Atom Feed (xml)
In many ways ’08 was no surprise, but for reasons most won’t have noticed.
Noise was the biggest culprit, but like most situations, it depends what you believe. I knew that inflation was being driven by index speculators buying up commodities. In the five years where oil, wheat, maize and every natural source we needed soared, the total amount of money invested into commodity index traded strategies soared by an amazing 1900% from $13b to $260. That demand caused false inflation, and interest rates were not allowed to soften in pursuit of stabilising the UK economy.
So the inevitable higher interest rates, mixed with a threat of increasing rates and tightening of credit, blasted the housing market and consumer confidence into oblivion.
Looking forward will 2009 be any different? We can choose to look at our feet when making forward decisions, or lift our heads and look at what the potential is. Which is the better thought?
Inflation is no longer a risk, deflation is. With the above mentioned commodities having been dumped and wheat, zinc, oil, maize etc plummeting in price, coupled with demand crashing, the cost of living will become remarkably cheaper. Interest rates will probably bottom at 1%, but much of that will depend on whether or not the UK consumer starts spending. I suspect many will allow the massive savings in mortgages to bed in before realising they are indeed a lot richer at the end of the month. Once the tail of expensive inventories for oil/wheat etc fall out, prices will plummet and consumers will consider they are indeed ‘safe’. Only at that point will spending begin in earnest. But by then however, the average homeowner will be at least £500 per month better off when all this is factored in.
That confidence will probably embed itself in the 'February sales' and will bring a short term boost to the markets. However the poor management of the economy will carry its sting in the tail (redundancies, property excesses, company failures, repossessions etc) and short term boosts will be followed by short term losses for the rest of the year, but the trend will be upward. Remember we have an election in 2009.
As for house prices? Unfortunately they are just too expensive and demand is still poor. There is a glut of nearly a million empty properties in the UK at the lower end of the market and that will dampen any hint of growth. Property prices were, and still are, too high and they will have to get to that point where they are offering true value before investors reconsider. Remember the last house crash occurred in 1989 and during the next ten years cash outperformed property by over 100%.
Notwithstanding any of that, a property is a home. Those developers with quality properties will find the property hunters in search of a fine home who are borrowing at unbelievably low rates.
This will provide a stimulus for the market but only at the quality end. Those with city apartments piled high on top of each other are in for a tough time. Excess supply and zero demand equal plummeting prices, and in turn, plummeting further demand. A Mortgage Broker can give you further advice as to the right mortgage solution for you.
On the upside is tourism in the UK. Sterling will continue to weaken and this simply makes overseas holidays much more expensive for us and cheaper for incomers which will bolster the coffers.
If you have a financial query call Peter on 0845 230 9876, e-mail info@wwfp.net
Think carefully before securing other debts against your home.
Your home may be repossessed if you do not keep up repayments on your mortgage
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
Wednesday, 31 December 2008
Thursday, 13 November 2008
Structured Wet Cotton
With all the negative euphoria in the world today it is easy to see why there are a range of 'structured' or 'guaranteed products' being released.
So if you have seen any of the arrangements in the shop windows of banks (normal hiding place for them) prepare to be enlightened. I will use Cater Allen’s recent offering as an example. (1) Cater Allen is part of the Abbey group.
As an investment adviser I think it has room for considerable improvement! The plan is sold on the basis that banking shares have taken a hiding and are cheap.
That statement was also mentioned five months ago. You now know, anything that can get cheap can get much cheaper. The plan can mature each year up to the fourth year if all four banking stocks (Lloyds, Barclays, HBOS and RBS) are higher than their initial strike price. The maturity in year one would be 11% and 22% year two and so on.
If the four stocks do rise, and they soar, you will get a maximum of 11% in the first year. If they all fly except one, you won’t get a penny. All four have to rise.
This is an inverse of modern portfolio theory. Consider that the four stocks are Lloyds, Barclays, RBS and HBOS and you may now have taken your eye off a headline rate of 11%. In a normal spread of the four stocks you would get a spread of their performance.
Consider also that you will be giving up a large proportion of your returns as these plans do not pay the dividends the stocks participate in.
Lloyds has been averaging c35p per share dividend over the last seven years. Within a structured plan these are lost. Is it really worth that risk? (2)
Speaking of which, what’s the guarantee really worth.
The guarantee is provided by a counterparty. In this instance that is Abbey national treasury services (ANTS).
How many customers know what that really means to them? Do they know what risk ANTS carry?
What is the real potential for loss here? Do they know that if ANTS goes bust the customer will get nothing? You see it’s down to the FSCS rules which state the customer is not the investor and Cater Allen as the investor, is caught under the large company rule, so FSCS doesn’t come into play and you have no protection at all.
If you have a financial product or investment you would like to review call Peter on 0845 230 9876 or e-mail info@wwfp.net
Sources:
(1) http://www.caterallenstructuredproducts.co.uk/Default.aspx?pid=1
(2) http://www.mediacentre.lloydstsb.com/ir/uk_dividend_history_page.asp
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
So if you have seen any of the arrangements in the shop windows of banks (normal hiding place for them) prepare to be enlightened. I will use Cater Allen’s recent offering as an example. (1) Cater Allen is part of the Abbey group.
As an investment adviser I think it has room for considerable improvement! The plan is sold on the basis that banking shares have taken a hiding and are cheap.
That statement was also mentioned five months ago. You now know, anything that can get cheap can get much cheaper. The plan can mature each year up to the fourth year if all four banking stocks (Lloyds, Barclays, HBOS and RBS) are higher than their initial strike price. The maturity in year one would be 11% and 22% year two and so on.
If the four stocks do rise, and they soar, you will get a maximum of 11% in the first year. If they all fly except one, you won’t get a penny. All four have to rise.
This is an inverse of modern portfolio theory. Consider that the four stocks are Lloyds, Barclays, RBS and HBOS and you may now have taken your eye off a headline rate of 11%. In a normal spread of the four stocks you would get a spread of their performance.
Consider also that you will be giving up a large proportion of your returns as these plans do not pay the dividends the stocks participate in.
Lloyds has been averaging c35p per share dividend over the last seven years. Within a structured plan these are lost. Is it really worth that risk? (2)
Speaking of which, what’s the guarantee really worth.
The guarantee is provided by a counterparty. In this instance that is Abbey national treasury services (ANTS).
How many customers know what that really means to them? Do they know what risk ANTS carry?
What is the real potential for loss here? Do they know that if ANTS goes bust the customer will get nothing? You see it’s down to the FSCS rules which state the customer is not the investor and Cater Allen as the investor, is caught under the large company rule, so FSCS doesn’t come into play and you have no protection at all.
If you have a financial product or investment you would like to review call Peter on 0845 230 9876 or e-mail info@wwfp.net
Sources:
(1) http://www.caterallenstructuredproducts.co.uk/Default.aspx?pid=1
(2) http://www.mediacentre.lloydstsb.com/ir/uk_dividend_history_page.asp
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
Thursday, 6 November 2008
Understanding Investor Psychology
I was asked quite recently about how investors must be feeling. I was also asked at what point I believed the stock market would turn.
These conditions are extreme and it is in such times that a cool head has to be kept by all.
To know is to understand, so I will explain the basics of investor psychology for you.
January 2002, I was live on BBC Radio Cornwall with more dark hair than I have now, and was asked when we would hit the bottom (a customer had been advised they were at the bottom). I explained we were at the bottom when prices hit their all time lows in terms of price earnings ratios, and were considered ‘just too cheap’.
That point was 3287 in the FTSE when the market at 2002 was 5950. It is the point in the process when you have distressed sellers but also savvy investors. I believe we are pretty close to that now.
Let's look closer at the psychology behind the investment process: We typically start with an investor who is unhappy with what they have. That investor moves through the early stages of doubt, suspicion, caution and confidence before enthusiasm, conviction and greed kick in. Unfortunately most of the growth has gone by the time confidence arrives. The market peaks at the point where we are greedy, and the entire pub has ‘one’. Normally a sign to exit stage right.
Everyone was becoming a buy to let investor, the biggest iceberg you will ever see, and that should have been a clear message. It wasn’t, and many ignored the obvious.
On the downturn of investor psychology we peak at greed and then all flows south so we have indifference, dismissal, denial (don’t open your valuations), fear, panic and then capitulation.
Judging by the questions I receive from the personal finance websites, we are indeed at that point of panic selling and capitulation.
I still think there will be some fierce problems when hedge funds are forced to sell their assets to pay for their ‘bets gone wrong’.
Regretfully you will not receive a text message, so selling now if you are in the market and trying to time re-entry is not a good option.
If you are seeking investment advice call Peter on 0845 230 9876 or e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
These conditions are extreme and it is in such times that a cool head has to be kept by all.
To know is to understand, so I will explain the basics of investor psychology for you.
January 2002, I was live on BBC Radio Cornwall with more dark hair than I have now, and was asked when we would hit the bottom (a customer had been advised they were at the bottom). I explained we were at the bottom when prices hit their all time lows in terms of price earnings ratios, and were considered ‘just too cheap’.
That point was 3287 in the FTSE when the market at 2002 was 5950. It is the point in the process when you have distressed sellers but also savvy investors. I believe we are pretty close to that now.
Let's look closer at the psychology behind the investment process: We typically start with an investor who is unhappy with what they have. That investor moves through the early stages of doubt, suspicion, caution and confidence before enthusiasm, conviction and greed kick in. Unfortunately most of the growth has gone by the time confidence arrives. The market peaks at the point where we are greedy, and the entire pub has ‘one’. Normally a sign to exit stage right.
Everyone was becoming a buy to let investor, the biggest iceberg you will ever see, and that should have been a clear message. It wasn’t, and many ignored the obvious.
On the downturn of investor psychology we peak at greed and then all flows south so we have indifference, dismissal, denial (don’t open your valuations), fear, panic and then capitulation.
Judging by the questions I receive from the personal finance websites, we are indeed at that point of panic selling and capitulation.
I still think there will be some fierce problems when hedge funds are forced to sell their assets to pay for their ‘bets gone wrong’.
Regretfully you will not receive a text message, so selling now if you are in the market and trying to time re-entry is not a good option.
If you are seeking investment advice call Peter on 0845 230 9876 or e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
Thursday, 16 October 2008
Interest Rates will fall but there will be plenty more pain to come
So what do we make of it all then? Up to Thursday, it all made sense, even with all the falls. After that the whole thing became barmy.
So for any good news?
I believe we will have further drops in interest rates and they will be sharp. I forecasted 4% last year but I think it may need to go as low as 3% to stimulate the economy. In the meantime the traders in speculative commodities such as oil, food etc have had a torrid time and whilst this is having a real impact on energy stocks in the FTSE, it is easing inflationary pressures at a rapid rate.
So expect the cost of living to fall dramatically (hampered I expect by tax increases). Expect prices at the shop to fall too and expect your mortgages to be a lot lower than they are. A fall from 5% to 3% would be a 40% drop in expenditure.
In the meantime the government's intervention with banks may well have made their currency a lot weaker but this can be good. A weaker currency means we stay in the UK more and spend our money here but also we are a lot more attractive to overseas tourists. Manufacturing can also be buoyant as the cost of exports can be cheaper because of the currency differences.
Do I believe property will bounce? Not a prayer, not a sniff of a prayer. This one is for the long haul and will match the last one in the 90's when the market was flat for near six years. There are 870,000 empty properties in the UK and that’s before most of the building sites are finished (if they ever will).(1)
Whilst some may class that as doom and gloom, I am unemotional about the reality this situation will create. It was a bubble and it’s the same people talking it back up again as we speak.
There will be plenty of pain to come but next year will see some buds on those roses. Choosing them will be all about your ability to pick the right opportunities.
If you have a financial query or a query about your mortgage, speak to a mortgage broker or call Peter on 0845 230 9876 or e-mail info@wwfp.net
Sources:
(1) BBC
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
So for any good news?
I believe we will have further drops in interest rates and they will be sharp. I forecasted 4% last year but I think it may need to go as low as 3% to stimulate the economy. In the meantime the traders in speculative commodities such as oil, food etc have had a torrid time and whilst this is having a real impact on energy stocks in the FTSE, it is easing inflationary pressures at a rapid rate.
So expect the cost of living to fall dramatically (hampered I expect by tax increases). Expect prices at the shop to fall too and expect your mortgages to be a lot lower than they are. A fall from 5% to 3% would be a 40% drop in expenditure.
In the meantime the government's intervention with banks may well have made their currency a lot weaker but this can be good. A weaker currency means we stay in the UK more and spend our money here but also we are a lot more attractive to overseas tourists. Manufacturing can also be buoyant as the cost of exports can be cheaper because of the currency differences.
Do I believe property will bounce? Not a prayer, not a sniff of a prayer. This one is for the long haul and will match the last one in the 90's when the market was flat for near six years. There are 870,000 empty properties in the UK and that’s before most of the building sites are finished (if they ever will).(1)
Whilst some may class that as doom and gloom, I am unemotional about the reality this situation will create. It was a bubble and it’s the same people talking it back up again as we speak.
There will be plenty of pain to come but next year will see some buds on those roses. Choosing them will be all about your ability to pick the right opportunities.
If you have a financial query or a query about your mortgage, speak to a mortgage broker or call Peter on 0845 230 9876 or e-mail info@wwfp.net
Sources:
(1) BBC
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
Friday, 10 October 2008
Markets in almost Armageddon, what's next?
Someone once told me ' there is no such thing as good or bad, it's just your thinking that does that'. I am advised it was Shakespeare but that’s unlikely as I don’t like him.
We have seen an unbelievable situation occur in the last year. On one side we had interest rates under pressure to remain high because of inflation, on the other we have a falling housing market, plummeting spending on the high street and a lack of spare capital.
Inflation, as we pointed out in June, was being caused by speculators on commodities. Many of those have since been burned by bad decisions. Speculators bought up large positions in commodities such as oil, copper, wheat etc. As a consequence these goods quadrupled in price. We then felt the result via increased inflation, but could do nothing about it.
I pointed out that inflation would die when these speculators felt they were close to the top. The reason for this is because many of them had bought their commodities on margin. This means they had borrowed up to £92 of every £100 they had invested in commodities.
If the price of commodities starts to fall, these deals will go pear shaped, and the loss would be exponential. And so there would come a time that commodities would be dumped, and that would be when the market was close to its peak. It has reached that in my view. As the commodity deals close, commodities like oil, wheat etc will collapse in price and as such inflation will fall off.
So much so, inflationary pressures could easily become deflationary problems. As a consequence, a reasonably forwardly thinking, and well informed government might consider reducing interest rates as early as November to introduce capital into the system and free up spending. This is essential. I am pretty confident this will happen within the year and into next year there will be further sharp falls.
Now why else might I be so confident. Well I may be cynical, but much noise exists from the government about how bad the situation currently is. One might think they are not being helpful with that noise. One might also think they are actually bringing forward the inevitable. 'Get the recession over with now and ready for an election' might actually be a good plan.
Now we all know that economical changes take a good 18 months to flow through the system. Eighteen months from the expected date of the election (May 2010) is actually November 2008. Great work Sherlock.
If you have an investment query call Peter on 0845 230 9876 or e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
We have seen an unbelievable situation occur in the last year. On one side we had interest rates under pressure to remain high because of inflation, on the other we have a falling housing market, plummeting spending on the high street and a lack of spare capital.
Inflation, as we pointed out in June, was being caused by speculators on commodities. Many of those have since been burned by bad decisions. Speculators bought up large positions in commodities such as oil, copper, wheat etc. As a consequence these goods quadrupled in price. We then felt the result via increased inflation, but could do nothing about it.
I pointed out that inflation would die when these speculators felt they were close to the top. The reason for this is because many of them had bought their commodities on margin. This means they had borrowed up to £92 of every £100 they had invested in commodities.
If the price of commodities starts to fall, these deals will go pear shaped, and the loss would be exponential. And so there would come a time that commodities would be dumped, and that would be when the market was close to its peak. It has reached that in my view. As the commodity deals close, commodities like oil, wheat etc will collapse in price and as such inflation will fall off.
So much so, inflationary pressures could easily become deflationary problems. As a consequence, a reasonably forwardly thinking, and well informed government might consider reducing interest rates as early as November to introduce capital into the system and free up spending. This is essential. I am pretty confident this will happen within the year and into next year there will be further sharp falls.
Now why else might I be so confident. Well I may be cynical, but much noise exists from the government about how bad the situation currently is. One might think they are not being helpful with that noise. One might also think they are actually bringing forward the inevitable. 'Get the recession over with now and ready for an election' might actually be a good plan.
Now we all know that economical changes take a good 18 months to flow through the system. Eighteen months from the expected date of the election (May 2010) is actually November 2008. Great work Sherlock.
If you have an investment query call Peter on 0845 230 9876 or e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
Wednesday, 1 October 2008
Noise, noise, noise.
1 October 2008
You may remember my column in June '08 where I pointed out that commodities had remained at their average level until in 2003, they boomed. They all soared by virtually the same price with oil popping from $30 to $147. Common sense says we either had a 400% increase in population (aliens I assume) or supply had fallen by 80%. Neither were true and I pointed to the truth - investments in commodity index traded strategies had stood at $13billion in 2003. That’s the highest it had ever been. The total amount invested at May 2008 was a staggering $260 billion.
Investment banks excessive risk-taking has caused this situation. They caused havoc by betting short on stocks and vice versa. Betting short simply means they move a market by betting a stock will fall. This causes unrest and as such destabilises the market. It is not the same as buying and selling stocks and shares, this is normal market behaviour and whilst causing volatility in price movements, can do no harm.
The other side to this is long speculators i.e. those who bet on the price going up via derivatives. A derivative is basically a bet on the market going up and pays a multiple of the price movement. Worse still are those who leverage to invest. Leveraging is where they basically borrow cash to invest. This creates abnormal market conditions and can drive a price upwards unnecessarily.
The downside for those who bet up or down is that when it goes the wrong way, they lose a fortune. If you marry that to their investment into buying up mortgage debt that had only one future, the lot was due to come crashing down.
For those who didn’t believe it, the evidence is now firmly on your lap. Oil bombed from $147 to $90 (all the aliens must have gone home). On Monday last week, Royal Dutch Shell announced it had increased oil production - the response? Oil increased by near 25% the following day! Explain that one.
As always no supply and demand problem here. The nervousness that so much cash was being pumped into the market by the US government, which would have an inevitable downward effect on the dollar, scared investors into oil (a normal safe haven against a falling dollar).
This creates the same inflationary problems again. Is it time to now ban this type of speculative trading? Is it time to regulate these individuals and organisations into non existence? I really hope so.
If you have a financial query and wish to speak to an Independent Financial Adviser call 0845 230 9876 or e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
You may remember my column in June '08 where I pointed out that commodities had remained at their average level until in 2003, they boomed. They all soared by virtually the same price with oil popping from $30 to $147. Common sense says we either had a 400% increase in population (aliens I assume) or supply had fallen by 80%. Neither were true and I pointed to the truth - investments in commodity index traded strategies had stood at $13billion in 2003. That’s the highest it had ever been. The total amount invested at May 2008 was a staggering $260 billion.
Investment banks excessive risk-taking has caused this situation. They caused havoc by betting short on stocks and vice versa. Betting short simply means they move a market by betting a stock will fall. This causes unrest and as such destabilises the market. It is not the same as buying and selling stocks and shares, this is normal market behaviour and whilst causing volatility in price movements, can do no harm.
The other side to this is long speculators i.e. those who bet on the price going up via derivatives. A derivative is basically a bet on the market going up and pays a multiple of the price movement. Worse still are those who leverage to invest. Leveraging is where they basically borrow cash to invest. This creates abnormal market conditions and can drive a price upwards unnecessarily.
The downside for those who bet up or down is that when it goes the wrong way, they lose a fortune. If you marry that to their investment into buying up mortgage debt that had only one future, the lot was due to come crashing down.
For those who didn’t believe it, the evidence is now firmly on your lap. Oil bombed from $147 to $90 (all the aliens must have gone home). On Monday last week, Royal Dutch Shell announced it had increased oil production - the response? Oil increased by near 25% the following day! Explain that one.
As always no supply and demand problem here. The nervousness that so much cash was being pumped into the market by the US government, which would have an inevitable downward effect on the dollar, scared investors into oil (a normal safe haven against a falling dollar).
This creates the same inflationary problems again. Is it time to now ban this type of speculative trading? Is it time to regulate these individuals and organisations into non existence? I really hope so.
If you have a financial query and wish to speak to an Independent Financial Adviser call 0845 230 9876 or e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
Friday, 19 September 2008
What protection do I have if my insurer goes bust?
I am concerned about what protection I may have in the event my insurer goes bust. I had a pension and investment with AIG and was ready to pull it out. Have you any views on this?
What interesting times we are living in. Once regarded as one of the largest financial institutions in the world, AIG dropped to their knees. In fairness they must be there for a reason, them along with the other institutions who made atrocious investment decisions. I can only wonder at who thought buying bad securitised debt was a good idea as an investment.
Remember if it had gone well they would have taken the credit. Now it's gone badly, it’s the fault of the credit crunch. I am heartbroken!
Left in their trail of casino-like investments are the bemused investors who somehow have to work out how they can protect themselves. Up until now, the bank was as safe as bricks and mortar, now it still is.
Firstly there is a Financial Services Compensation Scheme (FSCS) which protects you.
An investment into bank deposits affords you protection of £35,000 protection per person, not account. Ensure you do not spread your capital between a bank and a subsidiary as the protection will only apply once. The FSCS also cover 100% of the first £30,000 and 90% of the next £20,000 for mortgage advice for business conducted after October 2004, and also the same total for certain investments like unit trusts for example. Long term insurance (pensions and life assurance) offer 100% protection for the first £2,000 plus 90% of the remaining claim. Whilst for deposits the rules also allow for a share of savings above the £35,000 following distribution of assets by the insolvency practitioner, it's not something you should rely on. As you can see an investment outside of cash offers much more protection.
Any policyholder protection will depend on the jurisdiction in which any life company or fund provider operates and more importantly on who is the buyer of the investment. Remember Jersey and Guernsey have no compensation scheme although they are reviewing it.
If you have an investment bond the protection is very complicated and could be quite worrying if you have a cash deposit investment or a protected investment held within it.
If you have a Financial query or are worried about your investments and need investment advice call Peter on 0845 230 9876, e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
What interesting times we are living in. Once regarded as one of the largest financial institutions in the world, AIG dropped to their knees. In fairness they must be there for a reason, them along with the other institutions who made atrocious investment decisions. I can only wonder at who thought buying bad securitised debt was a good idea as an investment.
Remember if it had gone well they would have taken the credit. Now it's gone badly, it’s the fault of the credit crunch. I am heartbroken!
Left in their trail of casino-like investments are the bemused investors who somehow have to work out how they can protect themselves. Up until now, the bank was as safe as bricks and mortar, now it still is.
Firstly there is a Financial Services Compensation Scheme (FSCS) which protects you.
An investment into bank deposits affords you protection of £35,000 protection per person, not account. Ensure you do not spread your capital between a bank and a subsidiary as the protection will only apply once. The FSCS also cover 100% of the first £30,000 and 90% of the next £20,000 for mortgage advice for business conducted after October 2004, and also the same total for certain investments like unit trusts for example. Long term insurance (pensions and life assurance) offer 100% protection for the first £2,000 plus 90% of the remaining claim. Whilst for deposits the rules also allow for a share of savings above the £35,000 following distribution of assets by the insolvency practitioner, it's not something you should rely on. As you can see an investment outside of cash offers much more protection.
Any policyholder protection will depend on the jurisdiction in which any life company or fund provider operates and more importantly on who is the buyer of the investment. Remember Jersey and Guernsey have no compensation scheme although they are reviewing it.
If you have an investment bond the protection is very complicated and could be quite worrying if you have a cash deposit investment or a protected investment held within it.
If you have a Financial query or are worried about your investments and need investment advice call Peter on 0845 230 9876, e-mail info@wwfp.net
Peter McGahan is an Independent Financial Adviser and the Managing Director of Worldwide Financial Planning Ltd who are authorised and regulated by the Financial Services Authority. 'The FSA does not regulate Credit Cards, Will Writing and some forms of mortgage and Inheritance Tax Planning.'
Information given is for general guidance only, and specific advice should be taken before acting on any suggestions made.
The above represents the personal opinions of Peter McGahan.
All information is based on our understanding of current tax practices, which are subject to change.The value of shares and investments can go down as well as up.
Subscribe to:
Posts (Atom)
