The UK Pension system has suffered decades of tinkering with successive governments failing to make any radical changes; instead chipping away with small changes which have made the system complex and untenable.
Many years ago I studied Neuro-Linguistic Programming (NLP). Humans have hard wired personality tendencies which if understood allow for more effective learning, communication and control of emotions.
Taken from the Guardian this headline highlights a growing dilemma for individuals trying to get on the property ladder. Not only have we seen house prices rise to unaffordable levels, but the new mortgage tests mean that those who previously might have been considered may find it very difficult to get lending now.
The standard advice is: 1. That a prudent investor should hold a diversified basket of assets which react differently in different economic environments (uncorrelated) 2. That this strategy provides for less volatility and smoother growth
As with most things the prerequisite to getting the right answers is to first ask the right questions. Before a portfolio can be constructed or a specific investment made, foundation questions must be addressed.
History is littered with periods of exceptional performance. These often follow periods of market decline. The best time to invest is during the periods of decline because when the market corrects those investors will gain the greater benefit.
Investors use ratios to identify potential investment opportunities. The most common is the P/E ratio, ‘price to earnings’. This is printed in the financial press daily as part of each individual shares information along with dividend yield and high/low prices in the last 12 months.
The recent Budget outlined in principle, an historic shift in how people can take their pension fund at retirement. Before we look at the implications and (beyond the headlines) it's interesting to review the recent history of pensions in retirement.
Sir John Templeton, a ‘Hall of Fame Investor’ was asked to name the most dangerous belief an investor can have. He replied “this time is different.”
Malcolm Gladwell in his book "Blink" explains the role of intuition in human decision making. Humans have the ability to process information almost instantaneously and gain a read on a situation that’s often extremely accurate.
At the start of January investors could have been mistaken for thinking that 2014 was going to be a bumper year.
In my second blog on the budget announcement I want to explore further the perceived demise of annuities…..
According to most financial papers, the answer is yes……This means that companies like Just Retirement and Partnership Assurance are finished because this is the majority of their business. But perhaps the journalists and markets are overreacting.
The Charles Stanley basic package is good value, care needs to be taken where investors are considering adding a pension or even making regular investments into shares or investment trusts.
At some points the proposition is cheaper and certainly for investors with larger sums to invest (£100,000 plus) it offers better value. What you don’t get with Interactive Investor are the bells and whistles you receive from Hargreaves Lansdown.
The practice of investment however seems to me a much nobler and more thoughtful endeavour. It embraces economics, law, accountancy, politics, psychology and emotional intelligence so to do it well is to master much.
Over the last 18 months we have wondered whether many Hargreaves clients would feel slightly duped when it became clear that they had in fact been charged or whether they actually wouldn’t care.