WHISKY – LIQUID GOLD?

TODAY’S BLOG

WHISKY – LIQUID GOLD?

I had the great pleasure of a short break in the Scottish Highlands in May this year. We stayed near Inverness, at a delightful B&B very close to the small village of Drumnadrochit. We had a fantastic view of Loch Ness, though given that I am something of a sceptic, didn’t venture into any of the monster museums.

Anyone that has been to the Highlands knows that the scenery is utterly fabulous. Huge wide open spaces, big skies, much like America. A part of our trip included visiting a friend who has set up a Whisky Bar in the distillery capital of Scotland – Dufftown. The Seven Stills has a wonderful little restaurant and vast supply of whiskys, do call in and say I sent you.

Anyway, I saw a piece on the news about a fire at a Jim Beam warehouse in the US. This reminded me of a tour around one of the distilleries we visited (well, it would be rude not to do so). The tour was interesting and by the end of the tour our guide was highlighting the merits of investing in whisky. There are huge prices being paid for whisky. Serious money snaps up “new” products (for which read, distilled and laid down about 50 years ago) and now decanted into bottles.

SOLOMONS IFA LIQUID GOLD ANGLE SHARE

Water to Whisky

I’m sure that for some there is money to be made in whisky, but not for most. Investing always comes with costs, these are explained and shown on your statements. The format has improved, but they are nothing short of useless in terms of explaining value. Stating the price of something is one way of showing a value, but.. whisky is designed to be consumed. Basic economics of supply and demand will inevitably mean that price rises with scarcity.

Angel’s Share

There are storage, security, insurance and maintenance costs incurred by a distillery for many years. The distillery I visited was holding a few barrels (casks) certainly as far back as 1967. A typical cask holds about 200 litres. The casks themselves are second-hand and from around the world, (typically Spain, Portugal and America) depending on the desired result would be changed to provide a different flavour to the whisky. Most casks last for up to 60 years. They leak and have to be fixed by a trained Cooper (there is a 5-year training process). The whisky evaporates and tends to lose 2% a year of its alcohol by volume every year! The distillers call this “The Angel’s Share”. I might call it an annual cost of 2%.

When a bottle finally goes on sale for a price of say £40 in most cases it has been in production for 12 years. The longer the production, the more expensive. To sell your cask (if you had bought one) from 1969 you are essentially selling something that has taken 50 years to produce, 5 decades of patience and “leaving well alone”. There have been 50 years of costs and inflation. This fact alone leads to the conclusion that there would be a very limited supply. Hence the £5,000 price tag for a bottle of 1969 Glenfarclas Family Cask S16, 2451. Yes, this is subjective to collector opinion. A 1999 “similar” bottle would be £265 for a 20-year-old bottle (new by comparison).

Inflation and intoxication

If we could have bought the bottle of 1969 Glenfarclas for £40 in 1969 today it would now cost £641.92 purely due to inflation over 50 years. So whilst this goes some way to explaining a £5,000 price tag, it is obviously only part of the story… the rest is in the perceived value, restraint and costs over 5 decades. In many senses there is also the survivor and success premium – of lasting the distance. You are only able to purchase what has survived. In the same way that you can buy shares in Shell but not Barings.

Leave it alone – stay off the good stuff?

If you are going to buy “alternatives” or “collectables” you basically have to leave them alone and wait for the impact of inflation, scarcity and perceived value. This might sound easy, but the temptation not to drink or consume your investment is fairly great in this instance. It is hard enough to persuade investors in mainstream investments to leave their portfolio alone each year, but for 5 decades? Even the Angels take something each year…

As for the fire at Jim Beam, it would seem that they lost 45,000 casks in the fire. This may have some impact on the price of casks sold to whisky producers around the world (in America the cask cannot be reused). It will also greatly increase the price of any surviving casks, but otherwise, I do hope they were insured against fire.

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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WHISKY – LIQUID GOLD?2019-07-04T14:19:36+01:00

BLOOMING MARVELLOUS & SUSTAINABILITY

TODAY’S BLOG

BLOOMING MARVELLOUS & SUSTAINABILITY

The British summer – when it arrives is a wonderful time when we all complain that it is too hot and expect this to be a short-lived experience, one with remedied with regular ice lollies and ice cream and a little too much Pimm’s. The summer sports events begin and from an English perspective, invariably end soon thereafter. This year we have seen a rather better competitive endurance from the Lionesses at the women’s FIFA Football World Cup. Wimbledon has begun and we wonder whether the covers will soon appear as the rain makes an unwelcome, but regular appearance.

Many of us spend rather more time outside in the garden, soaking up the sunshine and struggle to make sense of hosepipe bans when just a few weeks earlier we were ankle-deep in rainwater. This brings its challenges to those of us that enjoy gardening. The summer also brings about rural and floral events. The RHS Hampton Court Flower Show has begun. The Tudor grounds are transformed into spectacular smaller gardens and rammed with exhibitors demonstrating their skills and ideas. It is a fantastic show that I would encourage you to attend. Conservation, sustainability and a good gin and tonic, and a three-in-one with one I tried earlier by Warner’s Distillery.

Blooming Marvellous & Sustainability

Sustainability in your portfolio

So how about sustainable investing? When I started as an adviser, rather too many summers ago, there were relatively few ethical funds at the time. The most famous was the Stewardship Fund, which was really the first ethical fund launched in the UK in 1984. This was under the backing of Friends Provident and run by the late Charles Jacob, who died 3 years ago at the age of 94. Jacob and Friends Provident both had their faith at the core of their why?

This year we have seen the introduction of 16-year old Greta Thunberg onto the world stage, and a climate crisis declared. Protests in London and David Attenborough took to the stage at Glastonbury, declaring it the largest plastic-free festival and encouraging us all to take climate change seriously whilst announcing a new series “Seven Worlds, One Planet”.

ESG is the new SRI is the new Ethical

Today, ethical investment has evolved, initially through SRI (Socially Responsible Investment) and now more recently ESG (Environmental, Social and Governance). In truth the term ESG was first coined way back in 2004 in a study “Who Cares Wins”. The criteria have shifted, partly as the discussion about sustainability has evolved. In 1984, ethical investment meant not investing in certain companies in specific sectors. However not everyone holds the same views on alcohol or tobacco in the way that Methodists and Quakers did in 1984. In short, the ethical or SRI and ESG market is globally worth over $20 trillion. New funds have been launched all in attempt to meet the concerns of concerned investors.

Many of our clients prefer “ethical investing” or at least for their investments to be screened through the lens of ethics as far as it is possible to do so. There are now plenty of solutions, but certainly no obvious ones. The cost of investing is higher which is counter-intuitive for me as an adviser, but a price many are willing to pay. Returns vary, but one may take some comfort in the logic that ultimately surely those companies that adjust behaviour to reduce carbon emissions and so forth will ultimately be the long-term winners. Yet there are no certainties in life as we all know.

If you would like to discuss ethical investing, or however you would prefer to term it, please get in touch. Either email me or pick up the phone and call me on 020 8542 8084.

In the meantime, here is the trailer for the new series by Sir David Attenborough.

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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BLOOMING MARVELLOUS & SUSTAINABILITY2019-07-03T17:14:58+01:00

THE PERFECT MARKET TIMING?

TODAY’S BLOG

THE PERFECT MARKET TIMING?

We all know that Brexit has caused great division and frustration, whichever side of the “argument” that you are on. It has resulted in many people delaying decisions, attempting to time the market right. Many people are putting off large purchases until there is greater clarity about the future.

This is true too of many investors. One of the great benefits of a democracy is that we can have access to information about markets. However, this is invariably used very poorly. Investors (professional and “amateur”) attempt to invest during the ideal period and of course sell their investment at an equally ideal time. This strategy may work on occasion but is impossible to repeat in any sustainable way.

Let us look at the US experience. Why? Because the US market is about 54% of the global stock market by value. It is a mature market and a well-regulated one. JP Morgan have produced a great graphic about the flows or money in and out of funds. The blue spikes represent money moving into investments (above the line) and out of them (below). These are net inflows (or outflows).

JPMorgan research Market Timing US

The market falls, investors run

They (JP Morgan) then overlaid the US S&P 500 index. The result is startling. As markets fell, investors bailed out. Most money was taken out of funds at the bottom of market “crashes”. Most investments tend to be made at the market peaks. Investors are quite literally doing the opposite of what they have been told. They buy high and sell low. They know that they shouldn’t do this, but they cannot help themselves because of fear about the future.

Here is the newsflash. When markets crash, the media is full of disaster stories, this invokes a sense of dread and fear, which investors take as a call to get out of the market, sell, sell, sell… Once the crash is over investors return, usually once most of the gains have already been achieved.

A fantastic way to ruin

I can think of few better ways to reduce your wealth and increase the likelihood of self-imposed poverty. Yet this approach will happen this year and the next and probably for the rest of our lifetimes.

Your future is way too important to muck around trying to be an investment genius. The investment geniuses aren’t even able to consistently achieve outperformance. Many end up simply taking bigger bets and gambling with higher sums – just ask investors how happy they are with the genius of Mr Woodford about their holdings now.

It does not have to be like this!

It does not have to be like this. You can accept the reality that in life some things you simply cannot control. The markets and the returns from them cannot be controlled by you (or me). We simply must embrace reality, look to the real data and plan appropriately. We help you take the market return from the assets you invest in. Cost effectively. We take a long-term view. I mean decades long, because that is how long your money will remain invested, providing a lifetime of income to you and those you hold dear.

Don’t play the fools game. Get over the illusion of perfection and stop procrastinating. Now is the time, always. Get in touch to get yourself on track.

Call me on 020 8542 8084 or email me.

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

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THE PERFECT MARKET TIMING?2019-07-03T15:29:01+01:00

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

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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

GET IN TOUCH

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

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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

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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

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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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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

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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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

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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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

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