He Shed,She shed.....

Hello!

Reading an article in 'Investment Week' Magazine, has prompted me to pen a blog... Well... that's not strictly true....Watching the Dow bust through 20,000 points at Lunchtime, seeing all markets in 'green' on my phone app combined with The Tube strike tonight and ongoing Southern Rail issues, made me want to type this blog. On the one hand, we have markets bucking trends at the moment, on the other, concerns over pay, pensions and who will close the train doors.

Why am I highlighting the markets in green (up) and Dow Jones going through the 20,000 point mark? why are we still having strikes? why is there an almost 'Project Fear' now that we are on the cusp on leaving the EU and Single Market?- Change would be my answer.

We don't like it. Moving house, changing banks, changing partners, changing jobs, setting up own business, changing our style, fashion etc there are so many reasons we create in our head to remain as we are, that to change seems almost insurmountable. We tend to start embracing that change, but then doubt creeps in...we may even ask a close friend or relative for their view and the chances are, they'll fear change just as much as you do, and also promote the status quo, meaning more people think you shouldn't change.

If a big corporate (like TFL or Southern Rail) set out to make huge swathes of changes to working practices, it will bring out fear-it is a natural reaction of change-especially when it is perceived to affect pay or benefits. In My straw poll of a few ex-big company employee's, the majority took the changes to areas and working practices and the early mornings, late nights and occasional weekend work (the 'benefits' of a laptop and Blackberry apparently, was to give you a 'work/life balance' or in other words, do more work, from home) for that Final Salary pension and told their partners to bear with it as well. So when that said corporate ditched its Final Salary scheme for one with less generous benefits, those ex-employee's got it in the ear big time from their partner, who suffered aforementioned late nights and weekends, for a pension that now, is not so generous., those ex-staff felt outraged, betrayed and downright upset-especially given the earbashing they got from home and some protested...with hindsight, those employee's were also annoyed with themselves for accepting the workload, but fear of job loss and a journey into the unknown took a hold.  But fear, is only one way things can be looked at. To paraphrase  Richard Jeffrey, the chief economist at Cazenove Capital "...naturally we fear the impact of disrupting the status quo and tend to assume that due to this disturbance, we will suffer a negative impact..."

All to often, we only see one side of a two sided event, after all we could adopt the title of Susan Jeffers book "feel the fear and do it anyway"?

With this, comes the obvious comparison to Donald J.Trump and our own 'Brexit'- Now I have no crystal ball as I have said many times in my blog, but I am prepared to see what happens ( I voted Remain), rather than guess or make assumptions and as Richard Jeffrey continues in the same article "....While we may not like the political and/or social implications of these events (Trump,Brexit) we need to be careful not to allow our concerns at one level, to have an overly prominent influence on our interpretation of the consequences of another. Many people have concerns about some of the more contentious statements that have been made by the new US president, but this does not mean his policies will necessarily harm the US or even World economy...." He goes on to say, that yes, we should be concerned about a change of political direction, as it could undermine free trade, however, we need to recognise that we are NOT in a world of free trade, so disturbing the 'Status Quo' could actually be a good thing.

In another example, I cite clients who up until meeting me, have accepted that bank and cash deposit accounts and a few individual stocks and shares-either held as free shares, or bought on a whim- was the way to invest funds as they were 'uncertain' of using a Financial Adviser. 6 years on, and yes, mixed results experienced along the way, uncertainty is now not an issue.

Ultimately, the changes that will take place (Brexit etc) will test our hard wired, normal thinking pattern and rather than listening to the "he said, she said" chatter, listen to your own mind, have self belief and take that first step......

The Sheds? Mine and Tina's!!!

Victor

Victor Sacks is the owner and director of VS Associates Ltd, an appointed representative of The Sense Network Ltd, who are authorised and regulated by the Financial Conduct Authority. This blog is based on the article(s) mentioned and the authors own views and not to taken as financial advice.

For a free, initial consultation, or just to meet up and have a coffee, have a look at www.vsassociates.co.uk  contact victor by email: victor@vsassociates.co.uk or tel: 01480 384711 or Mobile:07866 504896 or follow on twitter (@SmartSacks), LinkedIn or Google+

Welcome to 2016..er sorry..2017!

Happy New Year!!!....we all said 10 days ago..yup 10 days have flown by already..Kids back at school, diets have started and ended, fitbits make for a nice bracelet addition...The grey sky punched with holes of blue....

January, statistics tell us, is not our favourite month. For some, its the longest month without income, as traditionally, some employers pay wages before Christmas, then revert to their normal pay period (last Friday in the month for example) in January. Solicitors tell us it's the busiest time for Divorces, though I can't see how the festive period alone can be responsible for this..or is it the in-laws?!! and we all feel pretty gloomy having had a good few days rest at home before beginning the commute to work, not helped by London Underground and Southern Rail train strikes.

Financially, as I've already mentioned, January is tough. Christmas presents, the food, wine etc all put  on the credit card, will be saying 'hello' again in the form of a credit card statement. Perhaps you bought a nice sofa, or large TV that too, will be saying hello..over and over again as it will take 4 years to pay it off and to cap it all, we will now see those holiday adverts, that remind us how hot it is somewhere else, especially when we're wrapped up and the heating is on full blast!

January therefore, is also a good time to take stock of expenses, from checking your utility bill costs on comparison websites, to looking at the food and brands you buy and where you buy it from? Is it cheaper to 'Batch cook' rather than buying ready made meals? Can you make your own bread for less than it costs to buy a loaf? my dear old mum used to say "take care of the pennies and the pounds will take care of themselves" and Tesco's tell us "every little helps." With regards to car insurance, don't just renew with the same provider, ask if they can do it cheaper, or better still, google a new quote, then you can go back to your existing provider with evidence. If they can't match or beat it, then you know what to do.

Life assurance policies can also be re-priced, but before doing so, just check you're not losing valuable benefits by changing. Comparison sites may look good, but its worthwhile seeking advice (not only will you be dealing with a professional, but also someone who is responsible for the advice given) and you know someone who can help you with this?!!!

You might also have a pension, or an Investment that hasn't been looked at in a while-what does 2017 have in store?

Well if I knew the answer, I would be writing this blog from a hot and sunny beach somewhere as that's where I'd be living! what I can say, is pretty much the same as I said in January 2016-its going to be bumpy.

President elect Trump takes office soon, and as I blog, I'm reading about the infiltration of Russian Spies on Donald Trump and they say, they have 'information' which he waves away as fake, which may unsettle the USA, however, its financial markets are doing well and so far, 'the glass is half full' as far as US markets are concerned.....

Here in the UK, we have stood firm since the Brexit Vote. We still don't know what life after Article 50 will look like, but I think we all accept there will be 'ups and downs.' This has been highlighted by the latest industrial output data, which states the UK turned a 1.1% deficit in October, into a 2.1% positive in November (ONS Jan '17) Exports were up £27bn (record increase), however, our imports rose to £39bn (all time high)

Against that set of figures, we can see that costs of imported goods will start to rise.

Elsewhere in Europe, elections loom and in France in particular, there has been a swingshift from Marine le Pen, who if elected, would have encouraged France to leave Europe and indeed, congratulated the UK on it's vote, has now said she believes France is better off in Europe and my own view, is that Europe will play out it's elections (Italy, Germany, Spain and The Netherlands), how David Cameron wanted the UK to play its own-a big enough vote to leave to cause the EU some discomfort, but the majority to vote to Remain.

Further afield, Emerging Markets/ Far East will replicate the USA, in so far as, if the US does well, then so does the far east, however, interest rate rises in the US will hurt the far east and it remains to be seen as to whether Trump decides to trade more with Russia and less with China and the far east and the effect that may or may not have on that part of the world.

Once again, I leave you with familiar words "Fasten your seatbelts, know where the exits are and enjoy your flight"

Victor is an Independent Financial Adviser and Company Director of VS Associates Ltd, an Appointed Representative of The Sense Network Ltd, who are Authorised and Regulated by the Financial Conduct Authority.

This blog represents the authors own views and is not be considered as Financial Advice.

If Victor has piqued your interest on this, or any financial matter, feel free to contact him via the website: www.vsassociates.co.uk or email: victor@vsassociates.co.uk or do it old school by calling 01480 384711 or 07866 504896

Follow Victor on twitter: @SmartSacks, connect on LinkedIn & Google+

Happy Talk?

Most of you may recognise my son, Noah although in fairness, most pictures I post of him, are when he's awake!!

This was taken after a particularly heavy 5yr olds birthday party where much cake was consumed. Before we could get his coat off, he was almost asleep, standing up.

So why this picture?

Well readers, I'm wondering if this is how we all feel, after all financial news bulletins tell the same story of financial doom & gloom for years to come, once the autumn statement was announced. 

I'm sure that if we went through old newsreel from the second world war, I can't believe the messages would portray the same doom and gloom, in fact we know that wasn't the case. I'm just amazed that, predictions for our financial futures from think tanks who have made mistakes in the past, are forming the basis of so called ' no opinion' TV & radio stations when in fact, no one really knows what the landscape will look like once we commence exiting from the EU. We know it will be uncertain, we know it won't be a smooth run- so why not leave it at that?

There is certainly a lot going on over the next 12 months that will add to the volatility, so I do understand the need to highlight such things, but I do not see the need to constantly drone on and on because ultimately, we'll hear white noise and just fall asleep.

France, Holland, Austria, Germany, Italy all go to the polls and the political outcomes will potentially have consequences for the EU, as well as our hard earned savings.

Certainly we need to remain well spread (diversification is the word!). It could be a time to review any European focused investment, but then again, it might not. There no way I can call which way we need to invest , other than keep an eye on things and react as quickly as possible, should the need arise.

Yet again, we find ourselves faced with " unknown, unknowns" and the best way forward-in my humble opinion- is to treat this as a airplane flight- know where the exits are, put your seat belt on & try an enjoy the in flight entertainment.

If anyone wants to provide me with a topic to blog about, feel free to let me know at victor@vsasscociates.co.uk and I'll be sure to mention you!

Have a great weekend 

Victor 


Victor Sacks is an independent financial adviser & company director of VS Associates Ltd an appointed representative of Sense Network, who are authorised and regulated by the Financial Conduct Authority . 

You can follow Me on Twitter @SmartSacks , connect on LinkedIn or get in touch on 01480 384711

"Pleased to meet you, hope you guessed my name"

The White House. Pure. Imposing. The power seat. Occupied by 44 presidents and up until now, the 44th was deemed a landmark. The 45th has possibly Trumped them all.

I landed at Birmingham Airport 7am 11th November and for the last three days, I've been itching to write this blog. This is a personal view-not knowingly plagiarising anyone else's blog or article-but just an observation of being in the land of the free, for a week.

Arriving on Thursday 3rd November, there was no escaping the Wall St Journal, Fox News, NBC, Bloomberg etc-It was all about the elections and notably, what would 'HC' (yes, she was known by her initials) have to trip up on, for her to lose the election-Emails came to mind.

Friday to Sunday was taken up by meeting my family (my Dad's sister married a GI so I have lots of cousins out there!) and celebrating a wedding, so I got immersed in it all again on Monday. We ( I was staying with my late aunt's eldest son-Lawyer, CPA and Financial Adviser) started reading about the 600,000 emails apparently sent by HC using the wrong email address. We paused...taking 3 seconds an email to read, that equates to roughly 21 days worth of emails to go through, if you have someone reading every 3 seconds, every minute, hour of the day for 21 days & yet the all clear was given a day later that all was well. We were both sitting there, watching the TV with one eyebrow raised.

DT (yup, initials again) was shown at a rally in Louisiana (I think) saying "your unadjusted unemployment is over 20%, you got crummy schools, your kids are gettin' crummy grades, you've got no jobs-why not vote for me and give me a chance...I mean...what else have you got to lose?" At this point, a Bottle of Balvennie, 16yr old Triple Cask was opened and our eyebrows were raised further.

By now, I'm beginning to draw parallels with our own 'Brexit'.

I'm not familiar with the 'bit in the middle' of America....I've been to a few states within the East and West coast during my 50yrs of seeing my family, But I haven't been to Nebraska, Idaho, The Dakota's, Alaska etc and who would've thought that DC (District of Columbia) would have a high rate of unemployed? it has the White House for goodness sake!...But it seems, much like we saw here, some 250m people were starting to show signs of having enough. Enough of bureaucracy. enough of seeing zero wage growth, enough of seeing rich get richer and enough of being prodded and push around and enough of being forgotten about.

Now, any other candidate than DC and Hilary had a problem...but a misogynist, sexist, bigoted, xenophobic, homophobic man like Donald Trump? Even Kanye West would have got more votes, surely?!! and yet......

Conversations with 'East coast' individuals, talked about Trump as "What you see, is what you get....At least you know what you're getting with Trump...I don't know what I'd get with HC..." Conversations, still east Coast, then went further " She'd be a diplomat-seen all over the world shaking hands with leaders, that's not where I want the president, or where we need our president-we need the president here, sorting out our issues first and foremost"

By Tuesday, my cousin is calling this tight. "We won't know the results by 10pm or 11pm, this could go on...By 1.15am eyes could not be kept open and we were still none the wiser-Wednesday Morning-the world knew.

On Wednesday morning, I was greeting with news bulletins showing people in the HC camp being sick-literally sick at the result. It seems HC and her advisers, failed to grasp the mood of the people of America and by the people, I mean those we don't see, the journalists don't see but call them 'stupid' or 'ill educated'..predicting Armageddon on the markets and a pompous attitude lacking any respect and more importantly, lacking any understanding of what vote won. Just as we failed to understand the mood of the people here and with our high court ruling and threats from certain factions in parliament to block Article 50, we potentially face civil riot on our hands.

I know that the vast majority of the british public fail to see what Trump can bring to the white house. He hasn't worked as a politician, been an army general or close to any sort of public office role. He is a businessman and wants to turn his back on the rest of the world (providing it makes sense to do) and rebuild his country-In fairness, I'd be very happy if Phillip Hammond said the same thing in a few weeks time when he announces the budget-borrow money because its cheap-lets build roads, rail, runways at airports..lets put the Great back into Britain..etc

I don't agree with Trumps' attitude to Women, LGBT, race, colour or religion . But to me, it just goes to show what happens with the 'silent majority' have had enough and want a change and clearly, they Didn't want Clinton.

Europe have already voiced their disgusted opinion of DT being 'president elect' USA couldn't care less. Indeed, is it now the case, given our Referendum and the USA vote, that the eyes of the world turn to France, Holland, Italy & Germany? if Marie le Pen, Gilders, etc get in, we could be looking a very different World indeed.

All I ask, is when considering the USA and yes, I guess I'm biased because of my family- Don't call them stupid-At a time when we remember those that served their country-They are entitled to mourn as hard as we do. DT suggests 'boots will not be on the ground' if it makes sense. He will need military advisers-he has no experience, but I don't see Trump going for the 'round em up, put 'em in a field and bomb the B...rds' as the late Kenny Everett portrayed the general, unless of course, it is deemed necessary to do so.

It will be interesting to see how Trump goes about trying to change attitudes and mindsets.

The picture? taken by me, when I was there in 2014.

The blog title? lyrics from "Sympathy for the Devil"-what else could I use.

Victor Sacks is an Independent Financial Adviser and company Director of VS Associates Ltd and an appointed representative of the Sense Network, who are regulated and registered with the Financial Conduct Authority.

Feel free to get in touch with Victor via:

email: victor@vsassociates.co.uk

T:01480-384711

M:07866 504896

Twitter: @SmartSacks or, check out the website www.vsassociates.co.uk

 

A view from...Cyprus!

I don't know whether its 'Blog protocol' to use a holiday picture-but here we are! myself on the left, then going around clockwise; Tina (my wife) our good friend Ria who lives in Cyprus, my son Noah and our good friends Janette and Carl who came with us.

So what-I hear you say-has this got to do with a financial blog?

Well....I thought I'd try something different. A bit 'Alan Whicker' meets 'Robert Peston' type thing....your feedback will tell me whether this worked..or not!

Cyprus-a population of 1.17m as of 2016 and a land mass of roughly 9,000 km2, Wales 3m population on a land mass of 20,000 km2 is almost proportionally the same size with regards to population and land mass.

So it comes as no surprise, that in certain beach areas along Cyprus' southerly coastline, the five of us were virtually alone and had swathes of beach and Mediterranean Sea as well as 34 degree heat, all to ourselves. We were staying 15 minutes drive from Larnaca Airport in a village called Pervolia. The picture was taken around 7.30pm on a Saturday Night...It seems that the tourists were more interested in Paphos, Ayia Nappa, Downton Larnaca or Limassol, as opposed to this little village and as far as the locals and the tourists that were there, that suited everyone fine.

It seemed to me, in this part of the world, taking it easy while working was the mantra. Nothing too busy please...just a gentle trickle of customers, with plenty of time on their hands is what there all about. As a relaxing holiday, that suited us fine-but...That ethic? in a Eurozone country? what's that all about? and that, readers, is what bugged me. Now don't get me wrong, Cyprus has every right to want to be chilled-200 miles east & Southeast is Lebanon/Israel 200 miles Northwest is Syria,  100 miles north is Turkey and a couple of hundred miles south is Egypt, so its not surprising that Cyprus becomes a relative Oasis of calm. Even the busy town of Larnaca, franchise owners of Haagen Das, KFC, Burger King etc, sit outside drinking Iced Coffee, inviting the lovely ladies to sit down and enjoy a similar beverage, appearing to pay no attention to the fact that the restaurant is quiet and maybe, like a few years ago, he should be offering menus and discounts to passers by, in the hope they'll sit down and spend a few Euro's.

On building sites (on which there were several) the laissez faire attitude appeared to exist along the banal decision to lay tarmac at 11am in 30 odd degree heat hoping it will set. With no signs put up, a lot of people walked onto to the path, becoming temporarily stuck and the workmen tutting as they had to re-apply the tarmac. Far be it for me to suggest laying it at 5am and then finish the day at 1pm! these workers toiled in the heat until 4pm most days. It was also interesting to note the half finished buildings. It turns out that the government demand taxes on built-but empty properties-from the developers, so the developers build a shell and wait until they sell it, before completing it-consequently, there are plenty of what looked like 'Abandoned builds' and houses with no roofs, swimming pools etc, as the developer waits to sell it.

But the quietness of this space between Paphos and larnanca and Larnaca and Ayia Nappa may not be quiet for long. 5 and 7 million Euro mansions are being built in areas such as Limassol and Pervolia. why? because wealthy Lebanese and Russians are buying them up. Why are they buying them up? because according to the locals, spent upwards of 5m Euros on a property and you get a Cypriot Passport & residency. Spend 300k Euros on a property and you get residency. A boardwalk is being built from Pervolia to Larnaca. The boardwalk will have houses to left, which will look over the sea to the right. This will not only sell the houses, but must surely indicate that restaurants, Bars, clubs, supermarkets, etc must soon be opening, to cater for these newly found 'residents'

'Passports for Houses' in Cyprus first raised its head in the FT in 2013. There are clear concerns about whose buying the properties, the money laundering checks that go on etc. That aside, Cyprus could become a quiet little spot for a lot of money and with that money, Cyprus could become a jewel in the severely dented and tarnished Euro Crown. Only time will tell.

Hope you enjoyed a different type of blog from me-please let me know!

Victor

Victor Sacks is an Independent Financial Adviser and Company Director of VS Associates Ltd, which in turn is an Appointed Representative of the Sense Network, who are Registered and Regulated by the Financial Conduct Authority.

If you want to get in touch with Victor;

E-victor@vsassociates.co.uk

M-07866 504896

T-01480 384711

Or, connect on Twitter @SmartSacks, LinkedIn and Google+

Can't touch this....

I daresay, the title of my blog for some of you, has conjured an image of MC Hammer, sliding along the floor in pantaloons that, were affectionately known around my neck of the woods as..well...'Sh*t Catchers' The middle seam, when legs were apart would be below the knee, yet around the ankle, there were elasticated cuffs..quite a sight!

For others, it's a familiar rant by a parent or child, or even as I show above, a simple message on a case or on a folder basically saying 'leave it'

So where am I going with this? an hour ago The Post Office announced a series of 24 hour strikes, as branch closures, job cuts and pensions come under attack.. The following is my own viewpoint and I've used my own ideas-So don't take this as advice, just something that hopefully, gives you a bit of info and food for thought....

Earlier this year, Financial Times Journalists voted for a 24 hour strike over Pensions, so did Dorset Firefighters and two Belfast leisure centres closed for a day as a result of similar action. Tube workers did the same in May this year.

Yes, the message is clear-Don't touch...my pension.

A pension? they strike for a pension? the same investment vehicle we hear Andy Haldane -Chief economist at The Bank of England- say is "Too complicated" and I'd "sooner invest in property"

The much maligned investment that most financial journalists pick holes in and the investment I hear being described as "Rubbish", is causing strike action?

We need to look into this then....

Let's be honest, any investment that starts off with "You can't access this until you're 55" isn't going to win many friends is it? OK, the access age will lower, if you are in a profession/Job that has been given special terms; Armed Forces, Police, Professional Footballer, Jockey etc-I could go on, but you get my drift.

Once we get over the Duration, we start to see some goodies:

-Tax relief on contributions at highest marginal rate of tax paid...So if you earn say £30k per annum, your highest income tax rate will be 20%, so with tax relief, an £80 per month from you, will be inflated to £100 overnight! 20% growth on your money!

-Once invested, your money grows predominately free of tax-Now there is a small element of dividend tax that can't be reclaimed, but in your hands, it grows tax free

-If death occurs before you retire, the fund is payable to your selected beneficiary(ies)

-At age 55 (or earlier, when dealing with special recognised careers) you can take a quarter of the fund value as tax free cash-either as one lump, or a bit at a time.

-The rest of the pot can be invested to provide you with an income for life, which will be taxed in the same way your income is now or;

You can opt for a flexible access pension and draw off what income you want when you want and ultimately when you die, it can be left to whoever you want to.

Oh, and we haven't spoken about the 2,500 + investment funds available.

What about costs, I hear you say? well yes, no one does "'owt for owt" If you are putting your money into a series of investment funds, there will be a charge which the fund manager will deduct-typically anywhere between 0.5%-1.5% per year, dependent upon the complexity of the investment recommended, so lets say you have £30,000 in your pension pot, £150-£450 per annum will be deducted. But remember, you're getting 20% PER MONTH tax relief, every time you pay in. Ultimately, you have no idea what your final value will be, but reviewing it regularly will help you and when the day eventually comes for you to start taking benefits, there won't be any surprises.

Now, when we consider the strike action being taken, we are talking about schemes that have similar mechanics, but the structure is very different. They are based on a percentage of Salary and so long as that individual stays employed, the pension value per annum, is a known figure to the individual and in fairness an unknown cost to the employer.

Lets take an example. A boy of 18 starts stacking shelves at a supermarket, earning £5k per annum. 35yrs later, he is chief executive of that supermarket, earning £450k per annum. His percentage payment into that scheme is set at 8% of salary from when he joins and doesn't change. His potential pension could be worth £262,500 per annum, yet at his peak earnings, he paid  just £36,000 per annum.

The supermarket would have had no idea how far this persons' career would have gone and no idea what the future cost of his pension would be (there's a good chance some £50-60k per annum would have to have been paid in by the supermarket, when our man was paying in £36k).

Now, lets say this supermarket faces competition, it starts losing market share and enters into a price war-its profits reduce, there isn't enough capital to fund pensions and they need to create breathing space-what can they do? push out retirement age? increase contributions from members? penalise anyone who wants to retire at the original retirement age? change the definition of 'pensionable pay'?

When I worked for a big Corporate company, all of the above were implemented and its my perception, that along with other measures, it's what's being put forward to members of the aforementioned companies who are going on strike.

Mr Haldane and others got it so wrong....A pension is a valuable asset. It doesn't have to be complex...and Isn't complex when someone takes time out to explain it.

By the way, if you understand a bit more about pensions now, that you did 15 minutes ago...tweet, text, or email me.

Have a great rest of week,

Victor

Did this post pique your interest in Pensions? do you have one and want to know a bit more about it?

E: victor@vsassociates.co.uk      W:www.vsassociates.co.uk

T: 01480 384711                         Twitter: @SmartSacks

M: 07866 504896

Victor Sacks is An independent Financial Adviser and company director of VS Associates Ltd an Appointed Representative of the Sense network, who are Authorised and Regulated by the Financial Conduct Authority.

Interest-ing times........

Hello!

I trust you're enjoying some 'down time' as well as the glimpses of great weather we have seen in parts.

While you contemplate whether its 'Margarita Time' allow me to provide you with some light reading......

My Blog this week has been triggered by the Bank of Englands' decision, to cut Interest rates. My own view, was one of amazement. I genuinely thought that our fiscal policy was sound, and that the Monetary Policy Committee would hold rates, while the political parties sort themselves out. If I'm being completely honest, I think interest rates should have gone up at the back end of last year, but it is my perception, that we were playing a Mexican standoff with America-or should that be Canmerican Stand-off?

Those familiar with my blogs, will know I come at things from different angles and play out various scenarios-this blog will be no different!

So, lets assume all lenders pass on the 0.25% cut to all their clients

Taking my research from 'This is Money' (Feb 2016) the average London mortgage is £215k and the lowest  average is in the North East where a mortgage is £79,500., so lets call the average mortgage £140k 0.25% of that, is £350 a year or £29 a month. If that makes a substantial difference in someone's finances, then I'd question as to whether they should have got a mortgage in the first place. Moreover, if you are renting a property, will the Landlord pass the saving on to you? or as a saver, will the banks, building societies etc, hold off from cutting your rates further?

So here's my left field thinking;

If an Institutional lender (bank, building society etc) is seeing rate cuts from the top and they are being pressured to pass these on, then their revenues must start to reduce. Lending is what these institutions are there for, but they will-contrary to popular belief-continue to be stringent, because they do not want to end up on the front page of a newspaper being cited for 'Irresponsible lending' and the obligatory photograph of a sad faced family and in this litigious society we find ourselves in, I can't blame them. So if they are not making their money from Lending..Now at this point, I'll look at Commercial Lending-Whilst banks have a matrix of pricings, using a rule of thumb of 3-4% over base, still only generates 3.25-4.25%..a long way off from the 6%-7% they were earning 10 years ago. Banks and building societies have decimated their financial advisory salesforce-no income from that now and there is no fat on interest rates to hold back from savers. To me, this leads to increased charges (I've already had the letter-my charges go up over 200% from September) and possibly-Current account fee's. We are, as a country, in the minority with regards to not having current account charges. I know some you may have super duper accounts that come with an annual fee, but not everyone has that-yet.

So an interest rate cut that broadly affects borrowers and savers can suddenly start to affect anyone who has a bank account....

With regards to savers, they are being pushed beyond their limits. ridiculously low interest rates for the last 9 years have seen many try to achieve those halcyon days by using well thought out investment strategies, however, some have succumbed to the investment scam and even as I post this, there are so called 'experts' emailing people with stories of Armageddon and they shouldn't trust anyone-apart from the writer of the email, who happens to be a financial whizz...its dodgy preachers all over again, asking you to call/subscribe.

I do wonder, if the 'pull' on Mum, Dad, Grandma, Granddad etc, could lead to two generations funding one....

Lets say Bill is 25, a graduate & earning £35k per annum. Wants to get on the housing ladder and spies a lovely property for £250k. He can borrow 5x earnings (£175k) which leaves him way short. Bill knows that Grandma has £150k in the bank earning 0.1% and Bills' parents have £100k earning the same (you can see where I'm going, can't you?)..Bill says " If you lend me £250k, I'll pay you £1400 per month, for 25yrs, giving you back £420,000. Now, there is a risk of unemployment on my part, but look at the return on investment I'm giving you" that equates to over 6% a year return....Now I know this isn't an everyday conversation going on up and down the country, but cutting interest rates could make people think this way..giving up the liquidity of cash, to the illiquidity of property, for income.

So, Interest-ing times indeed. I personally would have sooner seen VAT return to 15%. This would make a huge difference to anyone, that bought/sold vat rated goods..that's pretty much everything we buy and whether you're a tenant, homeowner, borrower, saver you would have benefited. The Bank of England have left themselves with no wriggle room at all-even though further cuts in interest rates maybe on the cards,-Mark Carney has no 'interest' in negative interest rates.

Enjoy the rest of your summer...Is it G&T o'clock yet? must be 5pm somewhere......!!

Victor xx

Victor Sacks is an Independent Financial Adviser and owner of VS Associates Ltd; an Appointed Representative of Sense Network. VS Associates and Sense Network are both Authorised and Regulated by the Financial Conduct Authority.

If Victor has piqued your interest, why not get in touch for a free informal meeting? victor@vsassociates.co.uk or follow him on twitter;@SmartSacks, connect on LinkedIn or visit the website: www.vsassociates.co.uk