TAX FREE AT 65 – IT’S ABOUT TIME…

TODAY’S BLOG

TAX FREE AT 65, IT’S ABOUT TIME…

I am going to have to put a lot of caveats with this item on tax free money. There are lots of ways to have tax free money, but I want to highlight a couple of issues, the first being the different tax treatment of different financial products and secondly how these might be used in conjunction with the current tax rules.

Joan is 65 and now finally retired – it’s about time!

Joan (10/02/1954) was 65 at the start of the tax year but she stopped working in February when she turned 65. She is single and back in the late 80’s a dead-ringer for Kim Bassinger. She has worked since leaving University in 1977 and much like her favourite band Fleetwood Mac, she has gone her own way. She did a bit of employed work whilst at Uni, but got her “first proper job” working as a junior assistant in an advertising company. Over the years she worked for various employers, most didn’t have pension schemes, anyway most wouldn’t let you join them until you were 30, so by the time she actually joined a scheme at 35 (in 1989), she didn’t really feel that she was too late to the party. She didn’t really like pensions, or rather the sharp suited, red-tie wearing blokes from Merchant Investors that sold them, they reminded her of some of the worst people in advertising. Then there was Robert Maxwell, no she didn’t like pensions at all. Mind you she was quite pleased that her current adviser found an old Contracted Out of SERPS pension, worth about £85,000 – so one of those fellas must have persuaded her to sign a form at some point. It helped top up her pension fund quite a lot to about £400,000.

At the age of 30 Joan bought her Wimbledon house in 1984 for £34,000 which was a lot back then. She recalls a great house warming party – lots of Wham! and Duran Duran. Looking back she wondered how she afforded it, (the house, not the party) given that interest rates were about 10% and kept going up. However property prices seemed to be rising (hers had doubled in value in 5 years) and she was forming a habit for nice things, which nearly got out of hand, but she spoke to her bank and remortgaged, increasing her loan in 1988 to almost £60,000. When the property crash happened shortly afterwards life got a little tricky, she had to economise. She enjoyed applying tips to improve her home from Tessa Shaw and the team on Home Front. She loved relaxing in the evening having done a bit of decorating whilst listening to Simply Red’s “Stars” curled up on the sofa. It heped her manage her feelings about her large mortgage which barely seemed to reduce in the first 10 years, but at least it was – and she hung in there. She finally paid off her mortgage 10 years ago at the age of 55. She still believes it was her best investment.

Joan quite liked PEPs and ISAs. She remembered getting a little lucky with a few Building Societies that demutualised and even put the proceeds into a Single Company PEP. She wasn’t sure why she liked them, perhaps it was because she was told she could get her money out if she needed to (she never did) or perhaps it was because it seemed that they were more glamorous, or was that because she seemed to remember a tune by Right Said Fred called “I’m Too Sexy For My Shirt” that was playing a lot at the time. It wasn’t, that was 1991, no perhaps it was all those boy bands like Westlife and Boyzone that she secretly liked she remembers them being around in 1999, that was Tony Blair and all the optimism and promise of equality of new Labour. She kept up her regular savings and built up her ISAs, which began 20 years ago in 1999.

Joan had learned a bit about investing, the important things like ignoring what everyone else said, she first learned this as her Yuppie thirtysomething friends got into a panic in the crash of October ’87 which she ignored. Then shortly after opening her new ISA learned never to invest in a technology themed fund when the dot-com bubble burst. She chalked it up to “experience”. Other than that, she took investment news in her stride, largely ignoring the mountains of paper that seemed to pile up each year. Over time she observed that stock markets tend to go up and down and up again. Admittedly Joan got a little lucky – 10 years ago at 55 when she had cleared off her mortgage, her career was going well and she had a decent disposable income. She saw an adviser who suggested she add more to her pension and ISA, as luck would have it the Government increased the amount she could contribute and she took advantage of 40% tax relief. It was just as well as her State Pension Age was being pushed even further into the future.

Not long afterwards, she started investing into VCTs, (Venture Capital Trusts) well, she had a few friends that had some good business ideas, she had watched The Apprentice and Dragon’s Den and thought a little bit of a flutter was probably ok. She saved into a VCT for few years ago but has since stopped adding money.

Joan has always paid her National Insurance and has a full State Pension which only started in the summer when she was 65, 4 months and 26 days old. Her State pension is £168 a week. She was a bit miffed that it wasn’t 65 (and when she started out at Uni, it would have been 60) but she had enjoyed the benefits of working until 65.

Joan’s Portfolio

£400,000 – Personal Pension Plan
£400,000 – Stocks and Shares ISA Portfolio
£80,000 – VCT (Venture Capital Trust)
£50,000 – Bank Deposit Account
£600,000 – Home

Not an unreasonable sum of money – in fact having paid off her mortgage and owning her home, Joan has savings and investments of £930,000. Her home is not an investment, its where she lives. Though her friends regularly tell her that it is an investment if she sells and moves away from Wimbledon. However what would be the point? her friends all live in the area, she loves going jogging on the Common with some of them. Her mum (91) is still alive and living nearby, though Joan is worried that she may need care at some point and the cost of care in Wimbledon is, well… there may not be much of an inheritance.

Tax Free Allowances

In the current tax year 2019/20. Joan has a personal allowance of £12,500 before she pays any income tax. Her State Pension will use up a lot of this. Income up to £50,000 is taxed at 20% (when the personal allowance is considered).

The VCT is a fairly “high-risk” type of investment, she isn’t paying any money into it any longer, but does enjoy income from it of 3% a year, this is tax free within a VCT. That’s £2,400 a year.

Her ISA is doing well, she has set up a monthly payment from it to her of £4,000 a quarter (£16,000 a year). As this is an ISA, the income that she takes (or capital) is tax free. By way of note £16,000 4% of £400,000.

The State Pension – Joan is caught by equalisation.

Joan originally expected her State Pension to start when she was 60, but following various rule changes and seeking advice in the early 2000’s she realised that it would be later than that. Joan’s State Pension actually began this summer on 6 July 2019. Over the full remainder of the tax year she will have 38 payments of £168 (£6,384) normally in a full tax year it would obviously be 52 weeks (£8,736) but she is one of many women that saw their State Pension Age increased. She’s a little miffed at having an extra 5 years to wait and wanted to know how she can minimise her tax payments.

Joan would like to know how much she could take from her pension without paying any tax. As her other investments are tax free, the only taxable income she has is money from her State pension (£6,384 in 2019/20) the personal allowance is £12,500. She puts £8,154 of her pension into a Flexible Access Drawdown pension. This enables her to take £2,038.50 as a tax free lump sum (25%) and £6,115 as taxable income. So rather like this:

State Pension £6,384 (taxable at 0%)
Drawdown Pension £6,115 (taxable at 0%)
Tax Free lump sum from pension £2,038 (tax free)
VCT income £2,400 (tax free)
ISA income £16,000 (tax free)
TOTAL income £32,927 and NO INCOME TAX

More and Less

The first point to make is that the above is not the maximum income that Joan could have. I simply want to identify some options. She could take more from her ISA, she is entitled to tax free interest on her money at the bank. She could take more from her pension (a larger tax free lump sum and no income from the pension if she was so minded). As an employed income £32,927 in 2019/20 would for most people result in about £7,000 paid in tax and national insurance.

Joan will need advice to adjust her portfolios and determine the most suitable way for her to draw income. Next year she will have a larger State pension, using more of her personal allowance as it will be a full year of income for her (and a likely increase in April).

Annuity Option

When she retired at the start of the year at 65, Joan had investigated using her pension to buy an annuity. She was going to simply take the 25% from her fund and put it in the bank and then use the £300,000 to buy an annuity. As a single person in very good health, she wanted an inflation-proofed income. The best annuity available would guarantee that she receives £9,851 a year rising by 3% a year. Job done. That’s an annuity rate of roughly 3.2%, but the income is taxable. In the first year she would have total income of £16,255 from the annuity and her State Pension, paying tax of £747. Her VCT and ISA income remain the same at £18,400 in all. So her total income would be £34,655 (more) but with tax of £747 (net £33,908) She has £300,000 less on her personal balance sheet and has £981 extra income in the year.

In the second year, she would expect £10,146 from the annuity and a State Pension of £8,736 a total of £18,882, which if the personal allowance remains at £12,500 would mean that £6,382 is taxed at 20% (£1,276.40 tax). Whilst there are good things about an annuity (it’s a guaranteed income) this is also a problem for tax planning as the income cannot be switched off and is taxable.

The purpose of this fictional case study is simply meant to highlight the issues involved, everyone’s circumstances will be different. I have not considered that Joan may live a very long time and whether taking 4% from her ISA is a good idea or indeed if she has a suitable globally diverse portfolio. I have done no inheritance tax planning and no contributions to anything that might get tax relief. Had Joan had other investments, she could also use her capital gains tax allowance. There are lots of options.

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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TAX FREE AT 65 – IT’S ABOUT TIME…Dominic2023-12-01T12:17:07+00:00

HBOS scam, stranger than fiction

Dominic Thomas
Feb 2017 • 4 min read

HBOS scam, stranger than fiction

Yesterday I wrote about Venture Capital Trusts and explained that any business is reliant upon its management. You might recall my use of the new Trainspotting film T2 as an illustration of poorly suited characters for management of any business. If T2 is 20 years on then this must surely be Trainspotting 40 years on…

As is often the case, reality can be stranger than fiction. On 2nd February 2016 there was finally a successful conviction of fraudsters Lynden Scourfield and David Mills. They are guilty of a £245m loans scam. Scourfield was a manager at HBOS, supposedly tasked with helping struggling businesses. He was bribed by David Mills to pressure HBOS business clients to use a business services company called Quayside Corporate Services. Quayside was owned and run by Mills and his wife Alison. Together they set about extracting huge sums in fees from HBOS business clients who were being told that they would lose HBOS support and sources credit finance if they didn’t comply. Many ended up going bankrupt.

Like Characters from Trainspotting…

These three and three others (Mark Dobson, Michael Bancroft and John Cartwright) have finally been sentenced to prison, having spent huge sums on all the typical cliché trappings, all evident in both Trainspotting films. They ruined various businesses, who were trapped within the Bank, who issued fairly standard penalties which evolved into eviction notices with employees of the bank deceiving their own internal systems which then kicked in to the normal processes for how to handle a failing business (which you can imagine). Under pressure people do strange things, and a number of the business owners that were scammed, gave away control and or ownership of their own businesses. However this appears to be largely due to the complexity of the scam and a classic confidence trick, regularly reassuring the HBOS customers that the Bank was agreeing their finance.

Ripped off Businesses that were ruined

This is a deeply disturbing case of a major bank failing to understand that its own staff were scamming its customers. According to reports, the scam may have amounted to around £1bn, although official reports suggest £245m, all over a 4-year period between 2003-2007 (just before the credit crunch). Thankfully the six involved, have been rewarded with a collective 47 years and 9 months in prison. You may recall that HBOS was rescued by Lloyds TSB having notched up £45bn of bad debt and at one point it was reliant on a £25bn lifeline from the Bank of England. Well done Thames Valley Police.

BACK TO ALL BLOGS

HBOS scam, stranger than fictionDominic2024-03-13T10:40:19+00:00

70 is the new 60…. well for the State Pension

Solomons-financial-advisor-wimbledon-blogger

70 is the new 60….for the State Pension

One wonders what we are doing to future generations. Today I read an article suggesting that the State pension age will inevitably become 70, all due to the fact that more people are living longer. The State pension age used to be 60 for women and 65 for men, this has undergone a period of “equalisation” and will be 65 for both men and women from 2018. As this ideological “hurdle” was achieved some time ago, successive Governments have simply made plans to extend the age at which a State pension is provided. The State pension age will be 66 by 2020 and 67 from 2028.

The reason is really two-fold, cost and longevity. The State pays pensions in various forms, the most obvious being the State pension, which now costs about £110bn a year. Disability pensions costs around £42.2bn and survivors pensions about £1.1bn, amounting to roughly £153.3bn which is about 20% of all Government spending and by far the largest component of Government spending. Details here (click).

Looking ahead

In essence anyone born since 1960 can expect to have to work longer. Given the increasing life expectancy and inherent problems with ageing, care costs are expected to soar, resulting in further dilemmas for Government about how to meet costs…. from a population that is having fewer children.

Episode IV – A New Hope

Consider those that graduated this summer and are just starting out on their careers, born in the early 1990’s they were only just teenagers when the credit crunch occurred the property boom had happened. If you understand my heading (refering to the very first Star Wars movie in 1977) this generation can be forgiven for thinking that the Star Wars films were made sequentially when episode I was actually released in 1999 – they were 7). Student loans are now part of their deductions each month, along with compulsory pensions. I don’t like to be a pessimist, but the generation just starting out have inherited the debts of previous Governments (currently interest payments are around £40bn a year), have little prospect of “getting on the property ladder” and an ageing population that received their State pension many years younger than they will. Any academic results they achieve are met with accusations of “easy exams” and employers seem almost eager to say “we cannot find good enough people”. Not even to mention the problems with the environment. I appreciate that you already know this.

The Breakfast Club

I am reminded of the 1985 film, “The Breakfast Club” written and directed by John Hughes, which recently celebrated its 30th anniversary. This was a group of teenagers held back in detention one Saturday morning and who eventually reveal the stories that brought them there. Vernon, the supervising teacher, representative of a now uncaring, disillusioned, bored older generation loathes the fact that he is also forced to spend his Saturday supervising misfits. He is caught by Carl, the caretaker, fishing through the personnel files hoping to find scandal that he can use against his peers. This results in a conversation between the two, in which he complains about the youth of today and ends with this dialogue.

VERNON: You think about this…when you get old, these kids; when I get old, they’re gonna be runnin’ the country.

CARL: Yeah?

VERNON: Now this is the thought that wakes me up in the middle of the night…That when I get older, these kids are gonna take care of me…

CARL: I wouldn’t count on it!

No… neither would I…. perhaps we all need to think rather more carefully about how we are planing not just our own future, but that of future generations… as Simple Minds remind in the closing title music – Don’t You Forget About Me. Perhaps there could be some redemption… even Darth Vader managed to salvage something with his own offspring.

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

70 is the new 60…. well for the State PensionDominic2025-01-21T15:52:00+00:00

What’s Happened to the Co-Operative Bank?

You may well ask what has happened to the Co-Operative Bank? which has really come under fire of late. There is a very sad tale of Paul Flowers, the Chairman of the Bank since 2010. Mr Flowers has displayed some poor judgement, which he has admitted, but perhaps what is far more serious and telling of the problems within Banking and in particular the Co-Operative, is that it very difficult to see how he had the necessary skills and experience to run a large commercial Bank.

Experience from Inexperience?

Mr Flowers is a Methodist minister and for all I know he may be a wonderfully gifted one, however a 4 year job at NatWest when aged 19 (according to the BBC report) appears to be the sum total of his Banking experience. Now before everyone blows hot and cold on this, a Prime Minister has no experience of being one until they are elected, the same is true of pretty much any political position. There is certainly a case to be made for “you don’t get experience without starting without any” however it is more than surprising that in the months following the Credit Crunch he was appointed to such a significant position. I am not blaming Mr Flowers, but one has to question the wisdom of the Co-Operative Board and of course the regulatory approving body.

Biting off rather more than can be chewed

We all have off days and I’m sure have on occasion performed below expectations when “examined under the spot-light” and I can only hope that this explains his when questioned by the Treasury Select Committee on 6^th November. This is shown on the BBC website and rather speaks for itself. Mr Flowers might be a thoroughly good man (my hope if he is a Methodist minister) however being a nice or decent bloke does not qualify you to run a multi-billion operation.

Blushes not Smiles

I am not suggesting that Mr Flowers is entirely responsible for the demise of the Co-op Bank, (which includes Smile and Britannia) but losses of £781m are hard to ignore. I wonder if you can read the figures held within the Group Interim Report 2013 any better. Turn to page 12 on see the Balance sheet. I can only assume that Mr Flowers was thinking of Consolidated Net Assets of £3.5bn rather than assets of the Bank.

Now, don’t get me wrong, I am a fan of co-operatives and any organisation that attempts to apply ethics to business practice as the Co-Operative have claimed over the years….Heaven knows we could all do with a competitive retail banking sector that has some decency! So the plight of Co-Op is all rather saddening. I hope that they can be “fixed” but now run by Hedge Fund Managers, not known for their ethics, but for their asset stripping results. To my mind this appears to be the point at which the Co-Op Bank’s core values will either shine or fizzle out, consigned to history.

Dominic Thomas: Solomons IFA

What’s Happened to the Co-Operative Bank?Dominic2023-12-01T12:38:37+00:00

Summer Holidays Come To An End

2010: Insane – Jacobsson

I doubt that I am the only one that wonders why politicians think that each failed bailout for a failing Euro zone member must be met with yet another pile of money. If the problems are bad now, then surely simply throwing more long-term debt for future generations to struggle with is folly. In fact, I read somewhere that the definition of insanity is continuing to repeat the same mistakes expecting different results. It seems to me as though this is the perfect description of those that are more bothered about their next election than about the legacy that they leave us all.

I am deeply concerned for the younger generation who will be working longer, earning less, buying a home later, having to look after elderly parents that have run out of money and have tax rates that make ours look playful. It is beyond the point of a discussion over a glass of Pimms, but a deeply distressing situation that needs resolving. Here and in Europe, we need to stop funding the ridiculous and start funding enterprise that employs people from within their own borders. We need to rediscover self sustainability and work collaboratively with our neighbours to ensure mutual prosperity.

Importantly, I also believe that we need to abolish financial instruments that enable some to bet against a nation and effectively magnify a crisis. This facility may be part of the “investment piece” but it is deeply flawed in its connection with people. Economics should serve society, not the other way around. Markets are meant to be a place to swap things at a negotiated fair price, not murder the seller.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Summer Holidays Come To An EndDominic2025-01-21T15:33:48+00:00

Another Good Win?

1959: No Name on the Bullet – Arnold

The FSA recently fined and banned a commercial insurance broker who used clients’ insurance premiums to fund his business. The Lancashire based adviser, Stephen Goodwin, was fined £168,000 and had to replace the funds that he has misappropriated. This is the largest ever individual fine that the FSA has handed out. The total fine amounting to £471,846. Between 2008 and 2012 the firm used over £300,000 of money that should have been paid to insurers for their own purposes. One client attempted to claim against the insurance that they believed was in place, only to discover that it was not. It appears that this was a clear case of fraud. To my mind the FSA were right to ban and fine him.

The name of the culprit did remind me of another Goodwin, Sir Fred. Who made a mockery of the UK banking system by buying ABN AMRO without proper due diligence (as far as can be gathered) at a point when the financial crisis made it apparent to almost anyone that such a purchase would be unwise. This cost shareholders and the British public billions, and of course the legacy still rumbles on. The regulator even admitted that they could have done better. The fine for this Mr Goodwin….. well a pay off that most people would class as a lottery win. Whilst Fred may not have misappropriated funds in the same way, frankly the issue is really one of corporate governance and response to financial pressures. I find it very hard to disagree with many of those within the financial adviser community that believe that they receive far harsher treatment than those that really create a very big mess.

The story about Stephen Goodwin is another opportunity for me to remind you that we do not handle client money. All payments to us are for our fees. If and when we advise investments of any description the payment is made to that organisation. This is something that I believe is very important for the security of both our clients and our business.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Another Good Win?Dominic2025-01-21T15:33:48+00:00

Spinning The Records – The Truth About GDP

1939: Tail Spin – Roy Del Ruth

There is further bad news for the Government, which will note the growing criticism that current actions to stimulate the economy do not appear to be working. The ONS data reveals that the UK economy contracted by 0.7% in the second quarter of 2012. This is of course only an estimate, but means that the main way we measure the growth of the UK economy has shrunk for a third successive quarter. This is obviously unwelcome news. However, once again I would like to remind you of how politicians from all sides and our rather lazy media will report this.

Total seasonally adjusted GDP for the UK has data collected since 1948. Then it stood at £276,458m and last year reached £1,437,909m. A big number I’m sure you will agree. Remember that GDP naturally rises due to inflation (or should do). If I were to reveal that GDP reached its highest point in 2007 before the credit crunch, this may help provide a fuller picture.

We don’t know yet how 2012 will end, but if things remain as they I estimate a figure of £1,428,328, which would be better than 2010 and 2009 but not quite as good as last year £1,437,909. This would represent a decline in GDP by 0.66% against last year. I would remind you, not that you need it, that the crisis in Europe and world economies is probably the most serious in living memory. For the record, the top ten largest actual quarterly falls in GDP were as follows:

1958 Q2 -2.5%

1974 Q1 -2.4%

1979 Q3 -2.3%

2008 Q4 -2.1%

1980 Q2 -1.8%

2008 Q3 -1.8%

1975 Q2 -1.6%

2009 Q1 -1.5%

1975 Q4 -1.2%

The latest figures are the 22nd worst out of a possible 230 recorded. Negative or no growth is recorded in 51 of the 230 quarters. That’s about 22% of occasions. Growth under 1% is recorded in 101 quarters (44% of the time) and growth of 1% or more is recorded on 78 quarters 34% of the time. You may be interested to also know that there has been only one incident of quarterly growth of 2% or more in the last 33 years (since 1979), which was in Q3 of 1987 when 2.4% was recorded.

Whilst the media may talk of this as the worst economic data since the wheel, five successive negative quarterly periods were “achieved” from 1990 Q3- 1991 Q3 and again from 2008 Q2- 2009 Q2. The latest media feeding frenzy that this is news of a third consecutive negative quarter also occurred in 1973 Q3-1974 Q1 and 1980 Q1-Q3, and only just avoided 1974-1975. The uncomfortable truth is that we have not really recovered from the credit crunch, which anyone with a pulse knows. Certainly things are not good economically, but the way information is presented is not exactly helpful. Of course a reality check will not prevent the markets from behaving foolishly, but frankly in the short-term that is pretty much all we expect anyway. The wise proceed with caution.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

Spinning The Records – The Truth About GDPDominic2025-01-21T15:33:49+00:00

How Deep Is The Rabbit Hole?

1999: The Insider – Mann

As with many things in life, sometimes you simply don’t know who or what to believe. It seems that the IMF are under the spotlight for some criticism (normally they dish it out). Peter Doyle who left the IMF sent them a fairly scathing letter about their leadership and oversight, suggesting that he was even ashamed to have worked for the organisation. It is not unusual for an economist to disagree or frankly be wrong far more often than they are right, but his criticism of the IMF is something of a revelation about the organisation. It was CNN that “broke” the story which the BBC picked up. Mr Doyle, is fairly forthright in his opinion about the lack of direction and implies a significant degree of blame at the door of the IMF for the deepening crisis in Europe. If this were not so deeply concerning and real, it would make a thrilling plot line for a film.

Whilst these are very unusual times, we still believe that diversified portfolios with a long-term outlook remain the best proven strategy for successful long-term investing.

We are a boutique firm of financial planners. We create financial plans designed to achieve a desired lifestyle. We will craft and implement your plan that will provide you with the greatest chance of accomplishing your unique goals based upon the values that you hold. Financial products are little more than the tools to achieve your required results
Call us today or visit our website for more information and to arrange a meeting

How Deep Is The Rabbit Hole?Dominic2025-01-21T15:33:49+00:00

Could Financial Services Be Beautiful?

Could financial services be beautiful?

I wonder how many of us watched the final of the European Football Championship. The final was a footballing spectacle, with Spain beating a very good Italian side 4-0. The sports psychologists will have something to say about the score-line, but this was a world cup winning team perhaps at its best.

The pundit “experts” were left gob-smacked by the sublime passing and control that the Spanish side seemed to have in abundance. I had every sympathy with the Italians, who despite playing with 10 men for a large part of the second half, held on nobly. However one wonders if the result would have been much different if they had fielded 15 players – and Italy are good!

I have a confession, I’m not madly into football as some are. However, I do like to see good goals, team spirit and tenacity. I don’t like all the silly falling over and cries of “foul play”. I enjoy the drama of sport, but when sport becomes predominantly about winning it loses its purpose.

I know that these days it is simply a business, but something of sport is lost when winning is the only objective, which is why finals are usually so dull. One of the pundits was so in awe of the performance that he said that “football has just been reinvented”.

This made me wonder whether the collapse of faith in the Banking sector and generally within financial services is perhaps a good thing. There is certainly a need to reinvent a better way of managing risk and oversight of it.

There is also the enormous need for good financial planning which will help determine what level of risk needs to be taken on an individual level. The competition within the sector is in all the wrong things – performance and returns. A reliable, honourable and dare I say it, beautiful banking or financial services system is all about the why and how – not the what. It is time for a collective rethink.

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

Could Financial Services Be Beautiful?Dominic2025-01-21T15:33:49+00:00

Solomons: Truth Required – Dispelling Myths

2010: Clash of the Titans – Leterrier

When the Bank of England and politicians talk about the possible problems as a result of Greece leaving the Euro, one is only left to wonder if they have looked at their own finances. Here in the real world, the “possible problems” are a reality, with falling stock/share prices, which everyone has some exposure to – be it directly in their own portfolios or as people that live on planet earth and make use of products and services provided by business. Unless you live in a handmade tent and self sufficient, you are being impacted by the Eurozone nonsense that has been rumbling on. The markets are in reaction to indecisiveness. Here are a few facts which may help provide some perspective for a longer term view.

Financial planning is partly about dispelling myths about money. As we know Greece and China are two ancient nations with a great history for mythology, whether its Dragons or Gorgons, Minotaurs or Xiezhi, but their present day financial stories seem to be taking centre stage. However, these two ancient nations would provide a very uneven match for each other, this is no clash of the Titans. Today, Greece has an estimated population of 11.3m (about 20% of the size of the UK population) and GDP of $301,083m (about 14% of the UK’s GDP) which has been shrinking each year since 2008. At the same time its public debt has been rising rapidly since 2008 from 99% of GDP to over 150% of GDP. However, whilst the debt is certainly “bad” the percentage figure can be rather misleading when you consider the size of the economy against others.

Compare this to China, where GDP has been growing year on year. The population is a staggering 1,338.3m (over 100 times bigger than Greece) with GDP of $5,926,612m (20 times bigger than Greece) and growing by about 9% a year (almost twice the size of the Greek economy a year). The US has GDP of $14,586,736m about 3 times the size of China (as the world’s most developed economy) and has a population of 309.3m (about a quarter of the Chinese population). Here within the British Isles, collectively known as the UK, we have a population of 62.2m and GDP of $2,261,713 equivalent to about 15% of the US and now less than half of the Chinese GDP.

These “facts” are from the World Bank’s own data, which anyone can look up online.

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Solomons: Truth Required – Dispelling MythsDominic2017-01-06T14:40:02+00:00