Technology Tip: Red Laser for I-Phone

Whilst I was on holiday I came across an application for the i-phone that you may find of use. It is currently free of charge and enables you to scan a bar code. This results in an internet search for the same item, which is listed on your phone. The main point being that you can assess where you might make your purchase for less money. Sometimes, there's not a lot in it, but on occassion you may benefit from a substantial saving.

There's a write up on a blog I found that may also be of use.

Funds: Charges: AVIVA Investors

AVIVA Investors have announced that they will be charging an additional 0.10% per annum across a number of their funds. This includes the Sustainable Future funds and their UK Ethical Fund. Many investors may be familiar with the old Monthly Income Plus fund, which is also effected.

Funds: Objective Change: Blackrock

The Blackrock North American Equity Tracker fund has changed its objective from tracking the FTSE World Americas Index which includes all American markets (including Brazil and Mexico) as well as "developed markets". The new benchmark, the FTSE World North America Index will provide exposure only to developed markets in North America. This is likely to reduce the investment volatility of the fund.

Link to the 31 July 2010 Fund Sheet.

It is my opinion that this change is for the better, likely to result in reduced volatility. Exposure to emerging markets is met within other funds within portfolios. Note that the Blackrock fund has an annual management charge of just 0.20%

Too Fast too Furious?

I hadn't appreciated that Swiss speeding fines are linked to the drivers personal wealth until I came across a story on the BBC website. The Swiss currently hold the world record for the biggest speeding fine issued to a driver - a choking $290,000 - enough to buy many top sports cars. However this record may be shattered shortly with the possibility of a $1m fine that is being considered for the 37 year old driver of a Merecedes SLS AMG. He was clocked at 180mph.

The fine is effectively applied at a daily rate of SFr3600 (Swiss Francs) with the car being impounded. In this instance the car may be impounded for 300 days making a total of SFr 1,080,000 or about £656,000. I guess that he should be grateful that this sum is not compounded.

If you are interested here's the Mercedes link to the SLS AMG. Prices start at £157,500.

Update

I'm sorry that I have not been posting as regularly as normal. I was at a friends funeral on Tuesday and it has left me doing a fair amount of pondering. Gary was only 56 and died of a sudden massive stroke. He was fit too. So I've been a little subdued as a result.

There has been some economic news, some of which is good, some bad, but frankly its all a bit of "tinkering at the margins". The chatter about the chances of a double dip is increasing, but then we all knew this would be a difficult and long recession.

I'm taking a break from the end of tomorrow, so probably will not post anything over my holidays. The team here will operate as normal.

NEST...about to fly the nest?

Well, much as I have suggested, NEST has been in the news again. The papers report that the Government could save £575m by not running with NEST. Heaven only knows who and how these sums are calculated, but I reckon that quite a few people would be prepared to have a go at implementing and running the system for rather less, which is precisely what the Government seem to be thinking as well. There is an ongoing review of the proposals and thought is being given to letting the private sector run whatever results, saving UKplc considerable sums... in theory.

Child Trust Funds

The Coalition Government have altered the rules about the Child Trust Fund scheme (CTF). You may recall that parents were given a £250 voucher to invest for their new baby. This has been reduced to £50 for children born from 1st August 2010 and will not apply at all to any child born after 31 December 2010 as a part of the ongoing cost cutting to help our ailing economy. So £200 less to all those of you expecting a baby before the end of the year, which unfortunately includes a member of the Solomon's team - Becky, who has today started her maternity leave.

If you are expecting a baby or know someone that is, get in touch to find out who we currently recommend for any CTF voucher that you have between now and Christmas... did I really just say Christmas?..

The Price of a Stamp

Stamps have been regarded as a form of investment for some time, albeit alternative investment. There have been a number of articles of late in the weekend press about the merits of investing in stamps. As with any form of investment, please exercise due caution and I would suggest that any investor only ever makes investments that s/he understands well.

Stamp collecting is a hobby and relies on collectors. The price of stamps can vary considerably from the "list price" published in one of the many Stanley Gibbons guides. As with many forms of investment the value of some stamps has risen, but for many it has fallen.

A note of caution too - I learned of one avid collector that died and his beneficiaries neither cared about nor understood his passion for stamp collecting. The entire collection ended up in the "to the dump" pile. It was a collection worth many thousands of pounds.

Out of interest, the worlds most expensive stamp is currently the three-skilling yellow, printed in Sweden in 1855 and was the result of a printing error. Instead of printing the stamp on green stock, it was printed on yellow paper. In 1970, the authenticity of this misprinted stamp was questioned by the Swedish Postal Museum, but it was found to be genuine.

The stamp has not actually appreciated in its considerable value of $2.3m in 1996 when it was reauctioned this year for what is believed to be the same price. So when you allow for inflation, that's a loss. I hope that the owner has this very small piece of paper insured.

So if you have been a stamp collector in the past, it may be in your interests to review your collection. Here's the authority on stamps.

Peston On Banks - BBC

Here's Robert Peston's take on the news over the last few days about some of our major Banks making plenty of profit. This is a clip from the BBC Breakfast news today. I'm afraid that this story will run for some time to come. If you want more information, here is a link to his blog as well.

Telecoms Down

It has been drawn to my attention that some phone calls to our office have not been reaching us. We now understand that the problem has been rectified. I am very sorry for any inconvenience caused.

Talking Money

I'm delighted to announce that the July/August 2010 issue of Talking Money is now available via our website. This is something that we promised to work on and have now been able to deliver.

Guide for Making a Will

We have added our Guide to making a Will in the resources section of the website. Hopefully you will find this of use. Please feel free to share it with others.

The importance of a Will is nothing to be trifled with. I may be behind the news on this one, but today learned about the problems that Stieg Larsson's death caused for his family and partner. You may know him as the Swedish author that has enjoyed success with his crime/thriller fiction, notably the Millennium Trilogy which were published after his sudden death in 2004. I understand that the Trilogy has sold over 27 million copies in 40 countries!

Unfortunately this posthumous success has resulted in a difficult situation for his surviving family. A Will from 1977 was found that was unsigned and therefore not valid under Swedish law. This Will left his estate to a branch of the Communist Workers League. It was found by his long-term partner Eva Gabrielsson who has no legal rights to any inheritance as they were not married (Swedish law) as it all passes to his father and brother.

As you might imagine, there are considerable sums involved and the dispute continues. This merely adds to the the body of evidence and experience that screams: "Sort your Will out!.... before its too late".

It is estimated that only 1 in 7 UK adults has a Will.

One Step At A Time

Sometimes setting big goals such as when you want to retire and how much income you want at that point can seem like very large goals. Its worth remembering that good financial planning is a journey, a series of steps taken that lead to your ultimate goal.

I reflect on this having spent an enjoyable evening with good friends who are both teachers. They have spent the last couple of weeks walking Shakespeare's Way, from Stratford upon Avon to the Globe in London, staying with friends along the route. Its about 150 miles and today they complete the last section of their journey having left us this morning. They have been accompanied by their two children, who are only 9 and 13 and are a great credit to them.

The key to their success - well, perhaps its a bit obvious - but basically knowing where they are heading, having a map and breaking the task up into small milestones. The same principles for good financial planning.

Well done Bill & Rachel (and Harry & Rosalind)

Seize the Day

Today I learned that a friend died. The news comes as a shock - I had spoken with him on Friday as he prepared for the start of his holiday. Even though my job involves talking about the possibility of death or some form of long term or serious illness, its still unsettling when these events occur. Death is hardly a topic that people are keen to discuss, something that IFAs appreciate very well. However we live with the certain knowledge of death and I am reminded, (again) to be thankful for each day.

Critical Illness Cover

Skandia have decided to cease offering new Critical Illness policies. This is a real pity as it has been one of the market leading protection policies for many years. They will continue to permit existing policyholders to top up their cover, but not take out any new policies. Skandia were one of the very best in this field, but seem to have taken a commercial decision to focus on investments (including pensions). I can see from their perspective that this makes sense, but have to admit that it is not good news for consumer choice.

NEST: National Employment Savings Trust

NEST is basically an automatic opt-in pension that has to be provided by employers unless they have a better option. The idea being simply that people are not saving enough for their retirement and having an opt-in approach simply doesn't work.

The new scheme is expected to be launched next year, but there are likely to be further changes along the way and not everyone will be effected initially. This is aimed at the low paid with little or no pension provision. The contibutions are capped at £3600 a year (this amount may rise) but at present the plan is not to allow funds to be transferred in or out of NEST except in very limited circumstances. This is presumably due to the complexity of advice and costs involved.

A key part of this is the calculation of "qualifying earnings". This is currently set at £5,035-£33,540 and includes overtime, bonuses, maternity/paternity leave, commissions and pretty much anything else you can think of relating to an employer paying an employee.

The plan is to start contributions (compulsory) at a low level. Employees will tend to start at 2% with employers paying 1% of qualifying earnings. This is expected to last until someting like 2016-2017 when contributions will increase to 5% for employees and 2% for employers. It is hoped that by 2017 this will rise to 8% from employees and 3% from employers.

Have a look at this pdf document for more basic facts. However, please be warned that much of the anticipated "rules" may alter. It is my understanding that the Coalition Government will press ahead with NEST, but some of the detail and timing could well alter depending on the state of the UK economy.

Northern Rock: Black & White Issue

Northern Rock are making progress towards repaying the Government. The bank was split into two "Good Bank" (Northern Rock Plc) "Bad Bank" (Northern Rock Asset Management)...a little be simplistic but basically that's what has happened. The "bad bank" is the one that is heavily in debt to the Government at last count, something in the region of £22.5bn. This is expected to be merged with Bradford & Bingley in an attempt to keep bad apples together.

The "good bank" today announced a half year loss of £140m to 30 June 2010. This is in-line with expectations (yes, you may ask who?). The "bad bank" ironically announed pre-tax profits of a nearly £350m which is a considerable improvement and paid £300m to the Government reducing its debt to £22.5bn. So at the current rate of repayment, that's about 75 years at £300m a year assuming no inflation or interest.

Pension Portfolio Risk Questionnaires

Clients have been sent a pension risk questionnaire, please let me know if you do not recieve your copy. These enable us to check that the holdings within your pension suit your attitude towards investment risk and the time left until you expect to draw an income from the pension.

Equitable Life

The day is finally dawning when the entire Equitable Life debacle may finally come to a satisfactory conclusion. The Treasury has published an update on the current situation and now hope/expect to begin making redress payments in 2011. There are something like 1.5m Equitable Life policyholders that may benefit from this outcome. To quote directly from the HM Treasury website:

The Coalition Government confirmed its commitment to “making fair and transparent payment to Equitable Life policyholders, through an independently designed payment scheme, for their relative loss as a result of regulatory failure“. In the two months since coming to power the Coalition Government has taken important steps towards implementing that commitment.

The Equitable Life (Payments) Bill
The Government has taken another important step forward in the establishment of an Equitable Life payment scheme by introducing a Bill into the House of Commons. The Bill, which was announced in the Queen’s speech on 25 May, enables payments to be made to Equitable Life policyholders in the future. The Equitable Life (Payments) Bill was introduced on 22 July 2010. More information can be found on the parliament website.

Independent advice from Sir John Chadwick
The Government has published independent advice from Sir John Chadwick on the financial losses sustained as a result of Government maladministration in the regulation of Equitable Life. Alongside the report, the Government has published the first robust figures surrounding the caluculation of relative losses suffered by policyholders, based on detailed analysis of Equitable Life’s database. These estimates were provided to the Treasury by Towers Watson.

Independent Commission on Equitable Life Payments
Furthermore, the Government announced the appointment of Brian Pomerory, John Howard and John Tattersall to the Independent Commission on Equitable Life Payments. The commission, which was announced on 26 May, will advise the Government on the allocation of payments and the design of the scheme. The commission will begin work imminently with a view to reporting in early 2011.

There is the warning though, which is of course the caveat for pretty much everything at the moment.

"...any scheme will need to take the potential impact on the public purse into account. The Government will need to consider what is affordable as part of the Spending review".