Risk measurement, protection

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 PRACTICE2018-11-07T17:13:31+00:00

KING OF THIEVES

King of Thieves

The movie world is full of theft and deception at the moment, perhaps this is symptomatic of the current state of global politics. This movie, The King of Thieves is yet another film about a real event. This time the Hatton Garden robbery during Easter 2015. You may recall the news items that showed clips of some rather concerned customers who feared and claimed to have lost millions in a robbery that was committed over the Easter weekend, when everyone was on holiday. The initial view was that the crime was perpetrated by a well-organised international gang of jewel thieves. In practice, it was some experience burglars, who were some significant way into their “retirement” and even went to the scene using their own pensioner bus pass.

The casting for the film has been done very thoughtfully. We all know the actors and probably have a fond or favourable attitude towards them, yet these are essentially villains that would do some serious harm to anyone in their way, each other and would not spare much mercy. Old does not mean nice or kind. It just means old.

Solomons Independent financial advisers london

Lack of Purpose

The sadness about this story is that there is a palpable sense that these men knew little else and believed that it was their purpose, to be thieves gave them meaning and significance. It certainly gave them a tribe. There is a sequence when they are all recalling how they got into crime – invariably it was stealing food, which of course is indicative of their outlook and circumstances. Perhaps had this not been so, their lives may have been rather different.

Keep up with Technology

The film follows the frankly unbelievable ease with which the robbery was performed. Yet despite being a movie, this is the reality. Security systems at Hatton Gardens were woefully out of date much like the criminals who really failed to appreciate the power of CCTV, mobile phones and a Police Force that knows its stuff. Their open dialogue in public settings may be simply an overconfidence or a lapse of concentration, but surely desperately foolish.

Honour among Thieves

The bickering, infighting and back-stabbing implied that honour amongst thieves is probably a very exaggerated claim. They all steal from each other and it is only when caught that they come together again to present some basic form of a united front. Who you select to work with is perhaps a key lesson, as indeed is having a well thought plan, that allows for interruption and frustration.

Given that the men pleaded guilty, but most of the money has never been recovered, the accuracy of the character portrayals is naturally questionable, perhaps for dramatic reasons, perhaps because the truth, when it comes to criminals, is as slippery as “Billy the Fish” the hapless fence, Billy Lincoln played by Michael Gambon. It would seem that only Brian Reader (Michael Caine) understood the value of diamonds and knew a gem from junk. Terry Perkins (Jim Broadbent) supposedly a great wing-man to Reader was little more than a bully (if the portrayal is fair) and Carl Wood (Paul Whitehouse) would seem to be an unwilling participant at worst. Danny Jones (Ray Winstone) was the sharpest operator, but seemed innumerate and failed to count the money and Kenny Collins (Tom Courtenay) seemed to spin a story to suit the listener.

Fair Cop

The Police did a pretty impressive job, arresting Reader within 5 weeks of the crime. Before a year had passed the team was convicted and imprisoned. Crime does not pay… well perhaps it does, hardly any of the claimed £200m has been recovered, but as Reader warned, many of the deposits were held by other criminals. The truth may never be known. As for your investments and savings, who you trust and where you place your money is vital to understand. There are still many cases of financial fraud and theft. Would that it were not so.

Here is the trailer…

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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KING OF THIEVES2018-09-24T17:17:38+00:00

Property Funds

Property Funds

Property funds have come into the spotlight today, with a number of very high-profile funds deciding to suspend trading.

Why? Well there have been a lot of people trying to get money out of property funds all at once and the Fund Managers wish to protect the remaining investors (billions or millions – depending on the fund). So they have prevented an exodus.

Why is there an exodus?

Because some investors are worried about the commercial property market following the referendum result. Invariably commercial property deals are the first to get kicked into touch when there is a whiff of a recession.

Does this mean house prices will fall?

No. A property fund is commercial property – by which I mean enormous offices, warehouses, supermarkets and shopping centres. Residential property is not in a property fund. The main problem with a property fund is that it is fairly illiquid – hard to sell the local shopping centre to get cash out – on the whole investors hold commercial property for the rental income from shops and businesses that rent the space – this provides income to the fund (yield).

Do I have any?

If you have holdings using any of our model portfolios, the answer is NO. Most investors (generally) do, but I have long held the view that investors need to be able to get out of holdings quickly if they need to. The last credit crunch saw the same problem, with one fund in particular closed for many months. So I took the view (with investment committee agreement) that this was not an asset class that I wanted our clients to hold. There are alternatives (which we use). This will mean we missed some of the favourable returns that commercial property it has provided, but it has also meant we have avoided problems like this.

Is there a problem?

To be blunt, this is largely fear and sentiment due to uncertainty. All predictable – depending on your point of view about “Project Fear”. These things happen. In reality it really means that new tenants into commercial property will rethink, until there is more certainty. There are of course knock-on effects to those connected to the commercial property market – surveyors and an endless list of people that are involved. At this point I am not worried, you shouldn’t be. Economics suggests if there is no new property, supply is limited, thus price ought to rise. This forgets that sentiment plays a considerable part in economic theory of supply and demand.

Will it spread to residential property?

When there is stress, there will always be an opportunity and opportunists. Anyone that has moved house will  know that a property purchases are an enormous headache, there isn’t enough of it anyway, so it is hard to see a logical reason for price reductions. However, we do know that property valuations defy logic. A house is meant to be a home not an investment, but many will disagree with me on that.

I remain watchful. You need not panic, in fact it would be rather pointless to do so. We can only control a very limited number of things in life, our response is one of them.

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

Property Funds2017-01-06T14:39:14+00:00

Money Monster

Money Monster

The latest George Clooney movie is on general release. It continues the theme of some elements of Hollywood questioning the current state of capitalism, yet recognises that the language used within financial circles is almost impenetrable and many feel so powerless that the impetus to understand is invariably lost.

Clooney plays Lee Gates, one of those dreadful money pundits on American TV stations that constantly cover the markets. If you have ever had the misfortune to tune into this sort of television you will know precisely what I mean. He is the worst sort of journalist – a TV presenter, who comments on markets and shares without context or thought of consequence. Regrettably this is not exclusive to the US, but within our own media too – both televised and written. The tempo may be different, but the problem is essentially the same. This is, for want of a better term, financial porn.

Financial Porn

Any glance at any financial publication over the last 10 years will reveal the same rather sad truth – the media appear to have little choice but to grab our attention with ever depressing or outrageous headlines. This reflects on us all and our overstuffed in-box lives, to which I am both a contributor and recipient.

The story itself revolves around Kyle, an irate investor who followed Lee Gates’ advice, but sank all his savings into this one “sure thing”. The stock collapses due to a “computer glitch” and he loses a lot of money. Kyle takes matters into his own hands, armed and in search of answers, takes the TV studio hostage. It’s a decent movie.

Lessons for investors

There are some obvious lessons for investors here. Firstly, all investment should have a context. There is no such thing as certainty, some things are much more likely than others, but not certain. I cannot guarantee that the sun will rise in the morning, but we all expect it will, but it’s not guaranteed. Do not invest all your money into one stock. Do not bet your future on a tip from a TV pundit or any other journalist – none of whom are accountable for the “advice” (that isn’t advice). Finally, in the event that the stock or investment collapses, few investments ever reduce to a value of nothing. It certainly is possible for a company to go bust, hence its share price worth “nada” but most investments are not single stocks. So you will not have “lost all your money” if the investment has a value, so does your investment. Ironically, in the film, the loss Kyle experiences would have been made far worse by the resulting story, not better.

I enjoyed the film, it poses some good and frequently asked questions. I would be happy to recommend it to you, about what not to do with your own money. Here is the trailer. It’s out now.

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

Money Monster2017-01-27T10:56:42+00:00

Should Risk be Contextualized?

Should risk be contextualized?

The media is full of stories telling us how much risk there is “out there”.  Whether its oil prices, fracking, stock markets, war in Syria, crowded cities, religious nutcases… its a wonder any of us make it through the week. Risk is real, but of course it needs a context.

Crossing the road is a risk, but looking each way, listening and crossing when its safe to do so makes it less risky. In such circumstances, we assume that we will make it to the other side – we don’t expect to collapse half way across or be struck by something falling from the sky…. or indeed someone driving something at 250mph.

So risk needs a context, we dismiss risk that is likely to be irrelevant, based upon our experience. We apply sensible practices (green cross code) and then make a judgement. We might be wrong, our “experience” may be under or over stating the actual risk.

For example, not swimming in the ocean for fear of being attacked and killed by a shark – yet the greater risk is drowning. You are more likely to be killed a mile from your home in an accident than being killed by a terrorist…. though I will of course quickly contextualize that to where your home is!

I don’t think its just me, but given all that has happened to investment markets in recent memory, I am always a little “alarmed” at how some businesses simply keep peddling the same myth… that becoming rich is easy.

 

Risk Warnings

So in a climate of anxiety about the state of the world, recent experiences of a credit crunch, a general concern and growing desire to state all risk warnings clearly. I was surprised and disappointed to see an advert on the home page of the London Stock Exchange website which is for a trading account, suggesting that you can become a trader in a matter of just 10 minutes. In all fairness, it doesn’t say become a good trader, a rich one – simply become one. I imagine that 10 minutes of investment experience of CFDs is likely to make you a very poor trader.

As it happens, this is trading CFDs… one of the more exotic forms of investing. I am not suggesting that Trade.com are a bad company, I have no way of telling if they are. What they offer ought to be aimed solely at wealthy investment experts who can afford to make enormous losses. I imagine that this would probably be who they also believe should be their target audience. However an advert on the LSE homepage, in fact two of them, rather implies something else… or is that just me? as for the risk warning… well “CFD trading is risky” (no kidding!).

Depending on who I listen to, even showing you the trade.com advert as I have above, might constitute a financial promotion… which may land me in trouble. Clearly I do not believe it is. I have made it very clear that there is a context for showing the advert, doing so and unless you fall into the category of the target audience that I have identified in the paragraph above, you would be mad to consider this an endorsement or worse still “advice”. Yet this plays into the current mindset of the day – blame someone else when something goes wrong.

If you ever switch on a commercial radio station, you will be aware of some adverts that end with someone talking very quickly about the terms and conditions of credit being made available, typically for car adverts. I might suggest that this is rather unnecessary, as anyone with half a brain that wants to take up such an offer has ample time to do some research to check the terms carefully, nobody is picking up a phone or firing an email off ordering a car (or whatever) as soon as the advert ends.

Somewhere there is a sensible amount of warning (about the potential for loss) for any type of investment or financial transaction. Clearly, we seem far from this (from my point of view). Why even bring this to your attention? Simply – just because the stock market is “risky” does not mean that other forms of investing are less risky, some are, most aren’t. Buying property abroad or a tree farm, ethanol plant, storage pod  or whatever via your pension, is almost certainly a bad decision.

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

Should Risk be Contextualized?2017-01-06T14:39:20+00:00

The Big Short

The Big Short

I have been looking forward to the release of “The Big Short” for some time. I suspect that many will yawn with incredulity at the prospect of watching a film about Bankers and the financial crisis… all that jargon, which is, lets face it, all rather dull and old news… I beg to differ.

This is a story well told, but a story that is frankly unbelievable, yet it happened. I would urge you to go and see it, I managed to do so on Monday evening (no I did not claim it as an expense). It will not change your mind about the Heads of Investment Banks or regulators, it will remind you of how utterly corrupt and complicit they have been in ripping off investors for years, and I see little evidence to suggest that this will alter.

The film makers attempt to explain some of the key terms that underpin the entire credit crunch. It is reminiscent of the musical about Enron – yes a musical essentially about accountants, but as with the musical, this is really an exposure of some rather foolish human behaviour.

Whilst the vast bulk of the film concentrates on the American story, the financial services industry is of course global and the setting for the story is largely irrelevant.

Are you sitting comfortably?

There are many that will not like the content of the film. The film is damning in its criticism of Government, regulators, bankers, credit rating agencies and mortgage brokers. The only group to have really been punished for the crisis in the US were the homeowners and the poor – by losing everything (a story told very well in the film “99 Homes” – see my piece on that too).

Here in the UK, we took the collective punishment of austerity, tax hikes and pay cuts. But at least the head of the regulator (then the FSA) was even knighted for services to the financial services industry (!).

You may have some questions after watching the film, both at the practical level and the “what one earth are they thinking?” level. Here is the official trailer to get you in the mood… oh and the film is nominated for an OSCAR. Mind you, I was even more incensed having watched “Four Horsemen“…  to my mind The Big Short is the softer option (pun intended).

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

The Big Short2017-01-27T11:02:15+00:00

What is the truth about SIPPs?

What is the truth about SIPPs?

If you didn’t read yesterday’s post, can I suggest that you do so. Click here to see it. The quickest route to a financial scam is to fail to read information. The Radio 4 programme suggested that the scam concerned meant that some people had pretty much lost their entire pension. So can I encourage you to simply give me 5 minutes of your time so that you have a few more facts about financial scams? This article assumes that you have heard the radio programme concerned.

SIPPs

Firstly, a SIPP (Self Invested Personal Pension) is not simply for the rich (as implied by the programme). There is nothing wrong with a SIPP they can be just as cheap as a standard personal pension. The main difference is that they can include unregulated investments. You may recall that this was supposedly what the public was clamouring for at one point – remember Gordon Brown back-tracking on being able to put residential property into a pension? Well that would have to be into a SIPP. A residential property is an unregulated investment too! We arrange SIPPs because they have a far greater range of funds – our main reason for using them is to access low cost funds (very low cost).

Risk Profiling and Risk Questionnaires

Any decent adviser will attempt to explain and assess your attitude to risk. This isn’t an easy concept. The best tool I know is the one I use for clients. The world-leading software from FinaMetrica, it’s a psychometric test and naturally rather more than “on a scale of 1 to 10..” Risk is relative and requires thought. Crossing the road is “risky” but rather more so if you don’t look or listen. Box-ticking is never going to do justice to a proper, contextualised conversation…. but worst of all is assuming that your attitude to risk is the same as your advisers…. almost certainly not.

Transferring Your Pension

Again, there is nothing wrong with this, but there needs to be a good reason to do so (or several). Moving an investment based pension to another investment based pension is pretty straight-forward, but there issues to consider carefully. In any event moving this sort of pension is called a pension switch (like for like), although often called a “pension transfer” in layman’s terms it isn’t. It doesn’t help that all the forms to do this are called pension transfer forms, or transfer packs and so to be consistent, advisers, myself included use the same term, but it is not what the regulator means by “pension transfer”.

A Real Pension Transfer

Moving a final salary or “Defined Benefit” pension is invariably unwise, but there are exceptions. We do not (and never have) moved these sort of pensions, these are called pension transfers, and these are the type that causes the regulator concern – for good reason – you would be giving up guarantees! In essence a pension transfer involves moving from a guaranteed arrangement into an investment (which fluctuates in value, so not guaranteed). On occasion, there can be good reasons to move though – if the original scheme is in difficulty or your own circumstances are a little unusual. This requires specialist advice, which we can refer. However, I would argue that historically pension transfers were done to generate commission for the adviser rather than benefit for the investor. However at times, a transfer might be suitable.

Valuing Pensions

Invariably we arrange investments of all descriptions and provide valuations. My own view is that the investor ought to be able to view the investment online and the data should confirm what we say. I also do not like lock-in’s. Any investment that is a little bit out of the ordinary will need an exit method. Many more complex, high risk and unregulated investments all have problems with exit. Normal, regulated funds do not, with the exception of property funds, which can have similar problems and are far from ideal for anyone seeking or requiring liquidity.

Fraud

There will always be people wanting to take advantage of you. These psychopaths (I cannot think of a more suitable term) have little remorse (if any) for the fact that this is your hard-earned money. People are always behind investments, never forget that, on both sides.

Celebrity Endorsements

Similarly, taking advice from anyone not qualified to provide it is a mistake that you really do not need to make in 2015 and beyond. Just because he or she writes about cars, finance, cooking or music or performs in films, does not make the product “good”. They are being paid to read a script. Most people would willingly accept a cheque for reading and smiling, my advice would be to never endorse anything that you have no genuine knowledge of. It is of course a very old “trick” of confidence.

Why does this happen?

Lots of reasons, here are 4.

  1. Because people become fed up with their investments and don’t like the alternative of cash which is currently paying peanuts. There are a plethora of alternatives now, some are ok, but most are simply taking advantage of the generally poor opinions about Bankers and will just as easily take advantage of you (by which I mean deprive you of as much of your money as you are willing to hand over).
  2. Because they are short of cash and being desperate will raid the future to pay for today
  3. Because they have been duped by people implying trustworthiness, but actually have no accountability or relationship
  4. Because financial stuff is pretty dull and full of jargon and its a lot of effort to read and not many people want to pay for advice, particularly if that advice doesn’t deliver the news that they want to hear.

The good news is that your investment experience does not have to be like this, however you do need to remove emotion from your investment strategy (easy to say) and also retain discipline. Investing is life-long, certainly not just for Christmas.

Want more? I suggest you get my free downloadable report about pensions.

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

What is the truth about SIPPs?2017-01-06T14:39:21+00:00

Financial Scams – Be Warned

Financial Scams – Be Warned

Believe it or not July 2015 is financial scam month…. given all that is going on in relation to Greece, the ECB, IMF and European Union….not to mention FIFA, perhaps the timing is perfect. Anyway, there is a whole month being dedicated to warning you about financial scams. Sadly there are a lot.

Let me be very plain. A scam works because you are caught off-guard. It is not only the “foolish” that get scammed. Anyone is a potential target. As with most deceptive crime, emphasis is placed on appearing to help you, to warn you of impending problems and to then offer what seems like a logical or sensible solution – such as withdrawing all your money from your “compromised account”. One of the most despicable crimes is to then involve you in the entrapment of the fraudster…. when actually you are simply at a deeper level of the scam.

Your telephone number is a bit like a front door key. You answer the phone, the line is open. Invariably the fraudster passes themselves off as a Bank representative or a large well-known shop and they report that your card appears to have been compromised. If they are pretending to be your Bank, it is unlikely that they reveal which “Bank” they are calling from, simply allowing your mind to fill in the gaps. If they pretend to call from a shop, well frankly you aren’t likely to be that suspicious as you are being helped and advised that fraud was committed on your card in their shop.

Open Line

Your guard is down, because you think you are being helped, it doesn’t occur to you to ask the caller to confirm YOUR name or your bank account number. The caller with mind distracted asks you to check your card… the details, is there a number on the back to call the bank? yes… ok, call them. Goodbye. But actually the fraudster is still on the open line – even if you have hung up, the line is open (a problem that telecom companies have failed to address properly). You call back, but are essentially on the same call… answered by a colleague of the fraudster or even the same one, who then simply harvests your personal information to use… name, address, account information etc.

Another scam involves a fraudster posing a police officer, who suggests that they want to entrap the criminal. S/he suggests you withdraw as much as you can from your account and send it to them for assessment or tagging, perhaps sending a “secure” delivery car to your home to collect it from you. This is a scam, you won’t see the money ever again.

I know that these things seem “obvious” but in the heat of the moment, being caught off-guard and thinking you are being helped and could also help catch the fraudster, you are simply the next victim. Here is a link to a video from the BBC about this.

What you can do

Firstly if someone calls you offering to solve a problem with your banking or IT , challenge them with the sort of questions that your Bank asks you when you phone them…. but go full hog. Do not give them your details but ask them to tell you your details (which they are highly unlikely to have). Go further by asking them to confirm the last 5 payments that you made, the amounts, dates and sources. The fraudster will quickly give up and hang up.

I have had a fraud call centre call me warning that my computers at home had a virus. I knew this was bogus, but quickly appreciated how easy it is to be duped. Normally in those circumstances they ask you to download something to your computer… which is essentially a trojan horse, tracking your banking, which of course can lie dormant for some time, so you forget all about the call and think  you were helped by someone pretending to be from BT or whoever.

The 2008 film The Brothers Bloom is well worth watching to remind yourself at how skillful confidence tricksters can be and how little regard they have for the “relationships” that they create.

 

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

Financial Scams – Be Warned2017-01-06T14:39:26+00:00

Your FSCS protection is reducing

FSCS compensation is reducing

Today the Government announced that from 1st January 2016 the FSCS compensation limit will be reduced from £85,000 to £75,000. This will achieve two things, firstly it will make some people panic that the reason must be due to some impending crash, the other will be that some people will need to shuffle £10,000 from various bank accounts into a different one.

In practice, the limit is reviewed every 5 years and was last reviewed in 2010. This is all based on European directives (yes another one), ingeniously entitled the Deposit Guarantee Schemes Directive, which is priced in Euros and is for the sum of €100,000 which is worth a bit less than it was in 2010, the pound and UK economy are stronger – hence revalued to £75,000. It is a little odd to make the announcement mid-Greek Euro crisis and of course we have the prospect of our own UK referendum on Europe.

Long story short, your protection is in place until the end of the year, but you will need to take action before then to move funds and open alternative deposit accounts.

Banking License Caveat

Please be aware that the FSCS protection is per person per bank, not per bank account and a significant issue is that several banks (and Building Societies) share the same banking license, so having accounts with them will make no difference to the total compensation that you would receive. You can find information about shared licenses here.

That said, and I really don’t want to alarm anyone, but if several major Banks collapsed at the same time, frankly there is little real prospect of the compensation having much relevance. This is for unusual one-off events where a single Bank fails. I very much doubt a major systemic failure would see £85,000 or the new £75,000 returned to you for each account held.

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

Your FSCS protection is reducing2017-01-06T14:39:27+00:00

Blue pill or red? time to decide about The Four Horsemen..

The Four Horsemen

Having recently seen The Renegade Economist film “Four Horsemen” I’m reminded of the moment in the film “The Matrix” where the character Morpheus says “This is your last chance. After this, there is no turning back. You take the blue pill – the story ends, you wake up in your bed and believe whatever you want to believe. You take the red pill – you stay in Wonderland and I show you how deep the rabbit-hole goes”. So at the risk of sounding like Morpheus, I’m giving you an opt out, right now. However if you’d like to be exposed to some alternative explanations of how the world works today, why you cannot actually buy the house you now live in and perhaps why you are feeling somewhat fed up with the amount of tax you pay, then perhaps I could encourage you to order or download this film.

Classical Capitalism v Neo Capitalism (not Marxism)

Contrary to some of the press that the film has received (it is a documentary) it is not an irrelevant rant by a bunch of Marxists. Indeed, it seems that anyone with a difference of opinion is currently branded a Marxist at the moment. This film is not anti-capitalism, it is about the form of capitalism that we currently live with. There can be few on planet earth that at some point are not prone to question why there are such huge paradoxes, vast amounts of wasted food and yet there are millions that go to bed hungry and starving. What has this to do with financial planning in Wimbledon? Well the film is engaging and inspirational. Financial planning is about creating the life you want, whilst enjoying and really living it today, this is an optimistic message and approach to life.

Eloi and Morlocks, sleepwalking into debt

I don’t know how much of what is said is true or accurate, but it makes interesting points. I am not a conspiracy theorist, I am a capitalist, yet I do believe that unbridled capitalism is gradually enslaving us all to debt, be it nationally, personally, socially or environmentally… dare I even say… spiritually? You will know that I place a great deal of emphasis in clearing personal debt, including mortgages. This is a slavery that we seem to be walking into in a trance-like, perhaps numb… state… rather like the scene from the 1960 film “The Time Machine” when the Eloi are summoned and enter the domain of the Morlocks. We don’t have the advantage of a time machine, though we do have the advantage of the lessons from history and our own minds. As ever, I welcome the conversation and debate.

So here’s the trailer… its up to you… blue pill or red? over to you..



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

Blue pill or red? time to decide about The Four Horsemen..2017-01-06T14:39:43+00:00