Hard Truths

Solomons-financial-advisor-wimbledon-blogger

Hard truths

As Wimbledon begins, some hard truths will be faced. Some players will not be “on their game”; some will peak too early and some will enjoy good luck whilst others might curse technology, training, lack of sleep or why on earth they did or didn’t do something that may have made all the difference. We will all have our favourites, but in the end only one person can win the singles championship. In just a couple of weeks all the questions, hopes and dreams for Wimbledon 2017 will be consigned to history.

In a similar vein, June was interesting and is now over. An election, a minority Government, a deal with the DUP, various horrendous disasters and circling political vultures all attempting to appeal to the crowds, some more obviously than others. Much of this we cannot control, despite what some might suggest within social media.

A new savings low

The FT reported the rather grim news that Britons are saving less of their disposable incomes that at any time since 1963 when such records began. An alarming 1.7% of income was left unspent in the first quarter of 2017, significantly below the long-term average of 9.2%. Reports also continue to make the argument that around 1 in 6 people use a credit card to get through the month. In tennis terms – there’s not enough left in the locker.

Squeezed rises

Whatever your view of austerity, clearly if income falls behind the rate of inflation, you effectively have a pay cut. This is something that the State Pension triple lock is designed to prevent (after many years when the State Pension arguably fell in real terms). It is estimated that the triple lock costs around £6bn. It would certainly appear that the days of austerity are coming to an end and that there is growing support for the end to the cap on Public Sector salaries which have been held back since 2010 (when Rafael Nadal won the men’s singles and Serena Williams won the women’s singles at Wimbledon).

Self-defeating

However, unless people begin to save for their own futures, arguments about austerity are going to seem like the proverbial storm in a teacup. The undeniable truth is that we all need to budget and live within our means. Most don’t appear to do this. No Government in recent history has achieved it either. If you cannot control what you earn, you can only control what you spend, which means accounting for how your money is spent. The truth is that hardly anyone likes to budget and probably dislikes drawing one up a little more. Our clients are no exception – and most don’t really “need to budget” but of course it is a discipline that we advise and encourage to ensure that your hard-earned income sticks to you.

However, it is vital to understand where your money goes. The chequebook (remember those?) does not lie. It is very easy to spend and keep spending in a society that is expert in parting you from your hard-earned cash.

As with politics, in tennis with patience, generally your opponent will tend to beat themselves. Sure, you may need to play well, but invariably the loser is the one that makes the most and more significant mistakes or errors. The most basic of these to make in financial planning is failing to budget, ignore it at your peril. In tennis terms, its the equivalent of not being able to serve.

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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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