Category Archives: Personal Finance and making money.

Bestseller Enables Those In Financial Or Emotional Debt To Turn Life Around

Posted on by

 By 27, she owed £2million.


By 29, she was debt-free.

 

By 35, she was worth £4million.

 

The Compass of Now  follows one woman’s incredible journey from destitute widow to one of the world’s most powerful entrepreneurs and inspirational leaders.

 

the compass of nowIt documents, in moving detail, how she fought back from the brink of financial ruin just months after giving birth and then suddenly losing husband to a heart attack, and emerged emotionally stronger – and significantly richer – than she could have ever imagined.

 

But The Compass of Now is more than just an inspirational success story. It is the definitive guide to taking control of your finances – and your life. It’s step-by-step advice to financial and emotional freedom has already made the book a global phenomenon with more than 1.4million sales worldwide.

 

Author and self-help guru DDnard is the bestselling writer of all time in her native Thailand and one of the country’s most sought-after celebrities. She is now set to become a household name in Britain with the release of an English-language version of The Compass of Now, which hits the shelves for the first time this month.

 

This internationally-acclaimed title, released through Life Compass Publishing, merges the best of Eastern and Western world thinking, mindfulness and emotional healing techniques to reveal the practical, tried-and-tested steps that Brits – including the estimated 70 per cent in debt – can take in order to:

–          Manage and overcome personal debt

–          Become financially and emotionally free

–          Unleash their full potential and live life to the fullest

Speaking about the 216-page, full-colour paperback, DDnard, who lives in Bangpakong, Thailand, said: “This inspiring book is filled with the message of hope and personal strength, and will help you come to understand that your future truly is in your own hands.”

The Compass of Now by DDnard (Life Compass Co., Ltd.) is available now.

 

Investment Trusts by John Baron | Book Review

Posted on by

investmenttrustsWhen I first saw the title of this book, ‘Investment Trusts’. I thought that it would be quite a dry read. I was very wrong. This is a well written and easy to read guide to investment trusts. A must read for investors and financial advisers.

John Baron presents an extremely compelling case for investing in investment trusts instead of the more common and traditional unit trusts/ mutual funds.

As a very basic overview.

Unit trusts are open ended (except  funds from new investors) and trade at their net asset value

Investment trusts trade like shares on an exchange. They are closed ended (don’t accept new investor funds) and can trade at a discount or premium to their actual net asset values.

The book does a much better job of explaining the differences and goes into a lot more detail. Baron examines the factors which explain why unit trusts/OEICs under perform investment trusts. He clearly presents the opportunities which many investors may be missing out on.

The book is well researched (Baron has worked in the industry for many years). It is clear easy to understand, jargon free and well structured. It is difficult to argue with any of the authors conclusions. The book also has extra tips for successful investing and information on how to construct and monitor a trust portfolio. This is a must read for any investor who currently only invests in mutual funds. I’m not surprised it has a flawless record of 5 star reviews on Amazon.

5/5

Financial Times Guide to Investment Trusts: Unlocking the City’s Best Kept Secret is available here.

 

 

US Shutdown no cause for panic (yet)

Posted on by

The US Government has begun its first partial shutdown in 17 years, following congress’ failure to agree a budget to continue its funding.

 

The S&P 500 closed down 0.6%, whilst the US dollar fell against sterling last night, as investors digested the news.  The market’s reaction to the shutdown has been muted and suggests investors are expecting a resolution to these negotiations.

 

Adrian Lowcock, Senior investment Manager at Hargreaves Lansdown says;-“Investors have become used to political brinksmanship in the US with negotiations going to the wire but each time a resolution has been found.

These negotiations are the warm up act. The bigger issue, in around 17 days’ time, is negotiations to raise the $16.7trn US debt ceiling. Failure to raise the debt ceiling and allow the US government to continue borrowing could force the country into a default scenario which could then have more serious consequences for investors.

A US default is highly unlikely but political negotiations could create volatility in stock markets.

This doesn’t look like a selling trigger. Investors should focus on their long term goals and use any short term weakness as opportunities to invest.”

The 2011 Debt ceiling

In August 2011 a similar scenario played out.  The S&P 500 fell 19.74% from its peak in July 2011 as the S&P credit rating agency cut their top notch rating for the US and investors sold out. However by the end of the year the S&P had recovered and ended the year up 1.46%.

Chris Saint, Head of Currency Dealing, Hargreaves Lansdown “The US dollar extended its recent decline against the pound (lows of US$1.6261) after the deadline was missed. The fallout appears to have been limited by hopes that significant damage to the US economic recovery will be avoided, assuming a resolution can be agreed upon very soon.  In September we saw demand for US dollars rise 29% on the previous month.”

 

At the time of writing, the exchange rate stands at:

 

         Interbank rate                   % daily change

Sterling / US dollar                          1.6242                                           +0.37%


Royal Mail to float – what interested investors should do

Posted on by

The biggest privatisation for two decades

 

·         Royal Mail to float

·         What interested investors should do

·         IPO Q & A

Today the Government have announced plans to float the Royal Mail in what could be the largest privatisation for two decades. The state-owned postal service could be valued up to as much as £3 billion in an initial public offering (IPO) taking place this year.

 

Richard Hunter, Head of Equities, Hargreaves Lansdown;-

““The success of the Direct Line Group & esure share offers has reignited private investor interest in IPOs. The offer of shares to the public is reminiscent of the float of British Gas in the 1980’s which was accompanied by the “Tell Sid” Campaign. Shares will be marketed to the public and any investors aged over 18 will be able to apply for shares.

 

What interested investors should do

 

Richard Hunter

 

“We don’t have the details of the IPO yet. Investors can register their interest with a stockbroker now and when a prospectus and application pack becomes available they will contact you with all the information needed to invest.”

 

Tell Sid? – Investing in an Initial Public Offerings (IPOs) Q & A

 

From the first “Tell Sid” privatisation of British Gas in the 1980s, flotations and Initial Public Offerings (IPOs) have always been of interest to the investor. Richard Hunter, Head of Equities, explains how they work.

 

What is an IPO?

 

An Initial Public Offering (IPO) is where the owner(s) of a company sell all of part of their stake to the public in order to raise money. This cash can then be used to grow the company or simply be returned to the owners. An IPO is also commonly called a flotation.

 

An IPO may only be made available to institutional investors or to a mixture of private (retail) and institutional investors. An IPO happens in three stages.

 

1.            The Intention to Float – The company announces to the stock market, public stating they wish to float the company

2.            Preparation of Prospectus – The company will then prepare and release a prospectus. This aims to be the definitive document relating to the launch and will describe the offer in detail. Applications to buy shares in an IPO should always be made on the basis of the information contained in the prospectus

3.            Sale of shares – The company and their advisers invite applications for the shares. The IPO will be open for a fixed time known as the Offer Period

 

When will the share price be known?

 

In some cases fixed price offers are made and the investor will know the share price in advance. Alternatively the share price will not be known until the date the company floats. In some cases the company will provide an indicative range for the flotation price of the shares e.g. £2.00 to £2.20. The precise price won’t be fixed until near the listing date and may depend on demand for the shares. Once the share has floated on the open market, the price will the rise and fall as all other shares do.

 

Why would investor want to get buy shares at IPO?

 

An IPO allows investment in a company when it first enters a stock market.

 

When will shares go on sale?

 

The timetable for an IPO generally spans four weeks. An Intention to Float announcement is made and then around two weeks later the prospectus is issued and the offer period starts. It is during this period investors can apply for shares.

 

Where can investors get a prospectus for an IPO?

 

Interested investors should contact a stock broker who will be able to register your interest in receiving a prospectus. In some cases a stock broker will provide research and updates as information becomes available. For example, Hargreaves Lansdown has been involved in the majority of IPOs over the last 30 years.

 

How do investors buy IPO shares?

 

Investors can buy IPO shares through a stockbroker. A share dealing account should be opened and money deposited to buy the shares. This can be done online or over the telephone using a debit card, or alternatively a paper application accompanied by a cheque can be used.

 

How many shares can investors buy from an IPO?

 

There is normally a minimum number – If the offer is oversubscribed investors may not be able to buy all the shares they want to buy. If this is the case the balance of money can be used to buy other shares or can be refunded.

 

Can investors buy IPO shares through an ISA, SIPP or Junior ISA?

 

In some cases money in an ISA, SIPP or Junior ISA can be used to buy IPO shares. This depends upon which market the company is listing upon and the type of IPO.

 

What dealing costs are paid?

 

Buying IPO shares is often free for investors.

 

Hargreaves Lansdown’s charges are as follows:

 

IPO share purchase                         Free

Share account charge                     Nil (Other charges to hold shares may apply e.g. in ISA and SIPP (ISA – 0.5% capped at £45 a year, SIPP – 0.5% capped at £200 a year).

 

Selling IPO shares will be subject to a dealing charge from £5.95 and no more than £11.95 (online).

 

Buying IPO shares after the offer period, when the shares are available in the market, will be subject to a dealing fee of no more than £11.95 (online) plus stamp duty of 0.5%.

 

Is there a minimum holding period? How quick can an investor sell?

 

There is no minimum period, but generally it takes 3 working days from the date of the float to issue the shares and selling cannot practically happen before then.

 

How will investors be able to sell IPO shares?

 

This is easy. Simply choose when and how many to sell, and execute the deal online or alternatively instruct a sale over the telephone. Dealing online is almost always cheaper than dealing over the telephone.

 

Will there be a dividend from IPO shares and if so, how will they be paid and when?

 

This depends upon the company. The prospectus will normally detail any proposed dividend policy.

 

How will investors find out if there are any special discounts or shareholder perks?

 

If there are any, they will be detailed in the prospectus

 

What are the risks?

 

The value of shares will fall as well as rise, so investors may get back less than they invested. Dividends are not guaranteed and, if paid, are variable. During the period between the Intention to Float being announced and the start of the offer period, the intention may be withdrawn. This rarely happens.

A company which is the subject of an IPO may not have a long track record and could be difficult to value or calculate a fair price. In many IPOs investors do not know the share price before committing to buy and therefore may end up buying at a higher price than they wished.

Investors should read the prospectus and any supplementary documentation as this will include the main risks of investing.

 

The Collapse of Private Pensions

Posted on by

According to data published by the Office for National Statistics today, membership of private pensions (as opposed to the National Insurance funded state pension) has hit a new low; just 35% of men and 32% of women aged between 16 and 64 were active members of a private pension in 2011/12.

Membership of Defined Benefit pensions has declined from 46% of employees in 1997 to just 28% in 2012, almost exclusively now in the public sector.

Participation rates of employees varies dramatically between public and private sectors, with 85% of men and 81% of women in the public sector, compared to 36% and 26% respectively in the private sector.

Hargreaves Lansdown comment, Tom McPhail, Head of Pensions Research ‘These figures illustrate dramatically how important it is that auto-enrolment succeeds over the next 5 years. It is vital that nothing is done to jeopardise this project and that everything possible is done to encourage people to stay enrolled in their workplace pensions. Recent calls for reform of pension taxation or for small businesses to be exempt from auto-enrolment should be postponed or ignored until the foundations of a savings culture have been properly laid.’

Separately, the ONS has reported average contribution rates as 19.2% of payroll for Defined Benefits schemes and just 9.4% for Defined Contribution arrangements.

Tom McPhail: ‘The inevitable consequence of this level of pension funding is that millions of people will have to work on into their 70s because they won’t be able to afford to retire earlier. All defined contribution members should be shown what their contributions are likely to buy for them in the way of a retirement income, this pension projection should be updated regularly and members should be encouraged to engage with their retirement planning. 9.4% as an average is simply not enough. Investors should aim to be contributing at least 12% of their income towards their retirement. For a more personal estimate, they should use an online pension calculator.’

Many pension calculators are available on the internet, this is one example http://www.hl.co.uk/pensions/interactive-calculators/pension-calculator

What do you think? Do you have a pension?

Are Vouchers Now Cool?

Posted on by

Sienna-Miller05_glamour_1ju_592x888Saving money is important in today’s climate. While the recession grumbles on with only slight growth people are having to look around to find ways to have the same standard of living. It seems we are working harder for less and less. Understandably, our attitude to money is changing. When we work so hard for so little, or have no job at all, we all become more frugal with our cash, and who can blame us for being fussy about spending our hard earned money?

Back in the day vouchers used to be incredibly uncool. Cutting clippings out of newspapers to save 30 pence was not worth the embarrassment at that time. But times change and now vouchers are cool. The embarrassments is no longer there because thrift is in.

This is in part due to the recession. Interest rates are low, jobs are hard to come by or keep, wages are not rising but the cost of living is. Our finances are stretched like never before. This is why not only have vouchers become popular, but voucher websites have also become part of our culture. We can save money on clothes and make up, food and drink, but we can also save money on going out. You don’t have to be rich to live rich; you just have to be savvy.

There are a lot of options for finding vouchers. There are still many in traditional media like magazines and newspapers. However, Coupon websites such as voucherbox.co.uk are where it is at. They help people save money and still live despite the squeeze. It seems folly now to buy anything without one or even go out. I don’t know anyone who goes to Pizza Express without checking the internet for buy one get one free vouchers.  We never need to buy full price ever again.

What is your opinion? Do you use vouchers or coupons? Comment below.

 

 

US Independence Day – Should investors buy into the American Dream?

Posted on by

·         US valuations are at their long term average

·         US economy accounts for 19% of World GDP

·         HL analysis shows only 3 out of 77 large cap US funds beat their benchmark

Adrian Lowcock, Senior Investment Manager of Hargreaves Lansdown, looks at the prospects for the US economy on the eve of Independence Day;

“The US economy is much further down the road to recovery than the UK and Europe.  The banking system has been fixed and the country does not have the problems that still exist in Europe. We can see the light at the end of the tunnel in the US and sustainable growth may be achievable.

“Many US companies benefit from strong management teams, are profitable businesses and operate in an environment of improving growth.  Many American companies have a consistent and long term track record of being able to grow profits. In the world of uncertainty a premium is being attached to those businesses that can continue to grow.

“Whilst overall the US stockmarket is not cheap, there are still areas which offer value and investors get access to companies with huge growth potential.  The US has a long history of encouraging entrepreneurs to develop and grow business.  The US has a large smaller companies sector which is full of businesses looking to grow into global leaders. Investors should make sure they have some investment in the US Market within their portfolio.”

US Economy

The US Economy accounts for 19% or nearly 1/5th of the world’s gross domestic product.  Economic outlook in the US is improving with GDP growth forecast by the IMF at 1.9% for 2013 and 3% in 2014.  The threat of a “fiscal cliff” was largely delayed; bank lending conditions have improved from low levels.

 

Household debt as proportion of disposable income has fallen back to 2004 levels. House prices started to rise in 2012 and investment in residential property has followed.

 

Unemployment is falling with major banks* predicting the unemployment rate will be around 7% by the end of 2013.

 

Rising house prices should help rebuild household finances, as will improving employment, providing support to personal consumption.  Low borrowing rates should be supportive of increased spending, while businesses encouraged by the improving financial conditions and healthy profits may well increase investment.

 

Shale gas could be transformative for the US economy.  According to the U.S. Energy Information Administration it will keep market gas prices low at around $4 per million Btu until 2019 with prices rising slowly thereafter. This could rejuvenate the industrial sector.

 

Risks to US Recovery

 

The biggest risk is the early withdrawal of the Quantitative Easing programme.  As the economic data, such as unemployment falling below 7%, improves it puts pressure for the Federal Reserve to roll back on further QE. The US has not addressed its budget deficit and the US lacks a plan to reduce the debt. As such there are risks of further political entanglements over raising the debt ceiling, both of which result in a higher sovereign risk premium.

 

Investing in the US

 

The US stock market has performed well in recent years recovering from the financial crisis having returned 103% since March 2009 compared to the FTSE 100 and the FTSE Europe Ex UK returning 80% and 62% respectively. The US stock market is around its long term average valuation with a P/E at 21.98 compared to its long term average of 23.8 times earnings. Even so there are areas of the US Market that remain attractive.

 

The challenge for investors is how to access the US market. Analysis by Hargreaves Lansdown shows that large cap active managers continue to struggle in the region with only 3 out of 77 funds in the IMA North American sector out-performing the S&P 500 over 3 years and 6 out 68 able to do so over a 5 five year period.

 

Investors looking for large cap exposure should consider US tracker funds, , such as HBSC American Index or I-Shares S&P 500, to give access to the world’s largest stock market whilst keeping fees low. For those wishing to access US smaller companies our preferred fund is Legg Mason US Smaller Companies.

 

* Bank of Tokyo-Mitsubishi, Barclays, Citigroup, Deutsche Bank and UBS


5 Ways to Help Your Children Financially Prepare for College

Posted on by

As secondary education continues to get more expensive, teaching your children financial responsibility, as well as helping them out with the monetary burden of college, becomes crucial. While you always want your children to have it better than you did, teaching them how to budget and handle money is important not only in saving you some cash, but developing them as productive people. Here are a few simple way to get your child financially ready for university life.

1. Have Your Child Get a Job

Financially Prepare for College

Ways to Help Your Children Financially Prepare for College

 

Image via flickr by Waponi

You should have your child get a job in high school. This teaches him responsibility and how to make money. By the time he reaches college, don’t just hand over money. Offer to supplement his income for spending money, but only if he gets a part-time job.

Although college does require studying and class work, there is still a lot of downtime for your child to pick up a 10 to 20 hour a week job. By being employed and earning some of his own income, your child will learn to appreciate the money he gets.

2. Prepare a Budget

Before your child heads off to college, sit him down and show him how to make a budget. Demonstrate the differences between wants and needs and mention that he doesn’t have to pay for other people, be it food or entertainment. List all the different categories of expenditures and what percentage of his money should go to each piece of the pie. This will teach him not to overspend on frivolous things.

3. Utilize Apps

Smart phones offer quite a variety of apps to help money management become simple. Mint is just one of many free apps that allows you to view your bank accounts, income, and expenditures. It also has an alarm that goes off when you are reaching your spending limit. Because the younger generation is glued to their smart phones, why not give your child a constant reminder of budgeting if he is going to be on his phone anyway.

4. Teach About Investing

Often, parents will just give their children money or a credit card when they go to college, but this is actually counterproductive. If you feel you must hand over money, make it into a learning experience. Give them $500 to invest in stocks. The sooner they learn about the risks and benefits of the stock market, the better.

You can even make them read about financial investments. One such book is Fisher Investments on Materials, which can benefit both new and seasoned investors about the materials market, which is ever-changing and growing.

5. Take Out a Student Loan

While this may not seem like the greatest option, the learning value is incredible. Even if you don’t have your child take out a traditional student loan, have him pay you back some of the money. You don’t have to make him sign an official loan with you, just put forward all the information.

Your child will learn about interest and how to pay for a loan on a monthly basis. This will prepare him for the real world when he purchases a house or a car.

Teaching your child fiscal responsibility is a difficult task. But the sooner you teach him the ins and outs of handling money and meeting financial obligations, the more able he’ll be to deal with it once he is on his own. College is just the first step of taking off the training wheels.