Got any dosh in Cyprus?

[Colin Leake]

My wife and I have just been looking at various interest rates with the view to splitting the dosh up into £85,000 blocks, most of which is in her name to reduce the tax bill, problem is that the rates on offer are well below those we already have, and we thought those were bad enough!

[Dave225]

At least now they know who their friends are. I suspect you will see some large movements of cash from Portugal, Spain and Italy soon......just in case. After all the Dutch Finance minister has let the cat out of the bag by stating 'we now have a template'.

 

As for Cyprus I read today that Christine Lagarde has confirmed she is one of the most stupid women on the planet by stating that this is a perfect solution and we will all live happily ever after. Ok she ddi n't use those exact words but her meaning was the same.

 

So boys and girls. do what nice Aunty Angela tells you or else...

[CliveH]

Colin Leake - 2013-03-25 3:55 PM

 

My wife and I have just been looking at various interest rates with the view to splitting the dosh up into £85,000 blocks, most of which is in her name to reduce the tax bill, problem is that the rates on offer are well below those we already have, and we thought those were bad enough!

 

Very wise Colin - Just make sure that you check that so called differing Banks are not registered as subsidiaries of a bigger one. If you get caught out here you may think you have two or three lots of £85K protection but sadly - with some banks this is not the case.

 

Here is a list of some of the major "links" - in simple terms if you £170K and had £85K in accounts each with Lloyds and also with C&G, - because they are linked the FSCS will ONLY protect £85K. So you are at risk of losing £85K

 

But put £85K with C&G and the second £85K with, say, Birmingham Midshires and each account is protected.

 

(1) Lloyds TSB, Cheltenham & Gloucester

(2) Halifax, Bank of Scotland, Birmingham Midshires, Saga, The AA, Intelligent Finance

(3) The Co-Operative Bank, Smile

(4) Yorkshire Bank, Clydesdale Bank

(5) Royal Bank of Scotland, Direct Line

(6) Bank of Ireland, Post Office

(7) HSBC, First Direct

(8) Abbey, Cahoot, Bradford & Bingley

(9) Barclays, Woolwich

(10) Newcastle Building Society, BMW Savings

 

One exception is Nat West and RBS - despite being one and the same essentially they are registered separately and so £85K in an account in each and the full £170K would be protected under the FSCS.

 

HOWEVER!!!!!!!! - there is severe concern at the viability of the RBS group - eg the forced branch sell off to Santander, the repeated computer problems that have caused chaos for its customers leads us to suggest extreme caution when considering this Bank.

 

It the whatsit hits the fan - it will be RBS/Nat West that is the most vulnerable and most susceptible to government interference - because it is owned by them! - Whilst this is looked on as a mild advantage by some - the more we look at it - the more we see it as a HUGE disadvantage. So take care. It is not as tho' there are not alternatives.

 

 

 

[CliveH]

Dave225 - 2013-03-25 5:50 PM

 

At least now they know who their friends are. I suspect you will see some large movements of cash from Portugal, Spain and Italy soon........

 

Already seeing it.

[Guest pelmetman]

CliveH - 2013-03-25 6:38 PM

 

Dave225 - 2013-03-25 5:50 PM

 

At least now they know who their friends are. I suspect you will see some large movements of cash from Portugal, Spain and Italy soon........

 

Already seeing it.

 

Didn't take long (lol) (lol)

[John 47]

Colin Leake - 2013-03-25 3:55 PM

 

My wife and I have just been looking at various interest rates with the view to splitting the dosh up into £85,000 blocks, most of which is in her name to reduce the tax bill, problem is that the rates on offer are well below those we already have, and we thought those were bad enough!

 

Just to add to Clive's very good summary - the £85k limit is an individual one, so you and your wife could have £170k in one banking group as long as both your names are on the account.

[CliveH]

1footinthegrave - 2013-03-25 2:38 PM

 

CliveH - 2013-03-25 2:01 PM

 

John 47 - 2013-03-25 9:44 AM

 

Well, a quick reading of the news this morning suggests that at last some common sense has crept in. The rules were clear to any saver: if you deposit less than 100,000 euros then that will be protected; if you invest more you take the risk of losing it all. The original "solution" tore up those rules and therefore sent a wave of panic through all EU countries that the same could happen to them.

 

This won't solve the problem overnight but it may at least restore some stability. Problem is it will mean, at least in the short-term, that the euro will strengthen against the pound - good job I got this week's cash when the rate was almost 1.18! :-D

 

Yes this is very much what everyone feared!

 

How could you have an EU ruling that states that 100K Euro (£85K for UK) is protected under EU law and then that same EU deciding that THEY could take part of that 100K Euro/£85K ??

 

But the irony is that Merkel has no room for manoeuvre seeing as her ratings in the polls is very low due to her bailing out basket case economies using German wealth and she faces an election in Sept. bailing out Cyprus would be one bailout too many for most Germans.

 

So the EU has been forced to do a deal whereby a huge percentage of wealthy savers could lose 40% (tho 30% has also been mentioned) which will mean an effective end to any trust that business has in dealing with the EU.

 

So this is a serious pre-cursor to the end of the Euro anyway - so what Merkel has been desperately trying to prop up is far closer to collapse due to her and her Euro numpties actions.

 

Imagine you have just sold your house and you have all your equity in a bank account waiting to purchase your next home. Now you have 30% or 40% less than you had before.

 

Imagine you are a company with a Corporation Tax Bill that has to be paid and you have planned and saved from your profit to pay that bill. Now you have to find 30% to 40% of that all over again.

 

Would you ever trust the powers that be again?

 

 

I must be thick, where does all this money come from to keep baling EU countries out, and I always thought the very reason for putting your money in a bank, be it a quid, or a million is that it's safe, so I'm with you, I would never trust any powers, just as well I'm skint. :D

 

They just keep printing more via Quantitive Easing. Which is basically a ruse the EU came up with when interest rates dropped so low that they could not go lower (and even negative rates have been contemplated and even issued for German Bunds) so to lower that value of the currency and to balance the books, they simply print more money and release it into the economy.

 

It is a deeply flawed strategy that will likely lead to high inflation. By printing more money - Banks that should have failed are propped up because they are seen as being to big to fail.

 

What it really means is that we are on a financial helter-skelter and when we reach the bottom our arse's are going to hit reality with a bump that could jar our financial backbone and then we are likely to get pitched over and slammed on our noses.

 

Cyprus could be that crystal ball we all need to catch a glimpse of the possible future.

 

 

[Guest 1footinthegrave]

pelmetman - 2013-03-25 6:40 PM

 

CliveH - 2013-03-25 6:38 PM

 

Dave225 - 2013-03-25 5:50 PM

 

At least now they know who their friends are. I suspect you will see some large movements of cash from Portugal, Spain and Italy soon........

 

Already seeing it.

 

Didn't take long (lol) (lol)

 

We too have been looking to split our dosh too, we've got a tenner in the crock piggy bank, a fiver under the bed, and a book of first class stamps. ;-) sorted.

[Guest Peter James]

CliveH - 2013-03-25 2:01 PM

Imagine you have just sold your house and you have all your equity in a bank account waiting to purchase your next home. Now you have 30% or 40% less than you had before.

 

Imagine you are a company with a Corporation Tax Bill that has to be paid and you have planned and saved from your profit to pay that bill. Now you have to find 30% to 40% of that all over again.

 

Would you ever trust the powers that be again?

 

 

Imagine you are a homeless person living on the street, and you are paying taxes to bail them out*

 

*VAT on takeaway food, Inflation through money printing

[nowtelse2do]

So the small banks in Cyprus can open sooner than the bigger banks, so is the reason for that is to see if there will be a run on the small banks, if you will, a precursor of what will happen to the bigger banks.

 

Dave

[CliveH]

Just watching Newsnight

 

a) A Russian indicated very clearly that Russia looking at retaliation against German companies in Russia*

 

b) Lawrence Summers - fiscal adviser to 3 US presidents - totally trashes Osbornes Budget**

 

*

http://www.guardian.co.uk/world/2013/mar/23/cyprus-bailout-kremlin-reprisal-bank-levy

 

**

http://www.bbc.co.uk/news/business-21933720

 

 

Oh dear! - "coming home to roost" springs to mind.

 

:-S

[Guest 1footinthegrave]

I've just discovered by inkjet printer is capable of some Quantitive Easing, I'll see how I get on with it tomorrow when I go to buy my fags. :-S

 

[Guest pelmetman]

Not opening the banks until Thursday as they're scared of a run on the banks in Cyprus 8-)..........

 

I bet the moneyed classes in the PIGS are queuing as I type :D.......

 

 

[CliveH]

The Dangers of QE - "a race to the bottom?"

 

 

"The Governor of the Bank of England has said the financial crisis is "far from over" as he joined fellow central bank chiefs including Ben Bernanke to discuss economic policy.

 

In an event at the London School of Economics attended by central bankers including Mark Carney, Mervyn King (pictured) added the path to economic recovery is unlikely to run smooth, the Telegraph reports.

 

"Whichever crisis we are talking about, it is far from over," he said on Monday. "There will surely be many unexpected twists and turns before we can truly say that the crisis is indeed over."

 

Bernanke, the chairman of the Federal Reserve, defended the US central bank's aggressive money printing, and argued that America's loose monetary policy has been supportive of other nations.

 

He added the weakness of sterling has helped the UK move towards a "relatively early recovery from the Depression [...] in part because of some rebound in exports", but also highlighted that many of Britain's gains resulted in losses for its trading partners "which became less internationally competitive - hence, 'beggar thy neighbor'."

 

His comments are a nod towards fears over a 'global currency war' if certain countries such as China are able to artificially weaken their currencies, resulting in a 'race to the bottom' as nations try to maintain their competitiveness."

 

Source - Investment Week

 

 

 

[Guest Peter James]

CliveH - 2013-03-26 10:27 AM

 

His comments are a nod towards fears over a 'global currency war' if certain countries such as China are able to artificially weaken their currencies, resulting in a 'race to the bottom' as nations try to maintain their competitiveness."

 

Source - Investment Week

 

 

 

Thats the point - and we can't beat them on price as long as property prices, fuel prices, taxation, infrastructure costs etc remain so much higher than theirs.

[Guest Peter James]

1footinthegrave - 2013-03-26 12:00 AM

 

I've just discovered by inkjet printer is capable of some Quantitive Easing

 

(lol) Good to see you are doing your bit for the economy Victor. :-D I'll have some of that B-)

[Guest Peter James]

1footinthegrave - 2013-03-26 12:00 AM

 

I've just discovered by inkjet printer is capable of some Quantitive Easing, I'll see how I get on with it tomorrow when I go to buy my fags. :-S

 

As long as we pay Gideon some interest on the notes we issue, I'm sure it will be fine, Partner :-)

.... and we should get an interest free loan under the funding for lending scheme to pay the interest :-D

.... free Graduates under the Work Experience Scheme to do the work.......

[nowtelse2do]

I think the UK has missed a chance here. Loan Cyprus the money they need 5 billion euro, then when their oil/gas comes on line to repay at an agreed fixed rate, payment in oil/gas or money (plus interest) Then tell them we will take all they have. Should be a bit cheaper, doesn't have to come through the Suez, and when the Egyptians close it and the tankers have to be diverted around the Cape.

 

Dave

[Colin Leake]

CliveH - 2013-03-25 6:36 PM

 

Colin Leake - 2013-03-25 3:55 PM

 

My wife and I have just been looking at various interest rates with the view to splitting the dosh up into £85,000 blocks, most of which is in her name to reduce the tax bill, problem is that the rates on offer are well below those we already have, and we thought those were bad enough!

 

Very wise Colin - Just make sure that you check that so called differing Banks are not registered as subsidiaries of a bigger one. If you get caught out here you may think you have two or three lots of £85K protection but sadly - with some banks this is not the case.

 

Here is a list of some of the major "links" - in simple terms if you £170K and had £85K in accounts each with Lloyds and also with C&G, - because they are linked the FSCS will ONLY protect £85K. So you are at risk of losing £85K

 

But put £85K with C&G and the second £85K with, say, Birmingham Midshires and each account is protected.

 

(1) Lloyds TSB, Cheltenham & Gloucester

(2) Halifax, Bank of Scotland, Birmingham Midshires, Saga, The AA, Intelligent Finance

(3) The Co-Operative Bank, Smile

(4) Yorkshire Bank, Clydesdale Bank

(5) Royal Bank of Scotland, Direct Line

(6) Bank of Ireland, Post Office

(7) HSBC, First Direct

(8) Abbey, Cahoot, Bradford & Bingley

(9) Barclays, Woolwich

(10) Newcastle Building Society, BMW Savings

 

One exception is Nat West and RBS - despite being one and the same essentially they are registered separately and so £85K in an account in each and the full £170K would be protected under the FSCS.

 

HOWEVER!!!!!!!! - there is severe concern at the viability of the RBS group - eg the forced branch sell off to Santander, the repeated computer problems that have caused chaos for its customers leads us to suggest extreme caution when considering this Bank.

 

It the whatsit hits the fan - it will be RBS/Nat West that is the most vulnerable and most susceptible to government interference - because it is owned by them! - Whilst this is looked on as a mild advantage by some - the more we look at it - the more we see it as a HUGE disadvantage. So take care. It is not as tho' there are not alternatives.

 

 

Thanks Clive very helpful advice. Any ideas where to get the best interest rates without tying the money up for long periods at fixed interest rates. We are both getting around 2.8% on average at the moment mainly with Nationwide but the rates are dropping rapidly as various bonds or special offers expire. On new investments the best we are getting is between 2% and 2.3%. When we look at moving money to other providers the rates on offer are pathetic. Having said that the main concern at the moment is simply keeping the funds protected. We can live very well off our various pensions and still save a little. We only ever use the capital for big ticket items. Motorhomes cars home improvements etc.

[CliveH]

Hi Colin

 

Bit of a long reply !

 

We seem to be approaching a similar issue that caused us problems back in 2007 when the Banks first started to go into meltdown.

 

Money on deposit was always the ultimate safe haven. If someone has an investment of any sort and market volatility became too much for their risk profile the recommendation would be to move some assets into money on deposit.

 

When interest rates were circa 5% and inflation about 3% this was fine unless you needed more than 2% as income.

 

Then we had the banks going bust and our techies analysis was that the Banks were so weak that Money on Deposit was no longer the safe haven it once was and so we had to increase the risk profile of Cash on Deposit.

 

Thus for the first time ever in my experience – we had the situation that whilst other usually higher risk sectors such as Corporate Bonds, Equities and properties where more volatile, the capital invested in these sectors was seen as being safer than money on deposit in the Banks.

 

The situation stabilized with the various Bank Bailouts – but now we have the same situation again but for a differing reason in that the techies are concerned that Money on Deposit is vulnerable to a EU “Grab” and so we have to take this into account when advising people.

 

Investment Risk is usually calibrated as a score – 1 to 10.

 

Direct share ownership is the most risky and that would be 8, 9, 10 – depending on the specific share.

 

Collective investments where funds are pooled and managed are circa 3 to 8.

 

Gilts and Corporate Bonds etc are (depending on their rating – The UK is no longer AAA and so our Gilts are now seen as slightly more risky than before) are from 2 to 7.

 

And in the past – 1 - would classically be cash – money on deposit. But no longer it seems. The reason is that if a fund manager in charge of £millions, or a Company about to make and investment, or pay a tax bill or pay dividends places huge sums of money on deposit so they are “ready” – even if they could spread their funds about in many accounts of under £85K – they cannot because the FSCS only applies to individuals (remember the Local Authorities that caught a cold having £millions in Icelandic Banks?) – so these large institutions are now coming to terms with the fact that their money, if placed on deposit in European Banks are now vulnerable to an EU “Grab”.

 

It seems clear to most people in business that the EU is blinkered and not living in the real world.

 

They think they have sorted a problem in Greece but they have given us all a far bigger problem – and that problem is far, far bigger in that the credibility and safety of the EU is now in question. Russia is seriously talking about retaliation against German Companies.

 

So we would advise great caution re money on deposit. Where only £85K is protected.

 

With other investments the FSCS limit is £50K but that is not a problem in that if you look at the number of investment houses and funds available – it runs into 10’s of thousands – so spreading your Unit Trust/OEIC investments is a good idea from this angle as well as the “eggs in baskets” viewpoint.

 

One investment medium that differs is the Investment Bond – these are provided by the big names like Prudential, Aegon Friends Life, Standard Life etc and these are Insurance based investments. As such compensation for investors under the FSCS has no upper limit and 90% of whatever you have in that investment is protected under the Financial Services Compensation Scheme.

 

How they work is that your investment of, say £200K is placed in a single premium Whole of Life Policy and on your death they will pay out 101% of whatever you have in it. So this 1% provides the “insurance element”. You can place the funds in the Bond in pretty much any investment you want from Cash to Unit Linked Funds.

 

 

So overall this means that if you had £200K to put somewhere and you put it on deposit with one bank and that bank went bust then you would only get £85K back.

 

But if you put the £200K in an Investment bond (and even had it all in cash within the Bond!) and the provider went bust you would get back 90% of whatever was in that plan – so assuming no change – you would get back £180K.

 

We are getting a huge number of enquiries where people are worried about having money on deposit. Investment bonds is one option that is worth considering. There are other advantages over money on deposit as well in that there is an income facility whereby 5% of the original investment can be taken each year tax deferred. Also, having that Insurance element means that the plan can be written in Trust so that IHT planning is no cost and VERY effective.

 

[Guest 1footinthegrave]

Funny old world isn't it, some worrying where to put their £200,000 for safe keeping,and minimizing inheritance tax, and some worrying if they can afford their next gas bill. ;-)

 

Dave's right, we're all in it together.

;-)

[CliveH]

Yes life is unfair. But life is what you make it.

 

But very few of my wealthy clients achieved their wealth via lottery or Pools wins.

 

In fact none of them.

 

They all achieved it via working hard. Some are supremely academic and have gifts that enable them to do great work and others simply work all of Gods hours to make their business work.

 

Most put their homes at risk when developing a business - We did - and it has been touch and go at times.

 

Some fail but most succeed.

 

Some plan well some do not.

 

Then there are some that do nothing and bitch about it.

 

 

 

[Guest Peter James]

1footinthegrave - 2013-03-27 10:56 AM

Dave's right, we're all in it together.

;-)

 

I think he means they are all in it together ;-)

 

PS: Clive, the ones who come to you for investment advice may be workers.

But the seriously wealthy are long established in land, property, or perhaps businesses, most of which is inherited. Thats nothing to do with hard work, ability, or effort.

[CliveH]

Peter James - 2013-03-27 2:43 PM

 

1footinthegrave - 2013-03-27 10:56 AM

Dave's right, we're all in it together.

;-)

 

I think he means they are all in it together ;-)

 

PS: Clive, the ones who come to you for investment advice may be workers.

But the seriously wealthy are long established in land, property, or perhaps businesses, most of which is inherited. Thats nothing to do with hard work, ability, or effort.

 

You are quite correct - and where you have huge estates there is little use for the likes of me. If you own huge swathes of land and property then your income is assured unless you are an incompetent - and indeed some are. But some work hard to keep inherited wealth and personally I do not blame them for an accident of birth.

 

That route only leads to bitterness and envy.

 

So most of my clients are those that have enough that advice is required. Some have so much that inertia takes over.

 

But it was ever thus.

 

Most of my clients are those that have spent years of time effort and sweat getting what they have and fail to see why the taxman should take 40% as IHT on death, their having already paid Income tax on earnings, Corporation Tax on Profit and CGT on any gains.

 

They are always pleasantly surprised at how a few tweaks here and there put them in a far more tax efficient position.

 

The case I am working on this afternoon is a lady with an elderly Mother who is in a Nursing Home and has just sold her house - there is just over £250,000 to invest.

 

The bank (Lloyds) said put it on deposit (that is all they can say as they have had their permissions curtailed due to the debacle of 97% of FOS complaints being upheld!) but this is very bad advice indeed as the interest (what little there is) is taxable and they wrongly assumed that she had no other assets and so never bothered to check the IHT liability.

 

When pressed - Lloyds said that the daughter would be able to use two zero rate bands but this is not so because the Mother divorced the Father and she never remarried - so only one IHT ZRB applies.

 

Had they done what the bank recommended - the interest would not meet the Nursing home fees and would be taxable. If the capital remained above c. £150K then IHT at 40% would be payable on the excess.

 

So if it stayed at £250K then on death the banks advice would have provided an IHT liability of £40,000. (40% of £100K) No doubt that would have been another one that the FOS would have found in favour of the customer when they complained about the poor advice from Lloyds TSB.

[Guest 1footinthegrave]

Perhaps it's sour grapes on my part, I worked bloody hard all my life in the service industry providing essential services for folk, as do millions of others. The system is such that they are never likely to have a pot to piss in, and need investment advice, but society could not function without them. Oh well, what the hell I'll be out of it all soon enough.