Archive for the ‘Investments’ Category

Why is everyone talking about Neil Woodford?

Friday, July 18th, 2014

Blog ImagePeople have been writing about Neil Woodford for years, his success as a fund manager has attracted the interest of financial writers and economists from the national papers and TV, so why recently has he been propelled, in investment terms, to the level of a household name?


About seven or eight years ago, the personal finance section in every Waterstones was bristling with biographies of or books by or books about Warren Buffett; the ‘sage of Omaha’ who famously refused to follow the herd and invest in anything with a .com after its name or simply any technology he didn’t understand, had become a celebrity.


Buffett’s fame and his standing was hardly anything new, ever since the 1920s and the era of frenzied over speculation that led to the Wall Street Crash, investors have become public heroes.


John J Raskob, the man who built the Empire State Building published a famous article just two months before the crash titled ‘Everyone Ought To Be Rich’ urging people to have blind faith in stocks and shares.


Raskob was perhaps the first celebrity investor, but as you can imagine, the public’s love affair with his was somewhat short lived.


Woodford, like Buffett, wisely avoided the .com boom in 2003, ignoring the short term feeding frenzy while he was running his High Income fund and the Invesco Perpetual Income fund.


In a Guardian article dating back to 2006, the working day of Neil Woodford was worlds away from the frenzy one normally associates with investing; at a quiet office in Henley On Thames, the lack of a frenetic pace and Woodford’s decisions often to ignore the pack mentality have clearly been part of his success.


In March this year he stepped down from heading his two celebrated funds to form Woodford Investment Management. His successor at Invesco Mark Barnett explained Woodford’s philosophy and strategy; to invest long term and only in companies he has absolute faith in.


Often this has meant sticking to his investment decisions when the sector or companies he has invested in have ceased to be fashionable, exciting or zeitgeisty. He is a fan of tobacco stocks and has stuck with them even when it appeared increasingly likely that there would be a smoking ban in pubs and restaurants in the US and UK.


Irrespective of the ethics of the investment, the lesson is clear, by not giving in to either greed or fear (the two prime motivators for any investor), Woodford’s investments have soared.


Some £2bn in funds were withdrawn from Invesco when Woodford left, which gives us an insight into the faith that his clients have placed in him as an investment manager; the Telegraph reported last year that £1,000 invested with Invesco would have appreciated in value by £23,000 over the course of 25 years – extremely impressive performance for investors looking to build wealth in the long term.


Many of the clients that Woodford has enriched in the past two quarter century, including fund supermarket Hargreaves Lansdown have followed him to his new venture. The new rules around fund charge transparency have created new opportunities to invest in Woodford’s fund for less.


Hargreaves Lansdown themselves are offering a commission rate on Woodford’s fund of just over one percent (a more standard rate across the industry before the new rules was about 1.5 percent).


The reduction in fees is a change that is affecting funds across the industry so this is not an act of largesse, but altogether it adds up to an interesting opportunity for investors.

Prospects for savers and investors in 2015

Friday, June 13th, 2014


Savers Prospects Blog ImageIs it almost five years since Gordon Brown was Prime Minister? Has it been nearly half a decade since he offended pensioners in Rochdale and announced that he loved the TV show Glee?

Indeed it has, and in the next twelve months we as prospective voters will be wooed with various offers and inducements to vote for an ever growing list of parties in the next general election.

In 2010 the outlook was grim; the Conservative Government offered austerity as a solution to the nation’s deficit and the Labour Party promised roughly similar measures. We had shopped, spent and frittered our way into an epic economic calamity, so we were told, and the economic medicine that would be administered would be bitter.

Four years on and we face a very different set of circumstances. As a nation we’ve done the tough part and since 2008 weathered a longer economic downturn than even the Great Depression of the 1930s.

The economy is booming with inflation low, rising house prices, and growing employment, which means that voters might reasonably expect some kind of reward for their forbearance over the last four years. Also, we as a population are as open to bribes from our elected masters as anyone else.

So what might 2015 have in store for those who take an active interest in their financial futures? Until the manifestos are published and the speeches are made, it’s impossible to say for sure, but we can make a few educated guesses about what each party offers the saver and investor.

The Conservative Party

One of the policies reputed by the Daily Telegraph to have been presented to George Osborne by an influential policy group is the abolishment of a compulsory retirement age.

This change would have a major impact on the pensions industry and would present individual savers with both challenges and opportunities. It is evident to most casual observers that today’s 65 year olds are substantially different from their counterparts thirty or forty years ago, and many still have much to offer the economy.

However, for the policy to have appeal it must present potential retirees with the option to stop work as for many, this is a cherished opportunity to enjoy some of the best years of their lives.

After the recent shake up of the annuities market, some insurers and pension companies might be relishing a postponement of the date when pensioners claim their policies. It might not be beyond the realms of possibility that they offer inducements to later claimers, encouraging retirees to work on for a few years.

The Labour Party

Whilst parts of the nation have complained bitterly about the austerity measures of the last four years, a recent poll shows that voters still hold Labour largely responsible for the financial crisis.

The Labour Party launched a document on its proposed economic policy in March 2014 (far from being anything as concrete as a manifesto) based on a nation wide consultation. Some of it makes for quite interesting reading from a personal finance point of view, though as with all things written by politicians, you have to read between the lines a little.

Labour have pledged to separate retail and investment banking, thus keeping the deposits of ordinary savers a lot safer in the event of another financial crash.

Overall the tone of the document threatens sanctions against ‘casino’ bankers, but there is another element to the document that will be potential welcome news (if it ever happens, that is).

A proposed break up of the big banks, as suggested by Labour, might well introduce fresh competition to the high street and usher in an era of deals that favor the savers and investors. The policy document also pledged to take action against mis-selling scandals, the likes of which have blighted the lives and the finances of savers and investors over the last two decades.

The Liberal Democrats

Also engaged in a nation-wide consultation at the moment are the Liberal Democrats. Their position is complicated by the fact that if they are to wield any influence at all, it will be as part of a coalition government.

This will mean that certain policies affecting personal finance might be endorsed and others quietly dropped.

On the issue of personal finance, savings and pensions, the workplace pension that was introduced last year will, under the Liberals, continue to be rolled out across the UK. This is likely to happen whoever wins the next election; however, there seems to be some commitment to protecting low and middle income pensioners’ incomes, preventing them from falling behind the rest of the population.

Perhaps the most interesting policy, and one echoed by the Conservatives, is that of taking low earners out of income taxation altogether. The party have aspirations to end income tax for those earning £12,500 and under by the year 2020.

Fine Words Indeed…

Most pundits agree that the outcome of the next general election is almost impossible to predict, with opinion polls giving a wide variety of potential outcomes on an almost weekly basis.

It must be stated that at the moment, all such pronouncements by each political party are not election promises by any stretch of the imagination. They are strong indications of what those promises might be, however.

The improvement in the country’s economic fortunes allow some scope for politicians to offer inducements to vote for them and the incumbent chancellor invariably saves his most attractive giveaways for the pre-election budget.

The most recent budget had a range of attractive inducements for savers and investors but the next one it’s suspected, will be a source of glad tidings; One thing that the polls seem to agree on is that in order to get an overall majority in the coming election, the government will need a considerable amount of public goodwill and what better way to get it than to cut taxes and make saving more worthwhile and borrowing easier and cheaper?


Making The Most Of The Recovery

Friday, May 9th, 2014

It was announced a few weeks ago that wages rose faster than inflation; a statement that coincided with the news that house prices increased on average by 1.9 percent across the country and unemployment continued to fall.

12 May Blog Promo ImageAll of this is welcome news and long overdue; as a nation we’ve struggled through six long difficult years since 2008 and whilst many are still cautious about the recovery, the signs are that it will continue.

The economic crisis in 2008 was created by governments and their policies, and it was created by banks and the companies that audited them. But it was also created by us. The great crash of 2008 was caused by a decade of spending and borrowing on the part of the general public that probably has no precedent.

Now that the return to prosperity seems to have arrived, there’s a chance for all of us to do things differently this time, and to ensure that our own personal good fortunes can be more sustainable.

During the Great Depression in the 1930s the economist John Maynard Keynes argued that governments should operate a ‘counter-cyclical’ policy, meaning that they should save during the times of surplus and spend those savings during times of dearth.

This meant that upswings never became unsustainable booms, because the government taxed wealth in order to save it, and then they could spend their way out of trouble during downswings.

There is much to be said for this common sense approach, and even the Chancellor George Osborne has pledged to run a budget surplus by 2018. Whilst Keynes was writing primarily about what governments should be doing, there is no reason why we can’t take on his advice at a personal level.

This suggests that the next few years for all of us need to be about employing a counter cyclical mind set and making simple, prudent decisions that will future-proof ourselves financially, not just for years but for decades. As the Chancellor put it recently, we need to ‘mend the roof while the sun shines.’

In too many instances in the decade 1998 to 2008, people were encouraged to believe that the good times would never end and that the low prices that globalised manufacturing could bring, along with an artificial housing boom would continue to deliver magic money.

Our sobering economic experiences, which have lasted longer than the Great Depression itself, have indicated otherwise, and there can be few illusions any more about how long the good times will last if we are careless. Here, then are some simple rules for a more sustainable future.


Britain’s economy is largely based on housing, and the property market is one of the most powerful forces pulling us out of recession. If you have decided to move recently or are hoping to add value to your property through a re-mortgage, you have to think of your decision as a key aspect of your long term prosperity.

New banking regulations being introduced this month will make it very hard for you to over extend yourself to the unsustainable levels of 2008, and if you want to borrow more ambitiously, you will need to prove that your finances have a clean bill of health.

This seems like a painful imposition, but in reality it is timely and necessary as the country gets ready to indulge in a frenzy of house buying and selling (Britain’s favourite obsession). Preventing a significant percentage of the home owning population from defaulting en mass the next time the economy runs into trouble could be one of the real golden legacies for the government.

If you have your eyes set on a dream property that will require excessive borrowing to afford, it might be the moment to ask whether it is worth saddling yourself with potentially unmanageable debt? The property has to be something that works for you, not the other way round, meaning that it needs to appreciate in value and (obviously) be a nice place to live, instead of simply it being somewhere you slave all day to afford.

Not only does this make sense in the immediate term, but also in the longer term too. Remember, when the storm hits again (and one day it will, rest assured), the ones who weather it will have assets and the ones who don’t far too well will be saddled with liabilities.


In the last budget the government announced that it would be raising the upper limit on ISAs to £15,000 from July 2014, allowing you to save far more each year without HMRC taxing the interest. In addition to this, the entire amount saved could be cash, whereas previously half had to be in stocks and shares.

To say that this has been welcome news by the savings industry is something of an understatement, and for individual savers it presents an excellent opportunity to see more returns on their wealth. Remember Keynes big idea? In a very subtle way the government is encouraging all of us to emulate his thinking and set up our own counter cyclical policy.

By saving in a regular and sustainable way and getting into the habit of tucking a little bit away each month, preferably somewhere like an ISA that is tax efficient, we can do wonders for our own financial stability. Not only could savings eventually go into sound investments like property in the future, but it is our insurance against tough times.

This all sounds rather obvious, doesn’t it? It bears repeating however, that because so few people between 1998 and 2008 saved at all, in fact quite the opposite occurred, and a relaxed credit environment led to a level of personal indebtedness of staggering proportions.


This one is simple. Pay it off as quickly as you possibly can. There is no one thing more injurious to financial health than borrowing, and if financial good times are about anything, they are about freeing yourself from this burden.

Credit cards, store cards, personal loans, and hire purchase agreements collectively represent the biggest threat to your future financial stability. In 2009, when the economy really took a nose dive, it was personal debt that was one of the first things that lenders called in, with countless customers desperate to appease ever growing queues of creditors.

There are some instances where borrowing is prudent, such as a purchase of a house or an investment in a small business, or a career development loan, but in most other instances it is a luxury that perhaps we as a society can ill afford. As a culture, most of our ideas about borrowing were formed back in more stable times (i.e. the 1960’s).

Back then the lender was more prudent and kindly and who one could meet in person and who would advise you on what you could afford to repay; in effect he acted as a brake on the system and offered advice how much to borrow.

Since the 1980s, the lending arms of certain business have not acted as advisory services so much as they have become salesmen, operating from call centre’s and looking to sell you their products (in short, to increase your personal indebtedness to them as much as possible).

Also borrowing was always predicated on the assumption that future personal financial stability was assured and that all of us would gradually become better off over time. Even though we are experiencing good times again now, there is no indication that these will last forever and it is vital that should there be another down turn, you can face it debt free.

It is true to say that we live in a very different financial world to the one we left in 2008, and most likely things will never be quite the same again in terms of our attitudes towards money, spending and saving.

This may be an unqualified good thing, as a lot of those attitudes and beliefs about money were long past their sell by date and resulted in a lot of financial pain. The past half decade has taught us some serious and challenging lessons about money and debt and now that the economy is starting to improve, we have to put those lessons into practice.

If you are thinking about getting financially fit now that the worst of the recession seems to be over, it might be an idea to see an independent financial advisor who can help you look at how you manage your money and suggest ways to make it work for you.



For more information please contact us today.

Investment Portfolio Health Check

Thursday, October 4th, 2012


Time for a portfolio health-check.  Once a financial plan has been put in place, it is tempting to believe the paperwork can simply be tucked away in a drawer and forgotten.  However, like a well-kept garden, a financial plan needs regular tending to ensure it is still on track. ‘Weeds’ can spring up or you may just like to grow something new.  What should a financial health-check comprise?

check it is still fit for purpose.  The original financial plan will have been matched to an investor’s goals – to retire at 60, say, to fund education for children or whatever.  A review will first look at whether these goals have changed, perhaps with the birth of another child, or a change of job or a surprise inheritance.  It should consider whether investors need to save more or switch to different types of investments to achieve their goals.

The Portfolio Review

A review will also look at an investor’s progress towards their goals.  It may be a portfolio has performed particularly well and it is no longer necessary to take as much risk – or the opposite might be true and an investor needs to take on more risk.  A financial health check will also examine whether the underlying investments are performing in line with expectations.  Fund managers will have good and bad periods.  A run of bad performance may mean their style is out of favour – for example, they may target larger, dividend-paying stocks while the market currently prefers small companies – but your financial adviser will be able to judge whether this is expected or whether it is a sign of a deeper problem.  It may be a manager is losing their touch, has left their employer or there are problems within the investment house.  In this case, it may be worth switching to another manager.

Investment Changes

A portfolio will also need to be tweaked according to the wider economic environment.  The 2008 financial crisis changed the investment landscape – for example, the low interest rates that have followed mean income-seekers have had to work harder to generate the same level of yield.  While an event of this magnitude will hopefully not repeat itself in the short term, it highlights the importance of regular reviews and ensuring your financial plan continues to be appropriate.  Financial health checks can ensure your garden grows abundantly in all weathers.  A little tending can go a long way.  To arrange a financial review contact Maxim Wealth Management or call 0141 764 0040.

Can you afford to spend 1/3 of your life in retirement?

Thursday, September 15th, 2011

Life expectancy in the UK is rising

It has long been accepted that improvements in medicine, lifestyle and an understanding of the effects which habits such as smoking can have on our health means life expectancy is increasing. Future generations will enjoy much longer and healthier lives on average than their predecessors.

Figures released in April 2011 by the Department of Work & Pensions help illustrate rather exactly what this means. These figures suggest, of the under 16s already alive today, over a quarter are going to reach the age of 100 – and already, the average new-born female is going to live to over 90.

As Steve Webb, Minister for Pensions, commented at the time, this means that millions of people will spend over a third of their life in retirement.  But, as the DWP were quick to point out, this news also coincides with a period during which pension savings are in serious decline.

A population with increasing life expectancy is putting our welfare system under significant pressure as more people need not only pension income but also healthcare, incapacity support and help within the home.   When the time comes for you to retire you can expect that your State Pension will provide little more than a safety cushion. If your retirement plans include holidays, visiting relatives and treating yourself on occasion, then its time to take control of your savings and start building up a retirement fund of your own.

Call us today on 0141 764 0040 and our professionally trained financial advisers can talk you through your retirement planning options.

Retirement Planning

Thursday, September 15th, 2011

When it comes to retirement planning, time is one of the most important assets you have to save for retirement.

It takes a long time to build up the investments needed to provide a comfortable retirement income and the sooner you start retirement planning and saving, the better.  Even putting a small amount away on a regular basis, if done long term, can make a difference.  Both occupational or company pension schemes and personal pensions are tax-efficient.

Your contributions to company pension schemes are deducted from pay before tax is calculated and for contributions to personal schemes, tax you have paid before you make your contribution is reclaimed for you by your provider.  In to each type of plan you can contribute up to £3,600, 100% of your net relevant earnings or £50,000 (for tax year 2011/12), whichever is the greater and you can then use your personal income tax allowances before calculating the tax you pay when that pension finally pays out.

If you work for more than one employer, a financial adviser can help you check your previous company schemes and work out what you are entitled to.  Your retirement planning might also include individual savings accounts (ISAs) which are tax-efficient ‘wrappers’ all profits earned on investments held inside them are paid out to you free of further tax.  The amount of money you can invest in an ISA is also subject to limits (£10,680, tax year 2011/12), but it is worth getting into the habit early.

If you think you could benefit from retirement planning we’d be happy to offer our services.  But don’t delay because the longer you put off planning for your retirement the less retirement income you’ll have.  Call us now on 0141 764 0040 and let’s see if you can help.  Contact Us.

A pension or an ISA?

Thursday, September 15th, 2011

Our financial advisor explains that while a pension is one of the most common ways to save for retirement, it may not be your only option for retirement income and that an individual savings account (ISA) may provide an alternative.

Difference between a pension and an ISA

One of the main differences between a pension and an ISA is in the way they are taxed. Your pension payments will qualify for tax rebates up front, at your highest rate of income tax, but then the retirement income you receive later on will be taxed. With an ISA, the money you contribute will have already been subject to tax, but any withdrawals you make will be tax free. It’s also useful to be aware that your pension income counts towards your personal tax-free allowance, while your ISA withdrawals do not.

You might think that, thanks to the tax relief, a typical higher rate taxpayer saving the same annual amount into both an ISA and a pension plan over their working life will find that by the time they reach retirement age the pension fund is larger. This is obviously fully dependent on their investment choices and tax regulations remaining consistent but the tax rebates are important as they add to the value up front and therefore influence the size of annuity that can be bought. However, the retirement income from your annuity is likely to be taxable, unlike ISA withdrawals. But, your annuity payments are guaranteed for life and withdrawing the equivalent from an ISA may eat into your capital. It is therefore possible that the ISA capital eventually runs out.

Other pension benefits include the fact that employers can pay into a company or stakeholder pension scheme, and the annual contribution limits for pensions are much higher than for ISAs. Nevertheless, an ISA is much more flexible. With a pension, you have to wait until you are aged 55 to make withdrawals, whereas an ISA can be accessed pretty much whenever you like.

With longer life expectancies, as well as some high profile issues concerning the way in which a minority of pension funds have been managed, many investors’ funds will not provide quite as much retirement income as expected. As a result, some people are now looking to boost their pension funds by topping up their company pension, or by using additional investment vehicles. One other solution however, could be to use the ISA option and help ensure your retirement income is as healthy as possible.

Your options for retirement can be complex and will depend entirely on your own personal circumstances. If you’d like to speak to one of our financial advisors about pensions or ISAs they would be more than happy to take your call on 0141 764 0040.

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