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!

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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!!!

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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!

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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!

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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. 

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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.

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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.

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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!

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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.

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Last year was dominated by the Eurozone crisis and the crippling sovereign debt burden.  As a result of the numerous failed attempts by politicians to take control in a co-ordinated and convincing manner investors became nervous and took extreme views on both equities and bonds, including Gilts.

So what has changed?  In truth, very little.  The massive debt burden is continuing to grow and the politicians continue to vie for position within the European community. 

There is however one subtle change and this is giving investors more confidence. The markets are starting to believe the politicians are finally aware of the severity of the situation and the rhetoric is being replaced with a co-ordinated approach to come up with a plan.  At the same time the European Central Bank has provided increased liquidity which has then enabled the various national banks to catch their breath and defer any drastic action.

This modest change is a start.  The recovery will certainly be a long, and painful, process. There are no real comparisons in terms of the road ahead and past experience, but small tentative steps in the right direction will continue to give investors reasons to plan ahead.

As the Euro countries adopt the new debt and spending rules of the treaty anticipated in March, markets will hopefully continue their recovery, although there will likely be some dramatic falls backwards along the way.

The fear of a disorderly default by one of the Eurozone countries on their debt, combined with the fear that the Euro may fall apart in an uncontrolled and chaotic mess, will continue to cause uncertainty and volatility. 

However over the longer term I feel we will see markets return to some normality.  Looking ahead I think asset classes will revert to a more balanced and familiar format.  For example Gilts funds have done extremely well over the past year but these will probably fall back a little going forward.  The chief beneficiary of the reducing demand for Gilts will be equities and corporate bond funds within the UK, US and some emerging markets.

As always, our focus remains longer term and the outlook remains fairly buoyant as current stock market valuations appear undervalued in many cases, giving the right investment fund manager’s opportunities to benefit from any stock market recovery.  

It is important to take an approach suited to your needs and attitudes which is where we can help.  If you would like to discuss the situation further please get in touch.

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A category of investments known as Socially Responsible Investment (SRI) funds has developed, so that whilst most ethical funds fall within this category, SRI funds can support a much wider agenda. A good example would be where an ethical fund might never invest in a company that carries out animal testing, whereas a SRI fund could support animal testing if there is a sufficiently valid and justifiable reason for such testing.

We have access to schemes that offer access to thousands of different investment opportunities which cover the whole spectrum of funds, from the conventional through to SRI and also those who meet the stricter ethical criteria. This means that return on investment and risk factors can be considered along with your personal beliefs and opinions.

It’s an exciting time for us at Platinum because we believe some of our clients may be wanting to take a more socially responsible approach to their investments. If this is something that interests you, then please get in touch.

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2012 is already taking us into new areas, previously unexplored.

In order to welcome clients and explain how we work we have just launched two videos.  The idea is to show the videos on our new YouTube channel, Platinumifs, as well as posting links within our main website.

We always appreciate feedback from clients and contacts so would appreciate any thoughts or suggestions you may offer. 

Welcome to Platinum IFS

platinumifs_welcome_jh160112.mp4 Watch on Posterous

An introduction and explanation of both how we work and how we are paid

platinumifs_HowWeWork_mh160112.mp4 Watch on Posterous

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With his in mind I thought it is worth taking the time to note down some important dates which are due to affect all our lives and financial wellbeing. 

1.  31st January is the most immediate date.  It is the deadline for all online Self-assessment tax returns (paper submissions were due by 31st October last year).  Equally important is the payment of any tax due for the previous tax year which must be paid in full by the deadline.  Where appropriate tax payers will also have to make a payment on account for the current tax year at the same time, followed by a further on account payment by the end of June.

2.  21st March is the date of the annual budget.  This year will be of exceptional interest to all of us as the Chancellor George Osborne is almost certainly going to take the opportunity to announce changes designed to maintain his fiscal tightening and inspire growth.  This will no doubt entail changes to taxation and benefits for companies and individuals.

3.  5th April is the year end as always and will probably involve a rush to maximise tax allowances and take advantage of any budget changes.  A major change which is due to take effect this year though is the removal of contracting out and protected rights rules.  For almost every pension plan holder his will mean a reassessment of their plans as many restrictions are removed and many existing plans will stop receiving enhanced benefits.

4.  1st September marks the start of Auto-enrolment. The Pensions Reform starts to take effect and the largest UK employers will have to start implementing changes and start providing 'company sponsored' pension schemes. These will soon have to be implemented by all employers throughout the UK as their various staging dates are reached.

5.  21st December is the date when all insurance companies must remove any gender pricing in any insurance product as dictated by the ECJ.  This will have a huge impact on any insurance related product, from car insurance through to pension transfer values and annuity rates, as companies will have to offer the same rates for men and women. 

All the above regulatory changes will have an impact.  In order to ensure that you, your company or any friends, family and colleagues are prepared we recommend you seek advice or a review of your circumstances.

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As we approach the end of the year, it is worth reflecting upon the turmoil of the past 12 months, how well financial markets have withstood the onslaught and the opportunities for 2012.

At the beginning of the year the outlook was reserved.  The debt mountain was at the forefront of everyone’s minds and there was an awareness of looming cuts and a difficult year.

From the very start there was turmoil.  In January, the year started with civil unrest in the Middle East as countries such as Egypt fought for political reform and leadership change.  This created a spike in Oil prices and fuel costs which would have an impact on everyone’s disposable income.

The earthquake in Japan took everyone by surprise and it’s devastating impact reverberated around the world both financial and personally.  That said the Japanese financial markets soon started to recover as the country started setting about rebuilding their infrastructure.

Soon after, the US politicians failed to reach a decisive agreement on their ‘debt limit’ which failed to convince financial markets that the severity of the debt problem was understood by the political leaders.  This meant the US lost it’s AAA credit rating.  Whilst this didn’t have an immediate impact it was a wakeup call.

Alongside this the Eurozone sovereign debt crisis continued to build momentum as fears moved from Greece, to other countries and ultimately to the Eurozone as a whole.

This was manifested in the price of Gold which soared to new heights as it was perceived as a safe haven away from government debts.

The Eurozone crisis continues to bubble away but markets seem fairly steady as political leaders struggle to come to terms with the necessity of a fiscal union, likely underpinned by Germany.  In line with this the price of Gold has since fallen back from it’s earlier peak.

Closer to home there have been a number of issues regarding spending cuts & changes to public sector pension schemes.  Whilst none of these cuts are welcome the necessity of some change is unarguable and, so far, financial markets & investment managers have been pleased with the overall direction of our economy.

Looking ahead to 2012 there are some positives for investors. 

It is likely the Eurozone crisis will continue to stumble onwards however as time passes each of the 17 Eurozone countries appear to be moving closer together and a long term plan will hopefully start to form.  Once a stable approach is agreed financial markets will start to move forward. 

Outside the Eurozone and UK, the wider world is also coming to terms with their debt issues and changes to their political systems.  As with the Eurozone investment managers crave stability and as issues are tackled it is likely financial markets will respond.

Within the UK we are probably in a fairly robust position.  2012 is likely to be a year of little or no growth, however some things may start to get easier as inflation starts to lower and pundits will start to look ahead at 2013 to 2016, when they will see returns on investments.  As a result financial markets will hopefully demonstrate a steady climb from their current position.

In essence 2012 is unlikely to be a year of dramatic stock market climbs but it will hopefully be a year when investors see a steady positive climb in their valuations where they are invested in the right areas.

As always we are happy to discuss the financial future with any of our clients and welcome the chance to meet in the new year.

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Recent press speculation has devoted a lot of time to the ‘end game’ which is approaching for Europe and the sovereign debt crisis.

A number of issues have arisen over the past few months with the most recent being the signals from financial markets that they are worried about the political leaders ability to take control.

Last week the main world’s central banks showed their solidarity in a co-ordinated action to lower interest rates for commercial banks.  This action achieved its goal in that it immediately calmed nerves, however the euphoria will soon dissipate if the 17 Euro countries do not move forward.

The sovereign debt crisis, as it is described, needs long term plans.  With their backs to the wall it is likely Germany, France and the remaining 15 ‘Euro’ countries will have to move into a fiscal union.

Fiscal union will probably require a new treaty with the 17 ‘Euro’ countries operating as a separate entity within the greater EU.  The new inner EU will also likely have fiscal controls dictated by Germany in return for Germany’s commitment to help support their fellow countries and their huge debt burden.

In the long run it is difficult to predict how the EU will develop, however it is almost certain that there are no real alternatives to a common fiscal policy controlled by the strongest country, i.e. Germany.

In light of the lack of alternatives financial markets are likely to see a greater fiscal unity as a really positive move, one that offers stability and an opportunity for investment mangers to concentrate on their strengths which are spotting opportunities, and generating growth and income for investors.

I am well aware that the regular media updates can be confusing and alarming. 

As always I would suggest any worried client to contact us immediately to discuss their concerns and we can hopefully offer reassurance and allay any fears.  At the same time we can ensure that their savings, pensions and investments are well positioned for the future.

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With great fanfare the government has announced some recent changes to the housing policy and a guarantee scheme for 95% Loan to Value borrowers.

The first change is to what happens to profits made from tenants buying their council houses.  These are to be used by local authorities to help build new council houses.

At the same time councils are to be given incentives and subsidies to refurbish neglected and empty properties.

On its own, this is unlikely to result in a huge leap forward in the housing market but it is an encouraging move in the right direction.

The second, major, announcement was the launch of the mortgage guarantee scheme.  Based upon the Mortgage Indemnity Guarantees of the past, this new guarantee is specifically targeting new build properties only and homebuyers who have been struggling to borrow a 95% LTV mortgage.

Essentially it is insurance, funded by the house builder and the government, to protect lenders should house prices fall further.

In time this should certainly make it easier for borrowers to get the desired mortgage and encourage a few more deals.  The knock on effect will be to help the large house building firms in particular and to get some of the large new housing estates moving again.

For the majority of homeowners the impact will be negligible or, at least, much slower.  For those living in existing properties it is unlikely to create a sudden surge of activity at the bottom rung of the ladder as the target audience for the guarantee are ‘new build’ purchasers.

In short these announcements are good news for house builders and first time buyers on ‘new build’ estates, but it is unlikely to help the mortgage and housing market as a whole.  

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Over the past few months there has been a constant stream of news stories and bulletins regarding the financial markets and the Eurozone crisis.  As this has gone on we have tried to keep clients both informed and reassured.  This article is much of the same.

The latest headline is the Greek referendum.  In order to explain this think back to only a couple of weeks ago when the financial markets were in disarray as they waited for the 17 countries using the Euro to come to a consensus and start developing a meaningful plan for the future. 

Last week the full Eurozone, including the 17 Euro based economies, finally came to some agreement which involved both recapitalising their banks and writing off some of the huge debts owed.

This plan was very well received.  Whilst the plan is unlikely to be a permanent solution it demonstrates the leaders are looking to take control.  As a result markets climbed as demonstrated by the FTSE rising more than 15%.

The news that the Greeks are to hold a referendum has shook the market confidence again.  The referendum will effectively ask the Greek people whether they agree to the latest Eurozone plan.

It is a gamble from the Greek government to try and calm the civil unrest as they try to get the population to engage with the plan.  The risks are that the Greek people decide they don’t want to have many of their countries debts halved as a protest to any form of bailout and the massive cuts their government have levied so far.

Whilst there is no doubt the Greeks would be worse of if they voted no to the latest plan, there is that possibility and by leaving any referendum until January it is likely the impact will have a drawn out effect on financial markets.

That said, ultimately the Greeks will have to resolve their debt issues as will the Eurozone.  Whether the current plan is enforced in its current form it does mark a milestone in that all 17 Euro countries have agreed a way forward.  For this reason I do feel there are positive reasons to look towards the longer term.  If investors and savers keep that longer term focus they will benefit from the eventual recovery in Stockmarkets.

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Inflation (or deflation) is the change in the price of something from one period to the next.  For example, the price of petrol has increased over past few years.

The typical measure of inflation is simply the rate at which a specific basket of goods change from one year to the next.  There is some variation in the different goods that are included within this typical basket and it is this difference which gives us different rates of growth for the retail & consumer price index (RPI & CPI respectively).

Recent changes to legislation mean that the CPI figure has the greatest impact on benefits and pension income, although RPI does still apply to some pensions.  The figures are usually announced monthly based upon the previous 12 months and it is the most recent figure for September which has the greatest direct impact on income.

The high rate of 5.2% in September is particularly important as it dictates the amount that all state pensions and state benefits will be increased by as from next year.

Obviously this is good news for those drawing state pensions but it is not so good news for those with bank account and cash ISA savings. 

The average interest rate on bank accounts is less than 0.5%pa which means that in real terms savers are losing more than 4.5% of the value of their savings this year alone.

If you are concerned about how inflation is eroding your savings or you want to look at ways to combat inflation then please get in touch.

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