Sunday, 5 September 2010

Look further than the press releases – UK Property Market – August 2010 Update

If you were reading the papers over the last few days you will have probably seen the house price data from the Nationwide reported on. This will have been taken straight from their press release and I’m sure monthly changes of -0.9% will have been mentioned. I however prefer to analyse the raw data as the figures presented to the press are seasonally adjusted. The actual figures are worse than that reported. In July 2010 prices were £169,347 and in August they are now £166,507. That is a fall of 1.7% in a single month with the annual change now at +3.9%. This is now 2 months in a row that we have seen price falls. This is all shown in my 1st chart today.

Wednesday, 1 September 2010

The low fee mantra – a look at the results of Hargreaves Lansdown

Firstly an apology to regular readers of Retirement Investing Today. My life outside of this blog has recently become extremely busy. It’s going to take me a couple of weeks to get everything sorted out which unfortunately means for the next couple of weeks posts are going to be very sporadic if I manage any at all. Please bear with me as once everything is back in control the regular posts will reappear.

Friday, 27 August 2010

Alternatives to NS&I Index Linked Savings Certificates? – July 2010 Update

The Retail Prices Index (RPI) is currently sitting at 4.8% while the Consumer Prices Index (CPI) is at 3.1%. It is highly likely that if you are holding any cash in bank accounts that you are therefore seeing your hard earned cash being slowly devalued. I know I am. Firstly let’s look at my chart for today. This shows that if you’re prepared to lock your money up for greater than 2 years then on average you can get around 3.7% gross. If you’re a 20% taxpayer then that means a net return of 2.96% and if you’re a 40% taxpayer then unfortunately your net return is 2.22%. Both of these values are less than both the CPI and the RPI meaning on average people’s savings are still being eroded. Provided inflation keeps tracking at these types of year on year percentages then the average rates after tax seem to be well behind the deal that was being offered by NS&I Index Linked Savings Certificates (ILSC’s). If you’re not sure how the returns were calculated on ILSC’s then have a look here.

Wednesday, 25 August 2010

If this is true then the US (and the UK for that matter) is doomed

I was reading the BBC article “US existing home sales drop to 10-year low” which was discussing the 27.2% fall in US existing homes during July compared to June. Of course the government were blamed because they ended tax credits designed to boost home sales. I could today talk about why the government are even in the market trying to boost sales when it should be a free market that is not manipulated. But I won’t because I came across a couple of quotes from Carey Leahey at Decision Economics which concerned me greatly. These were "I think [the July figure] is just suggestive of an economy that is definitely slowing down" and "unfortunately, it is a situation where we can't have a meaningful recovery without a meaningful consumer recovery, and we can't have a meaningful consumer recovery without a recovery in housing."

Monday, 23 August 2010

The lowest cost low cost SIPP

My employer offers a money purchase pension scheme administered through a large UK based insurance company. I have been making substantial contributions into this scheme over the last few years which now means that it makes up 31.7% of my Retirement Investing Low Charge Portfolio. In my opinion my employer is very generous with the salary sacrifice scheme they offer as they match my contributions up to a certain limit plus they also contribute the employers national insurance that they save through the salary sacrifice. In addition as a 40% tax payer I get this paid into the pension working on the principle that some day when I retire I will structure my finances so that I am a 20% (or whatever the appropriate lower tax rate is by then) taxpayer on the money that comes out of my pension. With I fair wind I might not even be in the UK having taken my pension elsewhere using the QROPS process. Of course most of you knew this as I had detailed this and more here.