
Uncontrolled disciplinary violations can have a negative effect on the business, including loss of productivity, negative impact on the image of a company, including financial losses. The imposition of penalties is intended to prevent and correct such situations.
Some disciplinary infractions, such as failure to follow safety rules, can put workers' health and safety at risk. Penalties serve to ensure compliance with these rules and to protect the working environment.
According to the law, violations that may lead to disciplinary sanctions are the following:
Example: A worker or employee is frequently late to work without providing a reasonable explanation or supporting document. This breach causes workflow disruption and can affect team productivity.
Example: A worker or employee comes to work in an intoxicated state and cannot perform his responsibilities. This type of violation can lead to serious or even dangerous situations in the workplace.
Example: A worker or employee does not follow established procedures when working with complex equipment. This type of violation can lead to danger to the life and health of workers, as well as to technical problems and loss of time and resources.
Example: A worker or employee does not strictly follow the quality standards in the production of a product. This type of violation leads to a loss of company reputation and possible claims by customers.
Example: A worker or employee does not wear the prescribed protective equipment when working with hazardous substances. Such a violation can lead to serious health problems and even legal prosecutions.
Example: A worker or employee refuses to follow clearly stated instructions from management. This type of breach makes the internal functioning of the organization difficult.
Example: A worker or employee spreads through the company's official communication channels false rumors about the company and the management, which may lead to damage to the company's reputation and loss of markets.
Example: A worker or employee does not follow the rules for the use of equipment, which leads to frequent breakdowns and unnecessary repair costs.
Example: A worker or employee ignores new legal provisions related to the protection of personal data of customers, which can lead to legal problems for the company.
Using these examples, employers can more easily understand and apply disciplinary sanctions when violations of labor discipline occur in their organizations.
Reference:
Art. 187, art. 188, art. 194, Art. 193, Art. 221 of the Labor Code
05.08.2024
IT REDUCES THE DESIRE OF BULGARIANS TO WORK ABROAD
Fewer and fewer Bulgarians want to work abroad. This is shown by the data for Bulgaria from Decoding Global Talent 2024 - a joint web survey by The Boston Consulting Group (BCG), The Network and The Stepstone Group. Jobs.bg is the partner of the BCG survey for Bulgaria.
Boston Consulting Group (BCG), founded in 1963, is a leading global consulting firm with offices in over 100 locations worldwide.
The Network is a global network including the leading career media in more than 140 countries.
The Stepstone Group is a leading global talent recruitment platform operating in more than 30 countries.
Jobs.bg is the partner of the Boston Consulting Group study for Bulgaria.
The survey was conducted in the period October-December 2023 in 188 countries, with more than 150,000 respondents participating in it. In Bulgaria, the survey was conducted among the audience of Jobs.bg, with 969 respondents participating in it. The aim of the research is to show where people want to move to work and why.
The results for Bulgaria show that only 7% of the survey participants have an active desire to work abroad. For comparison, according to data from the same survey conducted in 2020, 14% actively wanted to work abroad, and in 2018 – 40%.
As for job positions, the report reveals that the share of talents in Bulgaria who are willing to work abroad is the largest among those engaged in Business Management (23%), Digitalization, Data Science, AI (18%) and Services, Restaurant and Hospitality (18%).
On the other hand, Bulgaria is becoming less and less attractive for foreigners who want to work in our country, it is clear from the report. In 2023, our country is in 86th place in the world in terms of overall attractiveness for global talents, and according to data from the same study, in 2020 it was in 60th position, and in 2018 - in 40th place. Turkey is the country from which the largest percentage of all respondents would like to come to Bulgaria to work, followed by Australia, the Netherlands and Romania.
02.08.2024
EMPLOYERS ARE PROHIBITED FROM ASKING ABOUT PREVIOUS SALARY
In May 2023, the European Parliament adopted Directive (EU) 2023/970 to strengthen the implementation of the principle of equal pay for women and men for equal work or work of equal value through pay transparency and enforcement mechanisms. By virtue of this Directive, which is yet to be transposed into our legislation, a number of requirements and restrictions are placed on employers when publishing job advertisements. Lawyer Miglena Micheva, Senior Manager and Head of Labor Law Department at Deloitte Legal Law Firm, provides clarification on the topic.
In what time frame is Directive 2023/970 expected to be transposed into Bulgarian legislation and to which employers does it apply?
Member States must transpose the Directive by 7 June 2026 at the latest. It applies to all employers in the public and private sectors and applies to all contract employees and also to job applicants. Employers with a minimum of 100 employees must regularly report various information, such as the gender pay gap and the ratio of female to male employees. This requirement will be introduced gradually from 7 June 2027. This information should be published by the so-called surveillance authorities of the Member States implementing the Directive. At the moment, there is still no draft of a normative act submitted to the National Assembly to introduce the Directive into the Bulgarian legislation, but at the end of last year an interdepartmental working group was formed under the Minister of Labor and Social Policy, which should develop the draft.
Will employers have the right to inquire about a job applicant's pay history?
The directive provides for a ban on employers asking the candidate questions about past pay, including current and previous employment contracts.
What information will employers be required to provide in their job postings regarding the salary for the position?
Employers should provide job applicants with information on: - the starting salary or its range, based on objective, gender-neutral criteria, to be determined for the relevant position; and - the relevant provisions of the collective labor agreement, if applicable. This information should be published in the vacancy advertisement prior to the job interview or otherwise provided to the applicant.
What information about company pay will employers be required to provide to their employees?
Employees may request and employers should provide them with written information on: - their individual pay level, and - the average pay levels, broken down by sex, for categories of employees who perform work equal to them or work of a value equal to the value of their work (defined as such according to non-discriminatory criteria). If the information received is inaccurate or incomplete, employees have the right to request in person or through their representatives additional and reasonable clarifications and details regarding all data provided. In addition, employers should provide their employees with easy access to the criteria used to determine pay, pay levels and pay increases.
What sanctions will companies be subject to if they do not provide this information?
Specific dimensions are not explicitly stated in the Directive. Member States should lay down rules on effective, proportionate and dissuasive sanctions. The directive states that these sanctions should include fines, possibly based on the employer's gross annual turnover or the total amount of its payroll. These sanctions may also include the withdrawal of public benefits or the exclusion for a certain period of time from any continuation of the provision of financial incentives or from participation in public tender procedures.
The Directive mentions an "equality body", what is meant - the Anti-Discrimination Commission or some internal structure for the company concerned?
This should be a state body and not an internal structure for the employer. There are currently two bodies that could perform these functions - the Commission for Protection against Discrimination and the National Council for the Equality of Women and Men (according to the Law on the Equality of Women and Men). Which authority will cover the requirements of the Directive or the distribution of responsibilities between them is a key question in view of the application of the Directive and it remains to be seen how it will be decided by the legislator.
01.08.2024
THE BULGARIAN INNOVATION JOBEE.BG ENTERS 21 COUNTRIES
Do you often say to yourself: "I can't find a job" or "I can't find the right one for the conditions I'm looking for". At the same time, you waste unnecessary time running from ad to ad on different sites. This can be changed easily and completely free of charge with Jobee.bg. It is an interactive job search and offer platform that connects the right candidates with the right employers, but behind all this are not hundreds of people, but artificial intelligence.
Thanks to the wide range of criteria, everyone can find their dream job by receiving recommendations for those positions that match the experience, ambition and requirements of the candidate, while at the same time facilitating employers who will instantly discover the right specialists for them in the given area. All this becomes easy and convenient, and most importantly, it is completely free for registered users!
In addition to the classic CV, the applicant can fill in information about his professional skills, ambitions and personal qualities, including "soft skills", which means how people interact with each other and how they manage their own behavior and attitudes. Once all these things are filled , Jobee's artificial intelligence creates an individual profile.The same goes for registering an employer and posting an ad.The emphasis is again not only on normative and measurable indicators, but also on those that reveal the character of your future boss.
Jobee states that there is also an "Incognito Profile" option. If you choose this feature, the employer will not have access to your personal information (name, phone, email), but will only see your professional experience and education. The employer can only communicate with you through messages on the platform, and the artificial intelligence continues to recommend suitable ads for you. Whatever you decide, the AI assistants will be by your side on the way to success.
In addition to a perfect, clear and accurate resume, the platform will also prepare you with sample questions of the answers you will receive during the interview. And anyone who wants to show themselves in their best light can present themselves with a video summary with brief information about their personal qualities, skills and talents. And at the disposal of all employers there is a tireless digital HR assistant who will monitor 24/7 to find the perfect employees. Jobee guarantees that using the platform, bosses will save 2 hours a day, and candidates will be more successful in finding suitable job positions.
At the moment, the Bulgarian artificial intelligence job search innovation is available in Bulgaria, but soon it will enter 7 markets in a total of 21 countries. A new platform 2.0 is also being developed for the marketplaces, where job seekers will pay a subscription plan. And for even greater convenience, everyone using the job site will soon be able to install the Jobee app for Android iPhone users to find their dream job even faster and easier.
