Assumption

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Assumption

You will have probably heard the saying “assume – makes an ass of u and me”. Whilst this holds some truth, it naturally requires context. As financial planners, we make assumptions about the future all the time, but equally we review these on a regular basis.

Watergate Bay

Like most people, I have picked up the occasional parking fine in the course of my driving lifetime, most, on reflection, were fair. One more recent experience, where I paid and displayed, resulted in a fine as my ticket “wasn’t seen”. I didn’t keep the original ticket, (does anyone?) so I had no evidence to affirm my claim. Reluctantly I paid the fine, which left me with a fairly bitter feeling towards the car park at Watergate Bay in Cornwall and its fine dining (yes, I have an irrational streak).

Court Orders Woman to pay £24,500 in parking fines

The headline above grabbed my attention. You can read the full story here about how Carly Mackie managed to accumulate fines that she could have avoided fairly easily – if only she had paid a small monthly fee. This would have permitted her to park in exactly the same spot, but ensuring that she could do with peace of mind, legitimately.

Price and Value

This reminded me of the mess that people can get in because they don’t see the value of a maintenance agreement. OK, it doesn’t necessarily hold true all the time, (electric goods “service agreement”) but it made me think about our services to clients. We provide an ongoing service to look after your financial “stuff”. We keep you posted about changes to rules and your arrangements. The purpose in doing so is to help prevent a larger expense later, because something was missed or not known. The problem with any such service is that most people see the price not the value. They assume that this aspect of life is all very straight-forward and any such service is an unnecessary cost. In fairness, it doesn’t help that the point of the service agreement is to do precisely that – to avoid unnecessary cost and making things appear to be simple.

Are you still paying attention?

I don’t wish to overstate, but a phrase that comes to mind is “those that pay, pay attention”. In other words, if you don’t really pay (enough) for something you tend not to value it. If you don’t value it, you probably ignore it….which can lead to problems.

Whilst some aspects of financial planning are “blindingly obvious” – such as spending less than you earn. Some are not (think new tax on annual pension allowance excess). Also, if nobody is around to challenge you on some “obvious” stuff, who will keep you on track? There are some “basic” traps that most people fall into…. Ready for it? (this is basic, but uncomfortable)…. If you spend more on your car each month than you put towards your pension, you are set for a miserable retirement. Most cars are monthly payment plans. It’s true of your holiday spending and so on… your pension is your future income stream, not an optional extra.

How is that coffee smelling?

All of which reminds me of one of the short films (Bombita) within “Wild Tales” (one of my favourite) about a demolition manager who takes the law into his own hands after dealing with the city parking bureaucrats.

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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Gold and the ATM give away

Dominic Thomas
July 2015 • 3 min read

Gold and the ATM give away

The continued fall in the price of gold reminded me of a 4 years ago (Gold to Go). This was a short piece about the arrival of an ATM that dispenses gold bars, rather small ones! in exchange for cash..

At the moment gold is at its lowest price in 5 years. The World Gold Council who recently issued their Q2 report, acknowledges the continued decline in the price of gold this year, but point to their belief that this is in part due to a possible increase in interest rates in the US.

Gold is really part of a defensive portfolio, not being cash, bonds or equities and an asset class that investors return to in times of uncertainty – or at least that tends to be the view based upon historical data.

I tend to take the view, from experience, that when investment advice is dispensed freely by those who clearly don’t have the qualifications to provide it, then there are serious signs of a bubble. An ATM dispensing gold at a shopping centre, placed their in July 2011… well the price of gold peaked in August 2011 $1,821 per oz. At the moment its around $1,093 per oz.

The price of gold soared from $431.65 per oz in July 2005, had a wobble from March 2008 until September 2009 as it eventually broke through $1,000 per oz, climbing further until August 2011. The price has been in decline ever since and returning to the $1,000 per oz level, (no this is not a forecast) in part reflecting a higher degree of confidence in world economies.

Boutique Design

I’m not sure if the ATM is still at Westfield, but a quick online search suggests that there are a few in London, largely in International foreign Banks. Being a German machine (the Gold to Go one) it is incredibly reliable and prices are updated every 10 minutes, so the vending machine may easily provide you with a different price for your gold bar in-between coffee breaks.

Anyway, just so that you know, gold is fine as an element of a portfolio, but it really should not be too significant an element. Having all your investment in one asset class is very unwise – precisely why gold is one option of many. Here is the video of the Gold to Go ATM… please do not take this as advice to use the machine or indeed to buy gold, I am merely commenting on general principles and all investments ought to be made in consideration of your own context, plans, attitude to risk and capacity for loss.

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