Included in this edition of our e-newsletter …
A very good interview Felix – well done. https://vimeo.com/365246775?ref=fb-share It not only covers who we are and what we do to some extent but it’s also good for anyone who wonders what a career in financial services could provide and the opportunities available – always happy to chat to someone investigating their options.
We haven’t provided some simple and practical guidance on this field for quite some time so here is a proposal. If you run a business of any form it is helpful to be as organised as you can be. So, have you thought about using a business credit card to help hone your expense reconciliations? Don’t use it for any private transactions.
Well, of the field, there is one which seems the ‘most attractive’ of all and it is Santander’s. There is a £30 annual charge but nothing for additional cards. Pay the balance-off in full every month and you can qualify for up to fifty-six days’ free credit (you can do that by direct debit too). However, there is also a 1% cashback credited every October! And – that is not taxable so is yours privately! “Cashback is not taxable as it’s treated as a discount on the goods/services purchased. A [HMRC] spokesman said: “There is no question of tax becoming payable on cashbacks received from credit, debit and loyalty cards or any other kind of cashback payment.” 25 Jan 2014
The biggest saving you are likely to make is cutting transactions on business bank accounts which can be costing you the earth. Instead of hordes of small debits, there is just one and now, retailers cannot charge you for the use of credit or debit cards (except in some circumstances and which can include company cards which typically charge retailers a bigger percentage processing fee). If you want to make your life much easier too, use one of the Apps whereby you can place all of your cards’ details and then simply select which one you need to use for the transaction you are making. Here is a link to a suitable possibility and one which offers you £5 to sign-up: – https://curve.page.link/7yYZ
Of course, they are still continuing and as we have not left yet, the consequences will only manifest themselves absolutely after the event. However, I should have mentioned the report about financial services’ jobs lost so far. It was predicted by the experts that many tens of thousands of jobs would go in advance of the change but in fact, so far in banking only 1,000 are reckoned to have gone. The detail supports the facts in my last eshot about the position which London and the UK still holds in world financial standing and busyness. https://www.telegraph.co.uk/business/2019/09/19/just-1000-banking-jobs-have-left-uk-ahead-brexit-far/
Curiously on the stockmarket front, things generally have been very sanguine overall. There have been continuing outflows of funds as investors have chosen to withdraw and build cash balances but despite some torrid political events, the market has brushed-them-off very well and a number of heavily sold stocks have bounced considerably. Look at Sports Direct Plc for example – no auditor and worries about corporate governance yet again, and its shares drifted below £2 but are now trading at over £3 – and as we read retail sales are struggling and House of Fraser is a basket case worse than Mike Ashley feared. It’s not alone – remember New River Property Investment Trust I mentioned? Yes, we missed the boat but it’s broached £2 now so that’s up 40% since Neil Woodford, SJP and other big holders like Invesco sold at the bottom and the shares are still paying a double-digit income yield too. What did I say at the time – panic sellers will not see good prices. Still, we are pretty fully invested and have enjoyed quite a bounce from the bottom on several holdings as well as appreciating that our mainstream Investment Trusts have held values very well.
It is interesting that investors take choices for particular reasons. One such is to use an ‘index’ because it is cheap (as there is no management). However, did they realise, say in the case of the mainstream UK indices, that these are dominated by so few firms? For example, Royal Dutch Shell, BP ad HSBC count for almost a quarter of the FTSE100 index (which by nature means most of the All Share too). So not saying this cynically but if you don’t fancy too much in fossil fuels, tough and if you despise what you might consider to be the capitalism of banks or exposure to problems in Hong Kong and the Far East especially, well that’s jolly tougher too. Even putting those attributes to one side however, it means that your portfolio relies upon the performance of just these three companies and two sectors so much – and is that really what you expected – need, or want? It is only then when ‘cheap cost’ can make an impact as you realise that the odd percentage point here or there is nothing in the bigger picture compared to either opting into these three stocks – or opting out. It’s a funny old world isn’t it – and don’t forget too that the two oil majors are amongst the biggest investors in alternative energy and conservation and the largest taxpayers to fund welfare and public services here so does that change things…! On the day of writing, banks’ shares have had one of the best days for a very long time and again it shows a weakness of passive investing – no direct active consideration as to whether that is good or bad but if you are devoid of them, then you will not only not perform but you underperform this important subsector.
By default, many investors will find that they own exposures to things like renewable energy anyway, such as bond funds etc which hold tranches of loan debts to alternative energy providers from solar farms to biofuel plants. It is never wise to overexpose yourself to any single sector however and one like this can be subjected to unexpected governmental influences so be wary as well as supportive. Yes, we have quoted entities which invest in such things. We also pursue what we call ‘ethical exclude’ policies within all of our strategies as well for those who wish to proactively exclude the very few firms which may pursue ‘inappropriate’ activities (but remember that we each have different ideas as to what those are as well!).
Continuing the theme, what is best – how we live, how we spend our money or how we invest – or are they all inexorably linked? One issue which causes me alarm is the ignorance so many have in the subjects which they promote – for example the ‘environment’ and yet do the enthusiasts know very much about the nature on their doorstep – do they care enough to be interested in being able to discern what bird, butterfly or plant is involved and what its life cycle may be and thus how conditions could impact it? Can they tell a blackbird from a jackdaw, a chaffinch from a gold finch… an ash tree from an oak, a dandelion from a dock?
Britons generally are very generous too with our charity. However, are we giving sensibly or are we responding to the emotional strings and professional fund-raisers who are very well rewarded for the money they attract? Don’t we owe our consciences enough to find-out where our money is going? For example, would we support say Battersea Dogs and Cats Home quite so much if we realised that it has £90million of reserves and enough money to fund its expenses for three years? Of course, I am not making any judgement on the fine works any charity does but just asking the question. Conversely there are say Christian Aid and Medicin Sans Frontiers which only have reserves to fund around five weeks’ expenditure. Medical research is Britons’ most popular charity cause followed by animal welfare. Then, do we also consider the generosity of the charities to their executives and the pay and benefit levels they receive… how much is really going on the underlying cause that we wish to support? Curiously a recent poll of over fifty-year-olds asked which charities were remembered in their wills and the top four all have over £90million in reserves and each had underspent its income for the past four years. These were Battersea as mentioned, Cats Protection, The Dogs Trust and the RSPCA and the last three all having at least eighteen months’ expenditure sitting on its bank accounts (and don’t forget they’ll have physical assets too). Should they all disclose what funds they have before they seek more money from the public – now there’s an interesting question perhaps!
Challenges to those exercising powers of attorney are on the increase. In fact, the number of attorneys taken to Court by the Office of Public Guardian have risen 55% in one year to 721 removals. https://www.ftadviser.com/your-industry/2019/10/07/power-of-attorney-challenges-up-55/?page=1 This is quite frightening as to arrive at that state it suggests some quite serious abuse will have taken place – effectively actions not in the individual’s best interests but to favour the attorney instead.
Who have you appointed? Just be careful – family friends may not be the most suitable and sometimes not family members either and be wary of financial issues which the attorney may have as temptation can be easier if that is the case – as sad as it is to say that. We act as attorney sometimes (meaning that we are often placed as the official attorney but frequently it is never needed to be relied upon as the individual continues to be able to cope) and whilst we have to cover the time cost of exercising such duty if the case arises, everything is conducted through our professional offices and with an independent integrity and if friends or family members can do most of the necessary ‘donkey work’ then so much the better of course. As I say, just please be careful about who you have appointed as you don’t want your nearest and dearest to be the victims of the 722nd case of misappropriation or negligence or even unresponsive professional offices elsewhere and yes, there are many of those it is sad to say. It isn’t necessarily an easy job either – do you know exactly what to do and can you manage their finances and investments in all respects – it can cause great stress and distress if ever you are placed in that situation. That said, each of us should think about having attorneys to act if ever the need arises – that is superior and more cost effective than if the Court of Protection has to become involved!
Stock market investments can offer income through the payment of dividends and interest and good opportunities for capital appreciation over the longer term. By this, generally we mean periods in excess of five years, preferably much longer. However, we can never promise you particular returns, especially in the short-term. At any point in time but especially in the short term, your capital could be worth less than the original amount invested as some of the selected holdings may fall in value, regardless of expectations at the time of acquisition. We may also invest in funds that hold overseas securities. The value of these investments may increase or decrease as a result of changes in currency exchange rates. Returns achieved in the past cannot be relied upon to be repeated.
To remind you, why do I send out occasional emails? Because everyone can save money. We have no connection with any companies mentioned and you have to make your own contacts and satisfy your own enquiries. What is in it for us? If we can prove that we are knowledgeable and that our service and advice have good value, then you might contact us for professional financial planning and investment help. You don’t have to do that though and there’s no charge for emails. If simply they save you money, then accept them with our compliments! However, you’ll know where we are!
If you have any queries of any form or indeed any subjects you think I could include, please contact me. I also refer you to our website www.miltonpj.net. We celebrated our thirtieth anniversary in 2015 and have been publishing a well-respected independent column in the local Paper for most of that time and free client newsletters as well.
Do not forget however the usual caveats – this is not ‘advice’ and you are encouraged to seek that before embarking upon any financial route involving investments, etc.
My best wishes
Philip J Milton DipFS CFPCM Chartered MCSI FPFS FCIB
Chartered Wealth Manager
Fellow Of The Personal Finance Society, Fellow Of The Chartered Institute Of Bankers