en-GB http://www.joslinrhodes.co.uk Joslin Rhodes are Independent Financial Advisers who provide unrivalled advice and support for our customers who are seeking mortgage advice, selling a house or who are looking for honest and trustworthy financial advice. Copyright 2010 Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/yawn-of-the-dead-49.html Anyone remember Simon Dee? To refresh any aging memories out there (as youre probably over 50 if you do remember him), Simon Dee hosted the Dee Time show in the late Sixties and had over 18 million viewers. Which was impressive at the time as that covered just about everyone with a television. For two brief years he was the most famous man on TV and very much enjoyed spending his 100,000 salary on lifes good things to the point that he made Chris Evanss binges look like Hannah Hauxwell sneaking an extra digestive at the vicars tea party. So what happened? Well his wage demands become too high, his ego too big and he fell to earth after his contract was cancelled. He struggled with debts for many years and even spent a month behind bars for non payment of rates, ultimately winding up as a bus driver. Now, not a lot of people know that, because once off the radar he was never mentioned again. In those days, when your star stopped burning you quietly exited stage left and were never seen again. In modern times however even the most minor of celebrity can stretch out a living for a good few years. Admittedly they need to leave their dignity, respect any last remnants of self worth at the ITV2 studio doors, but that is a trade off that many seem happy to make. Lets just throw a few more names at you from the past and see if you remember them. Pearl Assurance? Scottish Mutual? Clerical Medical? United Friendly? Equitable Life? Jog any memories? Yes, thought so. Have you ever wondered where they are now? Back in the Seventies and Eighties most insurance companies employed salesmen to go around knocking on doors and selling their products. We all remember the man from the Pru. You didnt need any qualifications, just a thick skin and some smooth talking. One day you were digging holes in the road, the next day you had a suit and a briefcase and you were an insurance man. Earnings were good for the successful ones because the commissions were very generous, largely due to the obscenely high charges applied within the plans that werent exactly highlighted on the front page of the glossy brochure. In the Nineties however regulations were tightened up dramatically and the FSA (and its predecessors) essentially gave the insurance companies two options. Either tidy up your act, or get out of town. So some of them thought right, lets train our staff, lower our charges, make our products more transparent and generally get into line. They  joined the mainstream and many are still around today. Others thought nah thats looks too much like hard work and wed rather just keep the big pot of policyholders money that we have and shut the doors to new business, and thats exactly what they did because the charges they receive on their existing funds are too good to give up in the name of being a good company. They are referred to as closed funds. A less salubrious term is zombie funds because they are half way between alive and dead. In celebrity terms they are a long way from prime time Saturday night but not yet driving a bus. Probably eating bugs in a jungle somewhere or having their wedding/funeral/mothers hip replacement filmed. The problem with closed funds is that they still need to be managed and investment decisions taken. Growth is normally generated in funds by investing in growth assets such as shares and property and holding a percentage in defensive funds for security such as cash and bonds. Normally the inflow of cash from new investors can be used to pay the outflow of leaving investors, meaning the percentage of money held growth assets can remain high. If however there are no new customers but only exiting ones, then a larger proportion of the fund needs to be held in cash which produces a lower return, which annoys more of the remaining policyholders, so they leave which means that more has to be held in cash which means the returns are lower.you get the idea. The trick is not to be the last person standing. A bit like musical chairs but staking your life savings to spice it up a bit. The moral of this story is that just because an insurance company hasnt died it doesnt mean that it isnt in a coma somewhere, being kept alive by the life support of your policy charges. Oh, and if you are with Resolution or Phoenix then that is like a hospice for terminally ill insurance companies. So, dont assume that just because you get a statement every year that they are still prime time. Maybe you should have a dig about at the bottom of your wardrobe and check that none of your policies are the financial planning equivalent of a Celebrity Wife Swap contestant.. 2010-07-19 14:27:16 http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/yawn-of-the-dead-49.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/yawn-of-the-dead-49.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/investment-income-11/moment-lifetime-fiscal-deficit-48.html Much has been made recently of cutting the budget deficit and the need to get the countries finances back on an even keel. The coalition has announced that they are to cut 6 billion from the deficit immediately, which sounds impressive. Until you understand the figures. The deficit is currently 167 Billion pounds per year. It is important to remember that this is just the deficit, i.e. how much more we are spending than we can raise in taxes every year. Cutting 6 billion from the deficit means that we will only overspend by 161 Billion next year and every year thereafter. Comforting isnt it. The actual debt that we are in is 914 billion, or 914,856,469,391 if you want the scary version. It is evident that cutting 6 billion here or there is like bailing out the Titanic with an eggcup. Even these modest cuts however have generated much howling and anguish amongst those who fear the effects; to the point where we know that cutting a further 908 Billion just isnt going to happen without rioting on the streets. But there is another way. Lets draw an analogy and imagine that you have also been gorging yourselves on the good things in life over the last ten years without much thought of the future and as a result have put on a few pounds. Actually, not just a few pounds but you are carrying more weight than anyone has ever carried since the 2nd World War. In fact Channel Five have been in touch and are considering doing a documentary. Naturally, following a program of sensible exercise and healthy diet would be the sensible, if boring, thing to do.  The downside is that this will take a very long time and cause upset and heartache to the local take away outlets that have become dependent on your revenue. Therefore you hit upon an idea that keeps everybody happy and makes you feel slimmer. Just wear bigger pants. Admittedly its not a recognised slimming technique but it works for the countries finances. Inflation is the fiscal equivalent of wearing bigger pants. The higher inflation is allowed to go, the smaller our debts appear. Given that by the inflation method you can reduce the debt without having to do those nasty cuts that are so unpopular, you can see why the idea might be appealing to the politicians when compared to rioting kebab shop owners. The problem is that allowing inflation to go up has numerous side effects, none of which are very pleasant for the jobs market or manufacturers who export. Those who remember the hyper inflation of the seventies will tell you that when you went to the pub you bought always got the first round as the last round could be twice the price by the end of the night. And yet inflation has gone up a fair bit recently, in fact last month it was between 3.7% and 4.5% depending on which figures you believe. Consequently, Mr Osbourne wont be too upset because it makes the debt a little smaller. Not much, but in dietary terms its enough to allow you to sunbathe on the beach without Greenpeace trying to roll you back in the water. You may be wondering however, why not just go along with this inflation idea if it means that we doesnt have to pay for it through cuts in government spending and increased taxes? After all the government debt is the equivalent to 31,623 for every person in employment. Well, you do pay for it actually. Lets just say you have some money in the bank on deposit and you are very pleased with yourself because you found a rate of 3% on a price comparison website. Just before you email Martin Lewis to tell him how clever you are, lets just do some maths. Firstly, take off 20% tax income tax. That reduces your 3% to 2.4% net return. Then deduct inflation over the year of 4.1%, leaves you with errrm.. a 1.7% loss. So for every 1,000 you have invested you are losing (paying) 17 every year. Look on the bright side though its a fixed rate so its guaranteed. Oh..thats not a point in its favour is it. So you see that whichever way you look at it, we need to reduce the debt and its going to hurt a little bit. There is no silver bullet, but perhaps when you have eaten yourself to such a size that washing yourself requires a rag on a stick; maybe wearing slightly bigger pants is no bad thing, if enjoyed with lots of salad and a bit of jogging. After all, worse things happen at sea, just ask the guy with the eggcup. 2010-06-14 20:47:07 http://www.joslinrhodes.co.uk/financial-adviser-blog/investment-income-11/moment-lifetime-fiscal-deficit-48.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investment-income-11/moment-lifetime-fiscal-deficit-48.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/so-the-fox-said-47.html It is noticeable that there are certain subjects around which everybody seems to be an expert. Health is a good example. We dont visit doctors to get diagnosed anymore. No, we go for confirmation that our own diagnosis, cobbled together from the internet and any family member who has completed a first aid course, is correct. Woe betide the hapless doctor who has the audacity to suggest that their thirty years experience and degree in medicine outranks the hallowed font of knowledge known as Aunty Mary. Investing is another. If there is one sure-fire subject upon which almost everyone is happy to divulge their pearls of wisdom, it is where you should be investing your money. You want to be in China you see, thats where the money is or Greek bonds, safe as houses my son, you mark my words. These nuggets of razor sharp insight are normally dispensed over a pint or two by someone who regards themselves as a bit of an expert because they watched Wall Street and have a Stocks and Shares ISA with the Halifax. If however, you ask the said knowledge dispenser how much he has invested in China or Greece, the answer is invariably, well I just missed out you see. I was going to put my money in but my grandma died / was made redundant / realised I didnt know what I was talking about (delete as appropriate) They will however go on to espouse about how much they would have made, if they had invested, despite the fact that they didnt. This is akin to boasting how Bill Gates came to you with a looney tunes idea for a computer system called Windows and how you proudly sent him packing because you wanted to put your life savings into a funny little electric car called a C5. The point that we are lurching towards is that the average anecdotal idea about what a well thought out and structured investment should look like, is normally pretty different to how it should be. Most people will fall into one of two types of investor. Foxes and Hedgehogs. A fox is an opportunist, light on its feet. It will look for opportunities in the market and invest some or all of their capital in that area, hoping for a short to medium term gain. Assuming it makes a profit it will withdraw from that investment and invest its gains in the next opportunity. To be a fox you need to have extraordinary foresight and knowledge about what you are investing in. You need to be absolutely sure that what you are putting your money into is going to increase in value, and quickly. The advantage of being a fox is that when it goes well, swift gains can be made. The downside is that when it goes wrong, it goes very wrong indeed. In fact if your investment goes down in value it can leave you with no option but to hold on until it goes up again, because you cant afford to take the loss. The hedgehog is a different beast. He doesnt run around looking for the big opportunity. Instead he spreads his money across a range of different investment types, spanning lots of different asset types. Instead of spending time looking for opportunities in the market, he focuses on researching the best managers for each element of his portfolio and building a robust long-term management team. Imagine the scenario where a fox and a hedgehog were each given a budget to build a football team. (stay with us) The fox would spend the majority of the budget on a star striker or two and not worry too much about the defence whilst the hedgehog would spread the money evenly and build a balanced team. The fox will hope that he wins big enough in the first few games to be able to buy more strikers but also risks plummeting through the divisions if his strikers dont perform. The hedgehog accepts that not all of his players will perform well in every match, but that as an overall team they will win more than they lose. Whilst the fox may win goal of the month on a regular basis, it is the hedgehog that is likely to win the league. And if you are in any doubt about the whether the fox or the hedgehog is most successful, ask yourself when you last saw a skinny hedgehog? Or a fat fox for that matter? 2010-05-17 20:51:44 http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/so-the-fox-said-47.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/so-the-fox-said-47.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/stock-market-9/that-will-be-two-46.html And so election time is upon us. Given that we are currently staggering out from one of the worst recessions in living memory, economic policy is at the top of most voters and politicians agenda. The next government and their fiscal policies will be absolutely critical in deciding whether we continue to steadily recover or go into freefall and make Greece look like a lottery winner. To help us assess their economic credentials weve even had an American style live debate involving the three potential chancellors, Alistair Darling, George Osbourne and Vince Cable. You would suspect that given the precarious state of the economy and the knock on effect for the jobs market as a whole, that this would be of great interest to the country. Well apparently it was for the 2 million people who tuned in. Unfortunately that meant that 58 million of us didnt really care. More worryingly, 9 million of those chose to watch East Enders on the other side instead. In mitigation apparently someone was being shot, which made it a bit more exciting. This does raise the prospect, and I am sure the TV executives have investigated the possibility already, that the chancellors debate would have been more appealing to the viewer if gunplay had been involved. Perhaps a Krypton Factor meets Deliverance type affair. In any event, this election is looking more and more likely of producing a hung parliament. This is not, unfortunately, where we get to hang all of the MPs but is the situation where one party does not have an overall majority in the House of Commons. The consequence of this is that in order to pass any legislation through parliament, they need to garner support from another party. Initially this may sound like a very lovely idea. All the politicians could sit around a table and make decisions in the best interests of the county as a whole. In politics however, nothing is ever given away for free. In return for their support, the smaller party will want to either put their stamp on the legislation in question, or insist on their way in some other policy area. This means that deals have to be constantly negotiated and compromises made in order to take any action. The legislation becomes so watered down in order for it to be all things to all men, that it often doesnt serve the purpose for which it was intended. After all, a camel is a horse designed by a committee. Imagine the scenario in the summer of 2008 if a hung parliament was in operation. Whilst the banking system collapsed around our ears, decisions were being made in government on an hour by hour basis as to whether to bail out the banks. Putting aside the moral rights or wrongs of those decisions, it was imperative that they were made. Yes, it was a bitter pill to swallow to put taxpayers money into private companies, but if we hadnt then it is likely that our banking system would have collapsed, Sterling would have become worthless and vegetables and cattle would once again have been the legal tender. Interestingly, if there were a hung parliament then the Lib Dems will become the most powerful party in the land. They wont be the biggest, but they will hold the most sway as they decide on whom they want to get into bed with to create a coalition. The two million people who watched the debate will tell you that the potential chancellor who talked the most sense was the Liberal Democrat, Vince Cable. This isnt a particular surprise as he has a track record of talking sense when it comes to the economy. He also predicted the downturn in part. Furthermore he is the only candidate with high level corporate financial experience, having been Chief Economist for Shell. Compare this to George Osborne whose previous commercial experience includes working at Selfridges or Alistair Darling who was a solicitor. So if you want advice on a new Sofa, George can surely help. Tripped over a pavement? Alistair can do you a No Win - No Fee claim. Run the countries economy? Wed put our last turnip on Vince Cable. 2010-04-19 16:44:27 http://www.joslinrhodes.co.uk/financial-adviser-blog/stock-market-9/that-will-be-two-46.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/stock-market-9/that-will-be-two-46.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/unacustomed-public-speaking-45.html There is nothing quite so cringe worthy as the office retirement speech. Forced to stand in front of your peers, clutching a bunch of flowers and an Elizabeth Duke carriage clock, expressing your heartfelt sorrow at the thought of not seeing them again. All this before skipping out the door to a life of carpet bowls, Werthers Originals and an unhealthy obsession in those weird products advertised in the back of the Sunday Mail magazine that you always wondered who on earth bought. Unfortunately, for many people who intended to retire about now, a few spanners have been thrown in the financial works. Firstly, unless they moved their pension funds into deposit investments prior to the downturn, the value of their pension fund is likely to have fallen. This means that they have less of a pot than they perhaps expected. The second whammy is that the said pension pot will provide them less of a pound-for-pound income now, than at pretty much any other point in history. To understand why, we need to know how pensions produce an income. When retirement looms, at least 75% of the fund that has been accrued, is used to purchase an annuity. The basic principle of such things is that you give a lump sum to an annuity provider and in return they will guarantee you a fixed regular income until the day you die. They will very much hope that you are hit by a bus on the way home, as they get to keep the money you gave them. Conversely, you hope that you live longer than Bruce Forsyth and bleed them dry. Annuity providers work on the same principle as bookmakers. In order to calculate how much income they will pay you, they first need to work out when you are going to die, and they are uncannily good at it. Your death date is based on your postcode, gender and lifestyle habits. If you reside in Dorset then the life expectancy for a male is aged 80. If however you were brought up in the shadow of ICI on fried bread and dripping, then it is aged 74. If that concerns you, (especially if you happen to be 73) then think yourself lucky you dont live in Glasgow where it is age 68. To put that in perspective, life expectancy in Iraq is currently 67. Lifestyle habits have a dramatic affect on the annuity rate also. The poorer the health, the higher the income. Smoking, drinking and obesity are all good when it comes to getting a higher annuity rate. Admittedly the trade off is that you are going to die much younger, which can be disappointing, but think how much more you will have to spend in the meantime. Also life expectancy doesnt care much for the niceties of equal opportunities. Hence men die on average five years before women and in turn they get a more attractive annuity rate for their trouble. All of these issues affect the rate that you will receive, but the overriding factor is interest rates. This is because the annuity provider invests the money in order to provide you with your income, and the greater return that they can get, the greater amount they can pay you. In this era of low interest rates, annuity rates are also punishingly modest and given that once purchased an annuity cannot be changed, those that need to buy one now can be locking in a bad deal until their dying day. So what options are there? The most obvious is to defer taking an annuity and carry on working, assuming you didnt burn any bridges during your retirement speech and Argos will give your colleagues a refund on the clock. If and when interest rates and fund values rise, then the figures may look more attractive. There is one sure-fire way of increasing your pension income and that is to shop around for the best annuity rates as you are not obliged to take the one offered by your pension provider. In fact you are positively encouraged not to do so as it is likely to be very poor value when compared to the open market. Other options are. well none really unless you fancy moving to Glasgow and starting on the Capstan Full Strength. 2010-03-11 11:47:39 http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/unacustomed-public-speaking-45.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/unacustomed-public-speaking-45.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/banks-13/zero-tolerance-tell-it-43.html It is a sad fact that four out of every ten marriages in the UK end in divorce. It is a sadder fact that only one in ten of us will change banks during our lifetime. The relationship we have with our banks is a long and some would say, destructive one. We start as childhood sweethearts, meeting on the high street on a Saturday morning. The promise of a free schoolbag and an Adam Ant poster was all it took and before you knew it you had a young saver account. Fidelity, or lack of it, is always a problem. Your bank is forever flirting with new customers and promising them the earth. Cheap deals, free stuff, but what about you the loyal partner? No more gifts for you or candlelit dinners. The rot sets in pretty quickly. The infidelity wouldnt be so bad if it wasnt flaunted at you all of the time. Have you ever popped into your local branch, on those rare occasions when it is open, to pay in a cheque. The golden rule seems to be one cashier to service existing customers for every three sales people prowling up and down the queue trying to sell you something else that you dont need. You generally hope that if your spouse is going to cheat on you, that they at least have the decency to do it behind your back. Unfortunately the abuse doesnt stop there. The regulator found that for many years they have been selling us things that we didnt need and that wouldnt pay out when they were due, and they were fined millions for it. This would be almost forgivable if it was a genuine error but it turns out that in many cases it was a deliberate ploy, driven by sales targets and greed. At least Dick Turpin had the courtesy to wear a mask. Normally when you catch you spouse cheating there is at least some penitence shown by the guilty party. Perhaps flowers, expensive jewellery, a sudden interest in DIY. In the relationship with our bank however, they still protest their innocence to the contrary even when caught red handed. The Financial Services Ombudsman is the body that overseas complaints in the financial services industry. Any complaints that cannot be resolved between the customer and the company are referred to the FOS for adjudication.  A bit like the Jeremy Kyle show but without the tracksuits and Ugg boots. There are 100,000 companies that the FOS overseas and in 2009 it dealt with around 140,000 complaints in total. Of these over half, yes half, related to just seven banks. You dont see those figures on the TV adverts do you? To compound this, over 61% of the complaints were found in the customers favour. This means the bank had already investigated and rejected the complaint, yet was overruled by the Ombudsman. You would assume that most people would deem this kind of relationship to be one not worth having but no, we battle on, trying to save the relationship for old times sake. We point to the fact that they provide us financial security in an uncertain world. In the last few years however, even this myth has been well and truly debunked. It turns out that they have been spending the housekeeping money unwisely. In fact they have been taking our money and gambling with it. Then, whether they won or lost the gamble, they have been paying themselves huge bonuses. Their greed for these bonuses caused them to gamble too much and it all went wrong. They lost all of our money and nearly brought the whole financial structure down with them. Of course at the time they said they were really, really sorry and could they borrow some more money from us to stop them going bust. Like love struck fools we said yes. Surely, now they will change their ways we thought. But alas no, just eighteen months down the line they are again paying themselves huge bonuses again despite the fact that they havent paid us back yet. So, if your Adam Ant poster has started to fade and you feel neglected, unloved, and you just dont talk anymore, maybe you should switch your Direct Debits to somebody who loves you for who you are. 2010-02-05 17:29:13 http://www.joslinrhodes.co.uk/financial-adviser-blog/banks-13/zero-tolerance-tell-it-43.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/banks-13/zero-tolerance-tell-it-43.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/meteors-doesnt-stronger-42.html As the recession continues to bite the effects are still being felt in all corners of the world, especially in Britain. Unfortunately, we are the only G20 country still in recession. We were first in and last out. It should be expected really as queuing is practically an Olympic sport for us Brits. We therefore thought that it might be time to look on the bright side of life, and consider the benefits that recessions bring. Yes, believe it or not recessions are a necessary evil in the economic cycle, and good does come of them. Eventually. It is said that capitalism is based on nature, with a survival of the fittest ethos. In fact Mother Nature makes Margaret Thatcher look like a bleeding heart  liberal. As Darwin identified, nature works on a very simple basis. It tries many different experiments and keeps the ones that benefit survival, discarding any that dont. Nature also recognises that its main aim is the survival of life itself, and it is brutal in its nonchalance about the survival of individual species, let alone single beings. At times throughout history the tree of life has branched off into a cul de sac. The dinosaurs are a good example. They evolved up to a point and enjoyed a period of total dominance, and then in evolutionary terms did absolutely nothing for 80 million years. No fire, wheels or tools. Not even a Skoda. Eventually nature decided that enough was enough and the accepted theory is that a large meteor landed in Mexico causing global devastation and the extinction of the dinosaurs. Some small mammals however did survive and went on to evolve into bigger mammals and ultimately the human race. The point being, is that the slate needed to be cleansed in order for new and improved species to evolve and continue the evolutionary path. Given that our capitalist society is modelled on Mother Nature, then recessions are also a necessary evil. In good economic times some poor companies and organisations may prosper, when they may otherwise have not. They survive with poor products, broken business models and shoddy service because in the good times we stop asking about quality and focus only on quantity. Even the banks stop asking the right questions and pump in more money to meet their short term sales targets. When a downturn strikes, these companies are often the first to be killed off. If you consider that two of the most infamous early casualties of the recession were Woolworths and MFI. Both of these companies had business models that in less opulent times would have been found out long before they actually were. Woolworths were famous for pick n mix sweets which nobody ate anymore and for selling music which had moved to something called the Internet. MFI had their heyday in the eighties and the profits saw them through the nineties before they became a comedic caricature of themselves. If you follow the companys financial history they were dying a slow but certain death for the preceding ten years. If they had been an animal, the RSPCA would have stepped in long before the recession finally put them out of their misery. The next batch of companies to struggle are those who had a good product or service in the past but who have rested on their laurels for many a year, finding it too easy to make money without really trying. Some will see the light and reinvent themselves; others will go the way of diplodocus. And then there are those that will once more rise to prominence as consumers gravitate to quality. It is no coincidence that John Lewis and Marks & Spencers this week posted strong results during the worst economic year for decades. So whilst we suffer the recession we must also remember that some good will come of it in the end. After all without that meteor you would still be grubbing around in a little hole trying not to get eaten by a velociraptor. 2010-01-08 09:45:55 http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/meteors-doesnt-stronger-42.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/meteors-doesnt-stronger-42.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/why-its-nifty-to-41.html Life is like a box of chocolates apparently. Well actually Forrest Gumps dear Ma was wrong, because its actually like a stick of rock with many layers of contrasting flavours. In our twenties we enjoy the freedom of limited responsibility and start our careers with high hopes of making a difference in the world. In our thirties we swop that freedom for nappies, sleepless nights and big mortgages. Forty brings teenage children and normally some kind of mid life crisis involving a leather jacket, a motorbike and a badly misjudged goatee. When we get to fifty however, life is supposed to level out. The kids have left home or are at the tail end of their education and the term left on the mortgage should be in single figures.  There is a glimmer of light at the end of the tunnel and all thoughts of making a difference in the world have been replaced by a simple desire to just get through life alive. Many quinquagenarians may however be feeling a little left out at the moment. It seems that every other age group is being thrown some sort of financial lifeline to help them through the economic downturn. Twentysomethngs have had an increase in the stamp duty threshold to assist first time buyers. Thirty & fortysomethings are enjoying the lowest interest rates in history, which is helpful as they have the largest debt liability in history. Its not even as though you get a bus pass and a winter fuel payment until you are in your sixties. Finally however, the hand of mercy has been extended to all people who can claim to remember William Hartnell as Doctor Who. Alistair Darling has extended the ISA allowance for those who will be aged fifty or over before 5th April 2010. The Cash ISA allowance has been increased from 3,600 to 5,100 and the Stocks & Shares allowance from 7,200 to 10,200. ISA stands for Individual Savings Account and they incur special tax advantages. Normally, income from savings will pay tax at either 20% or 40% depending on whether the investor is a basic or higher rate taxpayer. Growth on investments is also charged as a capital gain at a flat rate of 18%. It is best to think of an ISA as a protective blanket that can shield part of your savings from the beady eyes of the taxman. Each year you are granted a new allowance that means that the blanket can be extended over more of your investments. The key thing to remember is that if you dont use your allowance in the tax year, then it will be lost forever. This means that if you are over fifty, you only have until April to use your increased allowance for this tax year. The ISA allowance comes in two parts. The cash ISA element only covers cash based deposits and the Stocks & Shares ISA covers non cash based investments. Confusingly, the Stocks & Shares ISA is not limited to Stocks and Shares. It can actually hold many types of investment including fixed interest funds, corporate bonds and commercial property as well as equity based funds so there is no excuse not to use it. If you are in your fifth decade on this mortal coil then your thoughts may also be wandering towards the possibility of retirement. These may either be realistic thoughts based on sound financial planning or a harebrained scheme born of desperation as you gaze wistfully out of the office window. In any event, under current legislation you may take the benefits from your Personal Pensions from age 50, but this is also about to change. From 6th April 2010 the earliest you may take your benefits will be increased to age 55. Therefore if you are currently aged between 50 and 55, you only have five months left if you wish to take any pension benefits, including the tax free lump sum. Failure to do so will mean at least a few more years of window gazing. 2009-11-13 10:27:04 http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/why-its-nifty-to-41.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/why-its-nifty-to-41.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/i-am-spartacus-no-40.html So it seems that this will be the general election of doom with each party attempting to outdo the other with their prophecies of impending hardship, plagues and general armageddon. The rhetoric from the various party conferences all assured us that the only way to prevent this, is to offer ourselves to the sword of sacrifice and hard choices, as Brown and Cameron engaged in a game of one-upmanship as to who could be the more deserving martyr. One of the issues involved in this was which party would make us work the longest with various headlines screaming that we would now have to work to 68 and the ensuing groans of angst from the workforce at large could be heard up and down the country. The problem with this, is that it is the biggest misrepresentation of a statement of fact since we last obtained a quote from a low cost airline. What it actually means is not that you wont be able to retire until three years later than expected, but that you wont receive your state pension until then. Lets put this into perspective. The current state pension is 95.25 per week, or 152.30 if you are a couple. Thats not a lot to pay gas, electric, water, phone, council tax, insurance etcetera, oh and food and clothing every now and again as a treat. Consequently, unless you have made serious private pension provision or are one of the last few left who has an employers scheme, then it matters little whether the state pension age is 68 or 108. Either way you are likely to be getting measured up for a big orange apron and taking a crash course in DIY power tools in order to make ends meet. It was also with bittersweet irony that this all happened in the same week that the courts ruled that an employer has no legal obligation to employ someone beyond age 65. That means that between the ages of 65 and 68 you will have no right to work and no right to retire. Consequently, Eastern Europe may need to beef up its border patrols as all our pensioners will be hanging under a truck trying to claim asylum in Poland. To go slightly off subject we would like to bring a certain Charles Ponzi into the discussion. In 1920 the Italian immigrant started selling postage coupons to unsuspecting investors with the promise of substantial returns. Unfortunately the monies were never invested and the incoming cash was used to pay out wonderfully high returns. Hence the term Ponzi scheme that refers to any scam that uses new investor money to pay out fake investment returns to existing investors. There have been many versions of the Ponzi scheme over the years however they always fail because they run out of new investors and eventually collapse, as Bernie Maddoff and 'Women Empowering Women' will tell you. Fear not though because our heavily regulated pension industry has strict rules which mean that all pensions must have enough assets in them at all times to meet all of their liabilities. If they fall short at any point then the employer is obliged to plug the gap. This legislation was introduced after the Maxwell affair in which the Daily Mirror owner borrowed substantial funds from the pension scheme to prop up his ailing companies, which subsequently failed leaving thousands of employees without their pensions. There is only one pension scheme that is exempt from these robust regulations that exist to protect the public. It is allowed to operate without any assets or investments and it uses the cash it receives from new investors, to repay existing investors just like Charles Ponzi did. The name of this scheme? The State Pension.   2009-10-16 13:44:20 http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/i-am-spartacus-no-40.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/i-am-spartacus-no-40.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/they-think-its-all-39.html Here at adviser Blog we like a good horror film. Ever since Salems Lot weve never looked at a rocking chair in quite the same way. Have you noticed however, that they all follow a certain formula? Firstly the unsuspecting victim enters the haunted house in the middle of a stormy night. As they go from room to room the creepy music builds to a crescendo and finally they enter the basement where.. Tiddles the household cat jump out and startles everyone. We all then breathe a sigh of relief. Unfortunately for the hapless victim however, thats when the nasty man jumps out with the chainsaw and the hockey mask. The current economic meltdown has played out very much like a horror film although if we look more closely, there are more than just anecdotal similarities. Recessions are fuelled by anticipation (or pessimism to be more precise). When we are in a Bull (rising) market everyone is confident and that feeds into the market, which increases the price, which increases the confidence which..you get the idea. A Bear (falling) market operates in reverse. Pessimistic investors sell their stock, which depresses the price, forcing more to sell and the spiral continues. The point is, that investors make decisions now, on what they think is going to happen at some point in the future and this creates a lag. Therefore we see the results now of how we felt six months ago. Its a bit like stubbing your toe in the middle of the night. You know youve done it and you know its going to hurt, but you get a second or two to think about it before the pain actually hits. Recessions also come in different shapes and sizes? Oh yes, there is no standard recession and you never know which type it is, or was, until its over. You can have a V shaped recession which means there is a sharp plunge followed by a quick recovery. Then there are U shaped recessions involving a more sustained downturn before growth returns. The L shaped recession is the worst kind as they go on forever. Just ask Japan. And finally there is the W shaped one. Its actually like a VW, but that isnt a letter in the alphabet so we make do with w. If you can remember back to 2006 there was a bit of a wobble and we all panicked as we thought that the bubble may be about to burst. Lots of important and knowledgeable people like Gordon Brown told us not to worry because everything was fine and they had eradicated the boom and bust era. That was the first dip. Then came 2007 and it all went a bit pear shaped. The big bust that we were told couldnt happen, happened. That was the second dip and is where we are now. Now we are being told that everything is fine again and the green shoots of recovery have started. That may have something to do with a general election next year and the spin doctors attempting to portray an image of Gordon Brown galloping to our rescue astride his trusty steed. Not an easy image on the eye we admit. We may therefore be tempted to loosen up a bit. To dust off the savings accounts or buy that new car weve been eyeing. All of which helps to fulfil the prophecy of recovery, push the markets up, and we all think everythings going to be just fine. But as any self respecting B movie star will tell you, thats exactly when youre most likely to be parting company with a limb or two. So if it does turn out to be a W recession you may just want to keep a tight grip on that popcorn. 2009-09-17 10:31:59 http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/they-think-its-all-39.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/they-think-its-all-39.html#comments