ROCKET MAN

TODAY’S BLOG

ROCKET MAN

I suspect that you may have noticed that there is a new movie about Elton John – Rocket Man. As I grapple with the temptation to provide my own take on another film, attempting to find any tenuous link to life choices and money, my mind turned to a different rocket man. Whilst we are only days away from the 50th anniversary of the moon landing, I don’t mean those rocket men either. No, rather it is time to talk about Mr Neil Woodford…

Let me begin by saying that I do not know Mr Woodford, I have nothing to say against him personally. He ran the hugely successful Invesco Perpetual Income funds out of Henley upon Thames for many years, before leaving them with his departure announced in October 2013.  He went on to start his own asset management company Woodford Investment Management. He did a wonderful job at Invesco Perpetual. Most investors that owned holdings in his fund would or should have been very happy with the result.

SOLOMONS IFA BLOG - ROCKET MAN

Science Lessons

One of the few advantages of age is that gradually, lessons are learned, experience gained and sometimes there is the possibility of a modicum of wisdom. In the past I believed that fund managers were stars and their performance could be followed. Today I still believe that this is possible, but it is highly unlikely to happen. Fund Managers are often very clever, thoughtful people, but their ability to constantly beat the market or their peers is unsustainable. There is ample evidence to support this view if you can cut through the marketing and noise of “hot funds”, “Best Buys” and the latest “great idea”.

The battle for your money rages fiercely, huge marketing campaigns combined with an information culture that turns anyone into an expert and promotes the lie that investing is easy. Indeed I might argue that the financial services industry is supported by a media the prop up the belief that the improbable is highly likely. It simply fails any rational testing, if you are prepared to check your conditioning at the door. In practice, you might only need to ask yourself who is actually getting rich from your investment? However the obvious is an uncomfortable truth, so we all ignore it, well… most do until they see the light.

Epiphany

My gradual epiphany happened over the last 15 years, (remember I set up the firm 20 years ago and had been advising clients since ’91). I was familiar with market-index tracker funds, I even arranged them for clients in the 1990s (for example the Gartmore UK Index which was opened in 1989) but I, just like many (most) wanted to believe that intelligence and skill could be combined in a way that provided consistently better returns. Advisers and investors were (and still are) bombarded by information that shows “successful” short-term performance. My in-box, trade press, and conference bag are stuffed full with it.

In practice you will be investing for decades….”So I will change my investments” I hear you cry… well maybe, but that would acknowledge other detrimental investor behaviours – attempting to time the market, knowing when to get in or out of funds that are performing well or not….you may get lucky a couple of times, but frankly that is all that it would be luck – not skill. Luck is not a good strategy for your financial plan. In any event the two largest players providing advice and funds to investors only dropped the Woodford fund this week. They are far better resourced for detailed research and personal meetings with the Fund Managers…yet to absolutely no avail. You have heard of them both, nice brochures and websites.

Whilst I believe outperformance from skill is “possible”, I now recognise it as unlikely and blogged as much in 2014 implying that following a star manager is not a good investment strategy. I came to this conclusion later than some, earlier than many. I am neither genius, nor fool (I hope). In January 2010 I cited how his funds had suffered some lacklustre performance in 2009 after delivering some good returns, acknowledging that we had been users of his Invesco funds, which had delivered good results. At the time I was still advising clients to retain the Invesco fund. That changed, but not to Woodford – to a low cost, investment fund.

Number Crunching

Yesterday his flagship Equity Income fund, which was launched in June 2014 was suspended, almost precisely at the 5th anniversary. This was primarily because investors were turning away from the fund in droves. Performance has been taking a nose-dive since June 2017.

None of our clients hold the fund. None, nada – because for reasons stated. We use low cost investments and not the more expensive “actively managed” funds like this one, which typically charge between 0.65% to 1.50% depending on the fund share class. We tend to create portfolios with investment costs of around 0.3% – there or there abouts.

I do not wish Woodford anything other than success. His rocket-like performance earned at Invesco now seems to have really lost favour. Fund suspension is really something that no manager wishes to do. It does protect those remaining investors within the fund, but invariably signals the end of shelf life. The reputational damage has now been done and for a fund that relies primarily upon the manager, this is difficult to regain.

Star Gazing

This is a lesson that few learn. Over the years I have seen star managers rise and fall again and again. Yet investors will forget. They will see a new star performer and ask why we don’t hold anything in his or her fund. Sometimes this may turn into a plea to buy a fund, it isn’t my money – it’s yours, so do as you please with it, but I will not put my name to investment advice that I do not believe. Part of my job is to stop you making daft financial decisions. It isn’t rocket science…but you can follow the yellow brick road if you like, but the only records you should pay attention to are the musical type… on which note here, is the trailer for the rather good “Rocket Man”.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

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The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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ROCKET MAN2019-06-06T07:28:26+01:00

CELEBRITY ENDORSEMENTS

TODAY’S BLOG

CELEBRITY ENDORSEMENTS

If you believe much of the marketing spiel, it seems that in this life you have to become successful by becoming a celebrity. This isn’t necessarily famous, but well known within your specified field. Some call this personal branding and it’s the regular diet of entrepreneurial and self-improvement books and courses. I read a piece yesterday that resonated with me and debunked a lot of this twaddle.

It’s all Pants

What is certainly the case, is that many people will regard the opinions of others as evidence of credibility. “Celebrities” can certainly give added impetus to sales of products. Think David Beckham and underpants. It works, though I’m not sure who is kidding who when considering this particular example. I saw a video clip of a game show in which Gordon Ramsay posed a forfeit question to James Cordon “which of your endorsements have you never used?”. Forfeit taken, the money is presumably too good to forfeit with the truth.

CELEBRITY ENDORSEMENTS - SOLOMONS IFA BLOG

By Association

Many people buy or are certainly helped to buy based on the reviews or recommendations of others. That’s basically Trip Advisors entire business model, and of course most online retailers seek reviews, constantly. Hands up, we also ask clients to provide testimonials, which is much the same thing… we simply don’t shape or lead them (so they are honest).

Big Noise, Big Bucks, Big Blindspot

When it comes to investing, celebrities are now to be found endorsing all sorts of financial products that they have no real understanding of. Remember the adverts releases for the failing Equitable Life and Buzz Aldrin was promoting them in 1998? Or Anthony Hopkins promoting Big Bank Barclays, these days a task left to Simon Cowell.

Crypto – never expect good things in the Crypt

The world of financial products has become ever more complex with the rise of cryptocurrency. That specific field is full of corruption and fraud. One might say, its a bit of a jungle our there. The regulator has reported a tripling of reported fraud in cryptocurrency and foreign currency, each “investor” losing an average of £14,600. In my opinion, this will only get worse. Much worse. As more people seek easy returns to prop up the dismal interest from cash, the temptation is to try something that appears to have done well. Having a celebrity endorsement will, sadly for many, end in tears. Money talks and it walks, there are multitudes of people that will attempt to part you from yours, which is why part of my role is to act as guardian or bouncer on the door to your financial planning.

If you know someone that is contemplating a new investment that sounds too good to be true, or you suspect as much, refer them to the FCA scam smart website here. To be blunt, when it comes to investing, seeing any form of “celebrity” endorsement ought to leave you agreeing with those that make “I’m A Celebrity Get Me Out of Here”… except think.. “that’s a celebrity, get me out of here”…

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

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info@solomonsifa.co.uk    Call – 020 8542 8084

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CELEBRITY ENDORSEMENTS2019-05-21T11:22:00+01:00

SINGING LIKE A CANARY

TODAY’S BLOG

SINGING LIKE A CANARY

My twitter account got a little heated at the weekend. I, like many other financial planners am utterly fed up with financial scams. Most of us get scam emails – I have yet another only two minutes ago purporting to be HMRC with a refund… Anyway, what irritates me and many planners is the apparent ease and frequency at which scams occur.

We have a regulator and anyone that knows me will know that I believe that they play an important, arguably vital role within financial services (see Cops and Robbers in Spotlight March 2019). Yet the FCA twitter account seems unable and unwilling to accept information about suspected (or even obvious) scams.

Better but not great

An item by James Coney in The Sunday Times (12 May 2019) called “Here’s how the FCA could stop savings scams – use Google” sparked some mirth which evolved into a small, sometimes heated “debate”. Some comments suggested that regulation is much better than it was, that the scams are less costly. That the FCA is doing a good job. I am not denying that the FCA is trying, they have an enormous brief. However, there are many of us that think that too much time is wasted on the wrong things.

SING LIKE A CANARY

Climb a mountain, or use the tunnel ?

This week I will have to submit yet another 6-monthly online report to the FCA telling them lots of things about my business. It takes ages and frankly I don’t think it reveals much of any importance. In any event wouldn’t a crook would simply make up the data? At the coalface of advice regulation can also be over the top…you want to top up your ISA… well yes, that requires a report, really? To top one up? Yes. You want money out? Well a report telling you that taking too much may mean it runs out is required… Admittedly the length and depth of reports and research are not prescribed by the regulator, but very much enforced by compliance and professional indemnity insurers. Certainly there is a place for this, but often it looks and feels like “overkill”.

Scams to the left of me, scams to the right…

I cannot explain why people being ripped off is so upsetting to me. Its wired into my DNA or childhood experience I suspect. Many advisers are on the same side as the regulator, we both make a living from financial services. The flashpoint, was the suggestion that advisers will be forced to pay yet higher levies for the FSCS to make compensation payments to scammed investors. This relates to yet another “obvious to an adviser” scam of mini-Bonds of London Capital & Finance. Who made promises that they would never keep to the tune of £237m from 11,500 savers. This was not a regulated business. There was no FSCS compensation for the investors. At least that’s what should have been the case, but now it seems this is disputed and advisers will have to foot the bill… for a scam they had nothing to do with.

Virtual reality isn’t reality

James Coney, like many of my peers argues that a quick search of the web will reveal plenty of scams. Some are obvious, some less so. This is the occasion to use the word fake – there are fake websites, fake products and fake endorsements. Please don’t get taken in. Ask me or your adviser if you have one. Why take the risk for a couple of extra percentage points of interest?

Sadly, I am of the view that the system is in need of an overhaul. The regulator thought that forcing all other advisers to charge fees, and explain these each year would solve the mis-selling problem. I’m sure it has a small favourable result, but the bulk of crime is committed by criminals, who lie. No amount of legislation or disclosures will have any impact on them, what they require is the strong arm of the law and a custodial sentence.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

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SINGING LIKE A CANARY2019-05-15T16:29:56+01:00

INVESTORS NEED A POSITIVE OUTLOOK

TODAY’S BLOG

INVESTORS NEED A POSITIVE OUTLOOK

It may sound rather churlish, but it is true that investors need a positive outlook. There is little or no point at all investing if you believe that everything is getting worse. This is a feeling that becomes familiar with age, everything often seems to be getting worse, primarily because we are fed a diet of fairly dreary news stories and have a growing awareness of our inability to simply change the world or certain people.

Whilst I would not want you to think that everything is good or “fine” life is certainly much better for the most people on earth than it was say 100 years ago. The planet has a population north of 7 billion people and roughly 6 billion of them are, on global terms “doing ok” or better than “ok”. There are extremes of poverty and wealth of course, but there are a lot of people between those extremities. May I encourage you to have a look at gapminder.com for more detail about this

SOLOMONS IFA BLOG fiddler-on-the-roof-poster

Things are improving, but they could be better

Investors need a positive outlook, precisely because you are investing in the future, in that future, improvements will be made to the standard of living and innovations to improve our lives. Yes there are obvious problems that need addressing – fosil fuels, climate change, plastic in the oceans, but these and many other problems are solved by innovation. Innovation leads to patenting good ideas. Patent applications are in one sense evidence of good ideas that then require finance – capital…your investment.

Fiddler on the Roof

The musical “Fiddler on the Roof” has returned to the West End of London. Most of us know it from the 1971 film starring Topol and perhaps the most familiar song “If I were a rich man”. It is set in 1905, a touch over 110 years ago.  Tevye the milkman with his wife Golde and their five daughters live in Anatevka, Russia. The Jewish community coexist with the locals, but it is evident that this is a fragile relationship. They have the richness of a community and its rich traditions, yet life is evidently a struggle for them all.

It is interesting to compare what in 2019 someone in poverty might consider to be the trappings of wealth and what money could afford them to do, be and have. As for Tevye, his dream is of a house with 3 staircases (one going nowhere just for show), a wooden floor, to have some servants and not need to work. He would be respected and afforded time for spiritual reflection. By our standards today, Tevye has very little, in just over 100 years the standard of living for the typical milkman has risen considerably. We forget how much improvement has been made simply because we caught up by the present and trying to keep up with the future. We forget all the time. Investors capitalise on the momentum of human endeavour and a continual improvement in all things, many of which we do not yet even know we want.

Fiddler on the Roof is showing at The Playhouse, right next to embankment tube. Here is information – book an aisle seat if you are taller than 5’8” the legroom is poor, but the show is magnificent. See The Playhouse for tickets.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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INVESTORS NEED A POSITIVE OUTLOOK2019-04-15T19:19:32+01:00

WHAT WOULD YOU GIVE TO GO BACK IN TIME?

TODAY’S BLOG

WHAT WOULD YOU GIVE TO GO BACK IN TIME?

The concept of time is something that we all like to play around with. We recall memories, sometimes embellished, some highly accurate and others somewhat muddled. We encounter the present with our baggage and sense of identity based on the past and have hopes for our future.

To travel through time is what we all do, on a daily basis, yet to time-travel, well that is something for the writers of science fiction. As we all know, there would be some significant advantages to be gained if we could “correct” our own actions and perhaps those of others in the past. The chance to have another, better attempt at anything with the advantage of hindsight is the fuel of regrets and if only…

Time flies, The Old Bakery, Solomons IFA

Do we ever learn?

History is a great teacher, it is in many respects the best way we can apply “hindsight”. Yet we so readily ignore its lessons. Human behaviour has not really altered much over the years. We are having to adapt to new things all the time, but our nature seems slow to learn. The repetitive nature of war, division and “inhumanity” are sadly familiar. We don’t seem to learn.

Long-term thinking

The same is true of investing. We don’t learn very easily. Investing in equities (shares) has been proven time and again to provide the most likely way of increasing wealth above the rate of inflation. Looking at any long-term horizon, when considering the total returns (increase in capital value and income paid out by way of dividends) there is ample evidence to hold the very firm belief that over time, years and decades, equities are the obvious choice.

I can already hear you thinking “but…” and that’s what I have come to appreciate. We are not built for investing. Human nature has been built around the very useful instinct to flee at the sight of threat. This is helpful in a world of beasts and the beastly, but not in the sophisticated world of long-term equity investment. Every sign or signal of “downturn” is met with fear and panic. Pundits and journalists alike are designed to be storytellers, having something to say is better than the alternative. We hear “billions wiped off the market” yet we never hear “billions wiped on the market”. The news is skewed, we thrive on drama. Yet this passes and is arguably a vital aspect of equity markets, which always recover. Always. The crash comes, recovery comes, repeat, but we never seem to learn. Human nature is not our friend when it comes to successful investing. It is utterly inept.

These days the better part of my skill set is employed to remind you not to blow up your own financial plan. Indeed, it is to prevent you from doing so, which means confronting your own worst enemy… you. Some days will be very difficult. A 50% fall in markets is huge, but it will recover, not if, but when. The only measure for success with your financial planning is whether you reach your goals, not those of others. This is your story.

As for time travelling, there is a decent little series on Netflix called “The Umbrella Academy” which has some interesting ideas. Here is the trailer for the series.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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WHAT WOULD YOU GIVE TO GO BACK IN TIME?2019-03-06T10:57:21+01:00

THE ORPHAN FUNDS

TODAY’S BLOG

ORPHANS HAVE NO HIDING PLACE

One of the main investment fund research groups (Morningstar) have produced a report which has some fairly bad news for many investors that attempt to DIY their investments or fail to pay attention.

In a nutshell they found many investors are holding what might be described as expensive “Orphan” funds. Morningstar conducted a European wide piece of research into funds with a track record of at least 5 years. There were over 15,000 of them, yet a staggering 25% were “orphaned”. This means that the funds are run but attract relatively little investment – in effect, no longer promoted. They are deemed small in that they hold less than £90m with little to no new money.  As a result, they aren’t really on anyone’s radar. The money going in is generally “insignificant”. Consequently, performance becomes lacklustre to say the least.

You might be forgiven for thinking that being “small” these must be fairly new funds – the truth is that they have typically been running for around 12 years. They also have fairly high charges of typically 2.18%. That is a lot…. and far more than any of our clients pay for investments. This excludes any adviser charges (which is meant to be a European-wide format since 2013).

The short version of the report is that there are too many funds, many of which have very high charges. The longevity of the fund is prolonged by inaction by both investors and the fund managers that “run” the funds. It is hoped that costs and charges disclosure, brought about by European legislation (MIFID2) will help expose and reduce the problem and leaving them with nowhere to hide costs and performance. France currently have the largest number (5x more than the UK) of orphaned funds by quite some margin – c’est la vie?…

The UK didn’t do too badly in terms of the number of orphan funds by number, (194) but this still computes to around £4.2bn in small, expensive funds going pretty much nowhere. That’s a lot of money folks and it really needn’t be this way..

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

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WHAT WE’RE ALL ABOUT

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

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THE ORPHAN FUNDS2019-03-27T15:15:10+01:00

HOW TO READ YOUR VALUATION STATEMENT

TODAY’S BLOG

HOW TO READ YOUR VALUATION STATEMENT

If you have an investment, you will receive a valuation every 3 months, on a quarterly basis. These tend to be issued to the 5th of January, April, July, and October in-line with the tax year end. Your statement will show various items, the elements that I want you to focus on understanding are the fund, the units and the price.

The Fund ABC

The Fund. You will see the names of funds, these start with the name of the investment company and then followed by the name of the fund itself. This tells you where and probably what the fund is investing. By way of example. I will consider the Dimensional UK Smaller Companies Inc Fund.

A – The Investment Group

The first bit of any fund name is the name of the investment group, this may sound obvious, but as many names are unfamiliar or get altered due to mergers it is important to state the obvious. In my example, “Dimensional” is the name of the investment company.

B – The Sector

In my example, this fund is invested into UK Smaller companies, a specific sector of the UK stockmarket. This is investing in shares in companies in the UK that are deemed “small” which really means not the top 350 biggest companies in the UK. It does not mean a little local business.

C – The Unit Type

Most funds also show “Inc” or “Acc” at the end, this reveals if the fund is paying out any income (dividends) – hence “Inc”. Alternatively, “Acc” (accumulation units) whether they are automatically re-invested within the fund. Generally speaking we use “income” funds because this makes life easier for everyone to track income for capital gains calculations. The income can be re-invested within your portfolio or paid out to you, the investor. This varies depending on the product type and strategy required.

Unique Identifier

Every fund has its own reference number, to make life deliberately complicated there are several different unique numbers for a fund “SEDOL” or “ISIN” are perhaps the most well used. This is nothing more than a way of locating the specific fund. All funds now have their own summary fact sheet, now called a Key Information Investor Document or KIID. How the financial world loves its acronyms.

Where and what the fund is invested into is a deliberate selection, designed to form part of your overall portfolio. The fund itself may be thought of as “high risk” (or “low risk”) but as part of a larger portfolio is designed to provide a combined risk for the entire portfolio.

Units

On your statement you will probably then see the number of units. Think of this the quantity of your holding in the fund, which can run to several decimal places. This is what you hold, or what you have bought – units in the fund. These amounts will therefore only alter if you have added more money (bought more units). They might reduce for the opposite reason – you have withdrawn money or units were sold to pay charges.

Price

Typically, the next column will be the price of the units on a specific day. Please note that the price changes each day and reflects the end of day value of all of the holdings within the fund. So in our example of the UK Smaller Companies Fund, this would be the value of all the equities (shares) held in UK Smaller companies at the end of the day. These are listed on global stockmarkets.

Value (or valuation)

This is typically the next column and is the sum of the number of units that you own in a fund, multiplied by the value.

Dimensional UK Smaller Companies Inc 46.694 units at £28.38 per unit is worth £1,325.18. In short: 46.694 x £28.38 = £1,325.18.

Your valuation is therefore a snapshot of the value of your funds on a specific day. It has happened, today’s value will be different. Having quarterly valuations really means that you have 4 days in the year of information.

Think Twice

When you look at your statement you may well compare it against a previous one. You might see changes in the funds held (if we have advised any) or changes in the units – even if no new money has gone in (due to a rebalance or re-invested income). You may observe that some of the values have fallen or risen. This reflects the fund and the market at the time.

It is tempting to think that funds that are worth less must be doing badly. This is not necessarily the case, in fact its highly unlikely to be true. It is merely the current value, not a reflection on the fund, which is selected specifically for its cost, reliability and the way it combines with your other holdings. Think of each fund as a parts of a car, you don’t have all engine or only tyres, it is put together deliberately to produce a longer term overall performance, designed with decades in mind, not days or quarters. In practice the different bits are asset classes – types of liquid investments that can be priced reliably on regulated global markets.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

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The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

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To get started download and use password – solomons

   

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HOW TO READ YOUR VALUATION STATEMENT2019-02-08T07:00:50+01:00

IS IT TIME TO SELL MY INVESTMENTS?

TODAY’S BLOG

IS IT TIME TO SELL MY INVESTMENTS?

Politics has exposed how deeply entrenched our beliefs become. Irrespective of facts, truth or common sense, good judgement seems in woefully short-supply. The irony is that a lack of supply may shortly become something we all experience, due the Government’s lack of progress, direction or any plan for the impending self-harm of Brexit.

Fear not, I am not going to discuss Brexit and the impacts of it on your portfolio (the truth is that nobody knows, so why pretend to). What I can speak to is the poor behaviour that investors get lulled into due to their belief system.

The Uncomfortable Truth

We all have a belief system, for some it is a clearly defined religion, for others a life mantra, business process, political persuasion and so on. We all have them. Most of our beliefs are frankly, built upon the flimsiest of evidence, yet we hold onto them as though they are the original stones containing the ten commandments.

The prevailing belief in the world of investment is that common sense, fused with some research and useful information enables some individuals the ability and capacity to beat the market. Please do not misunderstand me. It is possible to out-perform the market; indeed each day half do, the other half don’t. This happens on a daily basis. Some will outperform over the short-term, a quarter, a year, perhaps 3 or even 5. However, the number of investors that can consistently outperform the market year on year is a very small number and one that diminishes each day.

SOLOMONS IFA BLOG - VICE

There would be days like these..

It is so difficult to outperform the market consistently that it is impossible to tell if this is mere luck or skill, the statistical chance is so small. Yet at times like these, despite all the evidence, people believe that they are able to correctly predict not only when to not invest and exit “the market” but also to perfectly time a return to it. The other unspoken belief is that this outwits all other investors.

Beware: Men in suits 

Despite what all the marketing you see by fund managers and their impressive statistics, beating the market is not easy to achieve. Some will ignore this advice because of a belief that it is “utter nonsense” – the mere inference that what they believe is wrong is too much to cope with. Others will take the view that this time is different, we can see the storm. This time is different – just like every other time. In other words, it is no different at all. May I remind you that everyone has a 100% track record of correct decisions when it comes to hindsight…yes we all saw the dotcom, the credit crunch and the subsequent bull runs….

The more you attempt to manipulate reality to suit your version of the future, the more you will end up attempting to correct the mistakes of the past in the future. It will become your new present reality, living with the discomforting truths that you simply would not face and continue to deny. Denial is an incredibly powerful force and leads to all manner of woes.

However, if you really are not content to live with a globally diversified portfolio of the worlds businesses (equities) mixed with some of the plodding IOUs (fixed income) from the more stable Governments and businesses on earth, then feel free to take on the world.

If you want returns without “risk” you are looking in the wrong places, always. Life is a risk, most, if not all of your decisions contain risk, you have merely formed a system of beliefs around them that enable you to cope with those risks and see them differently. We all do.

Select your vices carefully…

Your portfolio is designed with decades in mind, not days – at least not measurement in the next 30, 90 or 365. It is time to ask yourself what you believe. Be warned, we have often been asked to believe lies. A topical reminder comes in the form of the new film “Vice” starring Christian Bale as Dick Cheney. He and his sidekick, George W Bush, convinced our Prime Minister who subsequently convinced our Parliament that they had “evidence” about weapons of mass destruction in Iraq. Sadly this duplicity resulted in thousands of lost lives, the vast majority of which were “innocent” born in the wrong place at the wrong time.  We continue to live with and pay for those mistakes….

The one thing I can predict is that if you do see the film, I imagine that your views about Dick Cheney and your beliefs will probably not change – whatever your political persuasion or will you perhaps disarm me of mine?

Here is the trailer for the film “Vice” which is currently playing at cinemas.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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GET IN TOUCH

Solomon’s Independent Financial Advisers
The Old Bakery, 2D Edna Road, Raynes Park, London, SW20 8BT

info@solomonsifa.co.uk    Call – 020 8542 8084

SOLOMON’S FINANCIAL PLANNING APP

Our free powerful new Finance & Tax app.
To get started download and use password – solomons

   

WHAT WE’RE ALL ABOUT

If you would like a no-nonsense one page document explaining what financial planning is all about please enter your email here.

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IS IT TIME TO SELL MY INVESTMENTS?2019-01-29T10:36:45+01:00

CRASHING PRACTICE

CRASHING PRACTICE

It has now been ten years since the collapse of Lehman Brothers, the investment bank at the centre of the credit crunch. The impact of this has been felt here in Britain with years of austerity, tax rises and pay cuts. You and I have lived with the consequences and are mindful that it may happen again.

In reality a market crash happens about 25% of the time and despite required regulatory warnings that the value of investments may go down as well as up, the reality is that they will fall in value and they will rise in value. Fact. The issue is not if they will but when and why. As a financial planner I am sorry to tell you that those offering to know when or why are delusional fraudsters. We only know after the event and frankly, even then we may not truly understand why.

Time in the markets, not timing the markets

The unvarnished truth is that over time, over decades, investment in mainstream equities rise in value. This is proven time and time again. However, few of us are very good at thinking long-term and obsess over the short-term. This is for good reason – we can relate much more readily to the short-term and cope better planning for it, but thinking longer-term and much further ahead proves very difficult for us. Inevitably investors are persuaded by the short-term reality more than the long-term probability.

The Lehman Trilogy 

It is timely that “The Lehman Trilogy” by Stefano Massini was shown at the National Theatre to “sell out” audiences. So much so that the production is moving to the Piccadilly Theatre in May next year. The play charts the early beginnings of Lehman’s, arriving in New York. Their story is familiar. In 1844 Hayum Lehmann arrives with nothing, moves to Alabama and starts a modest shop selling equipment to farmers. Along with the new business is a new name Henry Lehman is born or created. His brother Mendel follows a couple of years later and finally Mayer arrives in 1850. Lehman Brothers.

150 years in the making 

Their story unfolds, experiencing the ups and downs of commercial life, but also reflecting the wider society and the development of business and capitalism. Disaster and opportunity meet along the way, the business diversifies becoming a cotton buyer and then trader. Experiencing blight, fire and the American Civil War, using maths and credit to smooth the path from the present to the future, eventually becoming a bank in 1867 to help rebuild the nation. Agricultural know-how becomes financing of business. Throughout all challenges, adapting and surviving. In many respects Lehman’s practiced crashing – regularly experiencing very dire trading circumstances, yet confused survival for skill and ultimately began to believe that they could not pick anything but winners…

The story is wonderfully presented by Sam Mendes and the three actors (Simon Russell Beale, Ben Miles and Adam Godley) were brilliant. A single, rotating minimalist set and the audience is transported through time, which you should allow 3 hours to cover 150 years that is very well spent. If you get the chance to see it in 2019, I would recommend getting tickets early. Here is a link to the ATG ticket booking site if you are interested.

Here is Sam Mendes talking about the production at the National Theatre.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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CRASHING PRACTICE2019-01-17T11:09:29+01:00

RETURN TO THE 1970s

RETURN TO THE 1970s

There has been a fair bit of talk about aspects of our current political rhetoric that threaten a return to the 1970s. Whilst my early childhood was pretty care-free in that time, there is little of the 70s that I would welcome back.

Insert a film set in the 70’s. A bleak story of a character that everyone’s limited television of the time cannot fail to recognise. “Funny Cow” has a title to offend and a story that will offer little other than despair as it pushes all the stereotypes and clichés of the time. The miserable family existence that passes for life in a northern town. The wife-beating, loud-mouthed husbands and the hollowed shells of wives that have turned to the new prison of alcoholism. Yet sadly this is very close to her story.

Solomons IFA review of Funny Cow the movie

A galaxy far, far away…

If you are inclined to revisit the 70s then this film is a reminder that it really is best left consigned to the past and a collection of good memories when we were all younger. The times were very different and have thankfully changed for the better. It seems like a long time ago… a galaxy far, far away… yet in practice it’s just 4 decades ago, closing in on 5. In reality that is the sort of time that most investors save and then live off their investments.

Short-term memory

The changes in our lives are not always easy to see but flipping through your photograph albums (remember them?) is a useful reminder of our journey. When it comes to investments, the opposite happens. We are constantly bombarded with a moment by moment update of the markets, what has changed in the last 5 minutes, rarely does anyone report or assess the long-term value of investing, billboards, newspapers, emails and websites are all set to the short term, as if this tells us anything of value. In reality the valuable information is surely only the long-term results. What has happened over not 3, 6 or 12 months, but over 10, 15, 20, 25 years. However, that requires a patience that most of us have been taught to ignore.

Here is the trailer for “Funny Cow” it’s well acted, (Maxine Peake is very good) but frankly unless you want to watch misery unfold for a lengthy 102 minutes, (the irony isn’t lost on me) a better use of your time would be to sort out those photos you still haven’t put into an album… or had one printed.

Dominic Thomas
Solomons IFA

You can read more articles about Pensions, Wealth Management, Retirement, Investments, Financial Planning and Estate Planning on my blog which gets updated every week. If you would like to talk to me about your personal wealth planning and how we can make you stay wealthier for longer then please get in touch by calling 08000 736 273 or email info@solomonsifa.co.uk

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RETURN TO THE 1970s2018-11-02T23:36:16+01:00