What is happening to our Money.

[Hymer C 9.]

Looking at the news this evening what is happening to our moneys how on our pensions we are supposed to keep us I don't know. What is worrying though is the job losses that looks likley in the banking/ credit card industry, around our area there are not hundreds but a couple of thousand jobs with big banks, such a worry for all walks of life.

 

Just hope things can be sorted out soon but unfortunatley the goverment at the moment don't inspire me, I know its world wide but it is going to affect us in many ways if it carry's on. Carol.

[omidknight]

 

China and India economy up = ours and Americans down.

 

The upside to lack of money here will lead to a greener country. Perhaps people will think again about having too many children, wanting the big TV must have the latest... keep up with the neighbours... and buying the big car. A return to the good old days where lack of money meant less pollution?

 

 

[GJH]

Hymer C 9. - 2008-03-17 10:07 PM

Just hope things can be sorted out soon but unfortunatley the goverment at the moment don't inspire me, I know its world wide but it is going to affect us in many ways if it carry's on. Carol.

They didn't inspire me over 10 years ago when Brown decided to leave the Bank of England to set economic policy when he should have managed it properly himself instead of just pretending to.

 

What we've seen over the last 10 or 15 years is the assumption on the part of too many people that they have a right to buy a house (and other material possessions) whether they can afford it or not. This has been coupled with the rise in the buy to let market because of lack of investment in social housing.

 

The people mainly to blame are governments taking an easy ride on a rising economy whilst ignoring the fact that there was no solid foundation plus financial institutions following risky policies aimed at boosting their own profits/bonuses - both often enough knowing that they would be out of it before the crash happened and somebody else would have to pick up the pieces.

 

The only way that it will be sorted out is if people take a good look at themselves and realise that their "want it all, want it now" attitude will only dig them deeper into the mire.

 

What cheeses me off is that those of us who lived within our means over the years will also suffer from the fallout of greed.

 

Graham

[Guest JudgeMental]

 

The tables are slowly turning; we are just another failing civilisation. History is full of them.....

 

On that happy note I'm going out to clean the van lol

 

[Tony Jones]

Another possible root cause is the fact that our whole economy has been built on the assumption that property prices will always rise faster than inflation.

 

Think about that for a moment - one of the very few things that everyone genuinely needs is somewhere to live (rented or owned). To assume that the cost of that will always keep rising faster than (say) the cost of food, or average earnings, is to assume that it will be harder and harder for many people to afford - whether mortgages or rents. And then to take that particular element out of the "official" calculations of inflation - thus effectively ENSURING that many incomes don't keep up with the cost of accommodation - seems little short of criminal.

 

I can't remember which economist made the revolutionary statement:

"If something can't go on forever, it will stop." But that may well be what's now happening to our house-price-based economic "growth."

 

Never mind, I'm with the Judge here - once civilisation collapses, we motorhomers will just have to "circle our wagons" round a farm, or possibly an oil-well, and start "wild-camping" for real!

[CliveH]

This article puts a lot of the gleeful hype and spin we see on the news into some kind of perspective:-

 

http://www.fundstrategy.co.uk/cgi-bin/item.cgi?id=161237&d=11&h=312&f=311

[Tomo3090]

Welcome to the wonderful world of capitalism! Remember the value of your "investments" can go down as well as up!

 

All these firms that "invest" your cash and insure you were set up in the 18th century when everyone wanted to get rich quick without doing anything themselves. They trade on our greed and without exception we all fall for it. The sales patter seems to be.

 

" You give us as much as you can afford for as long as 25 years or so and we'll give you back your money plus thousands of pounds extra."

 

"How much will you get back?..... MMMMM, well because of the way the markets work and capital gets invested in many different funds around the world, mainly to protect your investments of course, we can't actually say how much you will get back, but as far as I can guess, and please don't hold me to this, it may be as high as ten times what you give me. Now please be aware, there is the teeeniest smidgeon of a chance that you might lose the lot! Yes I know that's not what you wanted to hear, but I have to tell you that by law."

 

"Chances are you won't but just concentrate on the bigger number please. Ten times what you've given me in your pocket and you don't have to do anything at all! Sign here please and fill in your bank details on the slip."

 

Now if little old honest me asked you to do that you would walk away laughing, but if I call myself something grand like " National Bank of Midland investment Company Ltd." You'll be queueing at my door!

 

The only winners are the banks and directors of these companies, just like bookies and casino owners are the only winners in the gambling game. It's all just one big bet and the odds are well in their favour.

 

But if you do want to make some SERIOUS cash give me a ring I know a certain way to beat the bank. Honest :-D

[CliveH]

There are no get rich quick schemes out there - but equity and property has outperformed cash and earnings for about as long as records began.

 

As for placing all your eggs in one basket - DON'T! - remember Equitable Life.

 

Have a good mix of Equities via a cumulative investment funds, same goes for Property funds and Fixed interest investments such as gilts and Corporate bonds.

 

There are loads of people out there that have done well over the years - they very rarely shout about it.

 

Those that never did or got it wrong are always shouting the odds.

 

 

 

[tonyishuk]

CliveH - 2008-03-18 6:35 PM

 

There are no get rich quick schemes out there - .

 

 

Oh yes there are,

 

Think of all the commission earnt by the people selling cheap morgages, money and insurances. Laughing all the way to the bank with your money.

 

rgds

 

maybe I should add ;-) or (!)

[donna miller]

"There are no get rich schemes"

 

 

Well I just received a letter from the Baristar (actual spelling) Jose Alonso, telling me that if I present myself to be the next of kin to a man who died in the Egypt air crash in 1999, (despite the fact he got the date wrong), then I have inherited 50 million (yes million) Euros.

 

And for the "sake of transparency in this matter, I am free to contact him on his mobile phone or email".

 

Dont bother with begging letters, peasants.

:D

[GJH]

tonyishuk - 2008-03-19 10:01 AM

 

CliveH - 2008-03-18 6:35 PM

 

There are no get rich quick schemes out there - .

 

 

Oh yes there are,

 

Think of all the commission earnt by the people selling cheap morgages, money and insurances. Laughing all the way to the bank with your money.

 

rgds

 

maybe I should add ;-) or (!)

Some time ago a friend rang me after going into some sort of shop which guarantees to arrange a mortgage. The shop wanted £250 up front and the friend wanted to know if I could lend it.

 

I refused because I knew that the shop would come up with a mortgage but that the friend wouldn't be able to afford the deposit and/or repayments so the shop would have walked away with £250 for just getting my friend into a financial mess.

 

It's because too many people were conned into that sort of deal that financial institutions are in such a mess now that the bubble has burst. The people who actually did the mis-selling won't care because they've already had their bonuses.

 

Graham

[Tony Jones]

donna miller - 2008-03-19 10:33 AM

 

"There are no get rich schemes"

 

 

Well I just received a letter from the Baristar (actual spelling) Jose Alonso, telling me that if I present myself to be the next of kin to a man who died in the Egypt air crash in 1999, (despite the fact he got the date wrong), then I have inherited 50 million (yes million) Euros.

 

And for the "sake of transparency in this matter, I am free to contact him on his mobile phone or email".

 

Dont bother with begging letters, peasants.

:D

 

I hope you've remembered to send him your bank account details Donna, so he can pay you! :D

There now, don't you think you should send me a little something for that valuable reminder? >:-)

 

T x

[CliveH]

This is a true story that actually happened in our office.

 

We took a phone call from a chap who said he wanted advice on an ISA - and he was put through to me.

 

I asked him the normal questions re objectives etc and he said that he wanted to save £100 per month.

 

I then asked him when he wanted to come into the office?

 

He said he would not be coming into the office as he worked and that he thought "we came out to them and that he would only see someone after 7:00pm because he wanted to have his tea first.

 

I pointed out that we would have to charge for a visit out of hours and his reply was "I am not paying for advice - you lot get commission!"

 

I said that was one option though we prefer to charge a fee and that the maximum fee on an Equity ISA was 3% and so if he did proceed with us we would receive £3 a month for twelve months - a total of £36.

 

For that £36 under the FSA rules we would have to provide him with a full report and recommendation - usually about 4 to 5 pages, which would have to be based upon his current financial circumstances which we would need to get him to provide - usually by sitting with one of us for about an hour.

 

I said I could not do that and would not give up an evening with my family for £36 as it would not cover my costs.

 

He took exception to this and became quite abusive. I put the phone down.

 

 

 

So when people indicate that huge sums of money are made by us commission hungry IFA's - do realise that most of us work on a fee basis and those clients that use us are happy to do so because we greatly add to their financial wellbeing.

 

An independent survey showed that those that used an IFA were considerably better off financially than those that did not.

 

http://www.moneyextra.com/news/news-what-difference-037610.html

 

 

If you want to be ripped off though! - go to anyone of the high street banks! - Did you know that over 50% of all Financial Ombudsman complaints are against the banks with only about 12% against IFA's???

 

And what is worse - one of the high street banks has 10 times more complaints than its nearest rival!!

 

But the FOS and the FSA cannot tell consumers which bank this is because it would break Data Protection Rules!

 

This is b*****ks of course but we all know that those in charge at the FSA are all ex-banking people.

 

It's an equitable life Henry.

 

[Mel B]

We're changing mortgages at the moment, just coming to the end of a 2 year fixed rate on 31 March and the current lender's standard variable rate would add about £200 to the monthly payment! I've done a lot of searching on the internet for the best deals, as well as consulted (for no fee) the company who found us the extremely good deal last time, but unfortunately they didn't even come up with the one we've found which knocks spots of their suggestions. So we've gone for a no fee variable rate tracker, which has knocked about £100 off the monthly payment, not a bad deal, the best we could get was about £50 a month cheaper but with horrendous set-up and tie in costs and once we move to our place in Scun-thorpe (ah ha ... fooled the bad language bleeper!), we won't need a mortgage so want to be able to get out of it without a problem and also didn't want to tie ourselves into a fixed rate as the interests rates could go down again! Some mortgages set up fees were over £3000 with massive tie ins!!! No fees and no tie in, great stuff.

 

But, at the moment NOTHING seems to be going right for us!!! Got a letter from the old lender to say that we will owe them £3,250 in early repayment charges! Oh no we ruddy well don't!!! Turns out that even though we told the new company not to do the deal until the beginning of April, they have asked for a settlement figure for 28 March ... just 3 days before the expiry of the '2 year tie in' ... £3,250 for 3 days!!!! Not on your nellie, rang up and told them to get it sorted or stuff the mortgage! The thought of them not getting their commission does wonders for the service you know! All sorted now fingers crossed. :->

 

Anyone wanting a mortgage can highly recommend this site, it was the only one that came up with all of the mortgages on offer, the mortgage we're going for didn't show up on any of the other comparison sites at all. Even the chap at the bank we're getting it from was surprised it was included as they don't pay these mortgage 'comparison sites' to host their products, which a lot of the other providers do, so it really did give us a very good comparison of what's out there. To be safe I did carry out the same exercise on other comparison sites and none of them came up with the goods like this one.

 

www.moneyextra.com

[CliveH]

Yes - not a bad site - but if you organised a fixed rate last year no one will be able to match it. I just checked it out and it just referred me back to the initial questionnaire.

 

Not a fault of the site I am sure - more due to the current credit crunch tightening lending criteria.

 

[Hymer C 9.]

Clive H, Isa time coming up again and now you have got me wondering whether to stick with the bank or look around, and wondering which bank the complaints, I'm going from confused to more confused. Carol. *-)

[GJH]

CliveH - 2008-03-19 5:04 PM

But the FOS and the FSA cannot tell consumers which bank this is because it would break Data Protection Rules!

 

This is b*****ks of course but we all know that those in charge at the FSA are all ex-banking people.

Absolute and total b*****ks. The Data Protection Act only applies to living individuals, not companies. It might stop the details of complainants being released but in no way does it stop release of statistics about numbers of complaints.

 

Graham

[KD]

if all you that have invested into isas pensions or whatever else, think about how much of a second mortgage on a second home you could have got at the time for the same amount as you invested per month. even without renting the property out for the extra income i dare say your monies would be worth alot more now.

[Hymer C 9.]

Your right Dean but hindsight is a wonderful thing. if only.

[CliveH]

Always look around Carol.

 

The high street outlets rarely give a good long-term deal.

 

I am assuming it is a Cash ISA you are looking at?

 

If so

 

http://www.about-savings-accounts.co.uk/mini-cash-isas.htm?source=ggst&cat=ISA+Cash|1114219358&tpage=mini-cash-isas&tkeyword='best+cash+isa'&s_kwcid=best%20cash%20isa|1114219358

 

is good

 

If you are looking at Equity ISA's then what I said above applies really. These are investments and it is vital that your needs and objectives be discussed with a professional independent adviser so that what is recommended dovetails with what you already have in place and the funds chosen suit your attitude to risk. The alternative is to “Buy of the Page/Net” but here Caveat Emptor applies (buyer beware) and if you get it wrong you have no comeback.

 

It is the same with most High Street Outlets as well because they are usually tied agents for their own and only their own plans – so if you choose theirs – you have very little comeback.

 

But don't forget - even within an Equity ISA you can choose a Cash Fund - so you are not really limited to just the Mini Cash ISA limit - you can, in times of volatility, have the full ISA allowance on deposit. This is useful when you want to use your full ISA allowance but market volatility makes you nervous.

 

Also do not forget that new ISA limits come into force after April 6th

 

http://news.bbc.co.uk/1/hi/business/6475891.stm

 

 

If the market volatility does make you nervous do remember the benefit of regular saving as opposed to dropping in a lump sum into any investment – ISA’s included.

 

If you look at an investment that starts off with a unit value of £1 in May, and it drops to 50p in June, then recovers to £1 a unit in July.

 

Look what happens to a lump sum of £1000 during those three months.

 

May 1000 units =£1000, June 1000 units= £500, then July 1000 units = £1000 again.

 

Contrast that to someone who sticks the £1000 on deposit and then feeds the same investment £100 a month over the same period – May, June and July.

 

May 100 units = £100,

 

June 100 units from May plus another 200 units (they are 50p each this month!) bought with the second £100 in June – total value in June is 300 units at 50p each = £150.

 

July – unit price has recovered to £1 a unit and so a further 100 units are bought in July to add to the 300 already bought in May and June. – so total value at the end of July = 400 units = £400 for an outlay of only £300.

 

Plus you still have £700 on deposit earning a bit of interest.

 

If you play with the figures you will find that in a volatile market if you invest a lump sum you “enjoy” (if that is the correct term!!!) a rollercoaster ride.

 

If you “feed” a volatile investment you always buy more units in those months when the unit price is low. So as long as you choose the timing of when you come out you will do better than someone who invests a lump sum.

 

So a fund like an Asian Pacific Rim fund for a few £ a month could do rather well if it suits you!

 

Have a look at

 

http://www.skandia.co.uk/funds/fundinfo/GetFactsheet.asp?FundID=12082&Company=MISA&Class=UT&Language=ENG&Series=1&FileType=PDF

 

Now I know that past performance is no guarantee of future performance but with this fund you would have doubled your money in 5 years – that is 100% growth. It is not a recommendation just an illustration demonstrating that despite the news from the US and the doom and gloom that the Newsreaders just love! – the reality of what is happening in the world is very different.

 

And compare that fund to a cash deposit fund where you would be lucky to average out at about 15 or 16 % over the last 5 years.

 

It may not suit every one – but the above NEVER fails to get people thinking about HOW to invest as opposed to WHAT to invest in.

 

The HOW is just as important as the WHAT. Some people never get to grips with this concept, others embrace it and do rather better than average.

 

[KD]

Hymer C 9. - 2008-03-19 8:33 PM

 

Your right Dean but hindsight is a wonderful thing. if only.

its all about doing and not just saying house prices rise and rise and always have, there has and never will be a better place to put your money in than in bricks and mortor

[CliveH]

I have several clients who went through dreadful negative equity a decade or so ago who would dispute your optimism.

 

I believe we are going to see negative equity again - first in the buy to let market because with even the BBC advocating buying a second property to rent out in its tacky daytime TV "How to get rich quick" shows, we are already seeing areas of the country where there are more flats to rent than tenants.

 

And do not forget - just because your "nice little earner" remains unoccupied for 6 months the lender is not going to happy if you cannot pay the mortgage!!

 

We are already seeing some flats on the market at less than the cost and refurbishment bill. So Negative equity is a creeping certainty.

 

Especially as First Time Buyers are like Rocking horse doo doo.

 

If you like Bricks and mortar - save yourself a lot of agro - put your money in a property fund via you ISA, Pension, Investment funds, whatever.

 

These funds invest in Commercial Property and so as well as enjoying any capital growth of the property itself, they also enjoy the rental income from all the tenants.

 

I am not saying buying a second property is a bad thing - what I am saying it is a bit like buying shares in just one company - all your eggs are in just one basket. Fine if you are a builder and have the time to renovate.

 

But if not - Isn't it better to spread your risk a bit wider?? Both geographically and with type of property?

 

 

It is certainly simpler to do this via ISA's etc as well as cheaper. And with property prices a bit depressed it is a good time.

 

Also you do not have the hassle of declaring the income for income tax or the gain (hopefully!) for Capital Gains Tax.

 

 

[KD]

clive you obviously know what you are talking about, but lets look at the longer picture, had you purchased a modest terrace house 20 years ago in nottingham it would have cost arround £10k, that same house would now sell for £80k and you could have earned to start with £250 per month increasing to now about £450 per month during that time. this making your £10k investment now have got you approx £160k in 20 years, can any banker finacial invester/adviser compete with those sums

[CliveH]

 

On some of my own personal investments as well as for my clients - our original stake has doubled in just five years. So an unequivocal yes in answer to your question - I that is before I point out that if the house you bought in your example was now sold you would have a hefty CGT liability even with indexation relief.

 

So with no Income tax or CGT liability if the HOW is set up correctly, an investment can and has outperformed by some margin.

 

Have a look at the growth curve of this particular fund - it has been one of my favourites and it is not for the feint hearted - but then neither is buying into property!

 

http://www.skandia.co.uk/funds/fundinfo/GetFactsheet.asp?FundID=12082&Company=MISA&Class=UT&Language=ENG&Series=1&FileType=PDF

 

This fund has grown by 100% in just 5 years.

 

and as I say if you want property investment and you have the expertise and time to do a place up then fine - but the tax hit (CGT) on the profit is never mentioned on the TV programs, neither is the income tax on the rent.

 

In contrast have a look at a property fund fact sheet - I have linked to the NU Property fund via the Skandia ISA platform and you can see from the graph and the figs it has achieved 44% over five years.

 

On page 2 the fact sheet gives a breakdown of what types of property the fund manager has bought on the investor’s behalf.

 

I am never a fan of eggs in baskets and as for the example you quote - may I give you another one?

 

I client of mine had a son who bought a nice flat for £45K some years ago in a nice part of Boscombe near Bournemouth. Now Bournemouth like all towns has a drug problem.

 

10 houses down the street from my clients sons flat was a GP surgery. One of the GP's set up a clinic for the addicts.

 

Within months the whole area was trashed and their lovely two bedroom flat was worth £33K. The residents complained but nobody in authority cared a jot.

 

They did sell in the end after about two years on the market and they walked away from their first home with nothing. In fact worse than nothing - because they were still paying a mortgage on £12K.

 

I admit that this is unusual - but such things do happen.

 

They happened routinely when Lawson decided to stop joint MIRAS about 17 years ago. The resulting boom and bust in the housing market was such that negative equity for a heck of a lot of people lasted about 5 years.

 

Ask anyone that went through it. I did - it was not funny at all.

 

 

[CliveH]

Sorry forgot the link to the NU Property fund

 

http://www.skandia.co.uk/funds/fundinfo/GetFactsheet.asp?FundID=33100&Company=MISA&Class=UT&Language=ENG&Series=1&FileType=PDF