Just a thought. Actually a couple

Quotes from one of my subscriptions services – food for thought. I hope so.

……meanwhile, people with real financial assets – stocks and bonds, mostly – have done very well. So have the people who monger these things. As Marc Faber points out, the 173,000 employees of New York’s leading financial houses made more money last year than the entire population of Vietnam, some 84 million people.

At the top end of the US financial pyramid, it is party time. The median price of a New York condo is over $1 million. Even that is peanuts in central London. There, houses have just seen their biggest increase since ’79 (more on that below). And, last year, a single art auction at Christie’s brought in $269 million – a new record. Christie’s chairman said he had never seen
anything like it.

Stopping for two cups of tea and two muffins near Waterloo station in London last weekend, and I spent just over £10. The price seemed reasonable; the little coffee-shop was full. But we wondered; how many of the world’s people can afford to live like this?

But therein hangs a tale…and lies a problem. Most people are not getting rich. Most people are barely making ends meet. Because the great boom is a fraud. It does not lift up all boats; it lifts up only the luxury yachts. Why is that? Because it is an asset-price boom, not an economic boom.

Faber quotes Bank Credit Analyst:

“Increases in asset prices do nothing to create new resources for investment as the gains can only be realized by selling the asset to someone else, who must come up with the money from somewhere. The exception is if domestic investors sell their assets to foreigners (as the US has been doing.)” lenders who package the loans and sell them to investors worldwide. As assets rise, the 1% of the population in the financial industry or with significant financial assets gets rich. New wealth is not being created; it is merely being redistributed.

Never have so few done so little and made so much doing it.

Richard Smith
0845 226 9106

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Inflation – It’s back (or is it)

The Bank of England moved to increase Interest Rates last week which is interesting as it was not expected. Lets wait and see if this move is enough. Borrowers beware – more increases are likely.

As Inflation is now seen a bit more of a problem than it was in recent months (or years), and it is always part of a cycle this round of increased interest rates should not last for long.

The ONS (Office for National Statistics) has published a Personal Inflation Calculator that you can use online in order to determine your own Rate of Inflation. The service is launched today. and can be found by following the link above.

Richard Smith
0845 226 9106

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Jan 2007 – The Year Starts – More Inheritance Tax and Planning

With interest rates rising faster than expected it has proved to be an interesting start.
Judging by our ‘inboxes’ it seems many people will be considering their options further.

I have also been asked to clarify some further points in relation to Inheritance Tax Planning:-

Firstly an upto date Will is a great starting point – noting that without one the Legal Bill on your death will soar dramatically, (I am not wishing to upset my Solicitor clients, but I know how much you are earning). Make a Will and make one now. We offer a Fixed Price Service through our Midlands based Legal Practice.

Inheritance Tax is an optional Tax in that the very wealthy and those who are organised do not have to pay it, or you can reduce it substantially and without causing to much strain or hassles. You really should take advice now if you think this will concern you. In the final quarter of 2006 I managed to save 3 clients more than £320,ooo in Inheritance Tax.

It is not difficult to mitigate, but you do need advice.

For my Small Business Clients – it is even more important you make a Will and appoint Executors that can run your Business. Not sure why this is? Then you had better contact me.

Happy New Year.

Richard Smith
0845 226 9106

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