In the moneymarketing.co.uk edition for 19th March 2009 Brian Tora again does an excellent summary of the current financial situation. He muses about the 1970s and the problems suffered by the UK economy then. Tora concludes that "the risk of being out of the market is rising". Before that, he considers that gilts look vulnerable to a correction.
Since then we have had a gilts auction uncovered, which apparently the bond market taking a dim view of HM Government's borrowing plans. We could get a tough budget from Chancellor Alistair Darling, if he ignores his boss Premier Gordon Brown.
The government wants some voter friendly measures in the budget, which is happening late this year. Chancellor Darling will have to come up with a plan to get the public finances on track.
Thursday, 26 March 2009
Friday, 6 March 2009
In the UK defined contribution pensions are being crunched.
Research by the firm Aon Consulting has shown that the value of defined contribution pensions has fallen from a total of £550bn in September 2007 to £410bn at the end of January 2008 according to a report by moneymarketing.co.uk.
I think Gordon Brown, UK premier, will have to increase the tax advantages of personal pensions since people will otherwise decide that these investment vehicles are not worth the candle. I am thinking about putting a modest monthly amount in a pension for 15 years and probably the sum and the time period are not sufficient. I will probably invest in a tracker but it could be quite diminished by the charges, which mount up in time.
I think Gordon Brown, UK premier, will have to increase the tax advantages of personal pensions since people will otherwise decide that these investment vehicles are not worth the candle. I am thinking about putting a modest monthly amount in a pension for 15 years and probably the sum and the time period are not sufficient. I will probably invest in a tracker but it could be quite diminished by the charges, which mount up in time.
Monday, 2 March 2009
Protected rights!! What are they?
On the British pension scene we have the thorny issue of protected rights. These can now be transferred into a SIPP.
www.searchifa.co.uk The area of protected rights should be a good one for IFAs to give independent advice. Companies seemed to have washed their hands over trying to help out their employees in this area. In fact, it is pretty hard to get pension advice anywhere.
The collapse of corporate pension schemes, such as defined benefit ones, have made state pensions more valuable. The state scheme should be the cornerstone of pension planning. I suppose the tax raid on defined benefit schemes sanctioned by the then Chancellor of Exchequer Gordon Brown was based on an understanding that the sponsor companies would make up the difference. In fairness, increasing longevity would badly hit the pension schemes of firms. Perhaps, the demise of Equitable Life made people question the security and certainty of pensions. Despite being told by the Parliamentary ombudsman, the Labour government has not helped the victims of Equitable Life.
I invested in an Equitable Life with-profits fund and it was not funny aking the hit when I transferred. The authorities regulated the firm, which was originally founded in the 1760s, but provided no compensation. British personal depositors in Icelandic banks got their money back, where there was no UK regulation. However, this was not the case for Dutch and German depositors (I think), who really took a hit.
www.searchifa.co.uk The area of protected rights should be a good one for IFAs to give independent advice. Companies seemed to have washed their hands over trying to help out their employees in this area. In fact, it is pretty hard to get pension advice anywhere.
The collapse of corporate pension schemes, such as defined benefit ones, have made state pensions more valuable. The state scheme should be the cornerstone of pension planning. I suppose the tax raid on defined benefit schemes sanctioned by the then Chancellor of Exchequer Gordon Brown was based on an understanding that the sponsor companies would make up the difference. In fairness, increasing longevity would badly hit the pension schemes of firms. Perhaps, the demise of Equitable Life made people question the security and certainty of pensions. Despite being told by the Parliamentary ombudsman, the Labour government has not helped the victims of Equitable Life.
I invested in an Equitable Life with-profits fund and it was not funny aking the hit when I transferred. The authorities regulated the firm, which was originally founded in the 1760s, but provided no compensation. British personal depositors in Icelandic banks got their money back, where there was no UK regulation. However, this was not the case for Dutch and German depositors (I think), who really took a hit.
Monday, 23 February 2009
UK quantative easing is coming our way!!
The United Kingdom government is going to carry out quantative easing to get out of the economic predicament we are in. Gold reached $820 an ounce in August and now it
stands at $1,000. British premier Gordon Brown insisted that we sold at $250 an ounce. I wonder if the two issues are linked? Sterling is not supported by masses of currency reserves unlike the China or Taiwan. Although these countries must be wondering how long will they buy U.S Treasury bonds.
www.searchifa.co.uk
So we are probably in a bit of sticky situation. British savers have been abandoned (hopefully this will change) and they should keep to mainstream institutions. There was a rush to the Post Office agent Bank of Ireland and now there is a rush back. I suppose everyone needs some certainty.
The shenanigans at Anglo Irish Bank don't look good. I think the Irish would like to have some quantative easing but the good bankers at the Frankfurt-based ECB have proved several steps behind in this current economic crisis. Perhaps, the Bank of England held interest rates too high but have certainly gone for it in a big way. Say the UK central bank buys a few corporate bonds and some gilts, it probably would provide limited help to the housing market, which needs private individuals buying residential properties from other private individuals. To help these transactions Sir James Crosby proposed a reasonable plan involving mortgage securities. This plan has been studiously ignored by the Gordon Brown administration.
stands at $1,000. British premier Gordon Brown insisted that we sold at $250 an ounce. I wonder if the two issues are linked? Sterling is not supported by masses of currency reserves unlike the China or Taiwan. Although these countries must be wondering how long will they buy U.S Treasury bonds.
www.searchifa.co.uk
So we are probably in a bit of sticky situation. British savers have been abandoned (hopefully this will change) and they should keep to mainstream institutions. There was a rush to the Post Office agent Bank of Ireland and now there is a rush back. I suppose everyone needs some certainty.
The shenanigans at Anglo Irish Bank don't look good. I think the Irish would like to have some quantative easing but the good bankers at the Frankfurt-based ECB have proved several steps behind in this current economic crisis. Perhaps, the Bank of England held interest rates too high but have certainly gone for it in a big way. Say the UK central bank buys a few corporate bonds and some gilts, it probably would provide limited help to the housing market, which needs private individuals buying residential properties from other private individuals. To help these transactions Sir James Crosby proposed a reasonable plan involving mortgage securities. This plan has been studiously ignored by the Gordon Brown administration.
Monday, 16 February 2009
Should IFAs recommend buying baked beans and other provisions?
I wonder whether independent financial advisers (IFAs) should be recommending to their clients the purchase of baked beans and other provisions? In his article in the Sunday Times, William Kay makes some solid financial recommendations such as beware of gilts because historically the British government has managed to get out of its obligations. Kay says we should store extra food because of possible shortages. If these took place, they would happen very quickly. We should also have some gold stored in a safe place.
www.searchifa.co.uk
I have been trying to persuade members of my family of the need to stockpile certain items. This is maybe not to cope with a crisis but with perhaps more mundane issues. Recently my parents were hit by a wave of power strikes.
Last autumn we were close to financial disaster with the possible closure of Royal Bank of Scotland (RBS) and Halifax (HBOS). If ATMs temporarily closed, would people have enough cash to survive for a couple of weeks? What potential problems are we looking at? I think the favourites are the Middle East and North Korea.
www.searchifa.co.uk
I have been trying to persuade members of my family of the need to stockpile certain items. This is maybe not to cope with a crisis but with perhaps more mundane issues. Recently my parents were hit by a wave of power strikes.
Last autumn we were close to financial disaster with the possible closure of Royal Bank of Scotland (RBS) and Halifax (HBOS). If ATMs temporarily closed, would people have enough cash to survive for a couple of weeks? What potential problems are we looking at? I think the favourites are the Middle East and North Korea.
Friday, 13 February 2009
I might have to see an independent financial adviser.
I try (and probably fail) to write a blog aimed at independent financial advisers (IFAs) and obviously I am not one. I like reading the publication MoneyMarketing, which I think is excellent. So quite a few blogs relate to articles from the publication. I really like Brian Tora and Mark Dampier. Then, today I suddenly realised that I am going to have to see an IFA to get some investment ideas. For instance, what do you invest in at the moment? UK equities, even with dividends reinvested, have posted a loss over the past decade. This coincides with Gordon Brown's stewardship of the economy.
Do I invest in yet another pension? Would a modest investment bar me from means-tested benefits when I retire in 15 years time? Will pensioners get any benefits then?
If a company like Rio Tinto can see its share price fall from £70 to just under £20 and get imbroiled in a mighty row over Chinese investment (worrying the Australian government), then it looks like individual equities are out.
Investment funds are supposed to be safer with their diversification but suffer from their poor investment choices and high costs. For instance, UK investment funds were
unable to avoid the disintegration of the British banking sector.
What about buy-to-let, which seemed to answer pension needs at the time? If the UK residential property market is going to tank further in 2009, why buy a loss? Distressed buy-to-let investors would see me as a gullible buyer and would probably not lower the price. However, a real asset might be a long-term winner especially with the pound collapsing.
If I see an IFA, I will let you know how I got on.
www.searchifa.co.uk
Do I invest in yet another pension? Would a modest investment bar me from means-tested benefits when I retire in 15 years time? Will pensioners get any benefits then?
If a company like Rio Tinto can see its share price fall from £70 to just under £20 and get imbroiled in a mighty row over Chinese investment (worrying the Australian government), then it looks like individual equities are out.
Investment funds are supposed to be safer with their diversification but suffer from their poor investment choices and high costs. For instance, UK investment funds were
unable to avoid the disintegration of the British banking sector.
What about buy-to-let, which seemed to answer pension needs at the time? If the UK residential property market is going to tank further in 2009, why buy a loss? Distressed buy-to-let investors would see me as a gullible buyer and would probably not lower the price. However, a real asset might be a long-term winner especially with the pound collapsing.
If I see an IFA, I will let you know how I got on.
www.searchifa.co.uk
Wednesday, 11 February 2009
Standard Life coughs up £100m over pension sterling fund.
The venerable Scottish insurer Standard Life is going to cough up £100m following the tanking of its pension sterling fund. This was not the performance desired by independent financial advisers (IFAs), who pointed to the mention of "cash" in some brochures. Hargreaves Lansdown said simply that it wanted the money back for its clients.
It reminds me when a Fidelity Income fund was found to have invested in nil yielding tech stocks. There was a bit of a furore. The current investment conditions have really hit investment trusts and unit trusts. UK funds have been especially hit by the implosion of the British banking sector. Star fund managers have seen their reputations tarnished. The industry is trying to push corporate bond funds for investors looking for income. They represent quite a bet on future default levels to get the attractive yield.
www.searchifa.co.uk
Good corporate bonds paying 7 pct to 9 pct might be retired by companies, if they can refinance for less. Bond managers will be having another look at the issue documentation for the paper.
It reminds me when a Fidelity Income fund was found to have invested in nil yielding tech stocks. There was a bit of a furore. The current investment conditions have really hit investment trusts and unit trusts. UK funds have been especially hit by the implosion of the British banking sector. Star fund managers have seen their reputations tarnished. The industry is trying to push corporate bond funds for investors looking for income. They represent quite a bet on future default levels to get the attractive yield.
www.searchifa.co.uk
Good corporate bonds paying 7 pct to 9 pct might be retired by companies, if they can refinance for less. Bond managers will be having another look at the issue documentation for the paper.
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