What is the Pre Budget Report?

On Wednesday 9 Decemeber 2009, Alistair Darling delivers his Pre Budget report.
But what exactly is it?

It's a half time report on how the government is doing meeting its financial commitments.
It should be interesting in a time of decreasing tax revenue, government debt, unemployment and an election within 6 months.

To be continued....!

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As it turned out, there were few changes.
A few extra taxes on City fat cats' bonuses & pensions, a bit on national insurance and VAT & stamp duty on house purchases.
For further details see my article for the Swindon Advertiser.
http://www.wiltshirebusinessonline.co.uk/news/latest/4785410.print/

What happened in Dubai?

Last week there were sensational stories about financial collapse in Dubai.

What actually happened?

Dubai has set it elf up as a financial centre and simply there was overexpansion, over investment, unoccupied office towers and empty shopping malls. There was nothing to sustain development. Unlike its neighbour Abu Dhabi, it has no oil wealth or natural resources.

A source there noted that one of the reasons for the flow of money into Dubai was that banks did not ask too many questions about the origin of the money....

Bigger ISAs for over 50s

Over 50s now have bigger ISA allowances.

It's £10 200 in total, with a maximum of £5 100 in a Cash ISA. You can also invest in an Investment ISA..£5100 if you have used your Cash ISA allowance or the full £10 200 if you have not.

The returns from a cash ISA are not that great at the moment, so it may bve worth looking at the Investment ISA option depending on your attitude to risk & investment period.

The limits for under 50s will be increased to the same for over 50s on 6th April 2010.

As always, seek proper independent advice.

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

Will I get a mortgage?

The answer is maybe...

It depends on how a lender sees you as a financial risk. It's much more difficult than the pre-credit crunch days of 2 years ago.

The outcome will depend on

1 Your salary
2 Your outgoings
3 Existing credit commitments
4 Past credit history
5 Size of deposit you can put up

#4 is particularly important. People always look surprised when I reveal to them a lender will be reluctant to give them them £150 000 because they struggled in the past to pay a relatively small credit card or mobile phone bill!

Big salary, low level of outgoings, decent sized deposit.....no problem
Low salary, big outgoings, big debts, no deposit...no comment.

It's worth remembering, the credit crunch began when US banks lent to people who could not afford to make repayments....

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

Vulture & Zombie Pensions

Vulture companies & Zombie pension funds have been in the news again recently..what are they?

A vulture company takes over old pensions and makes a very healthy income from doing nothing much with them. The client still pays a management fee and the company provides an understaffed call centre.

A zombie fund is one that is barely alive...nobody has shown an interest in it for some time and nobody seems to care if the clients money is doing anyhting.

What pension companies are often mentioned in this context?

Pearl, Resolution & Windsor Life. Resolution have just bought Friends Provident.

What should I do if I have a zombie fund?

Speak to your local friendly IFA :)

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

Northern Rock...the mess continues

Nationalised bank Northern Rock announced losses of half year losses of £725 000 000. 22 000 of its mortgage customers are in arrears and 40% of their customers suffer form negative equity.

This is the consequence of Northern Rock's expnasion programme which involved lending to high risk groups of borrowers with 100%+ mortgages.

Not surprsingly Alistair Darling said he was in "no hurry" to try & find a buyer for the ailing bank.

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

Dead Cat Bounce

What is dead cat bounce? A term much used in financial circles these days.

It means that after a large fall in a share price or stock market it can be expected to recover.

It comes from the idea that "even a dead cat will bounce if it falls from a great height".


Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

Disappearing Banks

In the aftermath of banking collapses & mergers, there will quite a few bank closures on high streets of Swindon & beyond.

Cheltenham & Gloucester will disappear as a high street presence with the closure of 164 branches with the loss of 833 jobs.

The new Lloyds Banking group now owns the former Halifax Bank of Scotland branches too.

Santander, the Spanish bank now owns Abbey, Alliance & Leicester and Bradford & Bingley. It is likely that the branches in each town will be merged into one.

In Swindon, we have already seen the closure of Portman and Woolwich branches due to mergers in recent years.

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

"An End to Boom & Bust"....

It was Gordon Brown's famous pronouncement in 1997 & over 100 times since. It worked until 2002, the economy was doing well and he kept spending under control as chancellor. 25% of the tax the Treasury received in Corporation Tax (the tax companies pay on profits) was from the City of London

After that things started to unravel, public spending increased dramatically partly because of the cost of wars in Iraq & Afghanistan.

In 2007, the economy started to falter and the model started to falter....


Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

£1 388 000 000 000 Bank Bail Out

£1 388 000 000 000 is the amount of money the Bank of England & Treasury have spent on bailing out various banks.

This includes:

£319 000 000 000 on Royal Bank of Scotland
£266 000 000 000 on Halifax Bank of Scotland & Lloyds TSB
£113 000 000 000 on Northern Rock.

Figures come form Fathom Consulting.

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

Tax Relief on Pensions: Budget 2009

One of the big areas you can save money on income tax is by putting the money into a pension rather than taking it as salary. Currently you could save up to 40p tax for every £1 in salary.

For people earning over £150 000. This will be reduced over the next few years from 40% to 20% tax relief.

Pensions experts are already devising ways round this....

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

50% Tax Band : Budget 2009

One of the controversial aspects of the Budget was the introduction of a new 50% tax band for people earning more than £150 000 a year.

It creates a political dilemma for David Cameron & the Conservative Party. Do they go along with it in the "interests of the country" or criticise it and be denounced as fat cats.

Posted by Sean Wilson, APFS, Independent Financial Advisers (IFA), Swindon, Wiltshire.

ISA Changes; Budget 2009

One of the welcome parts of an interesting & scary budget was the change in ISA allowances.

For over 50s there is an immediate increase to £10 200 (£5 100 in Cash ISA)
For everybody else the change happens in April 2010.

Posted by Sean Wilson, Independent Financial Adviser (IFA), Swindon, Wiltshire.

Budget Special BBC Radio Swindon

I will be appearing with Matthew Smith on BBC Radio Swindon 5-6pm discussing the Budget on Wednesday (22 April).

Listen on 103.6FM or online

http://www.bbc.co.uk/iplayer/console/bbc_radio_swindon/

You may need to download Real Player
http://www.bbc.co.uk/webwise/categories/plug/real/newreal.shtml?intro2

Posted by Sean Wilson, Independent Financial Adviser (IFA), Swindon, Wiltshire.

Do I need a deposit to buy a house?

When a lender evaluates whether to grant you a mortgage to buy a house they look at your risk profile.

This involves looking at your

• incomings & outgoings
• other debts
• your ability to put down a deposit

The last one has become increasingly important since the start of the Credit Crunch. The reason is that lenders have less money to lend and are taking fewer risks and therefore are more choosy who to lend to.

So the answer to the question is yes.

A good independent financial or mortgage adviser can give you more information.
Remember to ask "are you whole of market or do you only have products from 1 provider?"

Posted by Sean Wilson, Independent Financial Adviser, Swindon, Wiltshire.

What are Corporate Bonds?

With interest rates approaching zero investors are looking around for alternative investments including Corporate Bonds....which begs the question, what are they?

Corporate Bonds are issued by companies to raise money. They are an IOU, with a promise to pay back the money at a set date plus regular interest payments.

They are tradeable, which means the price will vary...normally rising as interest rates fall and fall when interest rates rise.

Note: seek professional advice before making any investment decision

Posted by Sean Wilson, Independent Financial Adviser, Swindon, Wiltshire.

Incompetance at Halifax Bank of Scotland

Halifax Bank of Scotland (HBoS) has been one of the financial disasters of the last year.

It came to light during a Treasury Committee meeting that they had sacked its Head of Group Risk in 2005. The employee warned had against the costly mistakes which ultimately forced the bank to merge with Lloyds TSB. He was replaced by somebody with limited rise experience.

Posted by Sean Wilson, Independent Financial Adviser, Swindon, Wiltshire

Interest Rates Cut to 1%

The Bank of England has once again made history by dropping its Base rate to 1%.

Will it make any difference to an economy in free fall? Probably not. Again the decreases are unlikely to be passed on to borrowers or businesses

The government and the Bank of England now have stakes in most of the High Street Banks and Building Societies such as Swindon based Nationwide with a massive 60% in Royal Bank of Scotland (RBS).

Ideally this would mean forcing institutions to start lending however the government does not appear to want to use this option.


Posted by Sean Wilson, Independent Financial Adviser, Swindon, Wiltshire.

Free Mortgage Factsheets

Mortgage Factsheets from the FSA. Click on the link to open a PDF document.

Mortgages Colour / Ink friendly

Paying your mortgage – You can afford your mortgage now, but what if...?
Colour / Ink friendly

Dealing with your mortgage shortfall Colour / Ink friendly

What to do when you can't pay your mortgage Colour / Ink friendly

Stay in control of your mortgage (checklist) Colour / Ink friendly

Posted by Sean Wilson, Independent Financial Adviser, Swindon, Wiltshire.

Free Pension Facsheets

Factsheets published by the FSA on pensions & retirement.

Pensions Colour / Ink friendly

Retiring soon Colour / Ink friendly

Retirement options Colour / Ink friendly

Managing in retirement Colour / Ink friendly

Your pension – it's time to choose Colour / Ink friendly

Your retirement options – income withdrawal Colour / Ink friendly

Equity release schemes – raising money from your home Colour / Ink friendly

Stakeholder pensions and decision trees Colour / Ink friendly

The State Second Pension (formerly SERPS) – should you be contracted out?
Colour / Ink friendly

Pension transfers – the risks of salary-related occupational pension transfers
Colour / Ink friendly

Important information about your yearly pension statement Colour / Ink friendly

Posted by Sean Wilson, Independent Financial Adviser, Swindon, Wiltshire.

Is DIY investing dangerous?

It can be..a little knowledge can be dangerous.

Investors using a well known funds supermarket lost 50-60% on popular funds such as Allianz BRIC Stars and Neptune Russia!!

The organisation in question heavily promoted the funds but did not recommend them directly, which is their get out clause....

Before making any major investment decision it is wise to seek professional help.

House price falls to continue?

Probably yes.

House prices are still very high for first time buyers. A good way of measuring this is to look at the ratio of average house price to income of first time buyers as measured by Nationwide

This is presently 4.7, in 1995 it was 2.1. This alone suggests that house prices could halve!

Add in unemployment and low inflation, house prices are not likely to rise for some time.

Interest Rates cut by 0.5%

The Bank of England cut interest rates by 0.5% today. The new base rate is 1.5%, the lowest in the Bank's 315 year history

Normally this would see a reduction in rates for home owners & businesses. The question continued to be asked is "Will the banks pass it on to consumers?"

The Bank of England is also talking about printing money to lend to banks, something usually associated with countries with dire economic conditions or at war.

Financial & Economic prospects for 2009?

What does 2009 offer for the economy, your finances & your job?

America should pick up after Obama takes power, not so much that he will do dramatic things but confidence should start coming back.

Britain? Hmmm, Gordon Brown needs a few early nights....People working in "cyclical" industries, those which expand which expand & contact quickly eg housing & shops, will continue to face tough times.

The low value of the pound is also worrying, it makes imports more expensive. (Does Britain make much to export these days?)

The key thing is whether political leaders and their economic advisers show some courage & leadership which George W Bush unfortunately lacked.