Over the past couple of weeks there have been constant media updates on Greece, the Euro and financial markets.  It’s likely this speculation will continue so I thought it worth clarifying key points.

The central issue remains that Greece, and other European countries, have an enormous level of debt.  The difference between Greece and the others though is that Greece certainly cannot afford to repay those debts.  As a result they are in constant need of bail outs from other member states, in particular Germany, to keep afloat.

However in return for the bailout the wealthier member states (such as Germany) are demanding Greece make ever-greater sacrifices in terms of spending cuts and austerity measures.  This is an understandable request given Germany’s economic history and restraint over past years when their population has seen their own cutbacks, which meant they had to work longer, retire later and for less money to maintain their standard of living.

From Greece’s viewpoint they’re looking ahead and see little future aside from constant indebtedness and increasing cuts in lifestyle so are unwilling to meet all the demands made to receive the bailouts.  An increasing proportion of their electorate would rather the country defaulted on their debts and effectively went bankrupt wiping the slate clean and starting afresh.

Going bankrupt is not really a solution as this would create chaos for everyone within the Euro, including Greece and Germany, but there are other solutions.

Ultimately if Greece is absolutely determined to not make the austerity cuts it is likely the other Euro countries and Germany will have to compromise.  

This will either result in Greece being assisted in leaving the Euro by slowly writing down any debt and creating a New Drachma over a specified timescale, such as 12 months.  Or Greece will carry out a controlled default on its debts and Germany will be forced to take on more liabilities (debts) to help keep the European economies going whether that is by increasing finance to the European Central Bank or by issuing Euro bonds.

In essence the powerhouse of the Euro is Germany and it is unlikely they won’t support or compromise with countries such as Greece if it comes to a stalemate.  Ultimately Germany’s future is too closely pinned to the Euro so they need to ensure it continues as a valid currency.

As always what causes stock market fluctuations is uncertainty.  Once the situation in Greece moves forward a little more and shows a clearer direction, it is likely stock markets will respond.  Global equity markets in particular will probably benefit from being able to see a clearer road ahead.

Despite the media quoting terms such as ‘markets being in free-fall’, UK and global stock markets have shown reasonable resilience over the past couple of weeks.  It is likely this will become further evident when they recover over time.  The focus should remain on the medium to long term, not the short term fluctuations.

As always I would encourage anyone concerned over the situation to get in touch or feel free to contact us if you want to discuss any area of your financial planning.

And if you’re planning a holiday in the sun this year, Greece is still the outright winner!

I just wanted to introduce myself because from time to time, I’ll also be writing some of the blog articles.

I began working with Martin from the very beginning of Platinum, more than 10 years ago, and have seen the company grow to what it is today.  My day-to-day role is running the office and distributing work to the rest of the team, making sure that all necessary paperwork is completed to enable client meetings to go smoothly.

Outside of work I enjoy socialising and walking my dog Buddy who I rescued from Spain two years ago - this is in-between playing taxi service to my 13 yr old son!

On the 20^th May I will be taking part in the BUPA Great Manchester Run along with my colleague Faye.  It’s my first time running this distance so I’m just hoping I get round and not come last!!!

Whilst watching the most recent ‘local’ Manchester football derby I noticed that rarely did a player touch the ball or the referee make a movement without the commentators relaying some vital statistics.

The same could be said of both the local and national news when constant facts and figures are relayed to enrich the reporting, such as how many millimetres of rain we’ve received and how much more the South of England needs to avoid a drought.

The problem isn’t with statistics as such but more their overuse.  In my business they have a place, especially when comparing performances of various investments, but they can distract and distort opinion.  The figures quoted often focus on the negatives and don’t always give encouragement or reassurance.  In reality they distract from the game, the report or the real story.

In terms of financial planning it’s important to remember your longer term goals and that if you continually change the goal posts by reanalysing numbers without a correct benchmark then you will only dilute the outcome. 

The above is even more true when financial markets are in a constant state of flux as in the past few days with the changes to the political status quo of Greece and France.

At Platinum we constantly review investment performances but we always maintain a steady benchmark and focus on the overall goals for our clients.  If you are concerned about any aspect of your plans then please get in touch and we’ll help put your mind at rest, rather than dazzle you with data!

I have worked with the Platinum team since 2004, with a responsibility for the compliance aspects of the business. This means I make sure that we are aware of and take the necessary steps to comply with the laws and regulations affecting our industry. It gives reassurance to our clients and they trust that whatever decision they make, it is the best one for their circumstances.

Outside of work, I am generally pre-occupied with managing three children, a husband…and our social diary! I enjoy going to my weekly yoga class and I have recently taken up tap dancing which is great fun.

Feel free to comment on any of my future posts!

Royal Mail are due to increase the costs of stamps from the end of April and they have also been given the option to increase the price of stamps further in order to cover their overheads.

With stamp prices increasing up to 39% this has presented a fairly unique investment opportunity.  For example, if you know you are likely to use £100 of stamps over the coming year then buying now could represent a guaranteed tax free return on your money of nearly 40%.

Alternatively, if you were to buy enough stamps  to cover all your second class postage needs for the next three years, and assume Royal Mail increases their prices with inflation, then you would be getting a guaranteed TAX FREE investment return of 11.6% per annum which is index linked.

From an investment strategy viewpoint, buying stamps is not something investors and business owners would normally consider. However at this time, a saving of 39% is difficult to ignore.  The main drawback is that cashing in on any investment is dependent upon if and when you are likely to use the purchased stamps. 

Aviva recently released figures showing their claims history for policyholders with Life Assurance and Critical Illness Cover policies.

The results are encouraging and should alleviate some fears that companies will refuse payment on an insurance claim in any way possible.

From nearly 12,000 requests, Aviva paid out on 99.7% of life assurance claims and 94.1% of critical illness claims.

The most common reason with unsuccessful claims was the policyholder failing to disclose relevant information when taking the plan out.

Other interesting facts were the average age of a claimant for critical illness was between 44 and 46, with an average pay-out of £73,591.

Cancer remained the most common reason, representing 67% of claims, followed by a heart attack at 10%, stroke at 7% , Multiple Sclerosis at 6% and benign brain tumour at 2%.

Although the above statistics show Aviva in a good light, several other companies also have positive claims records.  It clearly destroys the misconception that insurance companies will never pay out. It also highlights the need for cover for those of us in a certain age group with family and dependents.

If you would like to discuss your cover and/or the alternatives for financial protection please get in touch.

Normally I wouldn’t repeat a previous blog article, however Budget time can call for an exception.

Having listened to George Osborne outline his latest budget for the coming tax year we can now concentrate on optimising tax positions.

Before the budget an awful lot of press attention was devoted to the changes to taxation of pensions, savings and properties.  Very few of these changes materialised, whilst a few unforeseen opportunities revealed themselves.

It's wise therefore to make sure that we have all maximised our various financial allowances where possible and do everything possible to mitigate our tax liabilities before the end of the current tax year, on 5^th April!

In particular, consider; pension contributions, small gifts, inheritance tax mitigation, using Capital Gains Tax allowances and maximising any Individual Savings Accounts (ISAs).

For more information have a look at an earlier article I wrote "What you need to do in the next two months."

Alternatively, just give us a call and we will help you prepare for the new tax year.

The past few years have encouraged nervous investors to look for secure products and to favour those offering ‘guarantees’.  This makes me ask how good is a guarantee?

Until a few years ago our banks had a secure feel about them, then the banking crisis hit and well-established names like Northern Rock were brought to their knees.  Since then, investors have become much more risk aware and the banking sector has strived hard to rebuild confidence. But in their eagerness to rebuild their reserves, banks have increased their marketing using the words ‘protected’ and ‘guaranteed’.

Recently Santander was fined £1.5m by the FSA for not fully explaining their ‘Guaranteed Growth’ and ‘Guaranteed Income’ bonds.  Essentially they marketed the product to investors saying their capital was not at risk, whereas in reality the capital was and continues to be at risk. 

What does this mean for our clients?  In reality, there are very few truly guaranteed products and those that do offer them can be expensive or complex.  The costs of the guarantee sometimes reduce the returns to a level which isn’t worth pursuing.  So it’s worthwhile considering what you are wanting to achieve.

Often it is worth using a balanced approach to build a portfolio of mixed assets which can effectively give you the peace of mind knowing the initial capital is secure, but allowing a proportion of your portfolio to hopefully achieve real positive returns. 

If you are considering a bond which is ‘guaranteed’ or are worried about any of your existing plans please get in touch and we would be happy to explain the risks, if any, to your savings. And that’s a promise!

February signifies the start of a two-month rush to make sure any tax year planning opportunities are covered.

The final couple of weeks of the tax year can become a minefield and it is essential to start early to avoid missing the deadline.

Many of the allowances and limits which we are permitted each year are lost if they’re not used, which can then create a potential tax liability.  A few key areas are:

Pension contributions. 

The 5^th April is the last day in which individuals can make pension payments.  For higher rate taxpayers the next few weeks offer an invaluable opportunity to maximise their tax relief by topping up their pensions.

For those on lower incomes, and possibly receiving working tax credits, a pension contribution before the tax year end could give them tax relief and increase their working tax credits in the new tax year.

Small Gifts and Inheritance Tax.

Every year a person can make a gift of £3000 and it will be exempt from inheritance tax.  You can also use the last tax years allowance if unused.

For example, an elderly couple could give £12000 to their children using the current and past years allowance.  This would immediately reduce their estate and save up to 40% inheritance tax.

Capital Gains Tax.

Almost without fail, every year, people do not maximise their capital gains tax allowances.  Every person can generate £10600 in capital gains (profit) in the tax year and pay no tax at all.  Once the tax year has gone this years allowance will be lost.

ISAs

Individual Savings Accounts are one of the most well known savings vehicles yet every year many of us do not maximise our savings.  The ISA is well known for its tax efficiency in that any monies taken out of the ISA are tax-free. 

The ISA can accept up to £10680 each tax year and can hold a combination of cash or bank deposits and/or stocks and shares.  You can even set up a Junior ISA for children following the change in rules this year. 

If the allowance isn’t used it is lost come the advent of the new tax year when limits are reset.

The above are just a few of the key areas we ask our clients to consider.  If you would like to discuss your plans for this tax year and look at the opportunities available please get in touch.