In today's Budget the Chancellor has restricted higher rate tax relief on employee contributions to pensions where the employee earns £150,000 or more and makes annual contributions of £20,000 or more.
For further details see this
Chris Wicks CFP
I help you achieve your lifetime goals for reasons that are important to you
Wednesday, 22 April 2009
Wednesday, 15 April 2009
Can investors trust what they don't understand?
In this video Tim Haywood, chief executive of Augustus Asset Managers argues that investors should place the same level of trust in fund managers as they do in manufacturers of high performance cars. In essence, do not try to understand what goes on under the bonnet.
In general derivative based funds, using options and futures and other complex financial instruments are difficult to understand for most investors and it is arguable that even the fund managers do not exactly know what levels of risk they are entering into. In addition, many tend to be based in offshore locations and lack proper transparency.
In general derivative based funds, using options and futures and other complex financial instruments are difficult to understand for most investors and it is arguable that even the fund managers do not exactly know what levels of risk they are entering into. In addition, many tend to be based in offshore locations and lack proper transparency.
Thursday, 12 March 2009
What can we learn from Past Financial Turnoil
This presentation by Inmoo Lee of Dimensional Fund Advisers explores previous financial crises and tries to draw out what we can learn from them in terms of our expectations going forward.
Saturday, 7 March 2009
The Arithmetic of Active Management
In the video featured below, Professor Kenneth French mentioned the paper written by Nobel Laureate Economist William F Sharpe. Well here it is.
This type of information needs to be seen in a completely different light to what those of us who are more enlightened call financial porn because it is the informed view of a very highly rated and acclaimed academic. Unlike fund management companies who pump out marketing material designed to entice unwitting investors to part from their money William F Sharpe and others like him have spent decades trying to get to the truth. They have no axe to grind.
The question you have to ask your self is, Do you want to be one of the (as William F Sharpe puts it) "individual investors ... foolish enough to pay the added costs of the institutions' active management via inferior performance". Of course there is also the famous Dirty Harry saying "What you want to ask yourself is ... Are You Feeling Lucky?"
For more information on William F Sharpe see this
This type of information needs to be seen in a completely different light to what those of us who are more enlightened call financial porn because it is the informed view of a very highly rated and acclaimed academic. Unlike fund management companies who pump out marketing material designed to entice unwitting investors to part from their money William F Sharpe and others like him have spent decades trying to get to the truth. They have no axe to grind.
The question you have to ask your self is, Do you want to be one of the (as William F Sharpe puts it) "individual investors ... foolish enough to pay the added costs of the institutions' active management via inferior performance". Of course there is also the famous Dirty Harry saying "What you want to ask yourself is ... Are You Feeling Lucky?"
For more information on William F Sharpe see this
Stock Picking v Index Investing
I have just found this extremely interesting video link which shows Professor Kenneth French talking about Stock Picking and Index Investing. He explains, far better than I ever could, how stock picking is essentially a fools errand ... but a very necessary one which enables those of us with more sense to take a cheap ride on the increased market efficiency which their zero sum strategies create. He also makes some very interesting comments about Hedge Funds.
Tuesday, 16 September 2008
In these times of financial stress, how well protected are your investments?
Given the current turmoil in the world markets with banks going bust and insurance companies needing emergency loans to keep afloat you could be forgiven for worrying about the security of your money. However, all is not lost.
In the UK when an insurance company, bank or broker goes bust there is an organisation called the Financial Services Compensation Scheme (FSCS) which provides compensation to investors and policyholders who have lost out. The FSCS is funded by levies on the companies authorised to trade in the market place. The levels of compensation that it can pay depend on the type of arrangement that you hold and have been set out below:
Deposits: £35,000 per person (for claims against firms declared in default from 1 October 2007). 100% of the first £35,000.*
Investments: £48,000 per person.
100% of the first £30,000 and 90% of the next £20,000.
Mortgage advice and arranging: £48,000 per person (for business conducted on or after 31 October 2004).
100% of the first £30,000 and 90% of the next £20,000.
Long-term insurance (e.g. pensions and life assurance): unlimited.
100% of the first £2,000 plus 90% of the remainder of the claim.
General insurance: unlimited.
Compulsory insurance (e.g. third party motor): 100% of the claim. Non-compulsory insurance (e.g. home and general): 100% of the first £2,000 plus 90% of the remainder of the claim.
General insurance advice and arranging: unlimited (for business conducted on or after 14 January 2005). 100% of the first £2,000 plus 90% of the remainder of the claim. Compulsory insurance is protected in full.
Summary
In summary, if hold cash with a bank or building society the maximum compensation amount is now £35,000 per customer at each bank. The maximum compensation for insurance policies is effectively 90% of the value of the claim (100% of the first £2000). Whilst insurance companies provide a greater degree of investor protection this relates to the surrender or claim value NOT what you paid for it. If your policy is invested in the markets it will certainky have reduced in value. If it is held in back deposits and the underlying banks go bust - you loose your money. The above levels of compensation relate to individual investors and policyholders - not institutions.
Whether you are worried about the solvency of the insitutions with which you hold money or about the effect of the markets on your investments you should not act in haste as this could trigger penalties or merely crytalise investment losses. Seek professional advice from an independent financial adviser who can provide you with impartial professional advice.
If you would like further information on the FSCS click here
In the UK when an insurance company, bank or broker goes bust there is an organisation called the Financial Services Compensation Scheme (FSCS) which provides compensation to investors and policyholders who have lost out. The FSCS is funded by levies on the companies authorised to trade in the market place. The levels of compensation that it can pay depend on the type of arrangement that you hold and have been set out below:
Deposits: £35,000 per person (for claims against firms declared in default from 1 October 2007). 100% of the first £35,000.*
Investments: £48,000 per person.
100% of the first £30,000 and 90% of the next £20,000.
Mortgage advice and arranging: £48,000 per person (for business conducted on or after 31 October 2004).
100% of the first £30,000 and 90% of the next £20,000.
Long-term insurance (e.g. pensions and life assurance): unlimited.
100% of the first £2,000 plus 90% of the remainder of the claim.
General insurance: unlimited.
Compulsory insurance (e.g. third party motor): 100% of the claim. Non-compulsory insurance (e.g. home and general): 100% of the first £2,000 plus 90% of the remainder of the claim.
General insurance advice and arranging: unlimited (for business conducted on or after 14 January 2005). 100% of the first £2,000 plus 90% of the remainder of the claim. Compulsory insurance is protected in full.
Summary
In summary, if hold cash with a bank or building society the maximum compensation amount is now £35,000 per customer at each bank. The maximum compensation for insurance policies is effectively 90% of the value of the claim (100% of the first £2000). Whilst insurance companies provide a greater degree of investor protection this relates to the surrender or claim value NOT what you paid for it. If your policy is invested in the markets it will certainky have reduced in value. If it is held in back deposits and the underlying banks go bust - you loose your money. The above levels of compensation relate to individual investors and policyholders - not institutions.
Whether you are worried about the solvency of the insitutions with which you hold money or about the effect of the markets on your investments you should not act in haste as this could trigger penalties or merely crytalise investment losses. Seek professional advice from an independent financial adviser who can provide you with impartial professional advice.
If you would like further information on the FSCS click here
Sunday, 22 June 2008
Where to find full fund cost data
In my previous posting entitled Hidden Costs of Investment I mentioned that that details on portfolio turnover rates are to be found in the Short Prospectuses of the fund management companies.
This blog will contain links to the short prospectuses. As I find more I will add more, so make sure you visit regularly or by subscribing here. Readers are more than welcome to help with this by providing additional links in the comments to this posting.The companies periodically change the links. Whilst I will try and keep on top of these, if readers spot any that no longer work please post a comment.
Links to Short Prospectuses
Blackrock
Credit Suisse
Dimensional
F&C
Fidelity
GAM You need to accept the terms, select 'Funds' and then choose 'Library' from the left hand menu where you will find the simplified prospectus.
Invesco Perpetual This links to the table on charges from which you can go on to see the PTR. Simplified Prospectuses are in the library section of the site.
Jupiter
Legal & General
M&G
New Star
Norwich Union
Old Mutual
Rensburg
Schroders This takes you to the funds section of the simplified prospectus containing the charging details for each fund. If you want to see the generic section look here
Chris Wicks CFP
I help you achieve your lifetime goals for reasons that are important to you
This blog will contain links to the short prospectuses. As I find more I will add more, so make sure you visit regularly or by subscribing here. Readers are more than welcome to help with this by providing additional links in the comments to this posting.The companies periodically change the links. Whilst I will try and keep on top of these, if readers spot any that no longer work please post a comment.
Links to Short Prospectuses
Blackrock
Credit Suisse
Dimensional
F&C
Fidelity
GAM You need to accept the terms, select 'Funds' and then choose 'Library' from the left hand menu where you will find the simplified prospectus.
Invesco Perpetual This links to the table on charges from which you can go on to see the PTR. Simplified Prospectuses are in the library section of the site.
Jupiter
Legal & General
M&G
New Star
Norwich Union
Old Mutual
Rensburg
Schroders This takes you to the funds section of the simplified prospectus containing the charging details for each fund. If you want to see the generic section look here
Chris Wicks CFP
I help you achieve your lifetime goals for reasons that are important to you
Subscribe to:
Posts (Atom)
Posts
