Money Swindon

House Prices Falling again

2010-07-26T14:00:00.000+01:00

House prices have now fallen for 4 out of the last 5 months according to the Halifax's monthly survey.

The reasons? The obvious general ones are:

Continuing economic worries
Lack of mortgage finance

Also, First time buyers cannot afford to buy property..why?

They need to put up a bigger deposit, compared to 4 years ago
Houses are still expensive in reflation to their earnings

Is all this likely to change?

It is unlikely in the short term. People are worried about their jobs and facing pay freezes and so are putting off decisions like buying a house.

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

Expensive bank accounts..££££s

2010-07-19T13:43:00.000+01:00

Do you pay a fee a monthly fee on your bank account? Yes? You probably do not need to.

Banks like to offer "premium" bank accounts to their customers which have a monthly fee ranging form £5 to £40 per month. You are paying for travel insurance and mobile phone insurance, which you can get elsewhere more cheaply if you want or need them.

15% of the population have accounts like these. If you have one of these accounts, seriously consider moving it to a fee free account.

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

Transferring your Cash ISA

2010-07-16T16:44:00.000+01:00

Each year Banks and Building Societies spend millions advertising trying to get you to put your ISA allowance with them.

What about your old ISA money?

They rarely mention your ISAs from previous years and mysteriously fail to mention you can transfer your ISA from your current bankto a new one.

It is worth reviewing rates on your old ISA and comparing them with the current best buys. A final note: check that the new ISA can receive old ISA money.

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

Post Budget Thoughts

2010-07-01T14:07:00.001+01:00

Every budget is many ways more political than financial. Each government has to decide how much it will raise from taxes & what to spend the money on.

To tackle the UK's budget deficit, Chancellor George Osborne decided he would raise 80% from spending cuts and 20% from tax increases.

The spending cuts will largely be announced in the October review and the tax has been mostly raised by increasing VAT to 20%.

Further information is available in the article I did for the Swindon Advertiser.

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

Buy to Let Property...big tax hike?

2010-05-21T12:30:00.000+01:00

One of the dilemmas facing the new government is how to raise money by increasing taxes. Politicians do no like increasing income tax because it is unpopular.

One area which is being considered is Capital gains Tax which affects Buy to Let Property amongst other things. It is being suggested that the tax on the profits of selling such a property could be raised from 18% to 40 or even 50%.

It is one area where it could be vital to talk to a financial planner.

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

How do the markets affect us?...pensions

2010-05-12T13:45:00.002+01:00

Over the past week, we have had journalists, politicians & academics talking about...the markets.

So, how do the markets affect us?

The most direct way is a fair portion of people's pension money will be invested in UK shares. So if shares rise, your pension can go up, if they go down your pension value goes down.

If your pension has been invested in UK shares, your pension has probably gone nowhere in the last 10 years.If that is the case, it is worth taking advice from a professional adviser about how to spread the risk and diversify.

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

Your ISA Allowances

2010-04-30T15:46:00.008+01:00

From 6th April 2010, everybody's ISA allowances rose to £10 200 a year.

That's £5100 in a Cash ISA....plus £5100 in a Stocks & Shares ISA.

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

How much can you earn without paying tax? (New Tax Allowances 2010-11)

2010-04-06T15:27:00.004+01:00

Today is the first day of the new tax year (I got a tax demand for the previous one this morning!)

How much can you earn without paying tax?

Up to 65 years old........£6,475
65-75...........................£9,490
75+..............................£9,640

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

Tax Free Cash...Pension Age Changes

2010-03-26T16:22:00.002Z

This year you will have seen discussion about whether to take tax free cash from pensions, especially if the person is between 50 & 55.

The minimum age you can take pension benefits goes up from 50 to 55 on 6th April 2010.

This has prompted debate on whether to take tax free cash. Should you take it?

The answer is..it depends on your personal circumstances, tax status and your other assets.
It is a complicated issue.

Please do not take the decision without taking professional advice, it could save you £1000s.....

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

Low Key Budget

2010-03-25T12:13:00.003Z

Yesterday Alistair Darling delivered the 2010 budget. It was very low key.

The highest profile change was abolishing stamp duty (for 2 years) for first time buyers buying a property under £250 000; the money will be recouped on a higher charge on £1 million plus properties.

More thoughts are in a column I wrote for the Swindon Advertiser.

Long Term Care: rather complex

2010-02-12T14:41:00.002Z

In recent weeks various political parties have put forward their proposals on long term care in England & Wales. (rules are different in Scotland)

What is Long term Care?

When a person is too old & frail to look after themselves, they may need to go into a care home. The main concern of individuals has been whether they would need to sell their home to pay for care.

The rules are very complicated & vague. However a couple of general points can be made.

You do not need to sell your home if your spouse is still resident there & over 60.
You start to get help with fees when your income is under £23 000 (2009-10)
Attempts to hide assets are penalised eg transferring money & assets to children or grandchildren

It is a specialist area and it worth consulting an expert financial adviser with experience in this area.

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

Beware...Banks...bad mortgage advice offered?

2010-01-22T11:48:00.007Z

Banks, are they acting in mortgage customers' best interests?

When you come a off fixed rate mortgage you go onto a lenders' Standard variable Rate (SVR). This should be substantially lower than what you are paying now.
However some banks are trying to get clients to take out a new deal which is much higher than the SVR.

Depending on when your mortgage lapsed, the rate could be as low as 2% with Nationwide

Many banks have the SVR very well hidden on their websites. I had to call Nationwide to get details.

If you are not sure what to do call an Independent Financial or Mortgage Adviser and they can investigate.

The Financial Mess at Manchester United

2010-01-18T13:16:00.005Z

A few years ago Manchester United were probably the most profitable football club on the planet.

Recent revelations have shown the takeover by the US based Glazer family has been disastrous.

The family bought the company via credit and saddled the club with the bill. The debt is £700 million and interest is paid at 10%. On one part the pay a hedge fund 14%.

The £80 million Real Madrid paid for Cristiano Ronaldo is being used to pay the debt.

To try to bring down the debt, the Glazers want to sell Old Trafford & the training ground and lease it back.

Unrest amongst supporters can only increase...

How well qualified is your financial adviser?

2010-01-12T16:25:00.003Z

A question you might want to ask anybody who gives you financial advice is, "How well qualified are you? Do you have higher qualifications or the bare minimum?"

In a few years' time every financial adviser will have to have a higher level qualification. This will apply to banks multi-tied advisers (who can only advise on a limited range of products & services) and Independent Financial Advisers (IFAs). The most common option is the Diploma PFS. (DipPFS)

Ideally your adviser will already have this or be well on the way to getting it. If not, ask why!

10 Tips to Make You Richer in 2010

2010-01-04T13:49:00.006Z

1 Pay off your debts. Those credit cards & personal loans are very expensive. The cost of borrowing money is much more than you get from a savings account.

2 Use your ISA allowances. Nobody likes paying tax, why pay it on your savings? Don't forget about the Investment ISA too.

3 Be careful who you take advice from. Ask the person, "Are you Independent & Impartial?" "What are your qualifications, the bare minimum or something higher?"

4 Insure your most valuable asset. People insure their cat, dog and mobile phone and forget about the most important thing....themselves. What happens if you lose your job or cannot work because of illness?

5 Save in a pension. They are simply long term savings plans with tax advantages. Why pay out money in income Tax & National Insurance? A pension allows you to keep & invest that money.

6 Over pay your mortgage. Most lenders allow you to pay off up to 10% of the mortgage amount each year. It saves you money in interest and shortens the time you have your biggest debt.

7 Avoid anything which seems too good to be true eg rates from Icelandic banks or current accounts which pay you 6% and levy hefty monthly charges.

8 Do not get obsessed with property. A large part of people's wealth in tied up in their house, buying more puts all your eggs in one basket. Consider alternative forms of investment

9 Transfer assets to a partner. Often one partner will pay less tax or have unused allowances.

10 Spend some money, you will have some fun & it will help the economy

As featured in the Swindon Advertiser 23 December 2009.

What is the Pre Budget Report?

2009-12-08T12:34:00.005Z

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....!

****************************************************************************
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?

2009-12-01T14:11:00.003Z

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

2009-10-15T13:47:00.004+01:00

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?

2009-09-15T15:22:00.008+01:00

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

2009-09-09T12:14:00.009+01:00

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

2009-08-10T16:10:00.007+01:00

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

2009-06-25T12:36:00.002+01:00

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

2009-06-17T14:55:00.003+01:00

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"....

2009-06-09T12:33:00.008+01:00

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

2009-05-06T16:45:00.007+01:00

£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

2009-05-01T15:02:00.007+01:00

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

2009-04-28T09:41:00.005+01:00

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

2009-04-24T14:27:00.005+01:00

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

2009-04-21T14:13:00.007+01:00

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?

2009-04-14T12:01:00.005+01:00

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?

2009-03-25T13:24:00.006Z

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

2009-02-12T11:57:00.009Z

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%

2009-02-05T17:47:00.007Z

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

2009-01-22T12:45:00.008Z

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

2009-01-21T16:50:00.014Z

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?

2009-01-15T15:42:00.002Z

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?

2009-01-13T15:09:00.005Z

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%

2009-01-08T14:21:00.003Z

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?

2009-01-05T15:31:00.006Z

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.

Anthony Bolton predicts better 2009 for Investors

2008-12-19T14:27:00.004Z

Legendary investor Anthony Bolton has predicted a better 2009 for investors.

He said in the Sunday Times on 14th Decemeber, “Everything I need to see for a bottom is there. Valuations look cheap and you often get this kind of high intra-day volatility at a turning point,” he said.

“All the pieces are in place for a rally in the first quarter. The first stage of the bull market will be quite strong followed by a long period of consolidation. In the long run the market could return to its peak [6,930 in December 1999] but it could take quite some time.”

Does he know what he is talking about?

From 1979 until 2007, Bolton delivered average annual returns of 20.3% , compared with 7.7% from the FTSE All-Share index in that period,

A to Z of 2008...Credit Crunch, recession, Iceland

2008-12-19T11:28:00.005Z

2008 was a busy year for everybody in financial Services & a new star was born in Robert Peston, the BBC's Mr Credit Crunch.

Money marketing have a useful A to Z of the year's events. (not online so far)

eg Z is for Zero : the number of banking jobs left in Iceland

10 Reasons to use an Independent Financial Adviser : 1

2008-12-16T15:05:00.003Z

1 We are independent. We are not tied to any particular group. This means our recommendations are unbiased & impartial.

Many advisers only have ties to certain product providers. This can generate higher commissions for the advisers involved. Always check for independence.

The question to ask, "are you independent & whole of market?"

To be continued

Xmas Luxuries at Lidl

2008-12-16T14:10:00.005Z

In this months Observer Food Monthly, Allegra McEvedy prepares a Christmas feast with luxury items bought at bargain price at Lidl.

Can vouch for the smoked salmon, rollmops and creme fraiche.

In Swindon, the store is in Gorse Hill, take a coat..the heating seems to be turned down!

http://www.guardian.co.uk/lifeandstyle/2008/dec/14/cheap-christmas-dinner

VAT Reduction of 2.5%

2008-12-02T11:19:00.004Z

Will Alistair Darling's 13 month reduction of VAT by 2.5% have any effect on an ailing economy?

A client remarked to me last week that they would not rush into a shop advertising a 2.5% reduction..

One problem for businesses is re-calculating their VAT bills.

Pre Budget Report November 2008

2008-11-25T11:52:00.006Z

Alistair Darling delivered his pre-budget report. The main points

Temporary 2.5% cut in VAT to 15% from 1st December for 13 months
New 45% tax band for those earning more than £150 000
National Insurance to go up by 0.5% in 2011
£60 Christmas gift for pensioners
Phased increase in vehicle excise duty

The key question is that will the government be able to pay for the increased borrowing caused by events such as bailing out failing financial institutions and financing wars in Iraq & Afghanistan.

Interest Rate cut of 1.5%

2008-11-07T15:05:00.005Z

As anticipated the Bank of England cut interest rates to 3%. The lowest in some 50 years.

Will mortgage rates come down?

That is the important question, banks and building societies have not been passing on reductions to consumers because they have been worried about their profit margins.

There are some lenders who would be able to lower rates substantially but are not doing so becasue of lack of competition in the market place.

Will savers be hit?

Yes, rates for savers will reduced much quicker than for lenders.

Recent Financial Events...September & October 2008

2008-10-09T12:26:00.002+01:00

The last few weeks have seen some extra-ordinary events in the financial World. US & UK governments have refinanced the banking sectors and failing institutions have been bought up by rivals.

The Bank of England lowered interest rates yesterday (8 October) along with other Central Banks. The idea being to stop or lessen recessions around the world.

Events have been driven by fear more than reality. What we will see is more regulation and less risk, which is what consumers need.

Lehman Brothers & Merrill Lynch...why the fuss? Important in Swindon?

2008-09-15T14:37:00.005+01:00

An extra-ordinary weekend has seen US Investment Bank Lehamn Brothers file for bankruptcy.

Secondly Merrill Lynch has ben bought bu the Bank of America.

Both companies were badly hit by having bought bad mortgage related debt.

There will be repercussions this week. The Bank of England & European Central Bank have provided more money today to help credit markets and it is predicted that the US Federal reserve will lower interest rates.

How does it affect the consumer in Swindon & beyond?

Lehaman Brothers & MerrillLynch have been at the heart of the credit crunch. The cleansing/purging of the 2 companies is part of the clear up process.

AS the process goes on then credit will slowly begin to be made available to banks....which will eventually mean customers will be able to get cheaper mortages (theoretically).

Cheshire & Derbyshire “saved” by Nationwide

2008-09-08T13:23:00.011+01:00

It looks like the Cheshire and Derbyshire Building Societies are about to be taken over by the Nationwide Building Society. The Derbyshire is the 9th and the Derbyshire the 11th biggest societies with about 1 million customers between them.

The Derbyshire has been hit because it could not raise money on the money markets...the credit crunch again. Whilst the Cheshire had encountered some problems with its commercial property lending.

The Financial Services Authority has had a hand in recommending the deals to the 2 societies and the speedy negotiations which have taken place

Will there be any windfall payments?

Borrowers & savers with the Derbyshire or Cheshire should not expect any windfall payments owing to the problems they have encountered.

Can you trust the financial pages of National Newspapers?

2008-09-05T15:58:00.005+01:00

Since the dawn of mankind there have been get rich schemes. The financial pages of the national pages abound with rich succesful people, the implication being that you are the only one not making any money.

Many a time the city editors encourage you to invest in a fund or company or asset that is high risk, has peaked in value and is on the way down.

Some examples from the last few years.

1 Invest in gold...it hit a high in April 2008 and the price has retreated
2 Buy to Let Property. Too many unwanted flats, falling house prices.
3 Bubbles in India & China in 2007

Possibly the worst re-occurring offence is to give tips on company shares as though they were horse racing tips (Thanks to Lawrence Gosling of Investment Week for that analogy)

The solution
Have a broad based portfolio of assets not linked to the rise of fall of risky asets

Stamp Duty "Holiday"

2008-09-03T13:58:00.004+01:00

Alistair Darling announced a Stamp Duty Payment Holiday.

The threshold for Stamp Duty has been temporarily raised to £175 000. The idea is to get the housing market going again.

Will it work?

In the early 1990s, thne Chancellor Norman Lamont tried it. He was asked his opinions this time round. He mentioned that it had not worked then & he did not expect it to work now.

It will have no effect in London & the South East where the average property for a first time buyer costs £241,985.

Pensions advisers & advice...Swindon & beyond

2008-08-21T12:22:00.006+01:00

In the old days when you wanted advice on your company pension, there was somebody you could call up or even meet to discuss contributions, investment choice & other matters.

However with cost cutting many firms outsource their pension services & employees do not have anybody to talk to.

Where can you get pensions advice?

You an contact an Independent Financial Adviser. We deal with pension everyday especially for self-employed people or those who had company pensions transferred into Personal Pensions.

The same principles apply whether you have a company, stakeholder, personal or self invested Personal Pension (SIPP).

You are looking to minimize charges and choose the right investments suited to your age and attitude to risk.

4.99% Mortgage Yorkshire Building Society...beware!

2008-08-19T14:16:00.001+01:00

Mortgage providers are well versed in the art of getting their products to the top of best buy tables.

There is a horrific example currently from Yorkshire Building Society. It has a fixed rate of 4.99% for 2 years.

Sounds good? The reality is somewhat different

It has an arrangement fee of 3%, on a remortgage of £200 000, this is £6000!. You can also add this fee to the mortgage & pay interest on it.

You also pay a non refundable fee of 0.25% on application, £500 on the £200 000 remortgage example.

Conclusion

Avoid, truly shocking & rather misleading product.

Stamp Duty

2008-08-08T17:08:00.003+01:00

This week the Chancellor announced some plans to possibly defer Stamp Duty to restart the housing market.

What is Stamp Duty?

It covers the registration of many types of official financial & legal transactions. The enforcement of it in the UK's American colonies was one of the triggers towards independence.

However the one you will be familiar with is when buying a house.

The rates are

over £125,000 to £250,000: 1%
over £250,000 to £500,000: 3%
over £500,000: 4%

Credit Crunch: 1 year old

2008-08-04T16:21:00.004+01:00

It’s now 1 year since the term “the credit crunch” entered public circulation. The first signs can be dated back to February 2007 when HSBC issued a profits warning.

UK Banks made some pretty horrendous decisions taking on bad debt from the US. Unfortunately these mistakes have been passed onto customers higher mortgage & loan interest rates.

This week banking heavy weights HSBC, the Royal Bank of Scotland & Barclays issue trading updates this week. The results will be interesting. As mentioned last week the only people to lose their jobs are some Directors at Northern Rock.

What will happen next?

The Mortgage market will continue to be complicated, so it is worth getting proper independent advice before making a decision.
Banks will probably merge, we have already seen Santander (Abbey) swallow up Alliance & Leicester. Some smaller banks such as Bradford & Bingley and even some building societies could follow suite.

Negative Equity: BBC Radio Swindon

2008-08-01T11:49:00.006+01:00

Below is a transcript of my feature with Claire Bailey on the BBC Radio Swindon Breakfast Show 1 August.

What is negative equity?

Your house is worth less than the mortgage you got to buy it.

When does it occur?

When house prices fall. The Telegraph said yesterday 1.7m home owners or 1/7 of the total were already affected ! There has been a 9% fall from last year’s peak (Halifax house price figures). A Standard & Poor’s survey predicts the market could fall by up to 26.8%.

Who is the worst hit by negative equity?

1 People who bought houses at the peak of the market last year and especially those who took out 100+% mortgages such as the infamous Northern Rock Together product. It allowed people to get houses when they didn’t earn enough.

2 Those in averagely priced homes…the top & cheap ends of the market haven’t been affected.

3 People who dabbled in Buy to let property..again bought at the top of the market

Does it happen often?

The last time was in the early 1990s.

Why have house prices fallen?

House price inflation was around 10% for most of the last decade. This is ultimately unsustainable. The people who drive the market..first time buyers can’t afford to buy.

Plus the impact of the most used financial term of the last year…the credit crunch.

First time buyers can’t get mortgages because banks aren’t lending money….certainly not 100+% mortgages.

What should you do?

Wait, sit tight. House prices will fall until the bottom is reached. At that point first time buyers will be able to afford properties.

The mortgage market will recover too…

John Templeton: Investment Wisdom

2008-07-31T16:08:00.001+01:00

Investing legend John Templeton recently passed away at the beginning of July. In 2007 Time magazine made him one of their 100 Most Influential People.

During his long life, he made one very pertinent remark on investing.

“When people are desperately trying to sell, help them and buy. When people are enthusiastically trying to buy, help them & sell”

Thanks to Lawrence Gosling of Investment Week for the quote.

Banking chiefs should be sacked says fund manager

2008-07-24T14:31:00.004+01:00

Fund manager James Foster of Artemis says heads of failing banks such as Fred Godwin of Royal Bank of Scotland & Andy Hornby of Halifax Bank of Scotland, "should be shown the door".

He continues, "they had forgotten the basic tenets of banking".

He was referring to their current problems, the way in which these had arisen & how the management of the banks are tackling them.

From Professional Adviser p5 24 July 2008

Northern Rock re-emerge

2008-07-11T11:06:00.006+01:00

For the first time in many months, I have received marketing material for Northern Rock mortgages.

They are the most financially secure company to buy a mortgage or a savings product from at the moment because of government backing.

How do the mortgages compare?

The rates are fine but they still maintain a traditional feature of Northern Rock products...high arrangement fees.

Who is Warren Buffet?

2008-07-10T14:02:00.004+01:00

Warren Buffet is probably the most famous investor in the world and may or may not be the richest man in the world.

He lives & works not in New York, Tokyo or London but Omaha, Nebraska

His investment style is basically buy good quality, profitable companies (Coca Cola, Gillette, Wal Mart) at low prices during market turbulence.

It sounds very simple like going to the supermarket and stocking up when your favourite beer or brand of beans is on discount....but it requires a lot of discipline, nerve and a long term view.

Currently markets have dipped in the last year and will continue to be low for the foreseeable future, people are scared to invest. Markets will recover the question is when. However by the time the amateur investor hears about an upturn it will be too late.

Equity Release: What is it?

2008-07-01T14:33:00.003+01:00

Equity Release is a way of people over 55 to release money from their property to give them more money in retirement.

There are 2 main types

Lifetime mortgages
Home Reversion

It is heavily regulated these days and has a trade body (SHIP)

Equity release is available through specially qualified Financial Advisers. My company AP Financial Services & I have the necessary permissions.

Bank of England "gives" banks £50 billion.

2008-04-22T12:52:00.003+01:00

Yesterday the Bank of England announced it would give UK banks £50 billion in exchange for mortgage backed securities.

It was a move designed to put more money into the financial markets.

However it is somewhat of a u-turn for the Bank of England & its governor Mervyn King who denied it would not do anything liek this a few moths ago. The bank has basically bought assets that nobody else wanted on the financial markets.

It should be noted that the big 5 banks made profits of £30 billion in the last year despite making some rather large mistakes.

Bank of England lowers Interest Rates

2008-04-11T14:19:00.004+01:00

The Bank of England yesterday lowered interest rates to 5%.

Will this mean lower mortgage interest rates?

Hmmm...it depends

1 Lenders had priced in the likely decrease into new tracker/discounted mortgages. it's like when supermarkets put up drink prices in November to claim a massive drop just before Christmas
2 Some organisations are not passing on the full 0.25% drop, with Nationwide you may only get a 0.12% drop.
3 Other banks are "reviewing rates within the next 2 weeks"

100% Mortgages Withdrawn

2008-04-09T14:51:00.007+01:00

Abbey became the final large lender to withdraw 100% mortgages this week.

Prior to the credit crunch, borrowers were able to borrow up to 125% of the property value. Like other riskier types of borrowings such as sub-prime mortgages, product providers have removed these loans from their books.

it will casuse probelems for 2 types of lenders

1 First time buyers who don't have a deposit.
2 Buyers who took out 100% mortgages in the good times and now won't be able to get a new remortgage deal especially those on interst only mortgages. Their mortgages are likely to increase considerably.

What happened at Bear Stearns?

2008-03-26T11:06:00.004Z

Bear Stearns was the 5th largest US Investment Bank. It encountered difficulties and had to be bailed out by the US Federal reserve the equivalent to the Bank of England) and is the subject of merger at a ridiculously cheap price by rival JP Morgan.

How did all this occur?

The company had exposure to bad (sub-rime) mortgages in America. The mortgages were sold on using quite complicated financial products. Rumours began circulating that it also had problems with its prime (normal) mortgage investments.

With the rumours & a lack of action to deny them, investors began withdrawing money from Bear Stearns giving it sever cash flow problems and a spiralling crisis.

What is an Investment Bank?

2008-03-25T15:32:00.004Z

Investment Banks have been widely discussed recently. Bear Stearns is one, as is Lehman Brothers. It begs the question, "what is an investment bank?"

Investment Banks don't offer services to normal retail customers like you or me nor do they have branches on the high street.

Basically they operate in 2 ways,

Helping companies and governments raise money by issuing and selling shares in the organisation or debt such as corporate bonds.
They also provide advice on mergers between companies & acquisitions

What are Sovereign Wealth Funds?

2008-02-25T15:28:00.002Z

There are lots of stories circulating about Sovereign Wealth Funds. So what are they?

They are government funds from counties like the oil rich Arab countries & emerging markets like Singapore & China. The Chinese one is worth $1.46 trillion! ($1 460,000,000,000 ) The money is generated by the export of natural resources such as oil and gas in the case of the Gulf States and Russia and manufactured goods in the case of China. The Sovereign Wealth funds are buying assets to safeguard the financial future of their home countries these might include shares in large companies, government stocks or commercial property. One example in the news recently is Dubai International Capital owns budget hotel chain Travel Lodge and has been interested in acquiring Liverpool Football Club.

The funds have become increasingly important in Western financial markets, bailing out US banks hit by the credit crunch. British Banks such as Royal Bank of Scotland & Barclays have seen investment from Qatar and Singapore respectively.

An interesting issue is that will the funds demand a greater say in the running of companies perhaps based on political reason? Some of the US banks bailed out by Arab money have issued special share classes to accommodate the new money without the usual voting rights.

Revenue buys stolen information about tax haven

2008-02-25T15:00:00.004Z

It has come to light, that the tax authorities (HMRC) have paid £100 000 for information about bank accounts in Liechtenstein. They aim to potentially get back £100 million in tax avoidance from UK residents who have stashed money there to avoid UK tax. They bought the disk with stolen data from a disgruntled former employee of the Liechtenstein Global Trust (LGT).

The German tax authorities previously had paid 5 million Euros for information about German tax payers. Tax inspectors there are going through the finances of 900 people based on the information they received.

Lichtenstein is a major financial centre with 75 000 registered companies but only 35 000 residents. The LGT offers “wealth management to individuals and companies with the promise of absolute confidentiality.”

HMRC have the power to pay informants for information and have been investigating offshore investment in tax havens like the Isle of Man & the Channel Islands. Whether the payments for the stolen data is legal will be a big question. Finally as Mickey Clarke of the Evening Standard noted, “hopefully they won’t lose the valuable disc!”

Spot the Dogs: Poor Investment Funds

2008-02-20T16:22:00.004Z

Every year Bestinvest name & shame the worst performing (dog) investment funds ; those underperforming the benchmark in each of the last three years and down on the benchmark by 10% over the same period.

Scottish Widows were quoted as ‘gone to the dogs’, with over half the group’s funds underperforming.

The worst culprits in different categories were

UK – £13m Marlborough UK Equity Growth, down 37%
European – £355m Melchior European Opportunities, down 37%
International – £60m UBS Global Optimal, down 14%
North America – £9m Invesco Perpetual US Aggressive, down 27%
Tech – £37m Jupiter Global Technology, down 11%
Japan – £66m M&G Japan Smaller Companies, down 28%
Emerging Markets – £59m Lloyd George Emerging Markets, down 19%
Asia Pacific – £232m Invesco Perpetual Hong Kong & China, down 25%

Invesco Perpetual have star manager Neil Woodford but as you can see are home to 2 dogs.

Share picking, potentially dangerous for your wealth.

2008-02-20T16:08:00.002Z

One area the Sunday newspapers love is share picking, it is also beloved of sites like the Motley Fool.

The problems include:

Newspaper journalists are not investment professionals. There is no comeback on their “advice”
They don’t consider attitude to risk or things like the need for emergency funds.
Do you have the investment knowledge? Is the share a cheap because they company is a basket case or merely unfashionable? Can you predict Northern Rock style crises?

The solution

Invest in a good mutual fund, you eliminate a lot of the risk. A professional manager looks after your money and can taken action on your behalf in the event of a Northern Rock style crisis or take advantage of low market prices

Which ones? Speak to your financial adviser, discuss your needs, risk and how much you can realistically invest.

Northern Rock Nationalised

2008-02-18T16:34:00.004Z

After 5 months, the government has finally taken action over Northern Rock. It will be nationalised after £51 billion has already committed to the ailing bank in loans & guarantees to savers.

Nationalisation become inevitable after the one potential bidder after another was rejected.

When the crisis arose, there were a number of alternatives

1 Let the bank go bust.

2 Let a high street bank like Lloyds TSB take over the bank, who were initially interested.

Probably the worst aspect of the crisis was the Chancellor being indecisive for so long & seemingly hoping the problem would go away, the delays have severely damaged the Northern Rock brand.

There is one glimmer of hope, the man put in charge Ron Sandler has a good record of previously running Lloyds & Nat West.

Norwich Union...windfall....generous?

2008-02-15T14:50:00.004Z

Norwich Union have not been slow in trumpeting a £3 billion distribution of money to With Profits policy holders.

Is it a good deal for the consumer?

They actually have over £5 billion left over from fund re-organisation. This is actually customers' money. They are being coy why they can't distribute the other £2 billion ot customers

90% of the money distributed is going to policy holders with 10% going to Norwich Union shareholders. They originally wanted to give a lower figure to clients but then the government's Policyholder Advocate put pressure on them.

In context, a lot of these policies are held in underperforming endowment policies for which Norwich Union have had to pay compensation for misselling.

A final note, they aren't paying out the customers' money to customers straight away. They are doing it over a 3 year period!

New Star: fallen Star?

2008-02-14T11:53:00.003Z

New Star are one of well known fund providers, they advertise heavily in the money sections of the broadsheet newspapers always launching a "new, exciting opportunity". They have a distinctive psychedelic multi-coloured logo, which apparently looks that way because the printers forgot to add any black to the printing proof.

They were founded by George Duffield, who previously built up Jupiter. He has been extremely generous in sharing his wealth by giving share options to his employees.

However things have started to come unstuck int he last year as Financial advisers have moved money out of under-performing New Star funds.

When the company was established in the early noughties, they brought in many highly paid star fund managers and continue to launch new Funds.

The perception now withing the industry is that they have concentrated too much on trying to grow rather than doing the basics of investing existing investor's money wisely. Some of the funds also have a novelty feel about them.

That said, they still have some very funds. Which ones? speak to your adviser ;).

Food & Fuel Inflation

2008-02-12T13:33:00.000Z

For the last 50 years, the price of food has come down due to intensive modern farming techniques.
Why then has the price of bread increased quite significantly over the last year?

Production of wheat worldwide hasn't increased much recently, what has increased is demand from India & China with a combined population of 2 billion. This has caused much of the food inflation we have seen recently.

It's a similar story with oil & gas, there is greater demand from newly industrialising countries with production remaining level as market makers put up prices as compettion is greater.

Interest Rates fall 0.25% to 5.25%

2008-02-07T13:27:00.000Z

As widely predicted the Bank of England reduced interest rates by a quarter of a percent to 5.25%.

It is a bid to stimulate the economy by putting more money in people's pockets. Is this a good thing? Not if it encourages people to borrow more money, as that it partly why economic problems possibly loom.

Interestingly the reason why the Bank of England put up rates several times last year before last summer's "credit crunch" was because of fears of inflation caused by borrowing. Fuel & food inflation is still around....

Rogue Trader: Jerome Kerviel at Societe Generale

2008-01-25T10:38:00.000Z

You will have read about Jerome Kervie. His deals lost French bank Societe Generale £3.71 billion, it seems he was able to counteract risk management measures due to his previous job in administration.

What made the problem worse for Societe Generale, was they sold the bad deals this week when the markets were headed downwards.

The Chief Executive has offered to resign.

How can we avoid a recession?

2008-01-23T11:41:00.001Z

Interesting question posed on Radio 5 Live's "Wake up to Money" programme.

How can we personally do to avoid a recession?

1 Pay off your debts
2 Spend money to help the economy? Not if it's on a credit card!

Mortgages: Best Buy tables...the problems

2007-12-19T10:52:00.000Z

Are mortgage best buy tables you see in newspapers misleading?
Possibly

The biggest problem is Lenders know how to manipulate them, the biggest snare is usually the ones at the top have large arrangement fees. Lenders use the arrangement fee as part of the cost of the deal rather than reflecting their administration costs

There are a number of problems with mortgage best buy tables. They don't contain important information such as:

1 Miss Loan to value (how much of the property value can you borrow)
2 Loan size
3 higher Lending charges
4 Applicant's salary & profession
5 Type of property
6 How long is the rate for? 6 months?
7 Is interest calculated daily or annually?

There are 12 000 mortgage products on the market, so maybe it's worth getting advice from an independent professional.

Greed & fear

2007-12-18T16:17:00.000Z

Sonja Schemmann of Schroder made a very simple but highly truthful statement recently.

"Greed drives markets higher, fear drives them lower"

Until this summer the markets were driven by greed, the global economy was was expanding, companies were buying other companies. Investors were putting their money into new areas without understanding the risks.

Result: markets reach new highs

Then this summer, problems emerge in the US banking sector, inflation rises due to high energy & food prices occurred. Consumer & business confidence falls & the markets drop.

Neil Woodford Invesco Perpetual "UK flirting with recession"

2007-12-07T12:17:00.000Z

Leading fund manger Neil Woodford believes the UK may be in recession by the end of next year. he states fears that the a downturn in the housing market may affect consumer confidence in other areas of the economy.

He runs £20 billion worth of money in various funds. In the last 5 years £1000 invested in Woodford's High Income Fund has returned £2610 compared the the FTSE 100 which would have returned £2100.

Recently he has favored utility companies, the oil sector, telecoms and a number of stock specific situations such as Tesco.

He is most famous for investing significant amounts in tobacco companies , which generate huge profits.

Virgin II FTSE 100 Tracker Fund

2007-12-05T14:15:00.000Z

Lawrence Gosling positively trashed Richard Branson & virgin Money with his comments in the previous post.

Would I, a Swindon based Financial adviser recommend Virgin products to my clients?

Well let's look at one.

The Virgin FTSE 100 is an investment fund which tracks the movements of the 100 biggest UK companies. This is not so great for a number of reasons.

The FTSE 100 still contains Northern Rock
Performance of FTSE 100 trackers is little better than breaking even over the last 7 years
The Annual Management charge is 1%, its cheapest competitor is 0.2%

Summary
No

Would you trust Richard Branson & Virgin with your money?

2007-12-05T14:05:00.001Z

“Would you rather give your pension, to get you through retirement, to a number of Scottish financial institutions that have been around for a few hundred years and are financially secure”

“Or rather give it to a group by someone who made his name selling records and has since dabbled in gyms, trains, mobiles and more recently financial services?”

“Buying a pension or life assurance is not the same as buying a plane ticket or a CD”

"I can see no reason why anyone would want to do business with the Virgin Group for financial services. It is not offering anyhting that yo cannot get better from other financial institutions"

The views of Lawrence Gosling in this week’s Investment Week (3/12/07)

Which? slams Bank Financial Advisers, IFAs better

2007-10-05T15:45:00.000+01:00

A report by Consumer group Which? has slammed financial advisers tied to banks & building societies. 2/3rd of advisers failed to pass its benchmarks for giving good advice

Neil Fowler, editor of Which? concluded "For more complex financial products such as investments, mortgages and pensions, you should really see an adviser. On the whole, you'll get better advice from an Independent Financial Adviser"

I will be telling everybody I meet in Swindon. :)

FSA wastes consumers money?

2007-09-11T12:35:00.000+01:00

There have been 2 instances reported in the Financial Press of consumer watchdog the Financial Services Authority (FSA) wasting tax payers’ money.

Firstly New Model Adviser reported outgoing Chief Executive John Tiner has had 2 leaving parties costing £13 000, not bad for a man on £650 000 a year.

Secondly Money Marketing noted the FSA pays more than £13 million to external consultants.

10 Largest Investment Funds in the UK

2007-08-30T18:37:00.002+01:00

Interesting article in Fund Strategy about investment fund size & performance. Normal logic is that if a fund becomes bigger because of populariy it becomes harder to run, it is more difficult to find invest the money in good value values which are often small in size.

The one exception has been Neil Woodford at Invesco Perpetual with his Income & High Income funds, who gas managed ot maintain his performance despite huge inflows of cash.

Woodford has nealy £15 billion in money invested in his funds. Huge, but as Chris Traulsen of Morningstar pointed out, the largest US funds exceed $100 billion.

Would I invest in any of the top 10 funds? Yes, a few...however I would avoid others.

Nationwide withdraws Payment Protection Insurance (PPI)

2007-08-30T17:57:00.000+01:00

Nationwide has stopped selling payment protection insurance after it admitted uncovering problems in mystery shopper exercises. They are now retraining their staff, a large percentage based in Swindon.

Payment Protection Insurance covers you against missed payments due to unemployment and other reasons on credit cards

They have advised customers to contact IFAs (Independent Financial Advisers).

Earlier in the the year loans.co.uk were fined by the Financial Services Authority (FSA) for misselling.

US Sub Prime Mortgages

2007-08-29T17:09:00.000+01:00

I've written abut the US Sub prime mortgage crisis previously and more generally about sub prime mortgages. Now as the current financial correction is being blamed on it, it is time to revisit it.

What happened?

US banks lent money when interest rates were very low to people who would maybe not normally get mortgages. Some sections of the press have dubbed them "trailer trash" hinting that the relatives of Britney Spears could cause economic meltdown.

Ok, some US banks have bad debts...how does this affect the UK & Swindon?

Banks buy debts form each other, some UK & European banks have taken on these debts. UK Bamks are being coy about how much of these problem debts they took on.

Stock markets are jumpy at the best of times, during August many dealers are away on holiday so small scale sell offs have had a larger impact.

What now?

The US federal Reserve stepped in to help US banks which calmed the fears.

What should I do?

1 Sit tight, corrections happen all the time. Banks like HBos (Halifax bank of Scotland) are sniffing aroung the US mortgage market looking to pick up bad debts and make a killing. Derive your own conclusions

2 Speak to your financial adviser, they should know more than the Sun or Daily Mail. I have one or 2 recommendations myself...

What next for interest rates?

2007-08-29T15:15:00.000+01:00

In the last 2 years the Bank of England's Base rate has risen from 3.5% to 5.75%, with products like mortgages & loans being linked to it.

The main reason for the rise was to control inflation and partly tot try to control the housing market.

Things have taken an unexpected twist recently with the sub prime mortgage problems in the US. To deal with this the US Federal reserve (the equivalent of the Bank of England) has lowered the rate at which it lends money to banks.

What does this mean for the UK, financial advisers & their clients in Swindon?

The rise in interest rates [& the forecasedt end of the world :)] is likely to stop for the time being. Tracker /discounted mortgages could become more attractive again as arrangement fees for Fixed Rate mortgages are now rather high.

Worst product provider for Customer Service

2007-08-22T16:31:00.000+01:00

The Worst Product provider in my experience.

By far, Scottish Provident. I sent in an insurance application in April. It has still not been underwritten. I asked to speak to managers twice, my number was taken, no phone calls received.

2 complaint letters written & still not resolved

Conclusion: Atrocious

Stock Market Crisis? No, a correction.

2007-08-17T16:20:00.000+01:00

Stock markets have been very volatile in recent weeks. In August many traders are on holiday and relatively small changes can cause huge swings in prices. The jargon used in such a situation is "a correction", typically there might be 2 or 3 corrections in any year.

In the long term markets should recover. The BBC noted yesterday that the FTSE 100 had merely returned to the values of October 2006.

Over the last 5 years markets have been relatively un-volatile historically.

There is an upside to the current volatility, now is a good time to buy. It is also a good time for clients with regular savings plans as their regular £50/100 buys more units.

14 000 homes repossessed in last 3 months

2007-08-10T17:23:00.000+01:00

Repossessions have risen by 30% since last year according to the Council Of Mortgage lenders (CML). 14 000 alone in the last 3 months

Additionally 125 000 borrowers have mortgage arrears.

Things can only get worse as around 1.5 million borrowers will experience a 2% rise in interest rates in the next 6 months when their fixed interest deals end.

Who are Anthony Bolton & Fidelity Special Situations?

2007-08-01T17:17:00.000+01:00

Anthony Bolton is one of the most famous fund managers in the UK. He's been in charge of the Fidelity Special Situations Fund since 1979. He has fantastic performance figures of 19.9% a year on average. His strategy is to find unloved out of favour shares in smaller companies

The fund has been in the news because Bolton is retiring at the end of the year. His replacement Sanjeev Shah is gradually taking over the reins.

The key question is...can Shah continue the track record of the fund?

1 At £3 billion the fund is huge, so finding bargain stocks & using the money becomes increasinlgy hard.

2 he has had mixed records in the 2 funds he has manged, one beating the market the other tracking it.

3 Fidelity's fund record has been a bit patchy recently & 3 fund managers recently left to set up their own investment boutique (small fund house).

Conclusion
There are plenty of decent alternatives to the fund with established fund managers. Have a word with your financial adviser.

See also Christpher Traulsen's article at Morningstar

Diary of Swindon Financial Adviser

2007-05-09T17:06:00.000+01:00

What does a financial adviser do during the course of a day?
Well...today...

9am-1pm
Presentations & meetings with product providers and other financial advisers in Wootton Bassett (near Swindon).
Some are interesting, others...less so (meetings & financial advisers)

1-2pm
Lunch

2pm-5pm
Chase up tardy mortgage lenders & insurance companies. The culprits? Royal Bank of Scotland & Norwich Union.
Sort out details of client's pension & annuity
Reply to client emails.
Speak to the lovely L2, mortgage guru in Leicester.

7pm meet a client to discuss pensions in North Swindon

8pm plus: possibly catch a bit of Chelsea vs Man Utd

HSBC the World's Bank? Not in Swindon

2007-05-03T16:56:00.000+01:00

HSBC made a profit of £11 000 000 000 (11 billion) last year.
Does this mean HSBC aren't offering customers competitive rates?
I can't comment.

Ex HSBC customers are probably the biggest source of my remortgages.
The World's Bank? Not in Swindon.

Abbey, HSBC: No arrangement fees....Misleading & Nothing New

2007-05-03T16:40:00.000+01:00

Both Abbey & HSBC are advertising mortgages with no arrangement fee. All lenders offer such a deal, it's called the Standard Variable Rate.

When remortgaging, it's normal to look for a deal with no arrangement, legal or valuation fees. In fact I've just done one for a client today.

Interested? Give me call on Tel :01793 524806.

Why become a Financial Adviser...in Swindon?

2007-05-02T13:22:00.000+01:00

Financial Adviser? (IFA)

I had a long term interest in saving & earning money for myself and friends.
Correct use of financial products means you can increase your standard of living without changing jobs. It's something I've always enjoyed and it's great job. Whether it's finding propel a cheaper mortgage than their bank or finding good investments for clients, it gives you a good feeling. Being a financial adviser gives me the opportunity to do this.

Why Swindon?

I live here, it has it's plusses & minuses. I am fortunate to know a few good people

What is a Sub Prime Mortgage? Exist in Swindon?

2007-05-01T16:40:00.000+01:00

During the stock market correction in February, there was much talk of sub prime mortgages in the US.

It raises the question...what is a sub prime mortgage?
Do they exist in places like Swindon?...Yes

It is a mortgage for somebody who can't get a mortgage in the normal ways
The person could

1 be self employed & doesn't have a long term track record
2 have had some debt problems (IVAs, bankruptcies).

The rates & arrangement fees are higher as the lender is taking a bigger risk and more people default (don't pay the money back).

Spanish Property...in Crisis

2007-04-27T11:34:00.000+01:00

Over the last week, there has been a tremendous loss in confidence in Spanish property market. One leading property firm Astroc lost 60% of its share value. .

In January the Organisation for Economic Cooperation & Development warned Spanish house prices were overvalued by up to 30%. Since 1999 prices have risen by 15% a year.

These prices have encouraged over investment and consequently over supply.

One widely held belief in recent years, was when the Euro was introduced in 2002, may criminal organisation invested illicit cash into Spanish property before the pesata became defunct.

What does it mean?
Prices will stabilize, possibly falling until market values reach more reasonable values.

Financial Advisers slam "cheap" mortgages from Abbey

2007-04-26T18:03:00.000+01:00

Financial Advisers have slammed cheap "stepped" mortgages. Abbey recently introduced a product where rates start at 2.99%, then shoot up to 6.2% then 6.35% over 5 years.

There is also a £799 arrangement fee.
People might be able to afford the payment in year 1 but the the huge increases mean first time buyers face a huge payment shock. You're locked into using the product for 5 years, if you try to get out, you will face a redemption penalty

Avoid

Consumers don't trust Big Banks..especially Barclays.

2007-04-26T17:40:00.000+01:00

Interesting article in Money Marketing. A survey of nearly 4000 consumers revealed 2/3rds of Barclays, HSBC, Halifax/Bank of Scotland, Lloyds TSB and Royal Bank of Scotland/NatWest customers do not trust them to sell the right products.

1 in 8 Customers claimed to have been missold a financial product.
1 in 5 Barclays customers said that money had gone astray from their accounts.

The survey was conducted by Motley Fool.