Author Archives: Richard Smith

About Richard Smith

Richard Smith provides financial guidance and training since 1988 and continues to train and educate individuals and business owners in those things that actually make money. My approach and training is one of the 'Kaizen' taking small but practical steps to improve your finances without an adviser. Focusing only on what works and what costs the least.

Pensions, time and money.


Richard is the owner over at Money Trainers – telling the truth about money. He’s


in chief over here at the  Financezone.co.uk and is currently working on the money/people/planet is close to fucked conundrum. Aged principles and modern money.

 

Money and Time

These are the two things that cause us humans most problems. There never seems to be enough money kicking around and time, well that just seems to disappear into the the ether.

Yet we seem to deny the truth about time and money, we are quite happy to trade our time in order to obtain money but very few of us it seems want to learn how to make money work for us and therefore to help us save time.

And then when we get the money, we tend to use it to purchase stuff. to consume, because this is the way of the world. If you want it’s the ultimate capitalism. We work hard, we earn money, we spend money, and that money once spent is never returned to us. It has been exchanged it is lost forever. every pound you spend, ends up in somebody else’s pocket, rewarding them. And not you.

This money has arrived with us because we have traded time. This time will never ever come back to us again, once time has been spent it never ever returns to us, sure we are able to manage our time in order to make work more effective for us but we can never make any more and we never know how much more we have left.

Time is not seen as a precious resource until it is too late and  we are close to death, a bit like not being able to draw down on your pensions until you are ¾’s dead.

This is what modern humans do, work, borrow from their futures, spend hard earned on stuff that they can’t or won’t use and that stuff is ruining the one and only ultimate safe space they have.

It seems that only modern humans suffer this fate.

Animals – not having the minds that allow them to contemplate themselves don’t worry about time – they just go round eating. Mating, running jumping. Until death. Little if any higher level thought it would seem.

Aborigines – when first discovered by foreign invaders (the British) were mocked because they had leisure time, time to paint in caves and to tell stories. Of course they understood about preserving resources – not hunting all of the wild life or taking all of the crops. They had learned this behaviour over the 65,000 years they’d live there. In 1788 when the British arrived they thought the locals were backward.

Modern Humans  – Crowd ourselves on trains in order to get to work, spend our money on stuff we don’t need after we’ve traded our lives for it and have only just started to notice  that the wholesale consumption of stuff is not doing much for our only planet. In the main, tend to have debt (a mortgaged future) are stressed up to the eyeballs and are surrounded by things that don’t make them happy, at least on the side of their lives they show. Reality check – go watch the news for five minutes or look around the office.

I’ve looked at much of this over the last ten years or so and have arrived at a couple of conclusions.

We are all fucked if we carry on as we are.

If you don’t learn how to make your money work for you now,  you are fucked.
If you don’t have a business/side business you will be fucked, slowly.
If you think someone (political party/new employer/magic button to press) is about to come and save you – you are completely fucked, now.

Sure, you may go on to have a reasonable life – but look at where we are. Record energy prices, record population (the majority of which are old and are now taking out the system and not adding anything to it. Record property prices, record reduction in state benefits like pensions – despite record levels of taxation.  The uber rich are cleaning up at the expense of the planet and many are are just working toward a minimum wage hell. You can’t even get a degree level education unless you commit to £60k of debt before you even get a job.

Before you all start trolling me. I’m not leftie, just a practical optimist – AKA a realist. You know when the system is fucked when directors award themselves a pay rise and divi just before the liquidators arrive – think Carillion – and then the Government of the day sits on it’s hands. Or when art prices are up by a squillion per cent and at the same city centre flats are never lived in.

Solutions To The Problem

 

Own your  time and your skills. That means your own business at least in part as a side hustle. Your own business, structured correctly is a  Money Machine . You can own one or Invest in one -shares for the time being.

With digital you can sell from your phone  – a side hustle is easier than ever.

Only invest in another  business (shares) if they provide an income, same goes for any investment. If it provides income back to you, that’s money that you don’t have to work for.

Home ownership as a goal. The Germans don’t as a rule, nothing wrong with the German economy.  Lobby your MP as hard as you like to make sure more houses are built, meanwhile get savvy with your money and rent. Let someone else tie up their cash property. Provided you take action on the above it won’t be long

Remember we trade our time for money, this money is then tied up an asset that produces no income (a house) it’s an expense to keep and maintain it. An asset must be like the business money machine – it should work in the background and produce an income for you without it being worked on or with – just the odd dusting down now and again.

Don’t Buy Into Pensions.

The tax benefits of pensions are a myth. Any tax relief on your contributions goes in charges, and any benefit when you are a lot closer to death is in the main taxable. Pensions are deferred income with charges deducted that you have little control over.

Pensions – are often recommended as the way to secure a future. At current retirement ages you’ll need to around seventy percent dead before you can draw on the (average life expectancy is 79 for men and you can draw on pensions from age 55).

This means you need to invest in pensions for a long while, in the hope that they will work for you, produce the capital appreciation you’ll need  between now and the. Of course the providers and advisers love pensions – they get to keep control of the money for thirty years or more and get to deduct charges over the period of time – no wonder you’ll not hear about any of the alternatives to pensions.

Importantly the lobbying carried out by financial services firms means you are left with more pensions and not less – recently auto enrolment – enforced pension savings and pension freedoms have been a massive gift to the industry.

Pensions are inflexible – you can’t get access to the funds until you get to an official date; and this date has been increasing in recent years.

Pensions  – do nothing for you between now and when you are close to being dead. They can’t produce an income you can use now, are limited in the choice of investments and add a layer of complexity to your planning.

Pensions – have notoriously high charges and adviser fees attached and there is no guarantee of any investment return, nor can you complain and expect compensation when the don’t deliver.

When you are ready for more, come over to www.moneytrainers.co.uk or www.thefinancezone.co.uk and start to get a proper education on this money and time stuff.

Swearily yours.

Richard

The great European cashpoint swindle.

The great European cashpoint swindle

I’m not so sure about you but certainly I can confirm we are being ripped off  buy a good number of foreign banks that seem to be working in our best interest.  So let me run you by the is

sue as I see it.

 

 

There you are lazing around the pool enjoying a couple of days of beautiful sunshine, kids commanding ice creams and of course,  the need to make sure that you have some cash around for lunch and a copy of a British newspaper.  In recent years all of the European Banks have made it so much easier for us – just about everywhere they  accept debit and credit cards and of course the cashpoints work perfectly.

I didn’t really pay much attention to these until I checked some transactions for my own current account.

You may have noticed the options you and I are now given at a foreign cash point, the one that looks so friendly and gives us an option of withdrawing cash based on your selected amount – it will normally ask you something like ‘do you want to accept our currency conversion offer’ and sometimes will be quite insistent even asking ‘are you sure you want to do that’ when you click no.

It’s not only cash points, it’s often card machines – particularly in France and Spain where I seem to get  the same, seemingly  generous offer.

I wondered what all this was about, until I realised that  I was being double charged – banks don’t give away services for free. And that includes currency transactions.

If you accept the transaction ‘with conversion’ you will nearly always face a double charge, one from the bank that owns the cashpoint and one from your own bank. You’ll also be charged a worse exchange rate (based on my experience).

The simple solution to these additional costs are always to use the local currency option and let your bank deal with the transaction – or you’ll end paying twice for the transaction.

Now you know you’ll never be ripped off again.

Pension Charges – How Can You Reduce Yours?

There is a whole load you can do in order to reduce your pension charges – in fact is one of the easiest ways of making sure your retirement is more secure.

That said, there are some problems with pensions. I’ve written about these over at my ‘Money Education’ website.

You can download my free Pension, Pension Charges and Tax Relief Myth report.

Until next time.

R

Probate Services – Crawley, West Sussex.

 

In the event of a death you’ll probably be overwhelmed with the amount of paperwork and the number of things that need doing. It’s not something we are ever prepared for; on top of the emotional issues – we’ve now got a pile of papers to sort through and a complex
legal process to wander through.

Probate – you’ll remember, it turns up in your mind like a great big scary, wild animal – and then you’ll start to remember the nightmares your parents had.

The choice of appointing a Solicitor, paying a large percentage of the estate in order to start getting things sorted, even then it takes months to sort out, or  DIY.

Unique Pay as You Go Service – No Charge If Not Delighted.

Over here at The Finance Zone I don’t just want to help you with your probate/probate application. I want to go the extra mile for you. This means
1. Any fees are fixed in advance – no surprises.
2. If you are not happy at any point – let me know and I’ll refund anything you’ve paid and return any papers.
3. Provide you with a ‘pay as you go – monthly’ service – which means you don’t have to find big chunks of cash upfront.
4. Probate usually completed in weeks not months.
5. Evening appointments not a problem.

The conundrum for you is what are your options?

  • Take time off work in order to deal with the paper and the endless forms that need completion.
  • Get together with a couple of family members and muddle through, using GOOGLE  to work through the difficult bits.
  • Buy a book on the subject and hope that helps.
  • So you speak to a couple of your friends and neighbours – only to find that they also faced similar problems to you and found  the only way to avoid the expensive and time consuming paper chase was to hand the whole thing over to a local Solicitor and pay a small fortune in order to get the thing moving forward.

The key to all of this is, there is a different way of dealing with probate. After dealing with my own relatives affairs and the  probate system I started working with a number of clients who were in a similar situation to you – wanted someone else to take the strain, wanted some help with the paper chase process – but didn’t want to hand control to a third party solicitor.

So I now offer a couple of options for solving the probate problem – one that keeps you in control but takes only  a few weeks to solve a problem that mostly take months and sometimes years.

Options.
Probate Services – Crawley, West Sussex. – Probate help and guidance. One off fee £235 – you get all of the help and assistance you need in order to submit that application, guidance, forms and shortcuts. Allowing you to save money and keep control. I also provide template letters which allow you to move rapidly through the system.

Help You Probate Service – a fixed fee option that allows you to sit back and do little. You’ll benefit from my guidance and shortcuts as a trusted adviser – I’ll get all all of the reporting done with you, submit all of the papers attend the interviews for you and make sure that things like pensions and tax matters are dealt with – at the same time making sure you don’t break
any of the rules or fall foul of any regulations – there are a few you’ll must be mindful of.

There are no surprises with this probate service, you end up with the peace of mind that your probate is being dealt with and keep control of the estate assets.

Even if you opt for the Borrow my Brain session first, you can offset the cost of this against the ‘done for you service’ either way you get access to the information and guidance you need without the time consuming stress most face.

Call today or contact me using the form below.

At a difficult time – a probate service you can rely on.

All enquiries are treated in the strictest confidence and with no time pressure. I’ll also provide you with a copy of my Dying to Know workbook which outlines how you should prepare for your final days and what you should do.

 

 

Care Fees – Care Home Costs

Many people of a certain age are concerned about this issue, to the point where they are making decisions to alter or adapt their plans in the hope they will avoid having homes seized, sold and the money raised used to fund care.

Bearing that in mind there are now many hundreds of ‘bad guys’ out there who are selling ‘care home fees avoidance‘ packages. Nearly all of these I’ve seen won’t work, don’t work and are an expensive ‘doorstep’ purchase.

Now, there are somethings you can do, however Asset Protection plans will not work for you. If you’ve been sold one of these you should act now in order to claim a refund of your costs and unwind the whole thing.

If you are worried about this area of planning, read this report first and do not act on any ‘doorstep’ seller.

The report is below, no charge. When you are ready for some guidance on this area of your planning you’d better get in touch. I offer a money back guarantee on all work, not happy don’t pay, run a number of workshops across the county, which are free or low cost.

But don’t, really don’t buy any doorstep asset protection trust before reading this free guide.

Care Fees Planning – 2018 Report

You can contact me here

 

Personal Financial Planning – Care Fee’s | Bitcoin | Estate Planning

In this article.

Welcome to 2018.

Stock Market Risks – Flight of capital.

Bitcoin and other Crypto Currency

Care Fees Planning – Scam Busting.

Estate Planning – Will Writing

 

2018 is with us. Like it or not we’ll seem more changes this year than we did in the last.

The more erudite of the Sunday papers are asking if Mrs May will continue in office, my guess is  – it will depend on how childish some of her backbenchers get.

Interesting to note that some of the so called ‘smart money’ has already started to leave the UK in advance of a Labour victory either before or after the next fixed election. I personally feel that this ‘money leaving’ is due to a few other reasons…

UK Stock Markets at all time highs, driven by a weak pound which has increased earnings for some of the large businesses based on the UK but with income from the rest of world, as the pound starts to rise overseas profits will start to tumble.

Interest rates have started to rise which will strengthen the pound but with Brexit we are all just guessing. My view for this year is more caution, but that’s been the case for a number of years now.

Crypto Currency – once the Sun Money pages start to talk about any form of investing you can bet the ‘party is over’ and to a certain extent that’s true. The rise of Bitcoin and others has taken a few people by surprise.

In the same way a winner in the Grand National at 100-1 or a greyhound at Hackney Dogs at 75-1 takes gamblers by surprise.

Forget Bitcoin as an investment until you’ll accept it as payment for a second hand car or to have your pension paid in it. At the moment it’s very much a fad, like the internet was in 1998 – for geeks and speculators. Of course if you risk nothing you risk everything and Bitcoin is certainly higher risk than most other investments – for that reason there will be spectacular gains in the coming years and then some equally spectacular losses.

Once things settle down we’ll be left with some new technology that makes a lot of sense. It’s been called the democratisation of money and I think this makes sense. The technology is very interesting and will change a lot for all us – but at the moment Crypto Currencies are a bet not an investment.

Nursing Home Fees – Care Costs.

I’ll keep coming back to this subject until it finally sinks in and the ‘bad guys’ stop peddling their wares to an unwary public. My ‘scam report’ is available here – Care Fees

I don’t think for one moment we will see central Government accepting the costs of care for all of those that need it. For the same reason not everyone qualifies for housing benefit or other social security payments – not everyone will qualify to have their care costs covered.

If you are in your twenties or thirties – there is little support to provide you with a roof over your head and the same process applies if you are in your 80’s – it’s just the way it is.

Putting your home in a trust or any other scam you’d like to menton won’t work for Care Home costs in the same way it won’t work to claim Housing Benefit when you are fit and well. Sure there are some plans you can make and you should – just don’t try and avoid your responsibility.

Wills and Trusts – are further in the spotlight with the changes introduced last year in relation to Inheritance Tax bands – honestly if you’ve not reviewed your estate planning or revised your Last Will and Testament in the last five years let me know – I’ll review it with you and let you know what do next.

2018 is likely to bring more change than 2017  and 2016 combined. Personally I think that’s a good thing, sometimes things get a lot worse before they get better and we should be reminded of that more often. Stay safe and remember you can’t change events or happenings you can only change your reaction to them, sure there is plenty of negative and bad news to come, but there is also a lot of good stuff happening.

Richard

www.thefinancezone.co.uk

0774 007 6226

 

British Steel Pension – TATA

*** January 2018 update ***

The Financial Conduct Authority have now started to restrict a number of advisers who have been advising on BSPS and of course many of them transferring benefits. It seems that one firm has been ‘on the radar’ since 2016.

From a pension advisory perspective, I find it disturbing that it has taken so long. It’s also fairly clear that the quality of the advice provided by at least one these firms is in question and it’s clear that they had in a place a marketing network within British Steel in order to peddle their poor advice.

Couple of things spring to mind. How with modern regulation has this been allowed to happen?

The  trustees of the British Steel pension scheme have questions to answer, the regulatory system has failed big time and TATA should certainly have put some systems in place.

It was down to the likes of Frank Field and a number of industry advisers, to make sure many of these members got the guidance they wanted, and it’s obvious that big chunks of the financial advisory community still haven’t learned the lessons of the past – they are still making dodgy recommendations and offering poor advice.

Sadly, it’s still buyer beware with pensions and pension planning. Fortunately, if you want the truth then I can help you.

***

British Steel Pension Advice

I had a rather disturbing call this morning from a member of the British Steel scheme; he told me that he felt under a great deal of pressure (and uncertain pressure at that) to make a decision between:-

 

 

 

 

  • Moving to the British Steel 2 scheme
  • Moving to the Pension Protection scheme
  • Transferring his pension to another provider  and giving up his guarantee.

Problem is what should he do?

Opinion – it would seem that the British Steel scheme is/has not able to produce correct statements and information about your individual benefits under the scheme – therefore any adviser providing transfer advice is likely to find that advice flawed.  YOU a British Steel Pension scheme member will need to stop, consider, understand and then act.

Couple of things to note here.

The main scheme details are here  British Steel Pension

Just to be clear. If you are a member of the old scheme (closed March 2017)  you can still

  • Move your pension to a new employer
  • Draw on benefits before your normal retirement date
  • Draw you pension earlier.

All of this information is on this web page British Steel Pension Members

But there are some options, you can (and have to choose)  linked information here

If he moves to the pension protection scheme (PPF)…

The new scheme’s benefits are the same as the current scheme, except for offering lower yearly increases. For certain members in certain situations, the PPF offers higher benefits than the current scheme, and so higher than the new scheme. For example, if when you start taking your pension you swap some of your pension income for tax-free cash, the PPF is more generous when it works out how much cash you get. The new scheme has to be affordable, and it would have been too expensive to give all members better benefits than the PPF.

Q: Could Pension Protection Fund benefits change in future? 

They could, though the benefits that the PPF provides are set out in legislation. It is possible that the government could change this legislation. For example, quite recently the amount of the cap that applies to certain members’ PPF benefits was increased for members with more than 20 years’ pensionable service.

The PPF is confident that it is currently in a strong financial position. If it became less strong in the future, there would be a number of options available to the PPF. One option would be to increase the levy that the PPF collects each year from the schemes it protects. The PPF legislation does allow the PPF or the Government to change member benefits – for example, it could reduce the maximum yearly increases it provides. However, reducing benefits would only be considered as an absolute last resort.

In that short summary above you’ll note that under both a transfer to PPF and a transfer to BS2 you will still benefit from a guaranteed pension at retirement, but the basis for the calculations are different.

In order to determine what is going to be the best option for you there needs to be simple comparison done.

Both schemes offer different levels of tax free cash, different widows and spouses pensions and different levels of future increases.

It’s these that are the main differences.

Some of you with benefits under the British Steel main pension may have been approached by advisers offering you an option to transfer away, and indeed may have been offered ‘telephone number’ figures of what you could achieve.

For me understanding the way these things work there are a couple of questions.

  • Can you afford the charges that come with these transferred plans. At least 2.5% per year on average – that 25% (twenty five percent) of your fund every ten (10) years.
  • Do you fully understand that you will give up valuable guarantee of benefits once you move.
  • Investment risk will be borne solely by you, your adviser or the transferring company will not accept any liability for investment market collapses or non performance of any pension fund (and most don’t perform that well).
  • Charges will be levied as and when you want to make changes to your pension – double charging.

They key thing about your present predicament is this.

Should you move from British Steel – to BS2 or the PPF?

You can only decide that once you have worked through the comparison options. Moving to another provider in the form of a pension transfer to a personal pension or a self invested personal pension means you will be paying very high charges and lose your valuable guarantees.

It would seem that many so called advisers are targeting British Steel employee’s and offering advice to transfer. I don’t see how that can be done correctly when, based on it’s own admission the British Steel Pension trustees have admitted to not being able to produce the correct figures for many staff.

Your decision to move your pensions is a big one, don’t fall for the hype from the industry predators – frankly I am appalled that any adviser in this day and age is able to make a recommendation to switch on such limited and seemingly false information.

Be very careful, if you have been approached by someone it’s likely you’ve been sold something you don’t want, don’t understand but will have paid dearly for it.

Charges of £9,000 +£7500 ever year (based on a pot of £300k) are not unusual.

Get in touch if you are not sure. Use this form.

 

Meanwhile please read the links below, some of it’s a bit technical but you’ll soon get a feel.

British Steel Pension Missing Data

482 Pension Transfers made – industry wins by several millions.

British Steel Pension Transfers

Important for all British Steel Pension Members to read

From Henry Tapper

British Steel Pension Scam Watch

British Steel and the Pension Promise

British Steel Tread Carefully with Pension Transfers

Note on investment risk.

On moving from a defined benefit scheme to an defined contribution scheme (an invested pot) you’ll need to remember that the investment markets are at all time highs and to be fully invested now you will taking substantially more investment risk than  five or even ten years ago.

I doubt your pension transfer adviser has told you that.

 

 

 

Investing for income – 2018 | The Adviser Industry is wrong.

Over the last thirty  years or so I’ve managed to confirm a  couple of things about investing and making your money work hard through investing.

There is no doubt that there are several investment options that make money and many that don’t and investing for income is one of the things that works and will make a poor performing portfolio zing with life.

My views have caused a little conflict with industry players and the invest for income or growth debate. My conclusion is most advisers and wealth managers get this completely wrong and the evidence is starting to become overwhelming against many advisers.

Investing for income is like having a machine inside your bank account churning out fivers on demand and whenever you need and without having to work for them.

Income that’s passive is the gold that most businesses look for and do their best to achieve.

Imagine for one minute, your retirement; with a portfolio of shares and Exchange Traded funds (ETF) that have been working for YOU over the last ten or twenty years. It’s likely that you’d have seen some increases in capital value (growth) which is good news, however when comparing that with the income you’ll note how much better off you could be with this strategy.

Growth funds you see are just that. Growth. But in order to survive, to pay bills you need income. Income is that tangible thing that flows into your bank each month or quarter. Income that doesn’t stop when the markets wobble or flatten.  In business terms ‘you can’t pay a gas bill with your balance sheet or share price, you can only do that with income.’

Traditionally, we invested in shares because of income. Capital value increases were the icing on the cake – something that would be nice to have. Income is something you should aim for.

Forget what your current adviser is telling you. They’re so wrong on this. Investing for income is the only way to go.

The evidence for this is supported by a number of ‘more erudite and knowledgeable’ than me people, one of which is Geraldine Weiss.

From Moneyweek…

Weiss felt that a stock should meet most (or ideally all) of seven key criteria before investors should consider buying it. They are: 1. Must be yielding more than its historical average dividend yield. 2. Must have raised dividends at a rate of at least 10% a year over the past 12 years. 3. Trading for less than double the value of net assets. 4. Trading at less than 20 times earnings. 5. Earnings are at least double dividends. 6. Debt is less than 50% of total market cap. 7. Financially stable and with a long enough track record to be considered a “blue chip”.

And from the Telegraph

Quite simply put. If you are not investing for income you are missing a trick and if haven’t been then it’s not to late start. With Pension Freedoms – this could be way to enjoy a good cash income in retirement and enjoy something to pass on to your kids – a proper tax free legacy.

When you’re ready to learn some more about this strategy then get in touch using the form below, you’ll be pleased you did.