The Bank of England has increased its quantitative easing programme by a more than expected £75bn in a bid to kick-start the UK’s ailing economy amid fresh fears about the country's stalling recovery amid an escalation of the eurozone debt crisis.
This additional amount of Quantitative Easing (QE) extends the total involved in the programme to £275bn. The £75bn is around 50% greater than many economists were predicting.
Citing its reasons to pump more money into the economy, the Bank said the pace of global expansion had slackened, particularly in the UK's export markets. It also pointed to "vulnerabilities" in the indebtedness of eurozone counties.
A central bank implements quantitative easing by purchasing financial assets from banks and other private sector businesses with new electronically created money. This action increases the excess reserves of the banks, and also raises the prices of the financial assets bought, which lowers their yield.
The main aim of this is to make available more money to the High Street banks, which should enable them to lend more money to businesses and the public.
Revised figures show the UK economy managed just 0.1% growth in the second quarter - against a previous reading of 0.2% - whilst first quarter growth was revised down to 0.4%.
It remains to be seen whether this latest move will have the desired result of stimulating economic growth although the stock market has responded positively to the news of further Quantitative Easing.
If these gains in investment markets are maintained beyond the very short term, higher equity and gilt prices will be good news for investors with diversified portfolios who have been suffering from recent equity market falls and the uncertainty of the eurozone debt.
The Bank kept interest rates on hold at 0.5%. They have now been at this historic low for 31 months and the outlook is for interest rates to remain at this level throughout next year.
Thursday 6 October 2011
Saturday 28 May 2011
Nomination by Kinnird Primary School as an Enterprise Champion...
I was delighted to receive a letter the other day from Falkirk Council advising me that I had been nominated by Kinnaird Primary School as an Enterprise Champion.
The nomination recognises that I have, through support, demonstrated an attitude that is enthusiastic and motivating and that I have inspired and encouraged young people to develop an enterprising attitude. I have to attend an informal presentation to collect my certificate of recognition on 7th June.
I have been nominated for this award by the Primary 7 class teacher and seconded by 2 pupils following my visit to the school to talk to the pupils about financial planning during their school finance week.
The pupils wrote:
- “Mr Hale was inspirational when he came during Finance Week, to talk to P7 about tax and money. He showed us a fantastic video and we now feel inspired to save money!”
- “He taught us the importance of saving money, so when you’re older you can have a better life and achieve your future dreams “.
- “Mr Hale invented a client and made graphs of their accounts to help us understand savings and pension. He made it interesting and easy to understand”.
I must say that this nomination came to me as a total surprise and I am actually overwhelmed by it. I very much enjoyed preparing for the presentation that I did for the primary 7 class and enjoyed even more presenting it and the interaction with the children about financial planning.
I would like to thank very much Kinnaird Primary School for inviting me to talk to the class and to the teacher and pupils who nominated me for this award. I am very delighted to have been nominated and I look forward to receiving my certificate of recognition on the 7th June.
Garry Hale
Director
HK Wealth Managers Ltd
Monday 16 May 2011
National Savings are back with Index-Linked Savings Certificates
NS&I have re-introduced new issues of its savings certificates, including index-linked Savings Certificates (often referred to as inflation-beating savings) and fixed-interest Savings Certificates.
The new Issues are available in a 5-year term only and offer tax-free returns based on inflation, Retail Prices Index (RPI) plus a fixed rate of 0.5%. They offer a maximum investment of £15,000. Fixed-interest Savings Certificates will pay 2.25% AER.
It is anticipated that Billions of pounds will flood into these new government backed investments as savers look to beat inflation on their savings. Savers are currently affected by the combination of high inflation and low interest rates, which means that the real value on savings are being eroded by inflation.
Although these do appear to look very attractive to savers particularly higher rate tax payers I would also consider the following points.
As we know currently inflation is at a very high level and with RPI at 5.3% it is well above the Bank of England’s inflation target. Also, at the moment interest is at an all time low and has been for some time now. Just in the last week the Bank of England has warned that inflation may rise further to a peak later this year. This would suggest that upon reaching its peak inflation will start to fall again.
It is therefore important to consider the effects of the anticipated returns over the full 5 year period where savers may be disappointed with the total return over the 5 years. It is possible to bail out after just 1 year where the return would be RPI plus 0.25%.
The anticipation over the next year or so is that interest rates are likely to start rising to bring the current high inflation under control. As inflation starts to drop the guaranteed return of inflation plus 0.5% will gradually become less attractive over time. The effect of this is that as interest rates start to rise again savers will start to receive some better rates of interest on their cash savings.
I therefore think there will be a point over the next year or so when there will be a tipping of the scales and that savers will benefit from the returns offered by the new NS&I Indexed Linked Savings in the early years of the 5 year period when inflation is still very high, as inflation drops savers will see a drop on their returns.
As a result although savers are receiving a very low rate of interest on their cash savings at present as inflation drops and interest rates increase savings will start to see some better rates of interest appear.
To conclude I would suggest that the rates currently look very attractive, particularly for higher rate taxpayers, and that they may be suitable for some savers as part of an overall savings and investment strategy to avoid the effects of high inflation.
The new Issues are available in a 5-year term only and offer tax-free returns based on inflation, Retail Prices Index (RPI) plus a fixed rate of 0.5%. They offer a maximum investment of £15,000. Fixed-interest Savings Certificates will pay 2.25% AER.
It is anticipated that Billions of pounds will flood into these new government backed investments as savers look to beat inflation on their savings. Savers are currently affected by the combination of high inflation and low interest rates, which means that the real value on savings are being eroded by inflation.
Although these do appear to look very attractive to savers particularly higher rate tax payers I would also consider the following points.
As we know currently inflation is at a very high level and with RPI at 5.3% it is well above the Bank of England’s inflation target. Also, at the moment interest is at an all time low and has been for some time now. Just in the last week the Bank of England has warned that inflation may rise further to a peak later this year. This would suggest that upon reaching its peak inflation will start to fall again.
It is therefore important to consider the effects of the anticipated returns over the full 5 year period where savers may be disappointed with the total return over the 5 years. It is possible to bail out after just 1 year where the return would be RPI plus 0.25%.
The anticipation over the next year or so is that interest rates are likely to start rising to bring the current high inflation under control. As inflation starts to drop the guaranteed return of inflation plus 0.5% will gradually become less attractive over time. The effect of this is that as interest rates start to rise again savers will start to receive some better rates of interest on their cash savings.
I therefore think there will be a point over the next year or so when there will be a tipping of the scales and that savers will benefit from the returns offered by the new NS&I Indexed Linked Savings in the early years of the 5 year period when inflation is still very high, as inflation drops savers will see a drop on their returns.
As a result although savers are receiving a very low rate of interest on their cash savings at present as inflation drops and interest rates increase savings will start to see some better rates of interest appear.
To conclude I would suggest that the rates currently look very attractive, particularly for higher rate taxpayers, and that they may be suitable for some savers as part of an overall savings and investment strategy to avoid the effects of high inflation.
Wednesday 20 April 2011
Don't put your retirement dreams on hold!
Almost two thirds of people who had planned to retire in 2011 would consider having to pospone retirement and continue working in order to give a vital boost to their retirement income.
New research from Prudential's Class of 2011 survey has revealed that almost 50% say they will definately continue working beyond their planned retirement age in order to supplement pensions and build further savings before they retire.
The Prudential Class of 2011 surveyed people who had the original intention of retiring throughout this year. The results highlight the growing trend of individuals phasing retirement gradually in the UK as a result of the reality of having to fund a much longer period in retirement.
The survey highlighted that over 30% would consider working for up to a further two years if it secured them a greater income in retirement. Where more than one in five would consider an extra two to five years working, 8% said they would be prepared to work for five to ten years longer.
Not all those surveyed planned to continue working beyond planned retirement due to financial constraints as many were happy to continue working on. Over 50% said they did not feel ready to retire and actually still enjoyed working.
I see more clients nearing retirement with a more flexible approach to how and when they retire and the option of part-time and consulting work is attractive for many clients.
The secret to all of this is in carefully planning your retirement in advance and arranging with professional financial advice appropriate investment portfolios and a suitable retirement strategy.
This prevents you having to delay your retirement dreams and allows you to stay in control of your retirement aspirations for which should be an exciting, enjoyable and relaxing period of your life.
New research from Prudential's Class of 2011 survey has revealed that almost 50% say they will definately continue working beyond their planned retirement age in order to supplement pensions and build further savings before they retire.
The Prudential Class of 2011 surveyed people who had the original intention of retiring throughout this year. The results highlight the growing trend of individuals phasing retirement gradually in the UK as a result of the reality of having to fund a much longer period in retirement.
The survey highlighted that over 30% would consider working for up to a further two years if it secured them a greater income in retirement. Where more than one in five would consider an extra two to five years working, 8% said they would be prepared to work for five to ten years longer.
Not all those surveyed planned to continue working beyond planned retirement due to financial constraints as many were happy to continue working on. Over 50% said they did not feel ready to retire and actually still enjoyed working.
I see more clients nearing retirement with a more flexible approach to how and when they retire and the option of part-time and consulting work is attractive for many clients.
The secret to all of this is in carefully planning your retirement in advance and arranging with professional financial advice appropriate investment portfolios and a suitable retirement strategy.
This prevents you having to delay your retirement dreams and allows you to stay in control of your retirement aspirations for which should be an exciting, enjoyable and relaxing period of your life.
Tuesday 8 March 2011
Government looking to abolish means testing and pension credits creating simpler flat rate state pension
Iain Duncan Smith signalled a move by the government to a flat-rate state pension in a speech today (8 March).
The work and pensions secretary said the government was looking at abolishing means testing and pensions credits.
Mr Duncan Smith claimed the current system was so complex that most people have no idea what any of this will mean for them now and in their retirement.
He argued means testing was demeaning and was known to put people off from making a claim, as well as acting as a disincentive to save.
Mr Duncan Smith said: "Too many people on low incomes who do the right thing in saving for their retirement find those savings clawed back through means-testing.
"When they reach pension age they discover that while they have foregone spending opportunities and made plans to be self-sufficient, others, who haven’t saved a penny, are able to get exactly the same income as them by claiming pension credit.
"We have to change this.
"We have to send out a clear message across both the welfare and pension systems – you will be better off in work than on benefits, and you will be better off in retirement if you save."
Mr Duncan Smith said he was seeking a debate on the next generation of pension reform.
He said: "I want a state pensions system fit for a 21st century welfare system, which is easy to understand and rewards those who do the right thing and save.
"My department has been working closely with colleagues at the Treasury on options for reform."
"As the Chancellor made clear late last year, he is keen to look at options for simplifying the pension system, and that is precisely what we are doing."
Maggie Craig, acting director general of the Association of British Insurers (ABI), said the ABI would strongly welcome plans to simplify the state pension to establish a flat-rate payment.
She said: "Ahead of the Budget the ABI has already written to the government urging them to take this step.
"The current system is complicated, confusing and leaves many people uncertain of the benefits of saving."
Joanne Segars, chief executive of the National Association of Pension Funds (Napf), claimed it was a turning point for pensions in the UK.
She said: "Radical state pension reform to create a single, simple and more generous state pension could take millions of pensioners out of poverty, and provide a firm foundation for saving for old age.
"For the first time in a generation, people would know that it pays to save.
"Today's commitment comes not a moment too soon."
The work and pensions secretary said the government was looking at abolishing means testing and pensions credits.
Mr Duncan Smith claimed the current system was so complex that most people have no idea what any of this will mean for them now and in their retirement.
He argued means testing was demeaning and was known to put people off from making a claim, as well as acting as a disincentive to save.
Mr Duncan Smith said: "Too many people on low incomes who do the right thing in saving for their retirement find those savings clawed back through means-testing.
"When they reach pension age they discover that while they have foregone spending opportunities and made plans to be self-sufficient, others, who haven’t saved a penny, are able to get exactly the same income as them by claiming pension credit.
"We have to change this.
"We have to send out a clear message across both the welfare and pension systems – you will be better off in work than on benefits, and you will be better off in retirement if you save."
Mr Duncan Smith said he was seeking a debate on the next generation of pension reform.
He said: "I want a state pensions system fit for a 21st century welfare system, which is easy to understand and rewards those who do the right thing and save.
"My department has been working closely with colleagues at the Treasury on options for reform."
"As the Chancellor made clear late last year, he is keen to look at options for simplifying the pension system, and that is precisely what we are doing."
Maggie Craig, acting director general of the Association of British Insurers (ABI), said the ABI would strongly welcome plans to simplify the state pension to establish a flat-rate payment.
She said: "Ahead of the Budget the ABI has already written to the government urging them to take this step.
"The current system is complicated, confusing and leaves many people uncertain of the benefits of saving."
Joanne Segars, chief executive of the National Association of Pension Funds (Napf), claimed it was a turning point for pensions in the UK.
She said: "Radical state pension reform to create a single, simple and more generous state pension could take millions of pensioners out of poverty, and provide a firm foundation for saving for old age.
"For the first time in a generation, people would know that it pays to save.
"Today's commitment comes not a moment too soon."
Thursday 3 February 2011
Financial Planning?
What is Financial Planning?
• Financial Planning involves working out what is most important to you in life: your goals.
• Then by adding timescales and costs, you can work out how to get where you want to be in life by planning your finances accordingly
What do Financial Planners do?
• Help their clients achieve their goals
• Protecting their assets and their family
• Saving and Investing
• Retirement Planning
• Tax planning
Garry Hale
• Financial Planning involves working out what is most important to you in life: your goals.
• Then by adding timescales and costs, you can work out how to get where you want to be in life by planning your finances accordingly
What do Financial Planners do?
• Help their clients achieve their goals
• Protecting their assets and their family
• Saving and Investing
• Retirement Planning
• Tax planning
Garry Hale
Tuesday 1 February 2011
If you want financial advice don't go to the bank.....
You may have noticed the recent decision by Barclays Bank to stop offering financial advice to individual customers in its bank branches. An overhaul of how financial advice is given, known as the Retail Distribution Review or “RDR” for short, comes into effect at the beginning of 2013 and this has meant the bank’s costs are likely to rise at exactly the same time as it will have to be more explicit about how much that advice is costing its customers.
Given the publicity Barclays’ announcement has received, I thought this might be the perfect moment to raise the subject of RDR and to write a few words to explain what changes you might see as a client of HK Wealth Managers Ltd.
Higher standards
RDR is specifically designed to improve people’s understanding of, as well as increase their confidence in, the financial services industry. Most significantly, the Review wants to increase the level of professionalism so the minimum qualifications required to give advice are being increased and the way in which you pay for that advice is being altered to ensure complete transparency.
This will affect all financial advisers to an extent. However, the reason for my note right now is that many of the reasons Barclays Bank has given for its decision to withdraw from in-branch advice do not hold true for all advisers – particularly ourselves.
At HK Wealth Managers Ltd most of the groundwork has already been done. Our continuous professional development means I am already qualified beyond the new minimum requirements and in fact am working on a few final exams to qualify as a Chartered Financial Planner.
In terms of payment for our services, we already operate on a fee based structure which is both fair and transparent to both our business and our clients. While a few of the logistics may change slightly nothing the new rules are asking of us should come as a shock.
Further information
Nevertheless, if you have any questions about comments made in the Barclays’ announcement, or are concerned about what it means for our relationship with you or would simply like to talk to us about the new rules, please do not hesitate to get in touch.
In the meantime, however, the following link to an opinion piece in this last weekend’s Independent on Sunday says a lot of things much better than we ever could…
http://www.independent.co.uk/money/spend-save/simon-read-if-you-want-some-financial-advice-dont-go-to-the-bank-2197858.html#Scene_1
Garry Hale AIFP, Dip PFS
Director
HK Wealth Managers Ltd
Given the publicity Barclays’ announcement has received, I thought this might be the perfect moment to raise the subject of RDR and to write a few words to explain what changes you might see as a client of HK Wealth Managers Ltd.
Higher standards
RDR is specifically designed to improve people’s understanding of, as well as increase their confidence in, the financial services industry. Most significantly, the Review wants to increase the level of professionalism so the minimum qualifications required to give advice are being increased and the way in which you pay for that advice is being altered to ensure complete transparency.
This will affect all financial advisers to an extent. However, the reason for my note right now is that many of the reasons Barclays Bank has given for its decision to withdraw from in-branch advice do not hold true for all advisers – particularly ourselves.
At HK Wealth Managers Ltd most of the groundwork has already been done. Our continuous professional development means I am already qualified beyond the new minimum requirements and in fact am working on a few final exams to qualify as a Chartered Financial Planner.
In terms of payment for our services, we already operate on a fee based structure which is both fair and transparent to both our business and our clients. While a few of the logistics may change slightly nothing the new rules are asking of us should come as a shock.
Further information
Nevertheless, if you have any questions about comments made in the Barclays’ announcement, or are concerned about what it means for our relationship with you or would simply like to talk to us about the new rules, please do not hesitate to get in touch.
In the meantime, however, the following link to an opinion piece in this last weekend’s Independent on Sunday says a lot of things much better than we ever could…
http://www.independent.co.uk/money/spend-save/simon-read-if-you-want-some-financial-advice-dont-go-to-the-bank-2197858.html#Scene_1
Garry Hale AIFP, Dip PFS
Director
HK Wealth Managers Ltd
Friday 14 January 2011
Removal of Default Retirement Age
The government yesterday announced its plans to remove the default retirement age (DRA) this year, despite calls from employers to delay the measures, according to reports.
The decision will provide more choices to people in work about when they wish to retire. At present it is possible for employers to make staff retire when they reach the age of 65.
The Default Retirement Age will be phased out over a period between 6th April 2011 and 1st October 2011. It will ne necessary for employers to give staff a notice period of at least six months when using the Default Retirement Age to force retirement.
The main reason for the change is due to people living longer and healthier lives. Forcing people to retire at age 65 is often causing financial difficulties where people are relying on the ability to keep working in older age to supplement other sources of retirement income, such as the State Pension.
Ed Davey, minister for employment relations, consumer and postal affairs, said the government would help businesses deal with the change.
‘Older workers have a lot to offer in the workplace and it's time we got rid of this outdated form of age discrimination. We will do all we can to support businesses with the change,’ he said.
People should not necessarly rely on the removal of the default retirment age as a retirement strategy as individulas may not be able to work beyond age 65 due to for example ill health.
It is important to adopt a flexible retirement strategy and create a personal Financial Plan and this move gives more flexibility to individuals in doing so.
The decision will provide more choices to people in work about when they wish to retire. At present it is possible for employers to make staff retire when they reach the age of 65.
The Default Retirement Age will be phased out over a period between 6th April 2011 and 1st October 2011. It will ne necessary for employers to give staff a notice period of at least six months when using the Default Retirement Age to force retirement.
The main reason for the change is due to people living longer and healthier lives. Forcing people to retire at age 65 is often causing financial difficulties where people are relying on the ability to keep working in older age to supplement other sources of retirement income, such as the State Pension.
Ed Davey, minister for employment relations, consumer and postal affairs, said the government would help businesses deal with the change.
‘Older workers have a lot to offer in the workplace and it's time we got rid of this outdated form of age discrimination. We will do all we can to support businesses with the change,’ he said.
People should not necessarly rely on the removal of the default retirment age as a retirement strategy as individulas may not be able to work beyond age 65 due to for example ill health.
It is important to adopt a flexible retirement strategy and create a personal Financial Plan and this move gives more flexibility to individuals in doing so.
Friday 7 January 2011
Baby boomers turn 65 in 2011!
2011 is a remarkable year where record numbers of the 'baby boom’ generation reach retirment age 65 throughout 2011.
The Department for Work and Pensions have advised that around 650,000 people reach the age of 65 this year. It has been suggested that this will be the largest number to reach age 65 in one single year since the records began.
There will also be a record number of men and women turning 65 next year with around 800,000 expected to turn 65 in 2012. This is an indication of the ageing population problems still to come.
Turning 65 is an important retirement age for many men and women and it is an important time to consider the many decisions that should be made around retirment and the many retirement payment options available.
If this is a time where you or someone you know will be reaching age 65 either this year or in 2012 it is an ideal time to consider your overall financial planning requirements. It is recommended you discuss these retirement options with an independent financial adviser who is in a position to review with you the many retirement payment options available to you.
This will allow you to gain an impartial view on your options and make better decisions on your retirement future.
Garry Hale
www.hkwealthmanagers.co.uk
The Department for Work and Pensions have advised that around 650,000 people reach the age of 65 this year. It has been suggested that this will be the largest number to reach age 65 in one single year since the records began.
There will also be a record number of men and women turning 65 next year with around 800,000 expected to turn 65 in 2012. This is an indication of the ageing population problems still to come.
Turning 65 is an important retirement age for many men and women and it is an important time to consider the many decisions that should be made around retirment and the many retirement payment options available.
If this is a time where you or someone you know will be reaching age 65 either this year or in 2012 it is an ideal time to consider your overall financial planning requirements. It is recommended you discuss these retirement options with an independent financial adviser who is in a position to review with you the many retirement payment options available to you.
This will allow you to gain an impartial view on your options and make better decisions on your retirement future.
Garry Hale
www.hkwealthmanagers.co.uk
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