Why make a will?

Your Will is one of the most important documents you will ever sign. If you do not make a Will, your property could end up in the hands of people you have no wish to benefit. Also, you might have failed to take advantage of the tax planning opportunities which often become apparent when making a Will.

Most people think that without a Will, everything passes automatically to the surviving spouse. This is not necessarily so and will depend upon your circumstances.

Comptons Solicitors in Camden have an excellent Wills service and give some good pointers on why making a will is so important. Check it out: http://www.comptons.co.uk/wills_probate.html

Jacqueline Thornton CertPFS Certs CII (MP&ER)

Norwich Union - Windfall?

If you're wading through the Norwich Union reattribution offer you may want to take a look at this article from The Telegraph.

How is your credit rating looking?

Interesting article in the FT last weekend. Credit reference agencies, such as Experian and Equifax, are reporting an increase in requests for credit reports as more and more people are having their loan, credit card and mortgage applications declined. Information held on agency files includes not only whether individuals have kept up with repayments and how much borrowing they have but also how long they have been at their current address and whether they are on the electoral roll.

See the article in full http://www.ft.com/cms/s/2/24115380-4c66-11de-a6c5-00144feabdc0.html

Jacqueline Thornton CertPFS Certs CII (MP& ER)

Fixed Rate Bonds and Deposit Accounts for SIPPs

More and more investers are now turning to Fixed Rate Bonds as a way to maximise the return from their investment while remaining in cash. This entails committing your funds to an account for a fixed period and in return gaining a higher level of interest. Generally investors are tied in for the full term of the bond or are heavily penalised for early withdrawals. Fixed Rate Bonds are now the most popular online search by savers at Moneysupermarket.com.

We have seen many clients who have Self Invested Personal Pensions (SIPPs) with the main bulk of their investment sitting in cash and earning abysmal interest. For example, the default bank account for an Alliance Trust SIPP is Cater Allen and this is currently offering 0% interest on the first £100,000; 0.375% on balances from £100,000 to £1m and on balances over £1m the account yields a rate of 0.453%. This means that on a SIPP cash balance of £500,000, an investor would earn £1,500 interest per annum. However, many other SIPP cash accounts will still offer 2-3%. Taking the same investor who moves his cash balance to one of these accounts, his £1,500 could become £15,000. Significant difference.

In one of my earlier posts where I talked about savings accounts, I mentioned the importance of reviewing what you have and if necessary find a better alternative. This is the same when looking at the underlying investments in your pension. I have talked to many clients this week who just did not realise the poor interest that was being paid on their default SIPP account and that they COULD increase their return by merely moving their cash. This is an example of one of the simple ways to help boost your portfolio.

Jacqueline Thornton CertPFS, Certs CII (MP& ER)

The bearish case for property

Just in case you were beginning to feel positive about the UK housing market here's the counter argument from the Weekend FT.

Landlords hit by high cost mortgages

Yesterday I read an article in the Weekend FT confirming what we already know - mortgages for Buy to Let landlords have become extremely expensive. Not content with inflicting high interest rates, many of the BTL lenders that remain in the market (very few!) have imposed high arrangment fees, ranging from 2% of the loan amount to 3.5%. To put this into context, the arrangement fee for a mortgage of £200,000 could be as high as £4,000 - and this is before valuation and legal fees come into it! The odd lender who does charge a flat fee imposes a higher interest rate - clients just can't win.

Figures from the Council of Mortgage Lenders (CML) showed that new Buy to Let lending fell for the sixth consecutive quarter in the first six months of 2009. It accounted for 6% of all lending on the first first quarter, compared to 12% last year for the same period.

The high costs make it difficult for landlords to switch to a new mortgage deal and many are having to stay with their existing lender. This may lead to problems when interest rates rise.

Jacqueline Thornton CertPFS

How are your savings doing?

So you've worked hard for your money and you expect your savings to do the same. But are they? Many savings accounts are now paying less than 0.1 per cent or less, including those which claim to be "premier" or "reward". Even those accounts which require a notice period are not immune to these low rates - for example the Cater Allen Soverign 30 day account pays 0% interest. How do you make sure that your savings are earning the best rate of interest possible? The answer is simple - review what you have and if needed find a better alternative. Abbey 5% Home Saver account is a regular savings account paying 5% aimed at prospective first time homebuyers (although the accumulated cash can be used for any purpose). It does require ongoing monthly deposits of between £100-£300 per month. If even one month is missed the interest rate drops to 0.1% for that month, after which it reverts to 5%. This shows that there are good deals to be had, if only you shop around.

Jacqueline Thornton CertPFS

Source: Financial Times 17/18 May 2009