Sadly, this assumption could lead to a lack in planning a better future for themselves under the supposition that only wealthy people need a financial planner.

Financial planning is about helping people achieve their short, medium and long-term financial goals. Many individuals incorrectly assume that they need to be wealthy to obtain professional advice.

The reality is that a simple meeting can turn your relationship with your own finances around, giving you perspective and helping you to direct your energies to achieve your aims.

Unfortunately, some people don’t take advice and this inaction could have a significant detrimental impact on their financial future.

The important thing is that you take the first step towards helping yourself.

As modern financial planners we operate with a different approach and focus our attention on what is important to you about your money.

We will help you to explore your goals in life and formulate a financial plan, so that your finances fully support those goals.

Subject to your agreement we will then meet with you on a regular basis in the future to review your plan and ensure that you are on track, with strategic and tactical advice to help you adjust your plan where this is necessary. This process need not take a long time, once the financial plan is in place, but is essential in taking account of a change in your plans, circumstances or views and changes in legislation and the economic climate.

Planning in this way isn’t the preserve of the very wealthy and is relevant to everybody.

For impartial advice on your own personal circumstances please contact us on 01626 833225 to make an appointment.

Please note that the above article does not constitute financial advice.

Typically they are referring to their money purchase pensions, where contributions are invested into one or more investment funds. These funds will fall and rise in line with investment market conditions and the returns paid from the underlying holdings held within investment funds.

Their response can often be for one or more reasons:

• They have invested and not seen a return or even lost money, typically looking at their plan’s performance over the short term.
• They have invested a small amount of money and then realise that they are not going to have the income they were expecting at retirement.
• They are unrealistic about the level of investment returns that their pension fund has the potential to provide.
• They have invested without diversity, often relying on one fund manager or sector (e.g. property) to deliver returns. No one sector or fund manager is always going to be the best performing all of the time.
• They have invested over a short period of time.
• They have not been able to access their pension fund in its entirety.
• They have seen one of their other investments (e.g. an ISA) perform better than their pension fund.
• They know of someone who has had one or more of the above happen to them.

So what are pensions?

Well, they are nothing more than a tax efficient ‘container’ for your investment funds. Poor investment performance has nothing to do with the pension ‘container’ and everything to do with the investment funds that your contributions are invested into.

You wouldn’t complain that a glass of wine tasted badly because of the shape of the bottle that the wine came in would you?

So, often when working with clients, we turn our attention to the following things:

• What investment funds is their money invested into?
• How well are the investment funds run? Who manages them?
• How well diversified are their investments?
• How does the combination of investment funds meet their attitude to investment returns / risk and their expectation of future returns?
• What are the costs for the pension ‘container’?
• What are the costs for the individual funds run by the fund managers?
• What access will they need from their fund and when?

Typically with today’s open investment architecture you could hold the same investment fund within many different ‘containers’, such as an ISA, a pension, an investment or insurance bond or collective investments such as unit trusts.

Of course, pensions have a big advantage over many other types of ‘container’ in that contributions can benefit from tax relief of up to 50%, meaning that extra contributions are paid by the Government on top of any other contributions that are made. There are limits to the level of tax relief, however, this acts as an incentive to save and can give a significant boost to the investment fund.

What else do I need to know?

Over the long-term (10 or more years) a key element is the quality of the fund management.

Poor fund management will in time deliver poor results. Good fund management has the potential to deliver good results.

Using our robust investment process, we can identify those fund managers that deliver good quality fund management within their fund. This will take account of their track record but also how returns are sought by the fund manager i.e. the process involved.

We identify Fund Managers that:

• Stick to what they say they are going to do – i.e. the remit of their fund.
• Within equity based funds, they identify companies that have strong balance sheets with well-contained liabilities, good managers and a proposition that works with a clear desire for the company’s services.

The importance of reviewing your portfolio

You wouldn’t go to the Gym once to remain fit for life would you? Everyone who is interested in maintaining a healthy lifestyle knows that they must make a regular effort to do so. So, if you want to maintain a healthy investment portfolio, you need to regularly review it to ensure that it is on course help you meet your goals and objectives.

A regular review of your portfolio with Loughtons can take into account many factors and ensure that your portfolio is optimised. Fund managers may leave, the market, economic and political environment will certainly change and your original objectives may alter. Different asset classes (cash, property, equities and fixed interest securities) will rise and fall within your portfolio at different rates, requiring them to be re-balanced to your attitude to investment returns / risk.

So the next time you hear someone bemoaning their pension scheme it could just be that they don’t understand what they really have and you may suggest they take a closer look at the fund managers they are using, in conjunction with an Independent Financial Adviser.

For impartial advice on your own personal circumstances please contact us on 01626 833225 to make an appointment.

Please note that the above article does not constitute financial advice.

In recent years I have developed what my wife calls a very disturbing habit. Every time I make the regular shop with her I have this habit of looking at prices and converting them back to the old £sd. How much is that loaf of bread?? I recall being able to buy a loaf of bread for 1/11, the chocolate bar was 5d and as for petrol, at 5/- a gallon I could buy 4 gallons for the pound. The surprising and pleasant result of this habit is that I rarely get taken shopping any more.

But it does raise the issue of how much more interesting the old currency was and the various names the coins had. For example we had 960 farthings to the pound, 8 half crowns in my pocket also made a pound, not forgetting the florin, the tanner, the joey, the shilling (bob) – after all two shillings known as two bob made one florin and that took ten of those to make a pound. Lost yet? Now isn’t that much more interesting than a straight 100 pennies to the pound or dare I say it 100 cents to the Euro.

Of course these nicknames for our coins delve way back into our history. I will let you look further into this. But somehow being paid 2/6 for a Saturday mornings work sounded a lot richer that 12.5 new pence, which became new pence and then just pence.

I recall visiting the post office on the 15^th February 1971 to convert some of my hard earned pocket money for the new coins. The new half penny was certainly very small compared to the old ship half penny. It was obviously a sign of the things to come, as indeed the new coins did not quite buy as much as the old coinage and the fate of the new half penny was short lived as inflation started to take it’s toll during the seventies. As most of us were still coming to terms what this new coinage would buy for us inflation crept up on the blind side and before you knew it four gallons of petrol for a pound was history, made in a blink of an eye!

The BIG mistake today though was looking at the share price of my Lloyds Bank shares, 4/9d. Okay 24p, to you but I still cannot help thinking how much was the Lloyds Bank share price in 1971. Is it just possible the share price then was higher than this?  I know Lloyds Bank have made various changes to their share structure, but the moral of the story to me is if I am looking somewhere to store my wealth, then I think a visit to an Independent Financial Adviser may be just more profitable than a visit to the Bank.

Please note that the above article does not constitute financial advice. For advice on your own personal circumstances please contact us on 01626 833225 to make an appointment.

In response to this, the impatience of stock markets has shown through recently with corrections in the major indices across the globe. This is largely due to the continued problems of high government borrowing and rising debt levels. As you will no doubt be aware, this has resulted in the likes of the USA losing their coveted AAA credit rating. This pushes up the cost of repaying the same borrowing.

This has also impacted upon the sustainability of the eurozone and raises question marks as to how long the lack of growth in developed economies will persist.

Why we need Banks!

Much to the annoyance of some, bank balance sheets across the globe are still being repaired. There are estimates that US banks are two thirds of the way through this process and UK banks are around half way through, although European banks have hardly started!

Unfortunately, if we adopt a capitalist system, we need banks, or something that performs their normal role, that is the supply and control of money within the economy. Banks have not been able to perform their normal role due to the extreme conditions of the credit crisis.

Eurozone-o-phobia

The challenge in the Eurozone is that every country that is a member of the single currency has their currency pegged at the same level – the Euro. This means that Germany, for all her strength has the same currency exchange rate as Greece.

The only way that these economies and all the economies that make up the Eurozone can be distinguished is in the interest that they pay on their debts. Concerns continue to focus on Greece, which has seen the largest widening of the cost of borrowing when compared to Germany. Unfortunately, Greece has had to borrow more money simply to pay the interest on its mounting debts.

Back in Old Blighty

Back at home, the debate about George Osborne’s plans to cut the government deficit continues. Some argue that these cuts are too quick and will push up unemployment and slow economic growth. They also argue that the recovery in the private sector will be impeded by tax increases and will not be able to counterbalance the contracting public sector.

As a contrarian view, some argue that these cuts are needed due to pressure from the bond (UK borrowing) and foreign exchange markets and that without such cuts; the UK may even face the same problems as Greece. In addition they state that public sector finances are still unstable and the cuts made so far may not eliminate the deficit and the level of outstanding debt will consequently continue to rise for several more years.

The Cuts in Context

Let’s look at the public finances in the UK. The figures go something like this:

If we deduct 7 noughts and use the figures to represent a modern UK household, they would look something like this:

Clearly under these circumstances, debts are going to continue to rise.

Debt Exit Strategy

So how do we extract ourselves from these difficult economic conditions? Some possible
options are:

1. Have a credible plan for reducing the debt levels over time.
2. The gap between the growth of the economy and the interest payments made to service debt needs to widen.
3. The longer the term of the loans (debt) that the government owes, puts less pressure on government finances, because less debt needs to be refinanced each year.

So how are we doing against these possible routes in the UK? The UK government debt level is for now considered sustainable by financial markets. The government has a credible plan for debt reduction and although growth is slow the interest payments on the debt is also low.

The UK also has longer term loans than most other developed economies.

Conclusion

The road to recovery is not quick and the options mentioned above are tough and we all have experience of this across the developed economies, i.e. the UK, US and Eurozone.

Many investors have looked for a risk-free investment, however, this may prove elusive as Government bonds (debt), usually considered to be risk free, and are unlikely to provide a return that exceeds inflation, over a reasonable time horizon.

After a sharp increase, Gold has recently fallen in value, however, in these circumstances there are selected opportunities in the bond markets and in global equities providing dividends. However, investors will need to accept capital and income volatility and these markets have the potential to provide a source of real returns.

Please note that the above commentary does not constitute financial advice. For advice on your own personal circumstances please contact us on 01626 833225 to make an appointment.

A derivative is a contract between two parties that specifies conditions—in particular, dates and the resulting values of the underlying variables—under which payments are to be made between the parties.

We have all become a lot more aware of these derivatives in the last few years culminating in the Banking Crisis of 2008.

So what has this to do with sheep farmers in the Norman period of our history who were producing wool. Well during the 12^th and 13^th centuries in Britain the vast majority of the population were poor. Success was deemed as surviving the winter to see another summer. Most trading, whether vegetables, wheat or any other produce was about the day-to-day need to feed yourself and the family. The same was true with wool merchants, who sold their wool in the Market Square for what anyone would pay for it.

The landowners or the Monasteries had a great need for monies up front, while those newly developing traders looking to sell the wool overseas were looking to acquire as much good quality wool as possible.

So, slowly but surely the trade developed where the producers of the wool started to sell their wool in advance, i.e. they would contract to sell their wool in advance to the middle men who would then export overseas.

It was not long before the producer’s of the wool, which in many cases were the Monasteries, began to sell next year’s wool. This eventually led to wool being sold up to several years in advance. Therefore within a short period of time, a large percentage of the wool was disposed of by advance contracts, this being the practice of many of the monasteries, who would sell their wool from a couple of years or sometimes as much as fifteen and twenty years ahead. Eventually, although small in number to begin with, there were merchants, both in Britain and abroad who were becoming rich in liquid capital.

By selling the wool in advance of production, this use of ‘derivatives’ allowed the risk related to the price of the underlying asset, the wool, to be transferred from one party to another.

For example, the wool producer and the trader could sign a futures contract to exchange a specified amount of cash for a specified amount of wool in the future. Both parties therefore reduced a future risk: for the wool producer, the uncertainty of the price, and for the trader, the availability of the wool.

However, there was still the risk that no wool would be available because of events unspecified by the contract, such as the weather, which was a very big problem in this country or that one party would renege on the contract.

You cannot but help think sometimes that there is nothing new under the sun!

If you would like to understand the history of your own pensions or investments or wish to make a positive difference to your own finances, please feel to call us on 01626 833225 to find out more.

As Governments, companies and consumers continue to repay their borrowing (deleverage) in addition to spending cuts like those seen in the UK with slow consumer spending this has led to a restriction of economic and employment growth and the low interest rate environment is likely to continue for the foreseeable future.

Therefore cash deposits will most likely continue to pay a negative real return, when we factor in the ongoing rate of inflation which is approximately 5% in the UK.

The government (sovereign /central bank) debt crisis in Europe remains the biggest threat to global recovery. Whilst the austerity measures are prevailing, economic growth is not evident at this stage.

Why is economic growth so important? Well, if economic growth is healthy, it means that more people are employed which in turn can stimulate among other things, the property market whilst the flow of money is greater within the economy and governments can raise more taxes to repay debts and raise interest rates to control inflation and public spending.

Unfortunately, for Greece, their method of tax collection is not as efficient as our own HMRC and the alleged corrupt collection of their own tax revenues, means effectively that the country has no sustained income from taxation and mounting debts. It may be a matter of when Greece defaults rather than if, and their departure from the Euro appears inevitable.

So, how can the Euro debt crisis be resolved? Well one solution could be for the European Central Bank to issue a ‘Euro bond’ which could help recapitalise the failing economies within the Eurozone – for example in Portugal, Italy, Ireland and Spain. However, in the short-term and for the remainder of 2011, expect choppy waters and volatility in stock markets until this situation improves.

So, how should investors respond? As we have said before, in the main our clients are not investing over the short-term so the sentiment of the day is not a concern to them. On the contrary, they are playing the long game, remaining patient and in conjunction with our help, ensuring that they are not falling foul of some of the common investment mistakes.

If you would like to discuss your own circumstances or wish to make a positive difference to your own finances, please feel to call us on 01626 833225 to find out more.

If you were asked which one word relates to Accountancy, I should think that ‘Tax’ would be high up on your list.

What your Accountant Can Do For You

Suitably qualified accountants are skilled in understanding the ever changing tax position of individuals, companies and charities. They may have to interpret legislation to ensure that they are up to speed with the latest developments in taxation to ensure that their clients are paying the correct amount of tax and not falling foul of the rules.

Some Accountants are proactive in ensuring that their clients have prepared for any forthcoming changes to law or ensured that sufficient funds are put by to pay tax. They will also be useful in helping you decide on the structure of any new business venture, be that as an incorporated company, limited liability partnership, partnership or sole trader.

What your Accountant can do is to look at the bigger picture and spot any opportunities to help you stay ahead. Are you depreciating all the right assets in the most productive way? Is your business structure the most beneficial for you now and in the long term? How do recent changes to tax law affect you? What opportunities exist?

And of course, Accountants can ensure that your tax returns are submitted on time and that you pay the right amount of tax, acting as a liaison between you and HMRC.

Accountants generally charge an hourly fee for their advice, and thus are quite task-oriented. You will usually need to be specific about how you want your accountant to help you, but their breadth of knowledge can be deep.

What Your Financial Planner Can Do For You

Likewise, If you were asked which one word or phrase relates to Financial Planning, you may come up with many examples – investment, protection, retirement, estate planning, mortgages.

Generally, people tend to associate financial planners with products, rather than a strategy. A modern financial planner, does just that, helps you create a financial plan.

As the saying goes, most people don’t plan to fail, they fail to plan.

The aim is simple – to help you build wealth and repay debt and whilst that process is being undertaken, to ensure that you are protected in the way that you require.

We have advised many people, not just about the products they should use, but about their strategy. The products are the tools to get the job done, not the actual job that needs doing!

Modern Financial planners are also focused on the big picture relating to goals and aspirations. Some people may have the experience of a Financial Adviser just looking to sell them products. This is not taking into account the bigger picture.

For business owners, it is also important to see how your business fits within your life objectives.

These decisions can also be extremely emotional to deal with and a Financial Planner can help to provide a dispassionate objectivity and perspective.

The cost of any work to be undertaken is agreed in advance. Therefore you know what you are paying for the financial advice.

Modern Developments

Accountants and Financial Planners are working closer to help achieve the best of outcomes for their clients, so you may find that this two-pronged approach gives you a thorough perspective on your affairs.

Get in Touch

If you‘d like to know more about how we can add value to you, please feel to call us on 01626 833225 to find out more or to arrange an initial complimentary meeting.

Sir Isaac Newton was a genius mathematician who had an input into many aspects of life in this country at the end of the 17^th and beginning of the 18^th century.

So what prompted him to state “I can calculate the motions of heavenly bodies, but not the madness of people”?

During Sir Isaac Newton’s lifetime a financial event took place that was famously known as the South Sea Bubble. Earlier in 1711 The South Sea Company was formed. By 1720 this had developed into the South Sea Bubble, the market was flooded with a whole variety of brand new ventures, some of which were so secret that they could not inform the investors what they were investing in. This only aided the speculative frenzy to increase even further. Speculation became rampant as the share price kept skyrocketing. It was thought that this company “could never fail”.

Few could avoid the promises of quick easy riches.

Well Sir Isaac Newton was not immune to what was happening around him. He invested early in the South Sea Bubble and had the good fortune of making a large profit by selling early, which despite being relatively wealthy already was important to him. He had invested early and then got out relatively early.

However he then watched friends and colleagues around him continuing to invest and becoming ever richer as the investments continued to rise in value.

Sir Isaac Newton then made his biggest error of judgment. He could not stay out of the market, so back in he went. However to make up for lost time he invested substantially more of his monies, some of which he had also borrowed.

This time he invested just as the bubble burst. Investor confidence soon began to wane, the sell-off quickly followed in July of 1720 which then became a collapse and by September the share price had completely plummeted, devastating institutions and individuals alike, including Sir Isaac Newton who financially lost a large amount of his wealth.

Therefore we discover that even a genius mathematician like Sir Isaac Newton could not predict the stock market, nor could he avoid being succumbed by greed. As Sir Isaac Newton learned, we are affected by the basic elements of human psychology – fear and greed, especially when it relates to our finances.

If you would like to benefit from our professional help in effectively managing your investments and strategy in the current climate, please do get in touch on 01626 833225

It is worth reminding ourselves that many of the companies that we invest into remain in excellent health. Debt levels are generally low, unlike during the financial crisis of 2008, and many companies are still producing decent profits. In the US, for example, the vast majority of the US companies in the S&P 500 index have now reported earnings for the second quarter of 2011 and 72% of those have exceeded analyst expectations. They are understandably cautious on the outlook but this does highlight that there are companies out there that are still doing well.

Furthermore, with western economic growth under pressure, Asia had been the popular area for investment until recently. Investment in these areas has slowed down recently amid concerns over countries such as China not being able to successfully control their faster growth rates. However, over the long term Asia and the Far East can still be seen as an area with much potential for future growth.

Gold has been favoured by investors in recent months, as its price has increased as investors have sought perceived safe havens. However, with the current price of approx $1,700 having nearly doubled in the past 3 years there is a concern that this price may be somewhat high and therefore investors should be cautious of putting new money into this area in the short term.

Notwithstanding the above daily fluctuations of markets; which can indeed test the nerves, we at Loughtons are very keen to ensure we carefully consider client investment objectives. In particular the reasons why they invested, the potential timescales of the investments and the appetite to risk and reward that they are prepared to take, to ensure that the investments currently held are appropriately aligned to their goals and objectives now and in the future.

As you know we always look to stress the importance of diversification of your investments and this will be beneficial to you as the overall impact of market changes takes hold. You are reminded that investments are medium to longer term by nature and indeed investment of time as well as capital is a requirement for any sensible investor.

If you need more help managing your investments and strategy in the current climate, please get in touch on 01626 833225

There is a general realisation that lifting the US debt ceiling or striking a deal on Greek debt will not solve the underlying problem facing the world economy. Governments, companies and individuals in developed countries are still very much ‘over borrowed’ and therefore need to continue to ‘tighten their belts’ for some time yet which has a ‘knock on’ affect that the prospect for economic growth outside of emerging markets remain somewhat limited.

These growth fears are further compounded by investor worries that Italy and Spain could be the next European economies to default illustrating further that the recent deal struck on Greek debt has quickly evaporated.

Consequently it is increasingly likely that governments will resort again to monetary easing to kick start their flagging economies. This would be despite the high levels of inflation that currently exist. Otherwise we could face a testing time in the markets in the next few months.

With stock markets falling, investors have sought ‘safe havens’ – Gold and currencies such as the Yen and the Swiss Franc. Furthermore, companies with exposure to emerging markets continue to produce good results. Careful stock picking can find good returns even when the economic outlook is gloomy, and there will continue to be good opportunities for investors. We could even see a rally in the markets now that the threat of US shutdown has been averted, as companies may become more relaxed about investing.

One of the main risks for investors is withdrawing from the markets at the wrong time. Time in the markets not timing the markets should continue to be a priority for investors. Furthermore, it is well worth remembering that our clients like many others investors have all diversified their investments amongst various asset classes broadly; Cash, Fixed Interest, Property & Equities, and whilst in the short term will see the value of their investment portfolios drop, this will not be to the same extent as the stock markets generally.

However, the good news is that investors will be rewarded for maintaining the risk within their investments. They will see value in stock prices, particularly in stocks where businesses are in a position to get through this difficult period of the economy in good shape, and where they have rising cash-flows, earnings and dividends. Therefore there remains a significant upside on a three-to-five year view. Investors who do not currently need cash may wish to look at the longer term, and take advantage of these depressed prices, as we look to higher equity values in months and years to come.

If you need more help managing your investments and strategy in the current climate, please get in touch on 01626 833225.