Don’t panic! – Avoid fear and greed driven markets

With global markets in turmoil and talk of new liquidity issues similar to the credit crisis of 2008 but this time the focus is on sovereign debt, money owed by countries through bond issues. We have seen the focus shift from Greece to Portugal from Ireland to Spain, Italy and now France.

Ratings agency Standard & Poor’s have recently taken the bold (but some may say late) move to downgrade the USA from the highly acclaimed AAA status to AA+. This latest move sent the markets into further turmoil with some analysts describing the scene on Wall Street as “financial Armageddon”. Although no one really thinks that there is a risk that the USA will default on any of its bond issues, the move was significant enough to cause investors to panic sell, sending markets spiralling and millions wiped off valuations overnight.

Meanwhile, others saw this as a great opportunity to invest more into the market, taking advantage of depressed stock prices caused by volatility. Spectators witnessed classic signs of the fear and greed that drives markets, with hasty sell offs and bargain hungry investors anxious to snap up a good deal with stocks 10% – 15% cheaper than the previous weeks.

So what is the lesson? It is easy to have a knee jerk reaction and panic sell when markets are in free fall. This is often accompanied the common mistake of waiting for markets to recover before reinvesting, creating a sell low buy back in high situation, totally the opposite of the basic fundamentals of investing for long term growth. Equity investments are a medium to long term investment because of short term volatility.

With so much information readily available via the internet, television, news and radio, the public tend to make investment decisions on a reactionary basis, closing the door after the horse as bolted. This is why it is important to have the advice and guidance of a fully qualified and locally regulated independent financial adviser who will give you advice based on your personal attitude to risk, tolerance to loss, and your per individual long term financial objectives. Equally it is important to regularly review your investments in line with your circumstances and any change in your attitude to risk. By doing this regularly you are in control of your investments and are not reacting to market movements.

Boal & Co Launch new QROPS Trust Facility

Isle of Man-based Boal & Co has announced the launch of a “Spousal Bypass Trust”. The trust ensures that QROPS death benefits are instead paid out to a trust, completely separate from the spouse’s taxable estate.

Isle of Man 50C QROPS on HMRC approved list Commenting on the launch, Managing Director Gary Boal explained: “One of the many benefits of QROPS (overseas pension transfer schemes) compared with UK pensions is the ability to bestow a pension fund on death. Scheme members who retire abroad are not subject to the 55% UK tax charge which applies to members with UK pension schemes.”

According to Boal “Member payment charges”, including the 55% special lump sum death benefits charge, are not applicable to members of QROPS schemes unless the member is UK-resident at the time of payment, or has been UK-resident in any of the 5 complete tax years preceding payment.

He adds: “Whilst it is true to say that QROPS funds are also free of inheritance tax (IHT) on a member’s death, payment of a member’s QROPS fund on death to, for example, his or her spouse could nonetheless create an IHT liability on the eventual death of the spouse. Use of a Spousal Bypass Trust can ensure that QROPS death benefits are instead paid out to a trust, completely separate from the spouse’s taxable estate, taking IHT out of the equation not just on the death of the member, but also on the subsequent death of the spouse.”

Boal & Co’s QROPs proposition now includes provision of specimen trust wording to establish the Spousal Bypass Trust, and links to (optional) professional trustee services.

Boal & Co received a Special Award for Technical Innovation in the QROPS sector at the 2011 Professional Adviser International Fund & Product Awards, see www.offshoreawards.com

Author: Deborah Benn
International Investment| 08 Sep 2011 | 08:35
Read more: http://www.ifaonline.co.uk/international-investment/news/2107667/boal-launch-qrops-trust-facility#ixzz1XRlkr6oN
IFA Online – News, blogs and analysis for IFAs. Visit the website now.

Abacus launches Isle of Man Qrops

Isle of Man-based fiduciary services provider announces the launch of its new bespoke Qrops.

The qualifying recognised overseas pension scheme (Qrops) is available to individuals who are leaving the UK or are already living outside the UK and enables the transfer of their personal and company pension funds to an overseas pension fund.

The Isle of Man Qrops is derived from the Isle of Man government’s creation of the Section 50C legislation.

The scheme offers significant advantages for approved pensions, namely no tax charges on any income and gains generated within the pension fund or on pension benefits paid to non-residents of the island.

The scheme also offers investors the ability to take a 30 per cent lump sum withdrawal on retirement, and potentially more, including the growth on funds transferred into the Qrops.

Flexibility in the withdrawal of benefits – the pensioner can choose income drawdown, (avoiding the need to purchase an annuity) or alternatively can leave the funds intact if there is no income requirement is also an option.

No tax charges are made on the death of the pensioner.

Andrew Cardwell, tax director of Abacus Trust Company Limited, said: “There are many providers currently offering master trust type arrangements in the Isle of Man, however our Qrops is an individual pension arrangement, which retains the freedom of investment and control currently enjoyed by investors in their existing Sipps and Ssas.

“Our fee structure, while competitive, reflects the bespoke nature of our Qrops solution and unlike the majority of Qrops providers, as an independent company with no financial ties to any financial institution, we accept no commissions or other financial incentives from organisations wishing to do business with us.”

Abacus Trust Company Limited will act as both trustees and administrators of the Qrops arrangements.

Alistair Stewart, director of Abacus Fiduciary Services Limited, UK, said: “Choosing the right location for a Qrops is essential.

“The Isle of Man is an offshore financial centre, internationally recognised and respected as a jurisdiction of excellence.

“Having reformed the Qrops landscape with its new pension legislation, the Isle of Man is fast becoming one of the leading jurisdictions in this arena with the island’s Qrops considered an innovative scheme, offering significant advantages for approved pensions.”

Emma Ann HughesMagazine: FTAdviser Published Thursday , September 08, 2011

Important Information

Information, news, views, opinions, articles and all other content contained in this site are personal views and opinions of the site owner and are not meant to be taken as financial advice. If you would like advice, please contact me for individual financial advice based on your needs and circumstances, or contact your own financial adviser, or if you have not got one, you can find one in your area by visiting sites like www.unbiased.co.uk

Top 5 Financial Planning Tips

With austerity measures already starting to take their toll, many of us are feeling the pinch. In testing times like these, getting the right advice from a qualified professional can pay dividends. Whilst everyone’s needs and objectives are different and it is important to get personalised advice based on your own specific needs and circumstances, we’ve asked Steve to put together his top five tips on surviving in this current economic climate.

Pay yourself first. Don’t live from one payday to the next, aim to make your first monthly commitment a contribution to a savings plan or separate deposit account. Work out your regular monthly expenses, then set up a standing order for a portion of your surplus. This will avoid the common pitfall of living to your means and will encourage you to save on a regular basis. Having a rainy day fund will help in the future, especially if you become incapacitated and unable to work or if you are made redundant, or it could go to towards a large unforeseen expense, or a child’s education or wedding, or your own retirement nest egg.

Don’t live on credit, its easy to get into and a lot harder to get out. Too many people rely on overdrafts, credit cards and loans to cover every day expenses. The interest rate on these can be 10% to 29% per year, or even more in some cases, the cost of a purchase is immediately made more expensive by the cost of borrowing and interest will continue to accrue until the balance is repaid. Don’t confuse being able to afford a monthly payment with being able to afford the item itself.

Avoid buying a brand new car, especially on finance. We all know that a brand new car is a luxury, we also know that the price of a car will depreciate vastly immediately after you drive it off the forecourt. Furthermore, if you buy the car on finance, it will depreciate over time, whilst interest will be added to the amount that you borrow to buy the car. When you come to sell the car, there will be little equity left in the vehicle after the loan has been paid. Whilst there are advantages to buying a new car, such as warranties and better fuel efficiency, the long term cost and depreciation can easily outweigh these.

Avoid excessive spending. It’s often said that great fortunes are lost or created a pound at a time. It may not sound like a great extravagance, but that latte in the coffee shop during the day, dinner out once a week, the odd take away here and there, going to the movies once a week, and this can add up to over £1200 per year, which could be an extra monthly mortgage payment, or a few payments on a personal loan, or even £100 per month towards a pension. Having this surplus cash will help in times of financial hardship. I am not saying cut out all of life’s little treats completely, but to keep an eye on the expenses that can be avoided.

Ensure you are adequately protected. Often overlooked, we take ourselves for granted, and presume that nothing will ever happen to us. Making sure we have sufficient financial protection in the event of being unable to work due to an accident or long term illness, or worse, if we suffer from a serious illness such as a heart attack, cancer, tumour or stroke, will help with our financial commitments and ensure that we don’t suffer financial hardship, or worse, lose our family home due to falling behind on mortgage payments. Often the value of protection is confused with the cost of the cover, after all, cost is what you pay, but value is what you get and what price can we put on peace of mind?

Benefits of Social Media Networking in the modern Financial Services industry

There was a time, not so long ago, that social media networking was considered a way for kids to keep in touch with each other rather than engage themselves in outdoor activities and face to face contact. Back in the day when all that was available was MSN, my daughter would rush home from school to start conversations with friends she had just left, this would go on through the night.

Come forward a bit in time and the opinion evolved and more an more sites and services developed and with them, a stream of adult followers. Social media sites are now the coffee shops of the high street, just when you thought there was enough, another one opens and to everyones surprise it does well and so does the competition.

Forward thinking professionals now use these services to keep up to date with current affairs, politics, finance and what is going on in the lives of those who live and work around them.

For instance, I use services like LinkedIn to source professional contacts and introducers from relevent industries, certain  countries and sometimes, specific companies. I have grown my contacts in a way that I could never have done before when all that was available was google searches or a phone book. I use Twitter, to keep up to date with family, friends and clients as well as the latest news, finance updates and political goings on. I also use industry specific sites such as Rubii and IFALife to keep up to date, bounce ideas off professionals from around the world and to inform others of the products and services that we can offer.

So as social media networking develops, so too does our expectations from the Internet and the way we interact with one another. Access to information as well as people is now on demand, real time and online. At one time, an advisers ‘patch’ would probably be a 30 mile radius, now only ignorance and regulation restrict an adviser from where and how they do business.  They say the world is a small place, it is, its the size of your computer screen.

Its not all doom and gloom. Positive solutions to beat the crunch

With so much negative news on every single headline and news broadcast, it would be easy to think that every investment sector is suffering the bite of the credit crunch. Inflation, deflation and historically low interest rates are terms so common that we are now desensitised when once this would be completely shocking.

I am not the eternal optimist, however, I do enjoy finding positive solutions rather than feeding the negative frenzy that is all around us, just today I heard a chief economist in the USA advising all his clients to dump all sterling assets and sell out of the UK market completely. That sort of talk only brings about the negativity that it forecasts.

If like me, your investment, SIPP or traditionally cautious deposit clients are concerned about global stock markets, falling property prices, bank stability, falling pound and historically low interest rates, (just to mention a few of the challenges we are up against), then you will be pleased to know that there are very low risk, reasonably high return investments out there:

So, stop waiting for recovery and wondering what to do with your concerned clients cash, there are solutions and I can refer you to these companies so you can be armed with positive alternatives when you next speak to your clients.

Steve Burdett Cert PFS ACMI
International QROPS Pension & Investment Adviser

follow me on twitter www.twitter.com/steveburdett