A break from blogging
Money Matters is taking a break and will return during the week of January 4.
In the meantime visit the personal finance section of ft.com for your latest Money news.
More pensions gloom
As soon as you report some good news, some bad news seems to come along the next day to undo all the good work.
On Saturday I reported that employees (of defined contribution -DC- pension schemes) were now able to retire earlier after rises in the stock markets this year meant their pension pots were worth more:
Rises in the stock market this year are allowing people to retire earlier than they had previously feared, new research shows.
Employees with workplace pension schemes now have to work six months less to retire on the same income, according to Mercer, the consultancy.
But this morning Aon Consulting has announced that final salary pension schemes – the alternatives to DC schemes – are in the worst state they’ve ever been in. The pensions accounting deficit for these workplace schemes is now over £100bn for the first time ever.
What does this mean if you’re in a final salary scheme? Well, it makes it more likely your employer might switch to a DC scheme, which is less generous, as they can’t afford the costs of the final salary scheme. It also increases the chances that they’ll start limiting the benefits somehow – maybe by raising the age you can access your benefits, or paying a lower proportion of final salary.
So much for the Christmas cheer.
Twelve ways of giving this Christmas
Christmas is here again and charity campaigns are working hard to make us part with our money. But it seems they will have to work even harder as total giving by individuals is down 11 percent in 2009, which means we have given £1.3bn less than last year.
But while some people are battening down the hatches and hiding their money under the mattress there are others who do still want to give to charity. Here are twelve ways to make your donations to charity go further:
1. Tick the Gift Aid box – If you’re a UK taxpayer making a donation to charity in the UK, you can add Gift Aid. This means Her Majesty’s Revenue and Customs will give an extra 28p to the charity for every one pound you donate. If you’re a higher-rate taxpayer you can also claim the difference between the basic and higher-rates of tax on your donation.
Investing: It’s not rocket science
A month ago, a fund manager gave an hour-long presentation on how a derivative worked, only to say to me afterwards, “It’s not rocket science.”
He might as well have just said, “It’s as easy as pie.”
So it came as a pleasant surprise when James Anderson, manager of the Scottish Mortgage Investment Trust, said yesterday, “Bankers caused a lot of damage to our system, especially by trying to sum up risk into models. Because of the recession all this stuff is now gone.”
As the next decade approaches, are investors heading back to the basics?
Get ready for the house price predictions
It’s that time of year again. With 2010 drawing closer, get ready for a surge of house market predictions.
Today the National Association of Estate Agents (NAEA) said it believed house prices in the UK are likely to remain flat, or, a slight drop in some markets, for the first six months of 2010, before picking up again and remaining stable in the second half of the year.
The prediction matches Halifax’s view in its latest house price index that house prices would remain flat, on average, next year.
The NAEA’s other predictions for the UK housing market include:
A survey by the Building Societies Association (BSA) also out today shows that the festive season – and maybe all that mulled wine – has had an effect on consumers’ good mood, with consumers giving an upbeat view on property prices.
According to the December BSA Property Tracker survey of over 2000 people, property prices will rise 3 per cent in 2010. This compares to consumers in the same survey a year ago predicting an 8.6 per cent decrease in prices.
While we can be certain that we’ll see a lot more 2010 house market predictions in the coming days and weeks from the wise and perhaps some not-so-wise property spokespeople, it is less clear on what will happen to house prices over the next 12 months. But you can be sure that won’t stop commentators from getting out their mystic balls….
Plain vanilla UK company funds out of favour
2009 has been a strange year for investing. At the start of the year bond funds were the popular choice among investors, then equity income and lately risk investing has returned to the fore.
And last month the IMA specialist sector dominated the performance charts due to the price of gold reaching a record high of over $1200 per ounce.
It seems investors have very short memories and are easily seduced by top performers; the one area largely missing in people’s portfolios recently has been plain vanilla UK All Company funds. Groups such as Newton, which are consistent long term performers, have been overlooked in the rush towards the sexy areas such as emerging markets and long/short investing.
How to avoid paying an extra £1,300 on insurance
For some of you, cutting back on luxuries is probably at the top of your New Year’s resolutions list (reluctantly, perhaps). But what about saving on insurance?
I sense a *yawn* coming from the reader. But what if that magic figure was £1,315? That’s enough to buy a round-trip for two to the Bahamas.
Moneysupermarket offers ten easy steps:
School fees: the smart way to save
The mear mention of schools can be enough to send parents with young children into a panic. But when you add fees to the conversation things get even more tense.
To make it a little easier, here are a few points tips for saving for school fees*.
First, things to consider before your children start their education:
1: Look at the total costs of education before you start. It costs approximately £150,000 to £175,000 per child for a day school from 5 to 18 and over double that for boarding. Remember to multiply the number by the number of children as it can come as quite a shock when all your children are at school concurrently.
2: If your school of choice offers a primary / prep school as well as secondary, consider moving your child out of the normal windows of 7, 11 or 13 to avoid some of the competition. During these difficult times many schools have vacancies lower down the schools and will accept a child at 10 or 12 who can move to fill a place.
Tips for improving your credit rating
It’s official, UK individuals are more inclined to spend their money than save it.
A survey of Britain’s wealth published this week by the Office for National Statistics showed that 44 per cent of the public would rather have a good standard of life now than provide for a comfortable retirement. The report showed that 19.3m households, nearly 80 per cent of the total, have racked up an average of £7,200 each on credit cards, loans and other nonmortgage related debts.
But while it is still relatively easy to borrow on credit cards and through personal loans it is still important for consumers to maintain a good credit rating in order to get the cheapest rates on this debt.
Nice guys finish first
The next decade could well belong to the nice guys.
I visited the London & Capital office yesterday, half-expecting to be ushered into some daunting and overly decorated corridor filled with isolated rooms, and occupied by very serious wealth managers.
Instead I was greeted by a large, bright and open space that resembled a bit like the FT office. There was no air of exclusion, as everyone on the L&C team sat in the same area, including the founders.
It’s a different strategy no doubt, but L&C’s entrepreneurial spirit has given it a competitive edge. At a time when investors are shifting towards a more DIY culture, L&C has maintained its clientele base by following a few simple rules:
Here’s a good one: Never talk about products and or use polysyllabic, technical jargon with clients in the first meeting!
After a decade of bankers and wealth managers hard-selling products (many destroyed the credibility of their trade), it’s unsurprising that investor sentiment is changing.
But do they want more than just performance?
Lucy Warwick-Ching is the FT’s new Money Online Editor and has been a UK Companies reporter covering tobacco, pubs and leisure companies as well as the deputy editor on House and Home.
Matthew Vincent is the FT’s Personal Finance Editor and was previously the editor of Investors Chronicle, where he also devised the award-winning online video The Market Programme, and produced the BBC-FT standalone magazine ‘How to be Better Off’. He presents the weekly FT Money Show audio podcast, and previously worked on the BBC TV programmes Short Change and Pound for Pound.
Alice Ross is deputy personal finance editor of FT Money. She specialises in pensions, investments and investment trusts. Alice joined FT Money in April 2008 - prior to that she was deputy editor at Money Management magazine.
Ellen Kelleher has been a personal finance reporter in the UK for close to
four years. Before arriving in London, she worked in the FT's New York
bureau where she covered the insurance sector.
Steve Lodge is a personal finance reporter on FT Money specialising in savings.
Josephine Cumbo has written about all aspects of personal finance but currently specialises in insurance. She also covered company news for FT.com. Prior to working at the FT she was a news reporter for the ABC.
Tanya Powley is a personal finance reporter on FT Money specialising in mortgages and the housing market. Tanya joined FT Money in November 2009 after working in Australia covering personal finance for the Australian Financial Review and its sister magazine Asset. Prior to that, Tanya wrote about mortgages for UK trade newspaper Money Marketing.
Jonathan Eley is editor of Investors Chronicle, and has been with the title for ten years. Before that he worked for newswires and trade journals in London, New York and Hong Kong.
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