I hope that you are enjoying the summer – we have been blessed with some really good weather recently; the South West is brimming with guests and it is difficult to find accommodation. The other problem is that so many establishments are short-staffed too and in some popular places there is no accommodation for the workers they need, as causal holiday lettings (without any regulatory control too) yield far more to the owners than permanent lets. It is a circle which cannot be squared at the moment but something will have to give…
There are still many on ‘furlough’ and not working too and the numbers on Universal Credit are still double what they were before the pandemic so how can people be encouraged back to take those jobs? (Of course many who work also qualify for UC). It is a strange situation too that a Society which is benevolent to its needy also deters those very same people from working and gaining independence and self-respect often, as it becomes too difficult to adjust benefits and indeed appears not economically viable for them to do a job. It is the same with rentals – make it as difficult as it has become for evictions of bad tenants and landlords will stop offering valuable accommodation for people who need it including those millions of trustworthy renters – and sadly it is hard not to blame them. I know of several cases when rent arrears are in five figures and damage of thousands to the properties are involved but still the poor landlord, with mortgages and bills to pay, can’t secure repossession of their properties easily or without significant additional cost. If the owners need their properties back for themselves too and the tenant knew that prior to renting, the process is the same and very expensive, not encouraging tenants to cooperate and local authorities tell tenants they won’t do anything to help find them somewhere to live till they are on the street – hardly encouraging cooperation with the authorities whose responsibility it is to provide housing for those in need (yet the same authorities also contact landlords asking for help to place homeless people – funny that, though they then ditch the tenants and the landlords when problems begin to appear).
We were reminded recently of a couple of facts. The first is that unless you were born before roughly 1967, you have not really experienced borrowing money other than under gently reducing interest rates. Fair enough, there were the odd blips on the way but the rates troughed between 2017-2020 depending on what index or facts you consider. Then they bumbled along the bottom, an extended period compounded by the economic consequences of the Pandemic.
What this also means is that all those people borrowing money to buy things like homes have only really experienced very low mortgage rates despite the trend having begun to turn in 2017 and perhaps now inexorably upwards, especially in view of unprecedented amounts of government borrowing exploding the money supply (which in the end we shall all have to fund). What will this mean to those who have bought homes over the last several years, only worried about ‘how much does it cost every month’? If they can only afford the monthly payment when the mortgage rate is 2%, what will happen if the renewal of their initial incentive term is at 3% or 4%? Can they afford double and even then, 4%pa is still below the long-term average rate for borrowing money in the UK to buy your home. What will this do to house prices too as it’s not just homes – it is investment properties, holiday homes, second homes… the average home is £262,000 according to the Halifax… is that nine times the average income? The long-term norm is a mere three times or so…
I was also reminded that on 9 November 2020, ‘Value’ stocks (of which we were and are full for clients), enjoyed their best ever day’s performance against ‘Growth’ stocks since records began. Indeed, more importantly that trend continued and ‘Value’ has out-performed ‘Growth’ by 25% since then and as we follow our convictions, our clients have enjoyed all the benefit of that. The chart still shows considerable additional catch-up to meet longer-term equilibrium levels. What’s important though is ‘did you listen to us?’ We’ve mentioned it many times and the eshot just before 9 November noted the most extreme under-valuation of Value stocks against Growth ever. As ever, I keep saying it is what we do now for the future which counts and not the past. Listening to those with a little knowledge and experience is perhaps the best investment you can make ever! These traits help us hold certain things and avoid others – however uncomfortable often too.
In early May last year, the eshot then noted that the long-term appropriate level for a barrel of oil was $70. Guess what level it has just broached. That May was just after oil futures went into minus prices you might remember! With our clients’ investments, we assess so many different factors all the time and use these points to skew and direct our strategies. Believe it or not but after the Brexit vote, in late October I noted that the US Dollar was ludicrously high against Sterling and noted that a fair value even then was $1.45, as endorsed by the ‘Big-Mac Index’. Go check it out now. It troughed at under $1.15. What were you or your investment manager (if not us) saying at those times?
Keeping with the Firm’s tradition of doing what it can to support local charities and voluntary organisations, giving a little back to the very Community which has made it so successful, we are delighted to give a helping hand to Woolacombe Football Club by sponsoring it with the provision of a brand-new kit!
We have always been keen to support local initiatives just like Woolacombe Football Club, not only enjoyed by the regular players but also guided and directed by some more experienced individuals behind the scenes who help to keep everything together for the team. If you’d like to support: https://www.facebook.com/woolacombefc/
We were reminded recently of another very successful investment firm’s approach to managing its clients’ investments which considered the different components and types of holdings as a football team all working together to create the best ‘balance’, so a Goalkeeper, Defensives, Mid-fielders, Wingers and some attackers. It’s as much about being consistent and having a wide range of different investment players in your portfolio team as it is having goal-scorers because if you think you are doing the wisest thing by simply having players forever on the front line (or back in goal) you really leave yourself wide open to serious and unplanned risks, so prudence is also wise!
I know the likelihood is rare but things are changing too on the credit and debit card regime. One of our readers alerted us to a new debit card which links with your existing bank account and with much better exchange rates than most – so, it may be worth a look: https://www.currensea.com/ Thank you Richard!
Solicitors And Regulation
I commented last time on a law firm and its atrocious handling of an Estate. We had had reason to raise our concerns about a pension claims’ chasing firm which happened to be a lawyer and the Solicitors’ Regulatory Authority has written to remind us of some truths. How many of their clients realise that the SRA, the regulatory body, “cannot compel a firm to take a certain action and cannot determine or become involved in legal issues or disputes”. In this instance, the law firm has not even acknowledged the client’s complaint, let alone dealt with it in any form!
‘But there is the Legal Services Ombudsman’ you shout! That too is a toothless entity with limited powers and jurisdiction. It can consider whether the costs were explained clearly or are appropriate for the work done. It can consider delays or poor information provisions. It doesn’t investigate negligence and error, the sorts of subjects which will cause most people loss – and considerable loss at that. For that you have to take the law firm to court – who would relish that?
With the Financial Services’ profession, if the adviser or company has been negligent, the Financial Ombudsman Service will adjudge whether compensation must be payable. Yes, if the firm has given the wrong advice, been negligent or recommended the wrong solution or whatever – anything is covered. Why won’t the law profession have such similar protections for its clients? Is it frightened about protecting its clients? It pretends to do so but it doesn’t so watch-out.
Coffee And Company
Have you been missing meeting others? Are you apprehensive about starting-up a social life again? We have all had many things to worry us over the past year or so. Lockdown has left many of us of all ages feeling somewhat isolated and now that some semblance of normality is back, we may feel worried about going out and mixing with other people.
Philip J Milton and Company Plc Charitable Foundation wants to help. At Trimstone Manor Country House Hotel, Trimstone, near Ilfracombe, we are hosting weekly “Coffee and Company” mornings every Wednesday for anyone who’d like to meet up with some others. We meet from 10.30-12. Just drop by! You’ll be welcome! Please be assured we follow the rules to keep everyone safe. If it’s nice we meet outside too! Such socialising has been proven to help keep our brains sharp too and with the routines having been much more mundane over the last year or so, it’s time to change things!
You don’t have to tell us in advance but if you wish to do so, let us know on 01271 862841 or email email@example.com but don’t worry if you haven’t told us – just turn up!
These are all free events, sponsored by us, with our pleasure and no, we are not seeking donations or anything but the works of the Charity are there for anyone who is interested.
We hope to see you there and achieving our simple aim of reaching out, bringing in and joining up!
Helen L Milton Trustee and Director
Both myself and Felix were asked our views on the leading trade organisation’s proposals to deregister the Personal Finance Society form the CII.
It’s always humbling to have our opinion sought but then, I suppose our long-toothedness is beginning to show in experience!
Charity Pay Et Al
I am sorry but I’ too’ have always shared a concern when charities have morphed into ‘big business’. Of course it is right that charity staff are rewarded appropriately but there is also an element of employment for a vocational calling to fulfil the charity’s objectives and thus it’s not all about receiving a colossal pay packet as well. I was disturbed to see the Telegraph’s recent research showing 278 charities pay executives over £157,372pa – the Prime Minister’s salary. Thirty-five had paid individuals receiving over £300,000. Overall, the reviewed charities showed that over 2,500 individuals receive over £100,000pa.
In my mind demonstrating the excess was a small assisted-living housing charity in North London which had an income primarily from rents of under £700,000 and yet which paid its chief executive not far from £200,000 – how on earth can that be right? The Charity Commission has reminded all that ‘Being a charity is a privilege’ and I shall hope that the message will resonate and start to redress the balance to prove to all those who are so supportive of charity by donations and time can feel that they are not simply supporting bloated fat-cats at the top of too many trees.
The Wellcome Trust had the highest paid individual on £4.7million and more akin to running a large corporation but still…
Related but unrelated, I was also reminded that within the EU, one in five of its 10,000 staff receives more than our Prime Minister too and they voted special tax rates so they only pay between 8-24% rather than the usual higher rates suffered in their home countries. Still, others will be paying their bills going forwards!
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 celebrate our 35th anniversary in 2020 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