| What odd financial news. The US Treasury comments on interest rates sent 10-year Treasuries to the highest yields and lowest capital values since 2019, another nail in the coffin of ludicrously high pension transfer values for those with deferred benefits in such schemes. Soon we shall indeed be able to say ‘November 2021 saw the highest ever transfer values’, I guess. Then in the week after we sent out our letter on financial ramifications from the Ukraine situation warning on volatility, it was the best week for the UK market since Dec 2020… and capping it all, a wake-up call to families as Inheritance Tax collected by the Chancellor is marching skywards rapidly! The Country needs more in the coffers, so please don’t take any advice to alleviate your personal IHT liability – as that will reduce what the rest of us have to pay… unless you are our clients of course, then we’ll do our best to guide you properly! It is interesting, isn’t it, the odd snippet of information you see which can have significant impact on our lives but no-one seems to reflect upon it. For example, the number of single person households in the UK has continued rising exponentially. Of course that is absolutely fine but will the cost of living begin to influence this societal change in the future? Is it so bad if people actually live together – not only across generations in families but friends too (and also without having to be labelled as ‘in a sexual relationship’)? This would have seriously beneficial ‘green’ benefits for the world, let alone possibly freeing up homes for those needing them (or larger units especially for families). The energy crisis may begin to make more people think about having a lodger or a house-share and I can’t blame them. Indeed, the other issue afflicting more people than any one of us may acknowledge is ‘loneliness’ too, so that has the opportunity of relieving that too. Of course, those singles pondering this may have to readjust their ‘independence’ but how much might that be worth monetarily for a more comfortable financial and choices-life’ existence altogether (let alone affordable)? Conversely, despite the bad news about the ‘cost of living crisis’, which is suggested as the biggest hit to living standards since records began in 1956, we must accept that the growth in single households is also because more people can afford to live on their own, though especially older generations. Maybe the ‘State’, through Benefits, should stop encouraging unaffordable single living arrangements – for the Country’s Climate Change reasons if not monetary ones!  Special opportunities No, sorry Dear but I am not thinking in the romantic sense but about one of the jobs I lead, which is the investment management and searching for and acquiring opportunities for clients. Yes, for me, after 44 years in the finance world, it’s still there, always learning, sometimes from things that didn’t work as hoped or anticipated but that is life too and each negative hones the future. There seems to be a constant supply of ‘new ideas’ or endorsements to old ones and even better opportunities the cleverer the masses think they have become. I also come across many in our industry who don’t have that zeal – they sell ‘products’ and couldn’t tell you where the FTSE100 finished the day, let alone the rate at which Cable stood (or what that is!) or the rough price of an ounce of gold. That can worry me as that is where and how most investors’ money is actually held… or flipped-on its head, it means that the opportunities for someone like me (us as a Firm!) to add real value for all clients are even greater – and without having to try too hard either. For example, you’ll know I like discounts on Investment Trusts/Quoted collective funds. I mentioned a multi-billion one recently which had floated at £3.50 on September 28 but then slipped ever since. It piqued my interest, despite the Ukraine ramifications. I have added it to strategies and we have been buying shares in the ‘fund’ as low as £1.97. We have since had to pay £2.50! So some fortunate clients bought collective investments at a 43% discount to what others had paid only last September and nothing whatsoever had changed with the prospects for the Fund meantime, to be frank! Regardless, even when we are full, this fund may only ever count for say 3-4% of the total assets we manage and all the rest of our clients’ pots is in different things with similar or different ‘stories’ reflecting the ‘reason why’. We also have a Trust which invests in other Trusts. We have held it for years. Its shares are trading at a discount to the asset value now, the widest for a long while, because a long-term holder (an insurance company) has changed manager and the new one doesn’t understand. So the instruction is simply ‘sell’ regardless of price, so guess what happens. However, this Fund invests in other funds and the underlying discount on this mixed bag is around 24-25% so a double discount! What isn’t there to like about it? However, we are quite full already but shall happily buy more with new clients’ monies! PJM&Co Plc has also bought some more for itself!  Budget hopes and taxes I was pleased to be asked by the Financial Times’ sister publication what I thought the Chancellor could add to his ‘Spring Statement’ this year – enjoy my thoughts! Advisers call for delay in NI increase ahead of spring statement  Bad news affects our decisions Another reason to employ a discretionary investment manager such as ourselves and one with our feet firmly on the ground to help you look after your finances, is how as individuals we cope with bad news. It is a fact that if you absorb too much ‘news’ it can be bad for you generally. Most people cannot rationalise the news and even if they don’t realise it, it does start to impact their demeanour, emotions and thus their life decisions. This can lead them into taking irrational views on investing and saving – as well as spending – and so having a cool-headed third party on board to manage your investments is imperative to save you from yourself! Readers would be amazed at some of the comments we have seen over the years, from ‘I’m not saving in a pension because the Earth won’t be here in 10 years so I am going to enjoy it now’ to ‘I’m keeping all my money in cash as I fear a nuclear attack’ (as if their cash would miraculously be protected anyway…). However, even having too optimistic a view on the future – as much as too pessimistic a one, will affect our life decisions and so having an impartial and experienced investment guide can smooth these excesses to help us do the right things at the right times and not the wrong things at the wrong times… and yes, sometimes it is swimming more against the crowd than with it too. If you know you are more predisposed to reacting like this, then you have even more need for a firm like us to be helping you keep to the straight and narrow!  Unsafe hands Following the long overdue regulation of the sale and maintenance of funeral plans, very few of the old providers are completing the process of applying to be regulated. ‘Safe Hands’ has filed for administration, putting the security of 45,000 policyholders in jeopardy – just one of the reasons we never liked the things in the first place – no ultimate ‘safe hands’ at all (let alone the fact so many people don’t need them anyway, the extortionate cost and average £800 commissions to salesmen). There may be very few completing the onerous regulatory obligations we have had to satisfy for decades. I’d like to see sales of mobile home/lodge/caravan/holiday parks up next. Boy would the fur fly and the losses there would be catastrophic for so many, sadly but people would at least then be better protected and more aware.  Inheritance tax and ugly wills The Chancellor is happy as tax on death is rocketing. This is where tax goes to him rather than capital to the family – which is usually the deceased’s wishes! We guide those who have assets over the personal allowances – typically a basic £325,000 each but there is more. Some investments accessible to investors maintain full personal control but shave 40p in the Pound off the top of the Estate – have you considered them? We see some ugly Wills too, where Family doesn’t see the legacies which are expected or where really nasty consequences arise – such as the awful one we have at the moment where the surviving spouse is being badgered by the step-children into giving them the half a house his deceased Wife left to them – what lawyer with any scruples or morality would write a Will like that – under pressure by the same step-children when the woman was on her death bed? If you don’t believe it will happen with your lovely family… don’t be naïve and make sure you use Trusts and other sensible provision to protect your nearest and dearest. Here’s a reminder of what can happen – ‘I’m cutting the boys out of my will’ Someone somewhere did some calculations and ascertained that the average person engaging a professional financial adviser would, after costs, be better-off by £47,000 over their lifetimes as a result of the wise guidance and stewardship, as opposed to someone without an adviser. Of course with us it is a far higher benefit… and when we talk about the potential Inheritance Tax savings we can guide, the figures escalate significantly! 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 |
Mixed news and some good PJM investments
