Impartial Financial Planners | IFA | Fee Based | Dentists | Doctors

Twitter Weekly Updates for Ray 2012-02-04

Ray Prince — Sat, 04 Feb 2012 21:59:00 +0000

The PL form table since MON arrived http://t.co/SI6cOdfB #
@sunderlandsmile it's s close one though GH always confused defences (our own) in reply to sunderlandsmile #
@sunderlandsmile his goal had a feel of @Summerbee7 and Superkev just like the old days in reply to sunderlandsmile #
@V2VFP just a bit #
@AlanMSuggett well done Alan, great result in reply to AlanMSuggett #
can anyone recommend a good 'enjoying/dealing/coping with retirement' type book for a client? on amazon and so many to choose from! #
@Cunningham_UK thanks! will take a look… in reply to Cunningham_UK #
@MeetSteveShaw Article Marketing Strategies, Lesson 3: Choosing Keywords For Your Niche http://t.co/ZmPqFXzt #
How to Avoid Panic in Presentations: Coping with Questions #

Twitter Weekly Updates for Ray 2012-01-28

Ray Prince — Sat, 28 Jan 2012 21:59:00 +0000

Just completed a 3.56 mi run with @RunKeeper. Check it out! http://t.co/Mh2arHSz #RunKeeper #
Industrial action on the way for doctors? http://t.co/m41nNERE #
The war of words re NHS Pensions http://t.co/G9uhoGAJ #
@LMInvestment done in reply to LMInvestment #

Twitter Weekly Updates for Ray 2012-01-21

Ray Prince — Sat, 21 Jan 2012 21:59:00 +0000

Dentists, give your views to the BDA on the proposed changes to the NHS Pension Scheme http://t.co/kyav4ma1 #
At Investment Intelligence seminar hosted by Invesco Perpetual, sloooow recovery on the cards (@ Marriott) http://t.co/llirzEEy #
@YellowtailFP @v2vfp north of Staples Corner but not as far as Berwick #
@petedickson midnight running? Fast pace again… in reply to petedickson #
BMA rejects NHS Pensions offer http://t.co/yLHOs17n #
@petedickson what's the target? Going well have stepped up gym/running, managed a light run around Hyde Park with Thomas last Fri in reply to petedickson #
Just completed a 4.31 mi run with @RunKeeper. Check it out! http://t.co/ai6eaAXO #RunKeeper #
@sylviesturrock Radisson's the one to go for, great hotel in reply to sylviesturrock #
@petedickson you're not giving your poor body time to rest! in reply to petedickson #
@DAVEDENTIST i hear it's being held in Newcastle? in reply to DAVEDENTIST #
45% of my followers are from #UK 34% from #USA & 12% from #London http://t.co/1cK4ZnV9. What's your #TweepsMap #
@petedickson absolutely mad!! you'll be on there by the end of the year… in reply to petedickson #
@DAVEDENTIST ah ok, btw how are you? – say hi to @karenthedentist and @tonygedge and hope it's going well in reply to DAVEDENTIST #

Twitter Weekly Updates for Ray 2012-01-14

Ray Prince — Sat, 14 Jan 2012 21:59:00 +0000

The Investor's New Year's Resolution,http://t.co/aR5mowd9 #
What sort of leader are you? http://t.co/bWzdE5ZS #
@PhillipMather everything ok fella? in reply to PhillipMather #
NHS Pension Early Retirement, How Will It Be Reduced?,http://t.co/6fsDvtSB #
Early start en route to London for New Model Adviser awards at Lancaster Hotel #
The myths of being an entrepreneur http://t.co/ESPAo7U4 #
@MatthewWalne looking forward to it – No doubt we'll meet at some point in reply to MatthewWalne #
@Nickcanncfp @julielordcfp @IFP_UK see you there Nick #
At #nmaconf not much sleep last night so running on adrenalin (@ Lancaster London Hotel w/ 2 others) http://t.co/ZzzkZecT #
@YellowtailFP too right little one kept me up last night so I'll be off for some zzz this afternoon in reply to YellowtailFP #
@PhillipMather not exactly fella little one kept me up last night then on 6am train to the smoke no doubt you know the feeling! in reply to PhillipMather #
Birthday Party & Resources for 2012,http://t.co/d0As1lMu #
All done in London, back up north we head (@ St Pancras Intl. Station (STP) – Domestic Lines w/ 3 others) http://t.co/b3wB2TeY #
@CathiParaSols happy birthday! #
NHS Pension Added Years no change in 2015 http://t.co/FyzSrnb0 #
@CathiParaSols Whahey! Welcome to the CFP 'club' many congrats not a bad weekend for you then in reply to CathiParaSols #

Birthday Party & Resources for 2012

Ray Prince — Fri, 13 Jan 2012 08:00:13 +0000

Did you have an enjoyable Christmas and New Year?

I hope you did and are looking forward to 2012.

My daughter celebrated her 2nd birthday just before Christmas so we hosted a party for her and some of her friends. She had a great time and Daddy really enjoyed trying to get the various food items out of the carpet afterwards!

She then more or less had a full week of opening Birthday/Christmas presents, although she did have that look of “er, what’s this all about then?”

Onto the business year ahead.

For us, we have many plans that we hope will come to bear. On a personal note, I’m already booked in to talk to 7 groups of dentists, with the first kicking off on 27 January at Cumberland Infirmary in Cumbria.

This is an afternoon course (workshop) that qualifies for 3 hours verifiable CPD so if you’d like to attend (there are only 5 places left) you can apply via the Deanery’s website.

Note: The link will take you to a preview page of the main page, so you will need to click on the link on the page (at the top) to view the main page.

Resources for 2012

I’ve been on the lookout for any resources that can help you with your year ahead.

Here’s a few (all will open as pdfs):

Arun Mehra of specialist dental accountants Samera has compiled his ‘Double Dip Tips’, which aims to help dentists through the tough economic times.

Alan Suggett of specialist dental accountants unw has put together a handy 1 page pdf of the advantages and disadvantages of incorporation.

And you can also still get hold of a copy of unw’s “NHS Pension Nightmare’ Flowchart.

If you have concerns that you may exceed the pensions Annual Allowance of £50,000 pa and are wondering when you will receive your NHS Pension Annual Allowance Statement, you can read guidance issued by the NHS.

I hope that will help in some way and until next time, best wishes.

NHS Pension Early Retirement, How Will It Be Reduced?

Ray Prince — Wed, 11 Jan 2012 08:00:28 +0000

Q. With all the recent announcements regarding proposed changes to the NHS Pension Scheme, I have heard that the actuarial reduction percentages have changed for members that are looking to take benefits prior to normal retirement date.

Can you please clarify the position?

A. The good news is that the percentage reductions have reduced slightly. As you are a 1995 section member, let’s look at how you would be affected.

Prior to the change, if you were to take benefits at age 55 your pension would be reduced by 24%, with the lump sum being reduced by 16%. Now the figures are 22/15%, which may not appear to be a big difference, however if you have accrued a pension of £40,000 pa by age 55 and decide to take the benefits you would now receive an additional £800 pa.

You are able to take pension benefits from age 50 or 55, depending upon various factors. Any pension paid to you will increase with inflation each April, although this only applies from age 55.

You can read full details at the NHS’s website.

The Investor’s New Year’s Resolution

Ray Prince — Mon, 09 Jan 2012 08:00:51 +0000

New Year’s resolutions often involve making promises to ourselves we can never keep. But instead of tilting at windmills, we can often generate better results by merely resolving to be less dumb in certain areas.

And money is a good place to start!

One human tendency is to judge the effectiveness of our retirement savings strategies by looking at performances on one, two or three-year horizons. We do this because we are wired to be more sensitive to short-term losses than to long-term gains.

This is why much of the financial services industry and media encourage a short-term focus for an audience with a long-term horizon. This is akin to looking through the wrong end of a telescope. The thing you should be focusing on looks even further away.

The result of this short-term mindset is that investors can end up following the herd and seeking safety when opportunities are plentiful and seeking risk when opportunities are few. The less dumb thing is maintain a level of discipline amid the noise.

Another human tendency, and one allied to our in-built loss aversion, is to be suckers for the supposedly ‘free’ or discounted offer. Like Homer Simpson, a zero price tag makes us fall for pitches that sell us stuff that is neither necessary nor good for us.

In the world of investment, it’s this tendency that makes people gravitate to strategies that headline high returns without mentioning the risk or that conveniently bury fees, commissions and other costs. Regret lies on the other side of those decisions.

A less dumb thing is to focus on return and risk. They’re related. Focusing exclusively on return can lead to rude awakenings when risk shows up. Focusing exclusively on risk can lead to disappointment when returns are delivered.

A third tendency among humans is to succumb to what behavioural scientists call “hindsight bias”. Essentially, this is our habit of viewing events as more predictable than they really were. Call it the “I saw it coming” syndrome.

There is a fair bit of this around at the moment, with plenty of “experts” saying the sovereign risk crisis was completely predictable. This is strange, because the overwhelming consensus among institutional investors a year ago was that fixed income would underperform in 2011.

The crisis may have been predictable, but the market reaction wasn’t.

(In 2011 the FTSE All-Share fell by 6.7% [3% when you add in dividend payments], whilst The FTSE 10-15 year gilt index climbed by 15.1% in 2011 while the FTSE Over 15 years Index-linked index rose by 24.6%. It was a similar story around the world, with the obvious exception of the Eurozone problem countries. For example, the US 10 year+ Treasury bonds returned an impressive 26.5%).

The consequence of hindsight bias for investors is they tend to be forever rewriting history and forever seeking to interpret performance based on what they know now rather than what they knew a year or more before.

Key Considerations

A less dumb thing is to accept there will always be a level of uncertainty. The future is unknowable. And all we can do as investors is to ensure the risks we take are related to an expected return, that we diversify around those risks as much as possible and that we exercise a level of discipline amid the noise.

It’s a way of embracing your imperfection and it’s a New Year’s resolution you have a chance of sticking to.

Action Point

So what is an ordinary investor supposed to do?

The first lesson might be that forecasting is hard, particularly about the future! You can do all the analysis you want, but events have a way of messing with your assumptions.

The second lesson is you don’t really need forecasts to succeed as an investor. Yes, equity markets were rocky again this past year, but a properly diversified portfolio would hopefully have cushioned some of the equity losses.

Staying diversified both across and within asset classes provides protection in down times and ensures you are still positioned to reap returns when riskier assets come back into demand.

The third lesson is that the past has gone. The news may be gloomy, but that information is in the price.

When risk appetites are low, the price of safety is higher than at other times. But the expected reward for risk is higher. Conversely, when risk appetites are high, the expected rewards are lower.

It’s human to feel anxious about bad news because we fear loss more than we like gains. But in this case, the loss isn’t real unless you realise it, so it makes sense to stay with the asset allocation your financial planner/adviser has tailored for you.

The final lesson is that nothing lasts forever. In fact, of all the forecasts ever made, the only one really worth counting on is that things change. What’s more they often change in ways we least expect.

Twitter Weekly Updates for Ray 2012-01-07

Ray Prince — Sat, 07 Jan 2012 21:59:00 +0000

@mmcgagh as you've started to tweet, it would be rude not to follow you see you at The Lancaster next week #
Inflation and Your Money – What Is Its Real Value?: http://t.co/uGylvakq #
probably the best ever post on a fans forum let's hope Darlington FC can be saved! http://t.co/xZnW5wFv #darlingtonfc #
@V2VFP are you going to the NMA gig next week? in reply to V2VFP #
@V2VFP you too in reply to V2VFP #
Inflation & Your Money – What Is Its Real Value?,http://t.co/gn5Ifu7W #
Sky News – Health Workers Reject Pensions Final Offer. http://t.co/ElDXTg8r #
Everything is going to be alright http://t.co/lCnJxWI4 #
@dentinaltubules yep clearing backlog this week but I'm onto it will send article tomorrow – all ok with you? Studying hard? in reply to dentinaltubules #
@dentinaltubules switch off the technology! in reply to dentinaltubules #
@ITinformed definitely! in reply to ITinformed #
@dentinaltubules I know it's just too tempting…all ok week of planning etc back seeing clients next week will hopefully be a great year in reply to dentinaltubules #
You Can't Bank On These Advisers,http://t.co/UyPZBR2c #
Are you organised and tidy? http://t.co/ZEJNyhG9 #
@ITinformed clear desk clear mind! in reply to ITinformed #

You Can’t Bank On These Advisers

Graeme Urwin — Thu, 05 Jan 2012 08:00:21 +0000

Q. Having inherited a sizeable sum of money, I was considering investing some of it into the stockmarket.

My Bank offered a free meeting with one of their advisers, who showed me various graphs showing that this was a good idea over, say, 5 years or more, and recommended their Bond.

I was quite comfortable with this, but then asked about the charges. The adviser told me that his advice was free, and “don’t worry about it”.

Needless to say I found this strange. How on earth can they run a business without charging?

A. As you say, it would be very strange if this were true.

An undercover investigation by consumer organisation Which? has found that “Bank and Building Society advisers are persisting in peddling the myth that commission-based advice is ‘free’, and providing inappropriate advice in the vast majority of cases”.

The investigation covered 37 advisers, and Which? said only five of the advisers it investigated gave appropriate advice, while the ”majority demonstrated a poor understanding of investment risk and made misleading statement about the features and costs”.

We think this says it all, and would simply suggest you speak to an Independent Adviser rather than policy salespeople.

Many Independent Advisers also offer an option to pay for their services via a fee, rather than commission. Remember, commission in an investment product simply makes it more expensive via higher charges – in effect you buy the product at ’retail’.

When the commission is removed you’d be buying it at a ‘wholesale’ price, but of course you have to factor in the fee paid to your adviser.

Inflation & Your Money – What Is Its Real Value?

Graeme Urwin — Tue, 03 Jan 2012 15:56:07 +0000

We held a Retirement Seminar for dentists at our office recently. This being part of an ongoing series of educational talks and workshops to several groups of dentists in the north, and which also takes us to North Wales next year.

It was good to see familiar faces in attendance, as well as new, with specialist dental accountant Alan Suggett also chipping in with a slot on the value of Practices and the complexity of Incorporation.

Part of what we covered was how volatile the markets have been this year, and also how inflation can play havoc with your wealth over time.

It is sometimes not appreciated how, over time, inflation can really damage wealth creation and preservation, and with inflation very high at present it is worth looking at this in more detail.

Of course, the context here is the real value of money. When we talk about the ‘real return’ on your money, it means the return that you get (or don’t get) over inflation.

So if inflation is, say, 5% pa, and you are getting a return in the bank of 3% pa before tax, and 2.4% pa after basic rate tax, then you are not getting anywhere near a real return on your money.

If this were to happen over many years, then the real value of your money would reduce markedly.

In fact, with present rates at around the 5% mark and with many experiencing a salary freeze, some people will be seeing a fall in their standard of living.

Let’s take a look at the impact of inflation on some consumer items, as well as salaries, pensions and debt over a recent 10 year period.

PRICE COMPARISON 1999 – 2009

Price in 1999 Price in 2009 % change Source

Milk (pint) 34p 45p 32.30% ONS

White Loaf 51p £1.26 147% ONS

Sugar (kg) 61p 88p 44.20% ONS

Pint lager £1.93 £2.79 44.50% ONS

20 Cigs £3.37 £5.39 60% ONS

Petrol / l 63.6p 90.4p 42% Petrol Prices

Ave salary £18,396 £20,900 13.60% ONS

Weekly state pension £66.75 £95.25 42.70% PAS

Level of UK consumer
debt (billions) £565.4 £1457.4 158% BOES

Price of oil per barrel £8.80 £28.70 226% WTRG

Bottle of wine £3.55 £4.18 18% W&STA

Ford Focus £15,500 £16,095 4% Ford

McDonald’s Big Mac £1.90 £1.99 4.70% McDonald’s

Source: This is Money

So those of you who like a pint and a fag while munching on a white bread sandwich will have reasons to moan!

Whilst the wine loving burger fans may well have a smile on their face!

For a bit of fun (answers below), have a guess at the price of these items in 1960 compared to the 2009 prices below:

1. Fish N Chips – £4.50

2. A Mini – £12,345

3. Petrol – 86p (was it?!)

So we can see that just 10 years can seriously erode the value of money, never mind 20, 30 or 50 years!

So what is the best way to combat inflation with your savings and investments?

The first thing to say is that there is no magic answer, and that there are 3 rules to investment return:

1. Risk and return are related

2. Risk and return are related

and yes

3. Risk and return are related

Other factors are accessibility, tax and the time period you have to invest.

Of course, in our opinion, the only reliable way in which you can find out what rate of return you need longer term so that you can be on track to achieve your goals in life is to devise a proper strategy, and have your own financial map called a cash flow forecast.

This will be able to calculate what returns (and therefore risk) you need to take, with the aim to minimise any risk perhaps a sensible option.

What such a plan will give you is how much to invest in the various asset classes, with each having their own expected rate of return & risk (standard deviation).

So getting the right mix is vital.

We covered some of this at the seminar, and using figures from a Scottish Widows UK Financial History graph ( Barclays Index data), we could see that returns from some major asset classes made interesting reading.

What one pound invested in 1950 to 2010 would be worth:

Building Society (Cash) – £1,560

Gilts (Government loans) – £6,146

Equities (Stocks & Shares) – £117,500 (dividends reinvested)

Retail Prices Index – £2,680

Other methods would be to utilise products that give a return over a period that is guaranteed to be above inflation. Even Tesco had launched such a bond a little while ago – but as is the case with any investments/savings accounts, watch out for the small print.

Of course, the past is no guarantee of the future, but what do these figures tell us?

Well, the most important one we feel is that in the longer term, say 10 years plus, it is important that any investments you have show a real return. That is a return that is higher than inflation.

To give you the best chance of this, having a relevant risk assessed investment portfolio that has the right ‘blend’ of asset classes that lets you sleep at night on the one hand, and yet give you the return you need on the other, is a tried and proven route.

Talking about inflation, we came across a couple of quotes to share with you:

By a continuing process of inflation, government can confiscate, secretly and unobserved, an important part of the wealth of their citizens.

- John Maynard Keynes

And on a less serious note:

“Inflation is when you pay fifteen dollars for the ten-dollar haircut you used to get for five dollars when you had hair.”

- Sam Ewing

Mini Quiz answers:

1. 6p – a 7,400% rise

2. £496 – a 2389% rise

3. 5p – a 1620% rise

Source: National Statistics.

The first one really is a surprise. The chip shop owners must have been salting their profit away for years! (sorry)

Key Considerations

Really think about what you want in life and by when.

Then measure the cost of this, and compare it to what assets you have.

If you don’t know where you are going, how do you know when you’ll get there?!

Use cash flow forecasts – how does it look for you?

Action Point

If you have an adviser, ask them to create you your own cash flow forecast. If they don’t know how to do this, then maybe it’s time to find a financial planner that does!