Investing in a Business

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Investing in a Business

One of the ways that Government attempts to create jobs is to encourage and stimulate small businesses, start-ups or recently started businesses. The Prime Minister wants these to scale up, not simply start up. So as a regular investor (which in my world we call a retail investor) there are various ways that you are incentivized to be part of this wealth creation.

Tax effective incentives

Venture Capital Trusts, Enterprise Investment Schemes, Small Enterprise Investment Schemes are all such investment structures designed to encourage you (with tax incentives) to invest into new businesses. Generally, though not always the case, these would be businesses looking for money, to which traditional banks don’t, can’t or won’t lend. Since the credit crunch, despite the Government pouring billions into the system, most lending to small businesses has not increased. Indeed any chart on the topic would suggest that Banks are positively less than helpful.

A Different Approach

As we approach the end of the tax year, various specialist companies will produce offers for these tax efficient investments. The rules for them are fairly complex, primarily because they (the rules) seem to get changed each year. It would certainly be true to say that the degree of investment risk is generally much higher than say investing into most normal investment funds that track an index. As with most things, there are good and not so good and some downright awful. Despite being 3 or 5 year investments, in reality they are long-term investments, where the positive rewards may take some years to bear fruit, and as with almost every business, extracting money from them requires a carefully considered exit strategy and ideally several potential buyers.

The company you keep

In the latest Trainspotting film, (T2, which is a return to Edinburgh and the characters from 20 years ago) two of the characters (Renton and Simon) decide to have a proper go at running a “business”. Despite being “creative thinkers” and possessing “the gift of the gab” rather more is required to run a successful business. Sadly, their skill set and personal focus do not lend themselves to a successful outcome. Some investors could be forgiven for thinking that the degree of risk being taken is similar to that of investing into non-mainstream investments. However the only thing in common is the capability of the management of the business. Good managers can turn a bad business around, but equally a good business can be ruined by bad management. We all know that there are some very unsavory characters in business, some even cross-over into politics. Trainspotting has a particularly nasty character. As is always the case, people are key. In this form of investing, it is certainly the case that a good business plan requires a good management team to implement it.

Choose wisely

So (and here is where you imagine Ewan McGregor reading this) if you think that you might want to choose to invest in small businesses, choose to create jobs, choose wealth creation, choose something a bit different, choose a dose of tax relief, perhaps you should be thinking about choosing to invest into an EIS, SEIS or VCT. As with T2 it won’t be everyone’s cup of tea, (or drug of choice). Generally, you’ll need a minimum of £25,000 to invest. This is for those that do want to choose some of the companies that will make a mark on the next 20 years. Those that are comfortable with the risk. Those that are choosing to invest for the long-term and have a clear idea of what they are getting into. Then investing in businesses can provide a rewarding experience. But choose wisely. Here is the trailer for T2: Trainspotting.

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 [email protected]

Investing in a BusinessDominic2023-12-01T12:18:49+00:00

Your Capacity for Loss

One of the more difficult aspects of financial planning is the subject of capacity for loss. In essence this attempt to assess how bad things need to be before your lifestyle is significantly worsened. Most think in terms of the decline of a portfolio due to stockmarket crash, which would also affect the level of income that could be withdrawn from it sustainably.

Your appetite for risk, (or risk tolerance) is normally tested using a psychometric tool, such as the one we use (FinaMetrica) is different – testing your ability to cope with the shift in value of your portfolio (or volatility). All tools are flawed and in reality, it isn’t a process for generating an answer, more of a helpful starting point in a discussion. Capacity for loss has more to do with your financial ability to cope with loss.

A financial planners job is to attempt to ensure that your money lasts a little longer than you do. Yes its more complicated than that in practice, but if you strip away the mechanics and maths, that’s invariably where it leads.

What you have to lose

However, putting a number on this is arguably an impossible task. There are lots of relevant variables. Your age, investment timeframe, years until you retire, health, family commitments, income and expenditure, net worth, cash reserves, debt and insurance and of course this is all a moving continuum. Many clients will at some point say that they will live within their means, to cut their cloth accordingly, which of course is a sensible approach to the restrictions of real life. However, in practice this can hurt, and it’s easier to blame someone else for discomfort, that it seems, is what our political system is all about.

Why capacity for loss is an issue

I assume (which is therefore prone to error) that the regulator is concerned about capacity for loss, because it would appear that over the years there have been many investors that simply didn’t understand what they had invested in and it would seem did not understand how the impact of an investment going wrong might impact them. Neither did they understand the illustrations. I would suggest that this is in part due to a lack of financial education, a lack of adviser explanation and frankly a lack of interest.

We live in a world of risk

The truth is that investing carries risk, but then so does not investing, just a different one, which can be equally as painful. In real terms, by which I mean once you allow for inflation, many people’s income has reduced over the last few years. Inflation, currently very low can ravage away at the power of the money you hold. So, holding cash, which is currently generating less than inflation each year is essentially going backwards.

There is always somewhere to be King…

By historical standards we are all rich, by global standards we are all rich, but you may not feel it. Indeed, to be richer, or certainly feel richer, simply encash your worldly wealth and move to somewhere that is obviously poor, there you can live like a king…. Isolated, needing high castle walls and compelled to spend huge sums on defending what you have. Rich, but perhaps not connected.

The roaring Lion

May I suggest an alternative? Perhaps pay a trip to the cinema to see Lion. This is the true story of how a small boy from a very poor village in India, gets lost and is eventually adopted by an incredible Australian couple. His life takes a very different path but eventually leads to a search for the family he lost.

Keep in mind the 767 million

We all know that most of the world is poor by our standards, and we are told that things are gradually improving, fewer people are in poverty, in 2013 10.7% of the world live on less than $1.90 a day. In the previous year, it was 12.4% (World Bank). That’s still 767million people, but 35% less than in 1990.

None of this is news to you. Yet I found myself confounded and discomforted once again by the plight of millions living in poverty and vulnerable children, who live on the streets and experience all sorts of abuse. I came away with a mixture of feelings, grateful that I don’t live in such circumstances, perplexed at why Governments don’t do more to serve their own people well and perhaps too a little ashamed of my own lifestyle choices, when so many have so few. So, I do wonder if it is ever truly possible to be even vaguely precise with terms like capacity for loss in a world of such extremes.

As for the film, it is very much worth watching and its good to see Dev Patel has been nominated for some awards along with the film. 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 [email protected]

Your Capacity for LossDominic2023-12-01T12:18:52+00:00

You’ve Been Trumped

When I ask most people when they wish to retire, they tend to say “65” some say earlier than that, but certainly most say 65. So whatever one thinks of the recent election in the United States, it is worth remembering that clearly the a new top job posed no obvious concerns for either Hilary Clinton (69) and Donald Trump (70) the latter will now replace Ronald Reagan as the oldest US President elected (who was 69 in 1981 at the time). Mr Obama, for the record turned 55 in August and so would only just have qualified for the new pension freedoms here in the UK.

The unease about Mr Trump is largely due to the rather reckless and aggressive things he said as a candidate. Naturally many of these have been taken at face value and it is hard to see how he would make a worthy world leader given his apparent lack of self-control and overly inflated ego. Indeed his understanding of “hate” and “harassment” must surely be out of whack. His own words before and since the election delivered in a tone precisely the opposite to that of the actors at a New York theatre, who respectfully offered their legitimate concerns to Mr Pence, yet he took this as an affront and has repeatedly demanded an apology, something that he has not offered himself to anyone for any of his rants. However, sadly, he will be the 45th President, assuming the 70-year-old can live with the stress and legal challenges until January. He is arguably one of the least suitable people to be President, but of course history reveals a lengthy list of similar psychopathic leaders.

The Great Con Trick

Mr Trump has estimated wealth of over $3bn yet seems to have persuaded the majority of key voters that he is anti-establishment. Yet this is a man who has only once elected finally settled a fraud case about his “University” – essentially proving that justice in America is for those with cash and who can make problems disappear. If ever there was an example of the 1% “elite” getting their way and deluding the masses, this must surely be it. Perhaps the Hamilton thing was simply his way of trying to distract people from yet another example of his utter hypocrisy.

Swallowing Camels

Talking of delusional, many of his voters were conservative evangelical Christians (some not all), who by any measure must fall foul of straining a gnat to swallow a camel, turning considerably more cheek and “blind eye”, perhaps due to some sense that he represents “family values” (ironic given his background) but by which is meant… there’s one way to do this thing called life.

A Deep Sense of Inadequacy

His credentials in business are somewhat questionable, having made a fortune and lost one, with six of his businesses declared bankrupt (Chapter 11) between 1991 and 2009, all of which came about from over-borrowing. He invariably claims that business isn’t personal, though excels at telling anyone how personally talented he is. In essence Mr Trump already had a fortune and then borrowed money as a landlord to make a larger one. His high-rise Trump Tower buildings presumably provide any psychotherapist with ample material.

Pandora’s Box?

Naturally, I do not know Mr Trump personally, so I am not in a strong position to assess the information we have about him any differently from anyone else. He does not appear to be a man able to remain calm in a crisis, indeed he merely stirs and promotes phobias of those who seem to need little prompting, perhaps due to ignorance or genuinely miserable lives that need to blame anyone and anything that’s different… and I am, like others, concerned that his election “normalizes” extreme views of a very unpleasant nature.

It’s possible that he might be a decisive President and able to get things through both Congress and the Senate, now that they are “rigged” in his favour, much as they have clearly been working against the interests of Mr Obama. His stated aims are alarming, he has surrounded himself with people who appear to also struggle with inflated egos and at this stage it is hard to see who will provide the wise counsel that he will certainly need.

Of course, quite why people voted as they did, for something different or just someone they thought was tough on TV I shall leave to the pundits to decipher. We will calmly review investments in light of information as it materializes.

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 [email protected]

You’ve Been TrumpedDominic2023-12-01T12:18:59+00:00

Good Money Week 2016

Sorry, I’m a bit late in the week to give a mention to Good Money Week 2016. If you are a client or have been following my blog over the years, you will know that I have been an advocate of what used to go by a different name, but is essentially the same National Ethical Investment Week.

Let’s start by stating the obvious, not all businesses are terribly “nice” some are run by people that can only be described as “psychopaths” (see book by Jon Ronson) and others are simply all about extracting as much profit without any regard for people or the planet. However, when it comes to defininig “good” and “bad” we all know that life gets somewhat complex.

Ethical investment began life really as a way of not investing in certain industries – typically, gambling, pornography, weapons and alcohol. Since then things have moved on, the world has become more complex and Governance has become arguably the key issue for businesses.

Ethical or Socially Responsible Investing (SRI) offers a range of options to best suit your values. It is not necessarily the case that these will perform worse than “non ethical” investments, which is often a misconception. In any event looking long-term, one can surely make the argument that sustainable businesses, services and products are highly likely to be profitable in the future.

SRI and Ethical Portfolios

Anyhow, quite a number of our clients express the view that they would like ethical criteria applied to their investments. Now it isnt a perfect world with perfect solutions, but certainly much can be done.

We offer ethically screened portfolios for those that want them and for those with assets under £100,000 we offer a low cost service with ethical options too – just have a look at our 100 Club, if you are looking for an ethical ISA or General Investment Account… and no need to even speak to us if you dont wish to. Click here for more.

Of course if you wish to discuss this in more detail, just send me an email or better still, pick up the phone!

Call me on 020 8542 8084

As you probably gather from this blog, I like movies and see a fair few of them. This short fairytale is perhaps one of the strangest I have seen in a while, but its the one that Good Money Week are using… so in the spirit of co-operation, here it is.

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 [email protected]

Good Money Week 2016Dominic2023-12-01T12:19:00+00:00

Donald Trump

It is very easy to ridicule Donald Trump, whilst obviously being rich and a shrewd businessman, which for some seem the only important credentials, for most ordinary people, there is an obvious lack in his basic ability to lead, let alone act with any sense of compassionate understanding.

Thankfully, the US Presidential election is now just a little over three weeks away, with the votes being cast on Tuesday 8th November. Over the last few months I have met many Americans and all of them, without exception have felt the need to begin with an apology for how Donald Trump has even managed to make it this far. Yet in truth, despite the obvious inappropriateness of his presence at the Presidential election, our own politicians scarcely do much better.

It’s not as if these roles are unimportant. There are clearly enormous problems at home and abroad that require a collaborative approach to finding solutions. The most obvious being that of climate change, yet the US, now eclipsed by China as the world’s largest polluter, has a Senate that is significantly paid by fossil fuel companies to block any progress on climate change policy. Many of whom are deny the reality of climate change, supporting the 3% of scientists who take the same view. In 2016, some $20.7m went to Republican senators from the Oil and Gas industry ($2.9m went to Democrat Senators). This isn’t so much cash for questions, but cash for impediment. In fact, the entire energy and resource sector paid out $9,280m to Democrats and $38,904m to Republicans in 2016 (source: www.opensecrets.org).

Walk the talk…

There seems to be a chasm of difference at times. Many calling themselves “Christian” essentially expressing the view that difference is not simply unwelcome, but provides a legitimate reason to murder and annihilate (see the report from the conservative Republican newspaper in Arizona who for the first time in its history endorsed a Democrat rather than Donald Trump). What is jaw-dropping about this is simply the utter lack of self-awareness, humility, humanity and an inability to see that there is just about a gnat’s whisker of difference between some of them and other extremist zealots that we call terrorists. Yet this apparent contradiction between stated “faith” and personal actions seems completely lost.

The small but deeply misguided minority

Which brings me back to my point. Americans apologising. Well, for starters I know of nobody that thinks all Christians or all Muslims are extremist bigots, any more than anyone thinks all Americans are nuts. OK I don’t keep company with those that express such views, but my point is that whilst we are shocked by what can come out of the mouths of Donald Trump and his “supporters” we don’t really think all Americans are like this, not for a millisecond. In the same way that we don’t think all Christians or Muslims, Jews or anyone else are hell-bent on making life utterly miserable. Some do, most don’t. Generalism is decidedly unhelpful in the world of adult conversation, particularly when serious topics are being discussed.

Comment is free… but costly

We have our own rather ridiculous politicians, many of them leading the country, or attempting to be an opposition, we are all hoping that common sense will prevail – eventually, yet our own prejudices are fed on slime from virtually every angle. Social media provides a forum to air frustration and requires significant self-control to avoid being dragged into argument. There is a very good radio play called “Comment is Free” by James Fritz which addresses the collective problem (well worth a listen).

So as I, and perhaps you, mock Donald Trump – publicly or privately, it occurs to me that one good thing has come from all of this – that topics of importance are being raised and discussed in homes all around the world. So perhaps there is a silver lining after all, though I do feel as though I’m grasping at straws…

As for the impact on your investments whoever wins, sadly the truth is uncomfortable. Nobody knows. Most have an opinion, but nobody knows. However, there is nothing that I have seen or heard to date that offers a credible challenge to the long-term principles of investing.

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 [email protected]

Donald TrumpDominic2023-12-01T12:19:04+00:00

Hacksaw Ridge

There are some that believe that life is rather like a circle, on a continual loop – particularly when the same “lessons” keep showing up. I’m more of the view that it is more like a spiral, hopefully, we have learned something and face moments differently, a little wiser. The new movie Hacksaw Ridge has much that is very familiar. In many ways it is another WWII movie that reminds us of the sacrifices and cost paid (in bloody lives) and is pertinent for the coming Remembrance services this November.

Then there is the not so insignificant point that this is a film by Mel Gibson, a man whose fall from grace has been spectacular, from the heights of Hollywood success with the Lethal Weapon series and Oscar winning Braveheart (1995) to arrest and ranting at Police (2006). A catholic man of 60 expecting his ninth child but from his third partner, 26-year-old Rosalind Ross – who was 4 when Braveheart was released, (and known for his struggle with alcoholism) it is hard to ignore the continual struggles that he has, which perhaps he attempts to expose and work-through within his craft be it The Passion of the Christ or this latest film “Hacksaw Ridge”, which has the familiarity of both Gallipoli (1981) and We Were Soldiers (2002).

Convictions… all have a context

Anyway, the new movie is one of those “true stories” this one about the remarkable Desmond Doss, a conscientious objector caught in the heart of the war, who refuses to bear arms. At a time when logic, common sense and sheer survival instinct would normally dictate that you defend yourself, Doss displays tremendous courage, loyalty and “grit”. Ultimately awarded the Medal of Honour (ok Honor for Americans) for his actions in the battle of Okinawa, which was undoubtedly deserved.

Much is made of his faith (and many will) yet, this is certainly a powerful and moving story, however there seems to be some confusion about holding convictions, particularly religious ones, which is not explored. What is arguably more relevant is a context of harsh misery, alcoholism, domestic violence and an overwhelming need to be the saviour to his mother, perhaps to his father too, which of course is outworked in his adult life to great effect.

So as we currently witness yet more human suffering in Syria and politicians posture for moral high ground, I am simply of the view that war is vile, rarely an actual resolution and reflects nothing other than failure to understand difference. Yet despite obvious lessons from history, leaders continue to send people into battle as though part of an enormous game of chess. Culturally we have made a sport of violence on an industrial scale.

As you consume the news this week and are reminded of the ominous spectre of the cold war, hear about the new oil negotiations and witness politicians that appear to be without any moral compass or sense of humanity, jostle for positions of power, it is little wonder that “the markets” will exhibit signs of nervousness in the coming days, because deep down, we know how utterly stupid our leaders can be.

The full carnage of Hacksaw Ridge can be seen at cinemas in November. It is a powerful, moving story with pertinent life lessons that you already know, of course if we choose to heed them is another matter entirely.

As for your financial planning, well – nothing so deserving of a medal, but as we approach the end of the year, I wonder how many lessons once, twice or more often learned, have been learned again this year. Taking the long-term view, avoiding the assault of the media on your nerves and keeping a calm head are vital elements of not merely surviving investment cycles, but succeeding through them. If you need to know more, pick up the phone or send me an email.

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 [email protected]

Hacksaw RidgeDominic2023-12-01T12:19:08+00:00

Help to Buy ISA… well, not that much help..

Help to Buy ISA…well not that much help

You may have heard of the Help to Buy ISAs. When this was announced by the then master of goalpost manoeuvers, Mr George Osborne, you would be forgiven for thinking that this was an innovative scheme to help savers get a bigger deposit for a house purchase. The Government will add 25% to whatever you save…. Well maybe not.. as ever, rarely do Governments make life easy, indeed one is often left to wonder if Government agenda is not precisely the opposite. So, let’s spell out a few of the issues. For the sake of simplicity, I will call the right to buy ISA “the plan” which will not help my search engine optimization, but will hopefully read a little better.

Maximum and Minimum

You can only save £200 a month into “the plan” with an initial deposit of £1000.The maximum that can be in the plan (from you is £12,000 – the minimum is £1,600). So the maximum £12,000 would get £3,000 (25%) from the Government, yes its better than nothing, but actually not that much help for a deposit. You have to be 16 or over for an account.

So then there is that mortgage…

Whilst it is possible to get a mortgage with a very small deposit (5%) the prevailing requirement is generally 15%-25% deposit. Of course this means being able to justify and afford the mortgage for the balance. So if the plan is 5% of the purchase price, that suggests a property valued at £300,000 and mortgage of £285,000… which in turn probably means an income of over £80,000. We don’t arrange mortgages, but generally borrowers can borrow up to about 3.5x their income. If you have found a property for £100,000 then of course this will be more useful, but one can only assume that the property is at least 100 miles from London.

The Hard Graft of Saving

As the plan is really a monthly saving scheme, that’s a total of 55 months or 4 and a half years of solid saving…. In the meantime, property prices are probably rising, at least in-line with inflation. Oh… just remind me how long is the typical Government lifetime? How time flies.. and policies change.

The Housing Problem

Another clause being that Government hand out only applies if the purchase price is up to £250,000 or £450,000 in London…. In which case for Londoners, clearly this would be just over a 3% deposit, so you will need other resources. The property must be in the UK (do not ask me what that would mean should either Scotland or Wales leave the UK). Naturally the plan cannot be used to purchase a second property, so if Mum and Dad have put your name of the deeds somewhere else… well, it’s not for you.

Meanwhile, as the Help to Buy ISA is really a Cash ISA, the savings earn interest, which today is about nothing. OK you can get some better deals, but not much better.

Snakes and Property Ladders

The Plan cannot be used for anything other than a deposit, not stamp duty, fees etc. It cannot form part of the deposit provided at Exchange of Contracts either…. which is quite daft! It must also be closed before you buy, which means obtaining a statement from the Bank to confirm that the account is closed (which may be easy in theory but hard in the stressful throws of purchasing a first home.. whilst the pressures mount from those higher in the chain.. It’s actually the conveyancing solicitor that claims the Government hand out for you between the Exchange and Completion… (I’m guessing a fee would apply to claim it)… what could possibly go wrong? (property falling through perhaps?).

Still, there’s no place like home….

So is it worth it? Launched nearly a year ago (December 2015) over 22,000 people have used the proceeds to buy a property, which presumably means that they had at the very most 10 months of £200 and £1000 initial deposit (£2000 in all) so a £500 help to buy. OK, ok… better than nothing, but is this really solving the housing crisis or simply providing a bit more cash to meet the inflated property prices? I think you can probably guess what I think.

However, this is money for nothing (well, there are some strings). In practice, perhaps try to use the account, fill it up to the maximum then forget about it in the hope that the offer remains valid for years to come. It does form part of your annual ISA allowance, but in practice only £2400 for most people, meaning that there is still a lot of ISA allowance left. If you move abroad or never end up buying a home, then you can easily get your money back, it simply will not be worth much more than you put in, due to poor rates of interest. Much like the Wizard of Oz, there are no magical solutions to resolve the housing crisis but if you make the effort and reflect on your own resourcefulness, its amazing what can be achieved… and you will have a bit more cash to play around with.

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 [email protected]

Help to Buy ISA… well, not that much help..Dominic2023-12-01T12:19:09+00:00

Why I struggle with the best

Why I struggle with the “best”

I will come to the point, I loathe the suggestion that something is the best. Whatever is given the title “best” is entirely subjective. Best film, best song, best politician, best car.. or something bearing the words “World’s Best Mum / Dad”… really?…. presented by who? out of a choice of how many? Oh… so no, not really the world’s best, just mine.. (sorry Mum and Dad) it’s simply the thought that hey, you are a great Mum / Dad and it’s the thought behind it, wanting to recognise something good… nobody takes it too seriously, it is harmless. So no problem.

Similarly when the i-phone 7 was launched, “It’s the best i-phone that we have ever created”…. Er… surely one would hope that it was, given that its meant to be an improvement, otherwise please lets simply stick with the one we have (which I will probably do anyway). If you are in the technology industry and not making things better, you will have a very short shelf-life.

The best investment fund

Ok, so I’m being pedantic, sorry… but here comes the point when it relates to financial services. There is no “best fund” there is no “best investment” or “best pension” that is all utter twaddle. There is no “best adviser”, “best buy” no “best firm” no, not even a “best financial plan”. This is nothing more than reductionist nonsense. A good financial adviser (better still a financial planner) is not paid to pick “best”… yes you heard it here.

There is always one fund that is top of the performance list…. on one day over one timeframe, but that was top, not best and it will change, by changing one of many variables. It’s important to me that clients are not told that something is the very best… because that is entirely misleading. What is fair to say is that something is suitable (really/very/highly/ blah blah..) and the “best for you” given X, Y or Z but that’s true today and may not be accurate next year. It is about context. We do our “best” in providing clear advice that isn’t sensationalist and doesn’t exaggerate, we want expectations to be realistic not false. The media and urban myth have already raised expectations well beyond what is realistic… we all want low risk and high returns, but that’s simply not going to happen. Financial advisers are not magicians (who it turns out, are also not magicians but illusionists).

Delusion, denial or simply daft ?

Similarly, this week I also heard the phrase “I over-exaggerated” it was used by the American 4x200m freestyle relay gold medallist Ryan Lochte, (who has now been banned from competitions for 10 months following his behaviour in Rio). In connection with his story, he said that he “over-exaggerated”. Mr Lochte you cannot over-exaggerate; you just do (exaggerate). In any event it wasn’t an exaggeration, it was a lie, something that he appears still unable to admit.

So when you are at a dinner party or a social event and someone is claiming how their portfolio is managed by the best, that they are generating the best returns, don’t get taken in. There is no such thing. No investor enjoys the best returns endlessly. We are all making the best of what we have within the limitations of being human and decidedly ordinary. When it comes to investing or financial services, your unique context and circumstances are the most important relevant details. What was best last week or in 2008, 1995 or even 1066 just isn’t your context today. As for politicians talking about the best education or the best healthcare, well… no, I’ll leave it there… well 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 [email protected]

Why I struggle with the bestDominic2025-01-27T16:25:31+00:00

Feeling like a million dollars…

Most of us partake in a little retail therapy from time to time, however fleeting, there is an undeniable “feel good factor” for most people. Perhaps it might be a car, the new i-phone or a new dress… whatever you buy for yourself, most of us probably will not find that the item increases in value purely because we owned, used, borrowed or wore it. Historical artefacts and increasingly the everyday items used by well-known figures are very much collectors’ items. The National Trust have recently launched a £7.1m appeal (click here) to acquire Winston Churchill’s various “items of national importance”. As you may imagine, there is considerable debate over the use of the money, after all what real national interest is being served by purchasing his hairbrush (“simply irreplaceable”) or House of Commons Birthday Book. I’m not so convinced… are you?

Happy birthday to you…

It is not simply these more historical figures that get buyers and collectors into something of a frenzy, as you will probably be aware, the cult of celebrity also has a spin off “once worn by” market. In November the dress worn by the marvellous Marilyn Monroe as she sang “Happy Birthday” in 1962 to JFK is up for sale again. It was last sold for $1.26million and experts are expecting this figure to be doubled on 17 November. So if you have a few million dollars and want to feel like it (wearing the dress?) then don’t miss the auction in Los Angles. If you simply wish to see it in person, its being shown in Ireland at Newbridge Silverware, (about 30 minutes from Dublin) where you can see this and many other outfits worn by celebrities.

Here’s a bit more information…

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 [email protected]

Feeling like a million dollars…Dominic2023-12-01T12:19:11+00:00

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 [email protected]

Property FundsDominic2025-01-27T16:25:41+00:00