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 2012 Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/Insurance-17/happy-birthday-or-not-68.html The 1967 novel Logans Run by William F. Nolan and George Clayton Johnson, depicted a time in 2116 when the Earths population had reached a critical mass and a person's age had been limited to exactly 21 years. To monitor this and avoid any white lies about how old you were, everyone had a palm flower crystal embedded in their hand which changed colour every seven years and finally to black on their 21st birthday. When this happened they were required to report to the Sleepshop for voluntary execution. Naturally, some people decided that this wasnt a good idea and decided to leg it. These were called runners and they were chased by a nasty man with a big gun called Logan 3. The man that is, not the gun. Fortunately, this scenario is unlikely to be a vote winner in mainstream politics and so is a premise unlikely to be re-enacted outside of the BNPs manifesto policy on immigrants rights. Or so you may think. In 2009 the various members of the EU, including our good selves, signed up to the Treaty of Lisbon. It wasnt particularly exciting and it was mostly an administrative exercise to tidy up a few of the previous treaties that had been in operation. It is effectively an EU constitution but because the British right wing nearly choked on their ginger beer at the thought of a federal Europe, they changed the title to a treaty and it slipped through quietly without any fuss. One of the features of this treaty was a hardening of the terms relating to discrimination and it made it illegal to discriminate on any grounds, which most people would agree is a noble principle. The problem with principles is that they often get in the way of real life and this change has caused all sorts of problems for insurance companies who are no longer allowed to offer different rates to men and women. It must be understood that insurers are just bookmakers. They offset the chances of one event happening against the chances of another and those who do not claim subsdise those that do. That may seem unfair in principle but it all works out in the end. Whilst a spotty teenager will pay a fortune to insure his Ford Escort Mark III he will reap the rewards when he retires and pays a pittance to insure his Toyota Prius Economy Special. Insurance companies hedge their bets by underwriting both sides of the same coin. One side may be pension annuities, which is where you give your pension pot to them in return for a guaranteed income for life. They hope that you get hit by a bus on the way home whilst you hope to live longer than Bruce Forsyth and get more back than you gave them. The other side of the coin will be life insurance, priced back to back against the annuities. So if you are a healthy 30-year-old non-smoker then your life insurance will be very cheap as they are confident that you have at least thirty years left in you. Your annuity rate however will be terrible for the same reasons. Reciprocally, a 90 year old who has put away 40 Capston Full Strength a day since they were fifteen will get the opposite treatment and hence the insurance company offsets the two against each other, ensuring they build a margin of profit in for themselves. Men have always paid more for their life insurance because statistically they die 4 years younger than women and are hence more likely to claim. Equally they get more attractive annuity rates for being polite enough to snuff it earlier. This will now cease and insurers will be forced to ignore this statistical probability. The issue then becomes what happens next? The treaty says that discrimination on any grounds is not allowed. So that means smokers cannot be asked to pay more for life insurance nor young drivers more for their car insurance. If you cannot discriminate then everyone must pay a flat rate. Thats great if you want life insurance when you are 80 but pants if youre the thirty year old whose premiums skyrocket to pay for it. The problem is that no matter how wonderful the principle may be, it does not reflect the harsh realties of life. It would be wonderful if we were all equal in life and in death but we are not. Some die young, some live a long time. Women will live longer than their male counterparts and young men will always want to drive their cars fast. This is because of evolution and testosterone respectively and is not something that can be legislated against. If you follow this thread through to its conclusion, how long is it before life expectancy is standardised to avoid any potential unfairness to those who may die young? Could the 'Sleepshop' envisaged in Logans Run become a reality but with 21st century pazzaz and customer service? Good morning Sir and welcome to Heavens Above the regions premier execution boutique. Oh, good morning Im here for my appointment. Ah yes, Mr Smithwick is it? We have you in for a 10 oclock extermination. Yes, thats the one, Im a bit early though Im afraid, the traffic wasnt as bad as I thought. Oh isnt it always the way Sir. Well never mind it wont be something you need to worry about any more after today. Yes, that will be a relief. Now how does this work, Im a first timer so am a bit nervous. Dont worry Sir; all of our customers are first timers. Your execution is scheduled for 10:15 so a few minutes before Ill show you into your booth and if you could just position yourself in the middle of the polythene and initiate your passing. You have a 10 minute slot so please ensure that you are medically dead within this period or Im afraid there will be a surcharge. I should also point out that if you manage to splash any blood or other body innards over any of the areas not covered by the polythene, then there will also be a cleaning fee added to your final bill. Oh, right. That seems straightforward although the bit about blood was a concern. I assumed I got tablets of some type? Err no Sir, youre booked onto our economy package so you will just be issued with the standard equipment like this. But thats a hammer? Yes Sir. But its a very sturdy hammer. Err, I was hoping for a little more of a serene passing. Ok Sir, I can offer you a Stihl Saw or perhaps a toaster and a bath? More serene than that. Perhaps something that doesnt need to be plugged in or kick-started?' OK, maybe I could tempt you to upgrade to our assisted passing package. I have our top executioner Cedric available at 10:30 if you can wait a while. Is that the gentleman with the black tabard and hockey mask that I passed on the way in? Yes, thatll be him. Hes very efficient, people ask for him by name. Really?, I think Ill pass. Let's go with the tablets. OK Sir Ill need to upgrade you to our platinum package. Can I also interest you in an extended warranty? What for? Well, sometimes people get half way through and lose a little motivation. To help you along we send somebody in to give you lots of little snippets like the fact that Olly Murrs has a recording contract or that Ed Balls may one day become Prime Minister. You can then add these to your list of reasons to die and it can help to reinforce your will to see it through. Oh, that sounds helpful, yes sign me up.   OK, so maybe its a little far fetched but then again imagine going back to 1977 and telling the guys at the bar in the working men's club that one day it would be illegal for them to have a fag with their pint after a days graft. Oh how theyd laugh.   var addthis_config = {"data_track_clickback":true}; 2012-04-23 14:37:08 http://www.joslinrhodes.co.uk/financial-adviser-blog/Insurance-17/happy-birthday-or-not-68.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/Insurance-17/happy-birthday-or-not-68.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/anchors-aweigh-67.html There has been much talk recently from politicians about manufacturing and bringing back Made in Britain. The theory is that this will solve all of our current economic ills. It is a popular political gesture to talk about such things in times of austerity because when we think of manufacturing we think of mass employment for blue-collar workers for whom the pain of long-term unemployment can be particularly harsh. Only the most hardened voter can fail to be seduced by the alluring claims of bringing back the golden age of manufacturing and yet it is all an illusion. It is in fact, a symptom of a physiological nuance called anchoring. Anchoring is where our minds set our standards and preconceptions based on the most favorable point in history. If nostalgia, which is a filtered view of our past taking out all of the bad stuff and leaving only the nice cuddly stuff, is a shotgun then anchoring is a sniper rifle. Anchoring is common in most aspects of our life but is especially noticeable when it comes to our money and how we view the economic world. To prove the point, try asking anyone you know how much their house is worth. The answer they will give you is not how much it is worth now, but the highest value it was ever worth. Their response will start with Well, in 2006 it was valued at (insert wildly optimistic valuation from zealous estate agent desperate for business here) Or Bob next door once thought about putting his up for sale for (insert absurd figure here based on how much Bob needed to sell his existing house for in order to buy his next house, despite the lack of any credible, let alone mathematical link between the two) And so anchoring is why we always think the TV, toys and childhood that we had as youngsters are better than todays and why our musical taste does not progress beyond the age of thirty five. Interest rates are another good example of how psychological anchoring can wreak havoc with your wealth. For the generation that had savings throughout the eighties and early nineties, they view getting an interest rate of 5% today as an insult. This is because they enjoyed 13.5% in 1991 and they have anchored that in their minds as normal. The fact that inflation was then 15% and they were actually making a real loss of 1.5% is missed in their irritation at only now getting 5% growth when inflation is about 4% depending on who you believe. Ironically they now make a real return of 1% rather than losing 1.5% per year and yet still view this as disappointing. Talk about hard to please. And so on to manufacturing and this so called golden age. When exactly was it? Well we can tell you the exact date. It was the 1st May 1851 and it was called the Great Exhibition. The exhibition, pioneered by Queen Victoria and especially Prince Albert was a huge showpiece of our engineering genius held in a specially designed glass and steel structure of huge proportions called Crystal Palace. The exhibition was crammed full of new gadgets including locomotives and exquisite artistry designed to flaunt our knowledge and design prowess to the rest of the world. That was the pinnacle and everything else is just nostalgia. Today, the closest we get is Britains Next Top Model. All this industry led to us getting rich and most of it was spent habitually fighting the French. The rest was just wasted. In the first part of the 20th century our factories either made weapons to fight the Germans or materials to rebuild things destroyed by the Germans. This inertia carried manufacturing through the fifties and into the sixties despite signs already that other countries could do it much cheaper than we could. By the late sixties and early seventies the game was up. Our standard of living had gone up to such a level that it cost more to pay the wages of the staff to make something than those same people would be prepared to pay for the thing that they had made. Even one of our most famous exports, the Mini, never made a bean of profit in over fifty years. They cost more to make than they could be sold for, yet we continued to make more of them and pat ourselves on the back for doing so. Well done guys, that cost us fifty quid more to make than we could sell it for. Lets make another! British Leyland epitomized the madness of trying to keep an industry going that we could no longer do effectively. It employed about 500,000 people both directly and indirectly and when it went bust in 1975, the left wing government of the day panicked and under pressure from the unions to do something it brought it under government ownership and went about wasting mind-numbing amounts of public money to prop up something that was inherently broke rather than make large swathes of angry voters unemployed. The almost communist business model was so orientated towards the rights and pay of the workers without any thought to the actual viability of the product that it would even have made Bob Crow blush. It limped along before being renamed MG Rover in 1986 and finally, mercifully, dying in 2005. And so when we hark back to the golden days of manufacturing it is really just an illusion that hasnt existed for 170 years, yet the politicians are happy to peddle the sound bites about rebalancing the economy etc. We shouldnt feel bad though, every country goes through this as it matures and its wealth increases. That is why as you get older and wiser you stop doing paper rounds and start paying someone else to deliver your papers for you. The same will happen with China as the wage demands of its workers increase and soon, manufacturing will move to Africa. When the Africans get too rich to make their own stuff were jiggered, but well worry about that when the time comes. Maybe Cliff can sing us a song to get us through. Anyway, back to the point. Lets look at the iPhone which retails at 480. Of that, 240 goes to the retailer, 190 to Apple, 45 on taxes and shipping and 5 to the manufacturer in China. So, do you want to be the person paid a pittance to make it or the well paid person who designs it? And that is the point, the Great Exhibition wasnt about manufacturing, it was about technology and innovation. We were very good at designing trains when it was known as technology, before building trains became thought of as manufacturing. We were brilliant when inventing automatic looms was deemed to be sorcery like magic, before making them became something anyone could do. We never were, and never will be able to mass-produce simple things at a profit and nor should we want to. Just because you sit on your whicker chair in your orangery, reading the Daily Mail and pontificating about the good old days doesnt mean you actually want to get on your BMX at daft oclock every morning and deliver papers. Maybe our politicians need to stop throwing around political sound bites and start telling the truth. We can still mass-produce things but they need to be at the forefront of technology. They should to be things that countries without our knowledge and technical skill cant do. Let the Indians build the cars as we make more profit from one electric battery than they make from producing the whole vehicle. There is more profit for us in one wind turbine than can be made from exporting unimaginable tons of coal. So instead of dreaming of the days of Made in Britain, would it be so bad if we were happy with Created in Britain? var addthis_config = {"data_track_clickback":true}; 2012-03-22 10:27:18 http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/anchors-aweigh-67.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/anchors-aweigh-67.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/it-is-with-much-66.html It has been four years since Gordon Browns claim that he had ended boom and bust was so spectacularly contradicted. Since then the UK, as well as much of the world, has struggled to adjust to a new age of austerity. Now that we all have razor sharp 20:20 economic hindsight it is blindingly obvious that the housing bubble just covered up the cracks and that we were technically in a downturn from the early part of the noughties. We were just encouraged to borrow artificially inflated equity from our properties in order to keep the wheels of the economy lubricated. What is interesting however is our current obsession with growth and our unswerving belief that this will solve all our ills. The only problem with this strategy is that growth is not part of the solution, it is part of the problem. It just sounds better than austerity to the voters. Growth is the politically correct term for boom, just as austerity is the same for bust. They are merely opposite ends of a scale and as a society we just ride the pendulum that swings between the two. The problem is that when you are on the pendulum it is difficult to gauge exactly where you are in the swing and by the time youve worked it out it is normally too late as a certain Lieutenant Onoda would attest. The Lieutenant started life as plain old Hiroo Onoda, born in Kainan in Japan in 1922 where he led a very ordinary life until he was drafted into the Imperial Army in 1944 and trained as an intelligence officer. The Japanese had recently invaded the Philippines and stationed troops on the various islands to defend them from the US supported Filipino forces that were trying to reclaim them. Onadas mission was to hamper the enemy attacks through any means necessary including destroying the airstrip and pier that was vital for any invading forces. It was essentially a one-way trip as the war was nearing its conclusion and the Japanese were massively outnumbered, only being able to afford a handful of soldiers on each of the 7,107 islands collectively known as the Philippines. The Japanese generals were optimistically hoping to defend the island from American warships with a few rag tag soldiers armed with little more than some harsh words. Consequently, they were more of a nuisance than any meaningful resistance. They were also expressly forbidden by their superiors from surrendering or taking their own life. Unfortunately, when he arrived on the island he was outranked by the soldiers who had been sent there previously and they prevented him from destroying the landing strips. This made it even easier for the Americans who soon overwhelmed them. Only Onoda and three other soldiers survived the battle and now that he was the highest ranked soldier, he ordered them to the hills to embark on a guerrilla war against the inhabitants. Now, the Japanese are probably the only race on Earth better at austerity than us British for whom going without is an Olympic sport. In Greece, mobs of public sector workers have been firebombing parliament in protest at not being able to retire on full salary until age 52 whereby we are being told we must work until 68 to get our state pension and have responded largely by sending strongly worded letters to newspapers and muttering between ourselves at bus stops about bankers. Even the public sector strike day was perhaps the most civilized strike in the world ever and the first to include tea and scones on the picket lines and scabs who could wander through without being spat upon and bricked to death. The closest it got to kicking off was when one was given a discouraging look by Sharon from accounts but the situation was quickly diffused with some herbal tea and Pilates. Compared to the Japs however we are positively lackadaisical. After the war their economy grew continuously for 30 years right up until the 90s when it all went wrong and they plunged into recession from which they have never really recovered. It was made worse by the fact that the country is run on a kind of dictatorial capitalism model, similar to the Chinese. They like the idea of making lots of money out of capitalism but have lots of vested interests based on internal politics and favoured groups. When things were going wrong and they should have been shedding a bit of fat, the government, under pressure from the unions (no scones here, but plenty of bricks), started spending huge sums on completely pointless public works programs; which may sound familiar to us, although we can take comfort in the fact that this is normally born of steadfast commercial incompetence by our civil servants rather than a structured economic policy. This created an artificial bubble that masked the fact that the wheels had come off their economy and made the resulting recession even worse. A bit like ours when we were encouraged to cash in our houses to keep on spending. They have now had close to 20 years of stagnation without a hint of growth. The funny thing is that the sun still rises every morning, they still go to work, they still have families that they love and enjoy spending time with, the food tastes the same and the sun still sets every evening. They just dont fret constantly about growth, which seems to be healthier than craving something which we know will ultimately put us right back in the mire. You dont encourage a recovering alcoholic to think about beer every day or invite someone who's just had their stomach stapled round for a rack of lamb and a slab of cheesecake. So why do we spend so much time obsessing over growth? Maybe instead, a more balanced diet and a change in lifestyle is better, similar to that which was forced upon the Japanese. The issue is working out when we are normal. At what point do you stop the pendulum? Sometimes you cant see the wood for the trees and need somebody else to come along and tell you to stop. Many attempts were made to convince Lieutenant Onoda that the war was over and he could stop fighting. As early as 1945 leaflets were dropped explaining that hostilities had ceased yet, fearing an enemy trap, they ignored it. Further leaflets were dropped ordering them to surrender but Onoda stayed true to his original mission to never surrender or take his own life. In the 1950s the soldiers families wrote letters including photographs and begged them to stop fighting and come home but again, they feared that this was allied propaganda and continued fighting. Over the years, Onodas men died from gun battles or ill health until he was left on his own and had, unknown to him, become a bit of a celebrity in his home country. So much so that many attempts were made to find him but they all failed. However, in 1974 a college dropout called Norio Suzuki was travelling the world looking for Lieutenant Onoda, a panda and the Abominable Snowman, in that order and managed to somehow blunder into Onodas well-hidden camp. Surprisingly they quickly became friends although Onoda still refused to surrender without a direct order from his superior. Hearing of Suzukis find, the Japanese government tracked down Onodas commanding officer, Major Taniguchi, who was now a bookseller, and flew him to the island where he officially ordered Onoda to cease hostilities, which he duly did. Onoda moved to Brazil where he remains today. In his autobiography he mused over the pointlessness of all those years fighting a war that didnt need to be fought which perhaps should be mandatory reading for all of our so called economic experts.   var addthis_config = {"data_track_clickback":true}; 2012-02-16 10:58:17 http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/it-is-with-much-66.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/the-recession-8/it-is-with-much-66.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/stock-market-9/bagsy-i-get-the-65.html Good evening and welcome to the Nine Oclock News. The world is going to end and its all Kevin McClouds faultreportedly. You may be surprised by that headline as we normally like to start the program by reporting on a grisly murder or such like.  Ideally, a good hammer attack in some pretty middle class village, although anything that makes you feel like you could be next is good for us. Unfortunately, and surprisingly, nobody was murdered today, which caused us a bit of a problem. We tried very hard to find one, and in desperation the Producer even considered bringing one about however we talked him out of it. Were sure that lots of nice people did some good things today but as the media, we are unable to bring ourselves to report these to you for fear that you may go to bed in any state other than terrified for your life. On the economic front nothing of any significance happened. Again we tried very hard to find some bad news but despite the lack of murders, nothing untoward actually happened. We first thought of talking about how the FTSE had billions wiped off its value just to scare the living pants off everyone and to try and panic you into cashing in your investments so the price would go down a bit and give us more of a story tomorrow but we were very disappointed because it had only gone down by 20 points. We tried converting this into a percentage to see if it sounded any worse but it was only 0.0035%. We even got our graphics department to do a graph over a very short timescale and make the drop look more dramatic but it just looked silly. We then looked at the economic statistics released by the Government and its various agencies but again we could find nothing overly horrific within them. Some were up a bit and some were down a bit but we couldnt really run a story on that. We even thought about asking the Shadow Chancellor Ed Balls for a comment as we figured he would be happy to talk down the economy and he duly obliged. Fortunately however we remembered that he had the fiscal credibility of a 12 year old clutching a fiver in a sweet shop and asking him for comments on the recovery was a bit like asking Imelda Marcos to talk about money saving tips for the poor. Admittedly, she is much less annoying and always wears fabulous shoes but it wasnt felt that that was enough. So, in desperation we decided to fall back on our favourite technique..speculation. Back in the days before Grand Designs, factual TV programs and news bulletins were just that, a report on the facts of the situation. Then Kevin came along and showed us that if you provide a commentary and start guessing what might happen then it is a much better story thanwell the truth. He showed us that he could make every house build that ever appeared on the show follow a certain path. He would start off full of enthusiasm and be nice to their faces when he first met them but during the middle part of the show he would urge us to come back after each commercial break to see if it had fallen down, they had run out of money or endured a clinical physiological collapse due to the stress. They never did, but it made you want to watch just to see, and he always liked the house in the end so it was OK. Admittedly X Factor and the like have refined the techniques to stratospheric new levels but it was Kevin that showed us the way. Hence, in the absence of any true economic facts we sent an email out to a few companies and asked them to tell us what they thought might happen. Most of them replied with statements that pretty much agreed with the facts that we had already established. We did manage to get one self-proclaimed expert to spout on about some doom and gloom in return for mentioning his name on the telly. We think his sole source of research was the Daily Mail as he also proclaimed that Diana may have been killed by the KGB or was it an asylum seeker or benefit claimant?.we forget. In relation to the economy he said he thought 2012 might be a rocky road and that if German inflation gets out of hand then they may be less inclined to allow the ECB to bail out some of the weaker Eurozone countries. If this did happen then one or more of those countries could go bust, which could have an effect on some of the banks in France and Germany, which could cause a second credit crunch. This, in tandem with a collapse of economic confidence, could plunge the world (including the UK unless Mr. Cameron has totally caved in to the Tory right wingers and has pulled us out of that as well as the EU) into a deep depression and even a total collapse of the global economic system. Money would become worthless, society would break down and we will all be living in caves by the summer. Despite not having a shred of evidence, proof, or reasoned thought, we decided that this would have to suffice given that there had not been any murders so far today. Obviously we couldnt run it as news because it isnt true and in fact is just the opinion of one person so what we do is announce the headline and then after it add one of the following phrases; [Insert headline here]reportedly. Translation; some other news channel has actually done some good old fashioned journalism and come up with a story which we have pinched and are trying to claim as our own It was alleged today that. [Insert obviously not true headline here]. Translation; I hope the person who put their name to this has a good lawyer because our legal department couldnt make it fly so we put the blame on someone else. [Insert ridiculous headline here].it was warned today. Translation; as above, we just asked some bloke off the street to guess about some stuff and were peddling it as news when actually it has no more factual content or forensic rigour than some kooky celebrity telling cancer sufferers that their new self help Crystology book is a much more effective treatment than that old fashioned chemotherapy. Then when we lead into the main details we introduce the opinion giver as a respected analyst. This is what we call people who were so bad at actually doing the job that they like to critique upon that they just decided to start guessing in the media. Its a bit like cold reading, if you get one or two lucky guesses in there then nobody remembers the other ten that you got wildly wrong. It will normally do the trick because hopefully enough of you will panic and cash in some of your investments and start burying your money in the garden. This will push down share prices to a level (FTSE of 5,000 normally) when all the professional fund managers will start buying them because they are such good value. This will push the markets up (but obviously this will not get a mention on our program, even if there have been no hammer murders that day) to a higher level and then they will sell the shares back to the amateur investors who decide it is safe to come back into the market and start digging up the lawn. In the end we will relent and, like Kevin, tell you that everything is going to be alright after all despite us scaring you witless in the meantime. Remember that you may still be hammered to death by a maniac at any time though, so dont drop your guard. var addthis_config = {"data_track_clickback":true}; 2012-01-13 09:30:27 http://www.joslinrhodes.co.uk/financial-adviser-blog/stock-market-9/bagsy-i-get-the-65.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/stock-market-9/bagsy-i-get-the-65.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/banks-13/build-it-and-they-64.html As banks prepare to pay out billions of pounds in compensation to customers who were strong-armed or tricked into taking worthless Payment Protection Insurance (PPI) policies, it is hard to imagine how these practices were operated on such a large scale and over such a long period of time without anybody in the organisations involved standing up and saying erm...I don't think we should be doing this? It also begs questions as to what went on at the staff training sessions for these products. Wed like to imagine that if an audio recording of such a training session was unearthed, it may go a little like this: Somewhere in deepest Slough, circa 2007...... Instructor: Good morning ladies and gentlemen! Welcome to Globobankss PPI sales training program. Today youre going to learn some of the fundamentals of selling our main product, Payment Protection Insurance. Luckily for you we have arranged some live demonstrations by some of the most successful PPI salespeople of our generation. People like Ron The Hammer Sheldon and Margaret The Merciless Green are just some of the legends that we have assembled here today for your benefit. But firstly, lets start with the basics. Our PPI policy is an insurance plan which covers a customers loan payments in the event of them being made redundant or unable to work through sickness. They pay us a monthly premium for the privilege and in return they get a lovely warm fuzzy feeling of being protected. Trainee: So if theyre off work for a week with flu, it will cover their payments? Instructor: My god no! They need to be off work for at least a month, just to make sure that theyre really ill. The hope is that they might die before they put in a claim although some of them hang on just to spite us. Trainee: Oh, does it pay out automatically after the month? Instructor: [Belly Laugh] - Oh dear, the innocence of youth! No, we just start the claim process then and after another thirty days tell them that they weren't covered after all. In a way were doing them a favour although youd never think it the way those troublemakers at Watchdog go on although that Ann Robinson can be strangely alluring..........[wistful silence]. Trainee: Oh......aren't insurance policies normally underwritten at the start, so we know whether we can cover them or not? Instructor: Yes, but thats the beauty of this product, we underwrite it at the point of claim, saving the hassle of all those messy medical questions at the beginning. Trainee: So they could be paying for a policy that wont pay out? Do we give them their premiums back if it turns out that they were never covered? Instructor: [Sounding exasperated] - Not exactly no......look youre thinking about this far too hard and Im not sure youre cut out for this, Im just going to ask a couple of my colleagues to step into the room and perhaps you could go with them for erm....extra training. [Muffled radio conversation] - Security team to room three, code sigma four, cleansing required - [sound of door opening and heavy footsteps approaching]. Instructor: Ah gentleman, can you escort this trainee to the reprogramming facility. Trainee: Reprogramming what? Whats that? Ow youre hurting my arm, I'm not sure.... [sound of door slamming and a hushed silence descending on the room]. Instructor: OK, lets observe some real life sales action. On the other side of this glass is what looks like an ordinary branch and those people that you see queuing are real live customers. What they dont know is that this is actually an exhibition arena for some of the PPI legends of our generation. Its a bit like Field of Dreams but with insurance instead of baseball. Lets watch Sheldon deal with this young couple who look like first time buyers trying to get a mortgage. Now, can you see how hes automatically included the PPI payments into the loan and just given them one monthly repayment figure? Thats text book sales everybody, if they dont know its in there they cant ask you to take it out can they? What you probably didnt notice, and I wouldnt expect you to because it was done with Jedi magic, was how he rolled up all of the PPI payments for the 25 year mortgage term and then added them onto the loan as a lump sum. That means that we get 25 years of premiums upfront, they get to pay interest on them for the life of their mortgage and most importantly Sheldon has trebled his commission for the sale. Watch and learn my young Padowans, watch and learn. Oh hey-up the customers clocked it and hes asked if the PPI is mandatory, thats a bit of a schoolboy error from Sheldon and hes going to be a bit embarrassed when he watches this back. Lets see how he handles it.........woooah, world class skills there; did you see how he intimated that the mortgage may be declined if they didnt include it? I think hes showboating there a little by making the girl well up, but thats excellent work, hes used their fear about losing out on their first home to get a very good sale.....excellent recovery, it really is a privilege to watch a craftsman at work. Trainee: I couldnt help but notice that the customer was self-employed. I didnt think the policy would pay out for self-employed people? Instructor: [Crackling radio call] Can you send another security team to training room one please?... Trainee: No.....please dont....I need this job....[sound of a struggle...door slams]. Instructor: Now, does anybody else have any questions? [Stunned silence] Instructor: OK. Now lets watch Margaret the Merciless in operation here. Can you see how shes prowling up and down the queue of customers under the guise of doing customer feedback surveys? Shes actually hunting in a pack with Alan The Assassin McKenzie and theyll be trying to separate one of the punters away from the protection of the herd. I think shes got her eye on that old lady there but......ooohh fantastic teamwork, did you see how McKenzie distracted the husband whilst Margaret maneuvered herself between him and his wife. The old dear is completely bamboozled and doesn't know whether shes coming or going. By using the pincer movement Margaret has now got her signed up to a PPI policy and shes also upgraded her account to platinum status and sold her some boiler insurance. World class sales, its a joy to watch, it really is. But now for a word of caution. Working in the field can be a difficult life. Trying to maintain your cover and keep up the pretence that you are there to provide banking services for the customers benefit. It can be hard to live a lie for so long and for those with weaker minds, it can prove too much as we saw with the Smithson Incident back in 92. Smithson was one of our brightest stars, he smashed sales record after sales record and nobody saw it coming. He was operating out of Dorking branch under the cover of a Branch Manger when he went native. Warning bells started going off when he was approving loans for people who actually needed them, against the company policy of only granting them to people who could prove conclusively that they didnt, but it was only when he started employing enough cashiers to serve the customers without the need for queuing through their entire lunch hour that the extraction team was finally sent in. By the time they got there hed also signed off on a small business loan for a local company. A very messy business which shocked the team to the core. We managed to put it right by forcing the small business into liquidation and asset stripping it to repay our loan but the consequences could have been far reaching. Rumour has it that files were found in his drawer with plans to start opening the branch on Saturdays! Can you imagine! And on that bombshell it is time for you to collect your pens and application forms from the armoury and enter the field. Some of you will make it through, some of you will fall - [sound of Tina Turners Simply The Best starts to play through a loudspeaker] - some of you may even return as legends to live out your days in the theatre of dreams.........only time will tell. Good luck my friends and may the force be with you. var addthis_config = {"data_track_clickback":true}; 2011-11-17 12:18:16 http://www.joslinrhodes.co.uk/financial-adviser-blog/banks-13/build-it-and-they-64.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/banks-13/build-it-and-they-64.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/time-please-gentlemen-62.html For something that is so integral to everything that we do, we humans have never really got to grips with time. Mostly we curse its passage as one birthday rolls relentlessly into another. Conversely, there are occasions, as any seven year old trying to sleep on Christmas Eve will tell you, when it seems to have stopped altogether. We can even view it as some kind of physical presence as demonstrated when well-meaning friends attempt to soothe your broken heart by telling you that times a great healer. On such occasions you can always try cutting off one of their more useful limbs to see if they still maintain that sentiment. Not so clever and smug now, eh? Time is actually a dimension. It is the fourth one to be precise, after height, width and depth and seems to be universally misunderstood by most people who arent physicists. Lets consider a few little-known facts about time. Firstly, there is no such thing as the past or the future. Only the present exists. The past is merely a collection of memories stored by your brain and is therefore unique to the individual. The future is merely the brain attempting to create a storyboard by anticipating likely scenarios based on the situation as it is in the present, taking into account its memory of what happened when similar situations were encountered previously. As you are reading this, Kennedy is being shot, one of your ancestors is legging it from a Velociraptor, man is taking his first steps on Mars and Cliff has just celebrated his 200th birthday. Just because your brain categorises them into past or future events doesnt change the fact that they already exist in the fabric of time. The manner in which we envisage time is therefore a purely human concept. We imagine it like an arrow moving from the past, through the present and into the future when actually it doesnt happen like that at all. Times movement is dictated by the universes expansion or contraction. The said universe is currently still expanding from the Big Bang and it is this that stipulates the direction of time as we need to perceive it. Think of it like a vinyl record. If you happen to be under 25 then these are the thin round things that your dad has stashed in a box in the loft (no, not that box) which always made you wonder who Floyd was and why he was pink. Youll find them next to his Bullworker and once only attempted home brewing kit. Anyhow, the record player needle focusses on an extremely specific point, which we might imagine to be the present. However, you can lift the needle and reposition it at any point and the record will play that particular section. You can move it forwards and backwards whenever you like and it doesnt change the words in the song or the order of the verses on the record. Nor does it alter the fact that they have been played previously and are likely to be played again at some point. Newly educated as you may be about the fourth dimension through reading this particular blog (if youre still with us), you may be pondering what on earth all this has to do with anything financial. And ponder you might. The premise that we are lurching towards is that time also does funny things to your investments which can either make you happy or make you sad. The returns we get from our investments are directly proportional to the level of risk we take with the capital. Cash deposits offer the lowest level (allegedly) of risk and return, and the scale moves upwards from there, through fixed interest funds, corporate bonds, managed funds, property and stocks and shares all of which offer a progressively higher rate of return in exchange for greater risk to your capital in times of woe. The problem for most investors is working out where on the scale they feel comfortable. Human nature dictates that we want the returns associated with the higher risk things coupled with the capital security of the lower risk stuff. Which is a bit like asking for the cheap Ferrari or the low maintenance supermodel wife, they just dont exist. However, time can distort and even reverse this equation. That is because the length of time that you intend to hold your investment for, can either increase or decrease the risk associated with that particular asset. Think of it like this. One day you decide to buy the house next door and do a quick deal with Bob over a pint. You march home and announce to the disbelieving wife that you have purchased said house and intend to sell it on in a few weeks for a profit. Displeased is possibly a marginal understatement to describe her feelings towards you and if you listen carefully to the subtler points of her screaming rage, you may discern a thread indicating that she feels that it is a high risk investment strategy. Conversely, if you had instead announced that you intend to hold it for ten years and then sell it with a view to making a profit then the verbal lashing may not be so savage and it is possible that she may view it as a lower risk investment. So, by extending the time period you have decreased the risk of the investment. The same applies to equities. Viewed over the short term, especially in the current climate, they can appear volatile and risky however if you view almost any ten year period in history then equities are normally the most consistent producer. But how can time make an investment more risky? Well consider that you take a five year fixed rate bond at a rate of 4% (if youre lucky). Now, 4% is not particularly attractive when inflation is 5% as it guarantees you a 1% per annum loss in real terms. Over the lifetime of the bond that total loss is 5%. Consider though, if inflation and or interest rates rise whilst you hold the bond to say 7%, then your 4% interest looks even worse as your losses are now 3% per year which is a 15% loss in real terms over the five year term that you signed up for. Simply put, time has increased the risk of your fixed rate deposit account to the volatility of short term equity trading. Which is disheartening. As a crumb of comfort though, sooner or later the universe will start to contract and at this point the direction of time will reverse. You will then get to live your life backwards and any losses that you make with your investments in this lifetime will be profits in your reverse life. Admittedly, its not a recognised financial planning technique but if it gets you through the day....   var addthis_config = {"data_track_clickback":true}; 2011-10-14 12:59:25 http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/time-please-gentlemen-62.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/time-please-gentlemen-62.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/you-have-the-time-61.html When we make decisions about what to buy, it is normal to follow some kind of logical process to ensure that the selected product does the job that it is required to do.  Decisions such as what clothes to wear or car to buy involve a system of identifying what needs to be solved, looking at the available options and matching the best option to the situation.  It is this logic that ensures we dont wear wellies in summer or end up in predicaments like this;   Daddy, why is that policeman waving at you?What policeman? Oh, now I see him, yes well, ermIm sure he just wants to give me directions.  Ill just pull over.Ahem, good evening officer.Good evening wing commander.  Having a little trouble getting this one off the ground are we sir?Oh I didnt think I was going that fast?You were significantly over the speed limit sir, although that wasnt the only thing that drew my attention.Really, what else have I done? The cars just passed its MOT so I am sure its roadworthy.Yes, the car appears roadworthy enough.  Perhaps you may care to take another guess as to why I may have wanted to have a little chat with you.Erm.I really cant think officer.Perhaps if you looked on the roof sir and tell me if there appears to be anything out of the ordinary?The roof rack? On the roof rack sirOn the roof rack? Oh, the corpse.Yes sir.  The corpse lashed to the roof rack.That would be Mr Ridgwell but hes properly secured, I made sure of that.Yes sir Im sure you did and I have given you extra credit for tying the luminescent jacket around his protruding legs.  However my primary concern, being a policeman and all, was to how he ended up dead and attached to your roof, rather than whether the straps used to secure him were sufficiently robust.Oh, yes I see.  Well the back seat was full unfortunately.  No room, hence the old roof straps.The back seat is full is it? I have to ask, although every sinew of my being is begging me not to, what is on the back seat sir?Erm, its Mr Smithwick.And he would beDead also Im afraid.Of course.  Now again, I hesitate to ask, but are there any more dead people in your vehicle?No officer, thats all I could fit in.  I had to leave room for the children, Im taking them to school you see.The children?Yes, Im just dropping little Jonny off now.  Its his first day and he is a bit nervous.Well I am sure that sitting next to the decomposing Mr Smithwick on the journey will have settled his nerves.  In any event Im afraid that youre going to have come with me.  Do you have a lawyer? Id go for a good one if I were you sir.Oh, you think l killed them!!! Ha ha no thats not the case, Im an undertaker you see.An undertaker? In a yellow Toyota Prius?Yes, just bought it last week.  Its a beauty isnt it?Again, at the risk of asking a stupid question, why did you not buy a hearse if you were going to be a undertaker?A what?A hearse sir. Big black thing with space for a grieving widow in the back and a coffin in the rear.That sounds exactly the kind of thing I need.You dont say. So why didnt you buy one?Well I asked around for advice on the best car and Sad Mick in the pub said that his Toyota Prius was very fuel efficient so I went with that.Oh, well that makes perfect sense sir.  Why dont you just come down to the station with me and you can explain it all again to the sergeant. This mirrors an often-played out scenario when it comes to our pensions, and especially when choosing the options at retirement.  Logic can go out of the window and there is a tendency to rush out and buy the first thing that is put in front of us, which is often a very uncompetitive standard annuity from the pension provider.  Probably the same as Sad Micks. So if you have spent forty years grafting to build your pension pot, then it may be worthwhile to give it some thought before blundering in and ticking the first box on the form.  Unfortunately some people take more time deciding what to have for their tea than they spend researching their pension options.  There are too many such options to list here in detail but to give you an idea; in addition to standard annuities there are also impaired life annuities that can give you a higher income if you have health issues.  Purchased life annuities do the same job but provide you with a large part of your income without that pesky income tax.  Capped drawdown permits you to vary the level of income that you take from your pension and even allows it to continue growing whilst you are drawing it.  You can take the tax-free lump sum and leave the rest of the pension to grow, even adding to it if you want.  You can take the tax-free lump sum and pay some of it back into a new pension fund and claim tax relief on the contribution, even carrying forward any unused tax relief from previous years.  You can purchase a temporary annuity that you can change after five years or a capital protected annuity where you get your money back when you die.  Phased pensions can allow you to drip feed your fund into an annuity or drawdown and take your income in increasing installments.  You can also ensure that your remaining pension fund is left to your nearest and dearest when you slip off this mortal coil or you may even be able to use flexible drawdown which can allow you to access all of your pot as cash, and you dont even need to be dead.  Which is convenient. It is all the more important with pensions to do the research before you make your decision as annuities cannot be changed once purchased.  Once done, thats it; it is with you for life.  There is no point asking the questions six months later of what you could have had.  Not unless you want to be like the losing contestants on Bullseye as Jim Bowen forced them, with solemn cruelty, to see what they could have won, as the wondrous yet totally inappropriate prizes were paraded in front of the defeated couple, one of which was pondering why he had taken Sad Micks advice to partner up with Bong Eyed Bob who was apparently the best darts player in the world. Thanks Mick. var addthis_config = {"data_track_clickback":true}; 2011-09-09 13:03:45 http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/you-have-the-time-61.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/you-have-the-time-61.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/my-god-man-is-60.html Have you ever heard the phrase about someone being on the fiddle? Or how about being sold a pup? Both of these sayings stem from confidence tricks that are hundreds of years old. Despite originating in medieval times, the fundamentals behind them are still used today and examples can be seen in emails from Nigerian dictators needing to stash a few million of their ill-gotten gains in your ISA Super Saver account or pathetically poor phishing emails allegedly from your bank asking you to verify your account details by phoning a UK call centre and telling them your account number and password. Somebody should tell the tricksters behind these fake emails that it may be more realistic if they asked you to phone a Bangladeshi call centre otherwise its a bit of a giveaway. The fiddle con involved two grifters working together and armed with the cheapest violin that money could buy. One would dress shabbily and enter a bar or restaurant, with said instrument, and order the most expensive meal on the menu. When presented with the bill he would make up a story about losing his wallet. He would then claim that he could borrow some money from a friend and return later to settle what he owed. The savvy restaurant owner, figuring the tramp needed his violin to earn a living busking, would agree, on condition that the violin was left as collateral. Sometime later, his smartly dressed accomplice would enter the establishment and sit at the bar for a drink. During the course of conversation with the Landlord he would notice the violin, exclaim that it was a very rare model and offer a substantial sum to buy it. An agreement would be made for him to return later with the required funds and off he would skip. When the tramp returns to settle his bill and reclaim his violin, the Landlord sees an opportunity to make a handsome profit. He offers to buy the violin from the tramp for a sum significantly greater than it is worth. The tramp barters a bit and then reluctantly agrees to sell his worthless piece of driftwood for a small fortune. The smug Landlord thinks he has outwitted everybody and waits for the smartly dressed man to return. And waits, and waits. The second con, the Pig in a Poke, originated in medieval markets. At his stall the trickster would have on display several big fat juicy pigs. Tempted by the boars the punter would pay a not insubstantial price in return for his choice of pig. Animals of the time were transported in sacks called pokes (which actually came from the French word poque and was ultimately lengthened to poquetts and then colloquially to pockets to describe a small bag secured around the waist) and the chosen animal would be wrestled into the poke for the victim to carry home. During this process, and with some practiced sleight of hand, the bag would be switched for one containing a stray cat. Once home the hapless punter would let the cat out of the bag and be duly crestfallen. Sometimes small dogs were used instead of cats and this is where the phrase sold a pup comes from. The fundamentals behind these cons, and most others, is the mark (grifter speak for the person about to be gently relieved of his wealth) not understanding the value of what he is getting, or what he has to give in return for it. The icing on the cake for these cons is to add a bit of officialdom to provide some gravitas. That is why those fake emails from the bank or the taxman can catch people out, especially the older generation who still think it was the man from the gas board who knocked on the door and convinced them to change their tariff. Such a nice man he was. He had a clipboard and everything. Told me Id be better off with an online Direct Debit saver tariff or something.Yes, but you havent got the Internet Grandma, or a bank account. In fact you dont have a gas supply. There is one other example that has recently reared its head and from an unlikely source. We all trust pension companies about as much as we trust banks these days but this mistrust is normally focused on insurance companies that provide private pensions and not on company pension schemes. Final Salary company schemes, and in particular civil service schemes are renowned for their gold plating despite the Coalitions plans to downgrade it to more of a chrome spray job. These Final Salary schemes are very valuable because all of the liability rests with the employer or taxpayer. The employee can sit back, make their fixed contributions and be guaranteed a certain percentage of their salary at the end. If there is not enough money in the pot when retirement comes to fund such a pension then the company or taxpayer must make up the shortfall. Hence the reason why most companies have shut their schemes and the Government is trying to water down the taxpayers commitment. Benefits from such schemes are normally given as an income and an additional tax-free lump sum. Recently however, some schemes have been offering the facility for an enhanced lump sum, in return for sacrificing some of the income.  To a lot of people this can be an alluring offer, especially when it is referred to as an enhanced lump sum. Enhanced means better right? Well, yes it does, but by proxy that means that the income is worse. How much worse? Well that depends on the value of that which you must give up. Here comes the stray cat switch.. Most final salary scheme pensions are index-linked, which means that they rise each year with inflation, and include a spouses pension as standard. If you were to purchase an annuity (private pension) with the same benefits it would cost a 65 year old about 28,900 to buy 1,000 of gross annual pension. Admittedly, the fact that the lump sum is tax free whereas pension income is taxable gives it a certain advantage and for most people this is worth an additional 20%. However, even if you build that 20% in to the calculations, it is still invariably the case that the extra lump sum on offer is pitiful compared to the value of pension given up. So why is it offered? Well, just because you worked for the company for forty years doesnt mean that the pension trustees are going to play fair with you. They want you off their books as quickly as possible and a lump sum payment looks significantly better on their balance sheet than a liability to pay an ongoing income for someone who could live to 120 in their worst, and your best, case scenario. Now to call it a con is perhaps a bit mischievous as for people who are higher rate taxpayers or have no spouse then taking the extra lump sum may well work out in their favour. It does however include all the ingredients that a good trickster would be proud of, such as a complicated presentation of the options and numbers, no comparative value for the income you are being asked to sacrifice, a tempting offer of an enhanced lump sum and all this wrapped up in officialdom and preferably with a please reply within 14 days just to add a bit of pressure. A Scottish Power doorknocker would be proud. So, in order to see whether you are getting a good deal, first work out how much gross pension income you are being asked to sacrifice and multiply that figure by 29 if you are age 65 (use 34 for age 60 and 39 for 55). This will give you a rough guide to the amount of lump sum they should be offering you; if it was a market value trade. Now, compare this figure with the so-called lump sum enhancement on offer to confirm whether it is a big fat juicy pig in that bag or a scrawny cat.   var addthis_config = {"data_track_clickback":true}; 2011-08-12 16:41:08 http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/my-god-man-is-60.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/pensions-12/my-god-man-is-60.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/hi-son-whats-with-59.html No matter what the Oil of Olay people say, there is no way to hold back the ageing process. In fact, science actually tells us that we start dying from the moment that we are born. Mercifully, that particular ray of sunshine isnt used too much in the Happy New Baby! card industry but the simple truth is that our cells can only regenerate a limited number of times and every time they do, they arent quite as good as the time before. Even Cliff Richard is starting to look mid-forties now.   How we view ageing is something that we can do something about. In the western world growing old is portrayed as a bad thing with those over the age of 65 seen as unproductive at best and at worst a liability. They are something to be tolerated, not cherished for the value that they can contribute to society. In this respect, we are not the norm. If you look at cultures other than the UK and United States, age is seen as a positive attribute. People play an active part in family life for a lot longer and help to raise their Grandchildren and even Great Grandchildren, passing on their knowledge from one generation to the next. In Japan, age is synonymous with wisdom and even has its own celebration. They have a fully integrated care system, funded by the whole society that helps the elderly to continue to contribute to their community. On the rare occasion where an elderly person lives alone, their utilities such as gas, water and electricity are monitored so that if there is a sudden fall in consumption an alert can be raised. The best we can expect from our utility companies in the UK is that our decomposed remains are found by the Gas Meter Man. The thought of putting your parents into a care home would be the most unnatural thing in the world to most of the population on this earth. We however, do not have such scruples and the thought of our parents coming to live with us is quite frankly terrifying in most circumstances. We cant wait to pack our parents off to a care home at the first opportunity, mumbling something about it being for the best. Heres the shopping Son.Thanks Dad, but wheres the milk?Oh darn it, I must have forgotten.Right, thats it Im ringing the Council.Why Son?You need to go into a care home, youve obviously got dementia.What? I only forgot the milk? Ill go back and get some.No, its past that stage now Dad, we all knew this day would come eventually.But Im only 54 Son.Yes, its tragic Dad but youre obviously a danger to yourself, now come on pack your bags, Ive got the Estate Agent coming round at two oclock. So what we are left with is the age old conundrum (did you see what we did there?) of how to fund our care when we are too old to look after ourselves or when society decides that we are no longer productive, whichever comes sooner. Lets start with some basics. The average care home costs about 600 per week (30,000 per year) and that is before you need any specialist care. If you have assets worth more than 23,000, including your home, then the state will provide absolutely no financial assistance whatsoever. It is up to you to sell your assets in order to pay for your care. Now, for some reason we seem loathed to do this. The logic being that we want to pass our assets down to our children. Thats the same children whose reluctance to look after us has forced us into a care home in the first place but hey ho, each to his own. Perhaps as you gaze longingly out of the care home window, desperately hoping for Gerry Robinson to turn up, you may want to thank your lucky stars that youre not part of the Nomadic Ach Indian tribe of Paraguay. Due to their unrelenting travels they cannot carry the infirm for long so once you cant keep up you are either killed with an axe or buried alive. Not a particularly pleasant choice but apparently the buried alive thing carries more honour. Which is nice. Can I just show you something over here Dad?Whats that Son?Just come round this big rock here and Ill show you.But everyone else is going that way.Yes, well catch them up shortly, I just want to show you something important.Ok Son, where are we looking?Just down there Dad, thats right lean over the edge there........ It is a common topic of bar room chat about how to avoid care fees, with many myths perpetuated about gifting your house to your kids or donating it to charity and various other Looney Tunes ideas. The simple fact is, if you give your assets away or sell them under value then the local authority will treat you as if you still have them, even though you dont. There is one technique that has recently provided some reported success however. When your home is valued to check whether your assets exceed the 23,000 limit, the definition used is market value. This is the amount of money that somebody would be prepared to pay for your home on the open market. Lets say however that you gift or sell a 5% share in your property to your Son or Daughter or anyone else for that matter and retain 95% for yourself. You will also need to ask your Solicitor to change the form of ownership to Tenants in Common rather than Joint Ownership along the way. This is like drawing a white line down your house and sectioning it into two parts under separate ownership. Each party is still allowed free reign of the whole house, just in case you were pondering that the person with the 5% ownership would need to live in the cupboard under the stairs. That would be silly, wherever would you keep the hoover? Consequently, when the Council come along and try to sell your 95% of the house, its market value will be nil. That is because nobody wants to buy a house that someone else is entitled to live in, and no mortgage company would lend the money in any event. If that reduces your overall assets to less than 23,000 then you may be able to claim financial assistance with your care costs. You may want to remember this as a suggestion if your children ever ask you to pop into the garden so they can show you something round the back of the garage.... var addthis_config = {"data_track_clickback":true}; 2011-07-13 13:32:02 http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/hi-son-whats-with-59.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investments-10/hi-son-whats-with-59.html#comments http://www.joslinrhodes.co.uk/financial-adviser-blog/investment-income-11/no-mr-bond-i-58.html For several hundred years inventors and scientists have dreamed wistfully of creating a perpetual motion machine. The theory being that it is possible to design a machine that creates more energy than it uses, and therefore runs perpetually. Such attempts are normally characterised by a strange combination of rolling steel balls and spinning wheels cobbled together in a half baked attempt to harness gravity and convert it into useable energy. It is obvious that none of these hopeful inventors have ever been parents otherwise they would have known that the secret to guaranteeing perpetual motion is to simply put a toddler in a barber's chair. Just lashing a few chairs together and harnessing the energy created would make Sellafield seem about as productive as a windmill. If you could build such a machine (the perpetual motion one, not the child slavery barber chair) then you would also solve the world's energy crisis at a stroke and a Nobel prize would surely follow. But before you dash off to your shed with the kid's marbles, a colander and some four by two, its probably worth mentioning that it cant be done. If you do actually succeed then you will likely be ran out of town by villagers carrying pitchforks, convinced that you are in league with Lucifer. The 17th century mathematician Blaise Pascal spent an awful lot of time trying to create a perpetual motion machine, in between developing mathematical theories such as Pascals triangle, much to the dismay of maths students ever since. They should probably be a bit more grateful as he also invented the world's first mechanical calculator which probably made up for torturing their minds with a triangular array of the binomial coefficients in his self-titled triangle. Maybe. Despite the fruitless folly of his pursuit of perpetual energy, one of his attempted inventions turned into something that is still very popular today. He created a spinning wheel with a groove around its perimeter in which a ball-bearing could be spun in the opposite direction. The idea being that each would power the other and it would run forever. It didnt. Time after time the ball lost momentum, fell off the wheel and settled around its spindle, which just happened to have grooved notches in. The dejected Pascal consoled himself by trying to guess which of the notches the ball would eventually fall into; and roulette was born. The game is simple. A grid with 36 numbered squares is drawn out on a table and you bet your money on which corresponding number you think the ball will land in on the roulette wheel. Guess correctly and you win 35 times the amount of your stake. That means that statistically, for every 36 you bet, you will win 35; which is the definition of having the odds stacked against you. A bit like an argument with the wife; the longer that you keep going for, the more it will cost you in the long run. When it comes to a business model, the casino is no different to an insurance company. It is the art of calculating the odds of an event happening under a certain set of circumstances that dictates whether you make a profit or loss. Where it is different is that roulette is a game immersed in glitz and glamour and a tool of seduction for British Secret Agents whilst insurance is just plain dull. James Bond may not have had the same allure with the ladies if he invited them to spend his money by completing his home insurance form. There is one occasion when insurance isnt dull though. Thats the day that you need to claim. Immediately it becomes the single most exciting thing in your life and you become the king of the small print, desperately scouring the policy conditions hoping beyond all hope that your particular calamity is covered and finding out, invariably, that youre not covered for what you thought you were covered for. This scenario is inevitable as long as human nature dictates that when we purchase our policy we want it to be the cheapest possible and when we claim on the policy we want it to be the best. It is much like when the kleptomaniac married the police informant. It was never going to end well. The way we view insurance has also changed with the advent of price comparison websites. Now, we can compare quotes at the click of a button and price is everything. That is why they are called price comparison sites and not best policy comparison sites. Lets face it; who ever clicks on anything but the lowest premium? Consequently, in the modern world insurers are all desperate to provide the lowest quote in order to get to the top of the list. The problem is that no matter what price they charge, it doesnt change the likelihood of a claim happening. Whether you pay 100 or 1,000 for your premium wont change the underlying odds of whether you will die, crash your car or get burgled. The casinos had the same problem with roulette. No matter how good or bad the casino was, the profit level was dictated by the odds. For every 36 staked by the player the casino stood to make 1, which worked out about a 2.3% margin. And so they decided to change the odds by adding another number to the board. Meaning that for every 37 staked, the hapless punter would win 35. But, instead of adding the number 37, they added a zero. The reason being, that if you ask people how many numbers there are on a roulette table, most will say 36. In their mind, they then think of the odds being 1 in 36 instead of 1 in 37 (including the zero). This minor change doubled the Casinos profit margin to over 5%. Their spiritual brothers in the insurance industry do not have the luxury of changing the odds of an event happening that they have insured against. They cannot just add another number to the table. So if they need to reduce their price to ensure they are top of the best buy tables and they cannot reduce the odds of a claim being made, then the only place they have left to go is.....reduce the number of payouts made. And so the games begin, increasing the excess on motor policies which pretty much rules out any claim other than a total write-off. Tightening the definitions of health policy conditions. Did you know that cancer isnt cancer anymore? No, in order to claim you must have the right type of cancer, and a personal favourite, the flogging of Reviewable Rates on term life assurance policies. This is where the premium they quote, to get to the top of the tables, is only fixed for the first five years of your life insurance plan. After that they can increase it each year to whatever they like. So, when you get older, and more likely to claim, they increase the premiums to a level that is obviously unaffordable and you have no option but to cancel it. They get to keep the premiums you paid when you were young and healthy and you get left without any cover when you actually need it. Its a bit like the budget airlines that start off with a price so low that you wouldnt think a pigeon could fly to Spain for, yet by the time you have finished your journey you realise that you could have chartered Air Force One for what it actually cost you in luxurious add ons -like a seat...and the fuel. So, for all the benefits that comparison sites bring, maybe the 19th century architect William Ruskin was referring to insurance when he noted that There is nothing in this world that some man cannot make a little worse, and sell a little cheaper, and those who consider price only are this mans lawful prey. var addthis_config = {"data_track_clickback":true}; 2011-05-23 13:17:01 http://www.joslinrhodes.co.uk/financial-adviser-blog/investment-income-11/no-mr-bond-i-58.html Joslin Rhodes http://www.joslinrhodes.co.uk/financial-adviser-blog/investment-income-11/no-mr-bond-i-58.html#comments