how to make money in the stock market in 2011 : Unlike experts of share investment who buy the share of only those companies whose values are on the rise, individuals should focus their investments more in blue chip companies which has a established reputation in the market. If share trading is not followed catutiously, investors can really loose majorty of their invested money in minutes. In order to minimize these losses it is also recommended to purchase a variety of different stock funds, so the downside risk is reduced. This is called investment diversification.
How To Make Money In The Stock Market With Little Money To Spare?
First let me tell you the fact that your friend has deliberately revealed half the truth! How? People conceal their mistakes that they make in the stock market of losing money. Read More...
How to make money in the stock market by recognizing trends with UCTrend technical analysis?
Technical analysis predicts probable future price trends through the use of historical price charts. The chart captures price movements of the securities, their trading volume and open interest (where applicable). Read More...
How to make money in the stock market
Not only entrepreneurs are able to participate in the stock business but individuals can also invest in shares and make profits. However, one should be well informed about the subject of shares trading.Read More...
How to Make Money in a Falling Stock Market
In bear markets, there are several ways of making money, but most are speculative. Examples include shorting stocks (where your potential for loss is unlimited) and buying puts (which are very volatile and have expiration dates). However, there is a less risky way of playing the market on the short side, and that is through the use of bearish exchange traded funds also known as ETFs.Read More...
How to make money in the stock market during a crash
The stock market is tanking. Again. How do you use this to your advantage? I think there’s something to be had for having a strategy that works in up, down and flat markets. Read More...
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Showing posts with label investment. Show all posts
Showing posts with label investment. Show all posts
Sunday, September 4, 2011
investment markets outlook september 2011
investment and stocks markets outlook september 2011 : Investment markets appear set to break one way or another over the next few weeks. While stocks managed to rally off of Jackson Hole and put together a brief rally to close out August, all bets are off looking out into September, as the calendar is loaded with make or break events that will go a long way in defining how the rest of the year plays out. By the end of the month, stocks could either be poised to rally for the remainder of the year, or they could be cascading off a cliff. Critical events over the next few days and weeks will go a long way in determining the fate of stocks and investment markets.
Through the Labor Day weekend holiday, stocks continued to hold their ground despite recently thrashing about. Despite the sharp decline to kick off the new month, stocks remain well above the recent intraday low of 1101 on the S&P 500 from August 9, at least for now.
But signals from a variety of markets indicate that trouble continues to brew under the surface. Starting with the stock market itself, the S&P 500’s Relative Strength Index reached 50 but was unable to make a bullish crossover and instead turned back lower. This is a bearish signal for stocks. The breakout by the Treasury market (IEI, IEF, TLT, TIP) to the upside also suggested that stress is building in the system, as investors continued to flock to safety despite already record low yields.
Gold (GLD) has been another safe haven trade that has been back on over the last seven trading days. Despite many commentators and analysts piling on Gold when it quickly lost steam for two days in late August (which not coincidentally were the same two days when margin requirements were sharply increased for the yellow metal on select exchanges), it has since posted a strong rally over the last seven trading days and appears poised to break out to new all time highs. Silver (SLV) has also responded in an almost identical fashion.
So what is at the core of the market stress? Certainly, the increasingly weakening U.S. economy is playing its part. And the “UNCH” jobs report on Friday did not help. But shouldn’t the consistently bad stream of economic data be playing right into the Tepperesque win-win story for stocks of weakening economy means even more aggressive stimulus from the Fed? Although I have my reservations as to whether QE3 would work in boosting stock prices, neither the weakening U.S. economy nor the lousy jobs report is at the heart of the matter.
The critical issue for investment markets is Europe. With each passing day, it appears increasingly likely that the situation is going to completely unravel. Greece remains out in front, as it looks like the latest bailout program may collapse amid concerns from the IMF and European leaders that the country is widely missing targets required to secure a second round of rescue funding.
Italy appears to be following close behind. After passing an austerity program in order to receive emergency support from the European Central Bank, the Italian government has been increasingly backtracking on these commitments in recent days. This has sent Italian 10-Year Government Bond yields soaring higher once again toward the critical 6%. On Friday alone, yields jumped 12 basis points to close at the highs for the day at 5.28%.
The key risk for investment markets is that a sovereign default in Europe could trigger another global financial crisis similar to what we saw begin to unfold in September 2008. Adding to the worry is the fiscal and monetary arsenal that was available to fight the crisis in 2008 has been largely depleted currently. These worries continue to take their toll on the stock market including the financial sector, which remains down sharply for the year.
One reassuring signal remains the Preferred Stock market, which continues to trade well above early August lows. However, the recent trade lower over the last three trading days should be watched closely, particularly following the suit announced on Friday by the FHFA against 17 global banks in an attempt to recover losses for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB). If Preferred Stocks begin to tail off to the downside, a severe stock market reaction may soon follow.
Looking out over the month of September, we should soon find answers as to how this is all going to play out. And we may not have to wait for long given the full calendar throughout the month. The following are some of the key events to monitor in the coming weeks:
September 7 2011: The German Federal Constitutional Court is set to rule whether of recent bond purchasing actions by the European Central Bank are in violation of euro zone rules. If the bailouts are determined to be illegal, this has the potential to seal the fate of the monetary union. Thus, this is a most critical news item to watch on Wednesday.
September 8 2011 : Two important speeches come on Thursday. The most notable of the two is President Obama’s jobs speech to a Joint Session of Congress. But perhaps just as critical will be Fed Chairman Bernanke’s speech in Minneapolis that day. Not only will this potentially provide a hint at potential policy actions at the upcoming Fed meeting, but it is also his first scheduled appearance following the German vote on September 7. If this vote were to go badly, Bernanke may be much more explicit in his policy language.
September 20-21 2011 : The U.S. Federal Reserve is scheduled for a once one day, now two day meeting to discuss its various monetary policy options. Some investors are anticipating some form of stimulus including perhaps a full blown QE3 with more large scale asset purchases. How global events and economic data unfold over the next 16 days will go a long way in determining how the Fed might react if at all. And even if the Fed does react with a full QE3, it may not be the panacea for the stock market this time around that some may be hoping for.
September 23 2011 : The German Parliament will vote on the Greek bailout and the expansion of the European Financial Stability Facility. While Germany is the backbone of the euro zone and has been the primary source of funding thus far for at risk economies across the region, the bailouts are becoming increasingly unpopular in the country and political support for any further action is becoming increasingly fragmented. So the vote is far from a sure thing, and this assumes the fiscal situation stays together in Greece long enough to actually get to the vote. In addition, 16 other euro zone nations are scheduled to vote on the bailout program roughly around the same time including Finland, which has demanded collateral from Greece in return for their approval of the rescue plan.
Investment markets have a great deal to monitor and contemplate in the coming weeks. Depending on how events unfold, we could see the final beginning of the end for the euro zone. At the same time, we could see European leaders come together once again to fight on for the monetary union. The stakes are also high in the U.S., as policy makers have the potential to excite markets with new stimulus measures or disappoint with the lack thereof. Interspersed among all of these key events is a steady wave of global economic data that may either show further deterioration toward a double-dip recession or signs of stabilization. And one last wrinkle will be the ongoing travails of selected financial institutions both in the U.S. and in Europe. Several are increasingly wobbling, and any further deterioration may soon lead to a major Lehman like shoe dropping once again in investment markets.
At present, the trend remains toward further deterioration and the risks are biased to the downside. As a result, keeping portfolio hedges such as Gold, Silver and U.S. Treasuries in place is worthwhile to both protect against downside and capture upside opportunity. Stock allocations would also be well served to emphasize the highest quality names in more defensive sectors, as these typically provide dividend income and are likely to experience considerably less volatility relative to the broader market. Lastly, holding an allocation to cash is also worthwhile in seeking to capture opportunities that may present themselves during any potential sharp market sell offs along the way. Stay closely tuned.(original post by seekingalpha.com)
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Through the Labor Day weekend holiday, stocks continued to hold their ground despite recently thrashing about. Despite the sharp decline to kick off the new month, stocks remain well above the recent intraday low of 1101 on the S&P 500 from August 9, at least for now.
But signals from a variety of markets indicate that trouble continues to brew under the surface. Starting with the stock market itself, the S&P 500’s Relative Strength Index reached 50 but was unable to make a bullish crossover and instead turned back lower. This is a bearish signal for stocks. The breakout by the Treasury market (IEI, IEF, TLT, TIP) to the upside also suggested that stress is building in the system, as investors continued to flock to safety despite already record low yields.
Gold (GLD) has been another safe haven trade that has been back on over the last seven trading days. Despite many commentators and analysts piling on Gold when it quickly lost steam for two days in late August (which not coincidentally were the same two days when margin requirements were sharply increased for the yellow metal on select exchanges), it has since posted a strong rally over the last seven trading days and appears poised to break out to new all time highs. Silver (SLV) has also responded in an almost identical fashion.
So what is at the core of the market stress? Certainly, the increasingly weakening U.S. economy is playing its part. And the “UNCH” jobs report on Friday did not help. But shouldn’t the consistently bad stream of economic data be playing right into the Tepperesque win-win story for stocks of weakening economy means even more aggressive stimulus from the Fed? Although I have my reservations as to whether QE3 would work in boosting stock prices, neither the weakening U.S. economy nor the lousy jobs report is at the heart of the matter.
The critical issue for investment markets is Europe. With each passing day, it appears increasingly likely that the situation is going to completely unravel. Greece remains out in front, as it looks like the latest bailout program may collapse amid concerns from the IMF and European leaders that the country is widely missing targets required to secure a second round of rescue funding.
Italy appears to be following close behind. After passing an austerity program in order to receive emergency support from the European Central Bank, the Italian government has been increasingly backtracking on these commitments in recent days. This has sent Italian 10-Year Government Bond yields soaring higher once again toward the critical 6%. On Friday alone, yields jumped 12 basis points to close at the highs for the day at 5.28%.
The key risk for investment markets is that a sovereign default in Europe could trigger another global financial crisis similar to what we saw begin to unfold in September 2008. Adding to the worry is the fiscal and monetary arsenal that was available to fight the crisis in 2008 has been largely depleted currently. These worries continue to take their toll on the stock market including the financial sector, which remains down sharply for the year.
One reassuring signal remains the Preferred Stock market, which continues to trade well above early August lows. However, the recent trade lower over the last three trading days should be watched closely, particularly following the suit announced on Friday by the FHFA against 17 global banks in an attempt to recover losses for Fannie Mae (FNMA.OB) and Freddie Mac (FMCC.OB). If Preferred Stocks begin to tail off to the downside, a severe stock market reaction may soon follow.
Looking out over the month of September, we should soon find answers as to how this is all going to play out. And we may not have to wait for long given the full calendar throughout the month. The following are some of the key events to monitor in the coming weeks:
September 7 2011: The German Federal Constitutional Court is set to rule whether of recent bond purchasing actions by the European Central Bank are in violation of euro zone rules. If the bailouts are determined to be illegal, this has the potential to seal the fate of the monetary union. Thus, this is a most critical news item to watch on Wednesday.
September 8 2011 : Two important speeches come on Thursday. The most notable of the two is President Obama’s jobs speech to a Joint Session of Congress. But perhaps just as critical will be Fed Chairman Bernanke’s speech in Minneapolis that day. Not only will this potentially provide a hint at potential policy actions at the upcoming Fed meeting, but it is also his first scheduled appearance following the German vote on September 7. If this vote were to go badly, Bernanke may be much more explicit in his policy language.
September 20-21 2011 : The U.S. Federal Reserve is scheduled for a once one day, now two day meeting to discuss its various monetary policy options. Some investors are anticipating some form of stimulus including perhaps a full blown QE3 with more large scale asset purchases. How global events and economic data unfold over the next 16 days will go a long way in determining how the Fed might react if at all. And even if the Fed does react with a full QE3, it may not be the panacea for the stock market this time around that some may be hoping for.
September 23 2011 : The German Parliament will vote on the Greek bailout and the expansion of the European Financial Stability Facility. While Germany is the backbone of the euro zone and has been the primary source of funding thus far for at risk economies across the region, the bailouts are becoming increasingly unpopular in the country and political support for any further action is becoming increasingly fragmented. So the vote is far from a sure thing, and this assumes the fiscal situation stays together in Greece long enough to actually get to the vote. In addition, 16 other euro zone nations are scheduled to vote on the bailout program roughly around the same time including Finland, which has demanded collateral from Greece in return for their approval of the rescue plan.
Investment markets have a great deal to monitor and contemplate in the coming weeks. Depending on how events unfold, we could see the final beginning of the end for the euro zone. At the same time, we could see European leaders come together once again to fight on for the monetary union. The stakes are also high in the U.S., as policy makers have the potential to excite markets with new stimulus measures or disappoint with the lack thereof. Interspersed among all of these key events is a steady wave of global economic data that may either show further deterioration toward a double-dip recession or signs of stabilization. And one last wrinkle will be the ongoing travails of selected financial institutions both in the U.S. and in Europe. Several are increasingly wobbling, and any further deterioration may soon lead to a major Lehman like shoe dropping once again in investment markets.
At present, the trend remains toward further deterioration and the risks are biased to the downside. As a result, keeping portfolio hedges such as Gold, Silver and U.S. Treasuries in place is worthwhile to both protect against downside and capture upside opportunity. Stock allocations would also be well served to emphasize the highest quality names in more defensive sectors, as these typically provide dividend income and are likely to experience considerably less volatility relative to the broader market. Lastly, holding an allocation to cash is also worthwhile in seeking to capture opportunities that may present themselves during any potential sharp market sell offs along the way. Stay closely tuned.(original post by seekingalpha.com)
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Monday, August 29, 2011
are tips a good investment in 2011
are tips a good investment in 2011 ; Inflation is probably the greatest enemy of a bond investor. Again it is true for a person with fixed income too. It is capable of putting your entire budget plan down. So, question may arise in your mind – is there any investment option which can fight against it? Where to put the hard-earned money so that it yields at least some relief at the devastating period of inflation?
seekingalpha ; Are TIPS Still a Good Investment?
I've been recommending TIPS since last November, when their real yields spiked and the market expected inflation to be negative for many years. Since then real yields have come down a lot, and inflation expectations have moved higher, Read More...
TIPS (Treasury Inflation-Protected Securities) for a Safer Bond Investment
Well, there is a very good way, which can help you in this situation, some TIPS. Don’t get confused. It stands for Treasury Inflation-Protected Securities and TIPS is really a great offer from the Federal Government, which is a sure shot way to beat inflation with no risk of money. If you could know the best way to use TIPS, then surely you will gain the power to fight against inflation. Read More...
Investment Tips for 2011 from Finance Expert Daniel Shaffer
It's been a wild ride. The Dow Jones is clocking in at above 11,000 these days. Just 20 months ago, in early March 2009, the index hovered around the 7,000s. Given the volatility, it's not surprising we average investors are skittish about entering or re-entering the market.Read More...
Investment tips for 2011
Naturally, if any of the following advice were foolproof, they wouldn't give it away. As always, do your own research, stay diversified and assess your own willingness for risk.Read More...
Top 10 investing tips for 2011
With an economy still on the mend and unemployment stubbornly high, it's important to make the best investing decisions for you and your family. The best strategy blends managing risk while investing to get the most bang for your buck. Read More...
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seekingalpha ; Are TIPS Still a Good Investment?
I've been recommending TIPS since last November, when their real yields spiked and the market expected inflation to be negative for many years. Since then real yields have come down a lot, and inflation expectations have moved higher, Read More...
TIPS (Treasury Inflation-Protected Securities) for a Safer Bond Investment
Well, there is a very good way, which can help you in this situation, some TIPS. Don’t get confused. It stands for Treasury Inflation-Protected Securities and TIPS is really a great offer from the Federal Government, which is a sure shot way to beat inflation with no risk of money. If you could know the best way to use TIPS, then surely you will gain the power to fight against inflation. Read More...
Investment Tips for 2011 from Finance Expert Daniel Shaffer
It's been a wild ride. The Dow Jones is clocking in at above 11,000 these days. Just 20 months ago, in early March 2009, the index hovered around the 7,000s. Given the volatility, it's not surprising we average investors are skittish about entering or re-entering the market.Read More...
Investment tips for 2011
Naturally, if any of the following advice were foolproof, they wouldn't give it away. As always, do your own research, stay diversified and assess your own willingness for risk.Read More...
Top 10 investing tips for 2011
With an economy still on the mend and unemployment stubbornly high, it's important to make the best investing decisions for you and your family. The best strategy blends managing risk while investing to get the most bang for your buck. Read More...
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Thursday, August 25, 2011
Best pension plans tips 2011- 2012
Best pension plans tips 2011-2012 : Suffice to say, then, if you plan to enjoy retirement, there's work to be done; a long and fulfilling life awaits many of us, but we're going to need to plan properly if we're to pay for it, pension tips to help you get – and stay – on the right track.
1. Seriously review; carefully re-plan
Retirement might seem aeons away, but that's no excuse to turn a blind eye and lapse into spendthrift ways.
If you don't know how much you've saved (via pensions, Isas, stock market investments, property etc.) then run a comprehensive review. Done on a regular basis – perhaps once or twice a year - this will help keep you on straight and narrow.
There are three essential boxes to tick before pension tinkering can begin, says Nick Lincoln, an independent financial adviser at Values to Vision Financial Planning.
First, work out when you want to retire and the income you'll need to live the retirement life you want. Calculate all your potential income streams in retirement (state pension, rental incomes, Isa investments, final salary benefits, employer pensions). Compare the two numbers. The shortfall figure should guide your action plan.
If you're not meeting your target, you'll have four main options: retiring later, saving more now, accepting less retirement income, or taking more risk to improve returns.
Steve Laird, an independent financial adviser at Carrington Wealth Management, has these top tips: 'If you have one or more existing pension plans, get a projection of what the benefits are likely to be at your chosen retirement age. If you have a company pension scheme you should be able to get this information from the scheme trustees.
'If it's a personal pension plan then write to the plan provider. Ask for a projection 'in today's money' – this will give you a much better idea of what you'll be able to buy with your pension fund.
'If there's a big shortfall between what you'll get and what you'll need then the time to take action is now – the longer that you leave it, the more it will cost you to make up the difference.
As a guide for how much to save, Alan Maxwell, a chartered financial planner at Corporate Benefits, says around 10% to 15% of your salary should be dedicated towards long-term planning - at all times.
2. Take advantage of Isas
Each year you can save up to £10,200 into an Isa (£5,100 in cash). Each year the allowance rises slightly (it's linked to inflation).Isas are simply investment 'wrappers' that shelter your cash from the long arm of the taxman. For basic rate taxpayers, this is a better saving solution than a pension (see below). The key difference with Isas is that you have access to your cash before age 55. If you're unsure which is right for you, check our Isa vs. Pension pros and cons round up.
Danny Cox, an adviser at Hargreaves Lansdown, says: 'Make full use of your Isa allowance. Less tax means the potential for much better returns from your savings and investments.'
Ian Lowes, of Lowes Financial Management, says: 'Despite the fact that Isas have been around for more than a decade, there is still a lot of misunderstanding surrounding them.
'An Isa is simply an annual allowance that everyone over 18 has to shelter some of their investments or savings from income tax and/or capital gains tax. They should be used by most investors each year in one form or another.
3. Use a pension to claw back tax
Pensions are the archetypal retirement savings product. It is more than possible to get all the way to retirement without them. But higher rate taxpayers should take note: a pension can help claw back some of the 40% or 50% tax you cough up each year.
Quite simply, the Government refunds your income tax when you store money in a pension. This is reward for being unable to use it until you're 55. Income tax is paid on the way out of the pension in retirement. But, the benefit is that you'll probably qualify within a lower income threshold – usually as a basic rate taxpayer – and so reduce your percentage liability from 40% or 50% to 20%. Additionally, you can claim a quarter of the pension pot direct as a tax-free lump sum – you'll never, ever have paid tax on this cash.
Ian Lowes says: 'Tax relief means a £1,000 contribution will cost a higher rate taxpayer just £600. The downside is that you can only have 25% of the fund back - and only once you're at least 55. The rest of the fund has to provide a taxable income (via an annuity or drawdown policy – see below).
4. Check how your pension is invested
This is one of the serious areas of concern for those already with a pension. Poor performance can leave you seriously under-funded in retirement. In particular, watch out for so-called 'zombie funds'. We warn about these at This is Money.
An estimated 11 million savers are trapped in failing pension funds that deny them thousands of pounds of yearly income in retirement.
Peter McGahan, an independent financial adviser at Worldwide Financial Planning, says: 'Make sure your money is being invested by the best fund managers. A decent investment-based IFA will know how to pick these.'
Alan Maxwell, a chartered financial planner at Corporate Benefits, says many people - particularly those with funds in very old pensions - never bother to check how their money is managed. They just presume solid returns are a given. They're not. With fund managers changing regularly and performance varying, it's a serious concern.
Nick Lincoln, independent financial adviser at Values to Vision Financial Planning recommends that younger investors with more than ten years to retirement make sure they're reaping the rewards of the stock markets.
'It's too risky to invest in anything else (risk defined here as the likelihood of your fund not growing fast enough, which is the biggest risk of all),' he says. 'Divest back out of equities as you approach retirement.'
In your 50s, you must reconsider your 'risk profile'. This means opting out of riskier investments – shares – to lock in your gains. Instead, cash and bonds will provide a more consistent return.
Chris Wicks, a chartered financial planner at Bridgewater, explains: 'If you are retiring in the next couple of years you need to start to reduce the risk of your pension fund by moving to fixed interest and cash funds to avoid the impact of a last minute stock market drop on your retirement income.
5. Cut costs with a fund supermarket
To optimise your investments to the full, steer clear of dinosaur personal pension plans altogether. Instead, try a Self-Invested Personal Pensions (Sipp). These allow you to choose exactly how your cash is invested, whether in shares, funds, commercial property or something else. Created 21 years ago for high net wealth savers, they have become far more accessible in the 21st Century.
For the majority of mid-wealth investors, a fund supermarket-style Sipp – which is simply a low-cost platform for investing in different funds – could work perfectly.
Danny Cox says: 'Use a fund supermarket to reduce costs and simplify your investments. As the name suggests a fund supermarket is a one stop shop for Isas, Sipps, funds, shares, ETFs and investment trusts.
'They buy in bulk and pass those savings onto the investor, meaning you can invest in a unit trust saving as much as 5.5% on the cost when buying direct. Fund supermarkets enable you to consolidate your investments and pensions into one simple statement, view the value at anytime on line and deal on-line from the comfort of your own home.'
Some of the cheapest fund low-cost Sipps are run by Hargreaves Lansdown, James Hay, AJ Bell's Sippdeal, and Alliance Trust. Help on finding the cheapest low cost Sipp.
6. Get the right annuity
From April, some retirees will no longer need to purchase an annuity to convert their pots into an income. It will be possible, instead, to stay invested in the stock market and draw money slowly from your pot.
But the operative word here is 'some' people. Most will still find that the secure income stream from an annuity is necessary for a hassle-free old age. Others simply won't be allowed to opt out of annuity purchases because their funds won't be large enough. More on the new rules here.
When you hit retirement, it's absolutely essential to shop around for the best annuity rate. At the beginning of 2011, a £100,000 pot typically buys a pension of just £5,500 a year for a couple. But different insurance companies vary wildly - by as much as 20% - in the sort of income they'll pay in exchange for your pension pot.
This is particularly important if your health is poor as you may qualify for an enhanced rate - sometimes a huge 30% - 40% more. This applies to smokers, too, as their life expectancy is shorter.
Peter McGahan points out that some pension plans provide 'guaranteed' annuity rates that comprehensively beat the open market options. But he warns that even then, these they aren't always the best option.
He says: 'Check whether your pension offers a guaranteed annuity. As you retire you might see this is around 8% or 9% and that looks very attractive. But when you dig deeper, you'll find that these often have serious downsides. Firstly, most don't include spouses in the terms. That means that if you die, your partner won't benefit – the payments will stop. (source www.thisismoney.co.u )
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1. Seriously review; carefully re-plan
Retirement might seem aeons away, but that's no excuse to turn a blind eye and lapse into spendthrift ways.
If you don't know how much you've saved (via pensions, Isas, stock market investments, property etc.) then run a comprehensive review. Done on a regular basis – perhaps once or twice a year - this will help keep you on straight and narrow.
There are three essential boxes to tick before pension tinkering can begin, says Nick Lincoln, an independent financial adviser at Values to Vision Financial Planning.
First, work out when you want to retire and the income you'll need to live the retirement life you want. Calculate all your potential income streams in retirement (state pension, rental incomes, Isa investments, final salary benefits, employer pensions). Compare the two numbers. The shortfall figure should guide your action plan.
If you're not meeting your target, you'll have four main options: retiring later, saving more now, accepting less retirement income, or taking more risk to improve returns.
Steve Laird, an independent financial adviser at Carrington Wealth Management, has these top tips: 'If you have one or more existing pension plans, get a projection of what the benefits are likely to be at your chosen retirement age. If you have a company pension scheme you should be able to get this information from the scheme trustees.
'If it's a personal pension plan then write to the plan provider. Ask for a projection 'in today's money' – this will give you a much better idea of what you'll be able to buy with your pension fund.
'If there's a big shortfall between what you'll get and what you'll need then the time to take action is now – the longer that you leave it, the more it will cost you to make up the difference.
As a guide for how much to save, Alan Maxwell, a chartered financial planner at Corporate Benefits, says around 10% to 15% of your salary should be dedicated towards long-term planning - at all times.
2. Take advantage of Isas
Each year you can save up to £10,200 into an Isa (£5,100 in cash). Each year the allowance rises slightly (it's linked to inflation).Isas are simply investment 'wrappers' that shelter your cash from the long arm of the taxman. For basic rate taxpayers, this is a better saving solution than a pension (see below). The key difference with Isas is that you have access to your cash before age 55. If you're unsure which is right for you, check our Isa vs. Pension pros and cons round up.
Danny Cox, an adviser at Hargreaves Lansdown, says: 'Make full use of your Isa allowance. Less tax means the potential for much better returns from your savings and investments.'
Ian Lowes, of Lowes Financial Management, says: 'Despite the fact that Isas have been around for more than a decade, there is still a lot of misunderstanding surrounding them.
'An Isa is simply an annual allowance that everyone over 18 has to shelter some of their investments or savings from income tax and/or capital gains tax. They should be used by most investors each year in one form or another.
3. Use a pension to claw back tax
Pensions are the archetypal retirement savings product. It is more than possible to get all the way to retirement without them. But higher rate taxpayers should take note: a pension can help claw back some of the 40% or 50% tax you cough up each year.
Quite simply, the Government refunds your income tax when you store money in a pension. This is reward for being unable to use it until you're 55. Income tax is paid on the way out of the pension in retirement. But, the benefit is that you'll probably qualify within a lower income threshold – usually as a basic rate taxpayer – and so reduce your percentage liability from 40% or 50% to 20%. Additionally, you can claim a quarter of the pension pot direct as a tax-free lump sum – you'll never, ever have paid tax on this cash.
Ian Lowes says: 'Tax relief means a £1,000 contribution will cost a higher rate taxpayer just £600. The downside is that you can only have 25% of the fund back - and only once you're at least 55. The rest of the fund has to provide a taxable income (via an annuity or drawdown policy – see below).
4. Check how your pension is invested
This is one of the serious areas of concern for those already with a pension. Poor performance can leave you seriously under-funded in retirement. In particular, watch out for so-called 'zombie funds'. We warn about these at This is Money.
An estimated 11 million savers are trapped in failing pension funds that deny them thousands of pounds of yearly income in retirement.
Peter McGahan, an independent financial adviser at Worldwide Financial Planning, says: 'Make sure your money is being invested by the best fund managers. A decent investment-based IFA will know how to pick these.'
Alan Maxwell, a chartered financial planner at Corporate Benefits, says many people - particularly those with funds in very old pensions - never bother to check how their money is managed. They just presume solid returns are a given. They're not. With fund managers changing regularly and performance varying, it's a serious concern.
Nick Lincoln, independent financial adviser at Values to Vision Financial Planning recommends that younger investors with more than ten years to retirement make sure they're reaping the rewards of the stock markets.
'It's too risky to invest in anything else (risk defined here as the likelihood of your fund not growing fast enough, which is the biggest risk of all),' he says. 'Divest back out of equities as you approach retirement.'
In your 50s, you must reconsider your 'risk profile'. This means opting out of riskier investments – shares – to lock in your gains. Instead, cash and bonds will provide a more consistent return.
Chris Wicks, a chartered financial planner at Bridgewater, explains: 'If you are retiring in the next couple of years you need to start to reduce the risk of your pension fund by moving to fixed interest and cash funds to avoid the impact of a last minute stock market drop on your retirement income.
5. Cut costs with a fund supermarket
To optimise your investments to the full, steer clear of dinosaur personal pension plans altogether. Instead, try a Self-Invested Personal Pensions (Sipp). These allow you to choose exactly how your cash is invested, whether in shares, funds, commercial property or something else. Created 21 years ago for high net wealth savers, they have become far more accessible in the 21st Century.
For the majority of mid-wealth investors, a fund supermarket-style Sipp – which is simply a low-cost platform for investing in different funds – could work perfectly.
Danny Cox says: 'Use a fund supermarket to reduce costs and simplify your investments. As the name suggests a fund supermarket is a one stop shop for Isas, Sipps, funds, shares, ETFs and investment trusts.
'They buy in bulk and pass those savings onto the investor, meaning you can invest in a unit trust saving as much as 5.5% on the cost when buying direct. Fund supermarkets enable you to consolidate your investments and pensions into one simple statement, view the value at anytime on line and deal on-line from the comfort of your own home.'
Some of the cheapest fund low-cost Sipps are run by Hargreaves Lansdown, James Hay, AJ Bell's Sippdeal, and Alliance Trust. Help on finding the cheapest low cost Sipp.
6. Get the right annuity
From April, some retirees will no longer need to purchase an annuity to convert their pots into an income. It will be possible, instead, to stay invested in the stock market and draw money slowly from your pot.
But the operative word here is 'some' people. Most will still find that the secure income stream from an annuity is necessary for a hassle-free old age. Others simply won't be allowed to opt out of annuity purchases because their funds won't be large enough. More on the new rules here.
When you hit retirement, it's absolutely essential to shop around for the best annuity rate. At the beginning of 2011, a £100,000 pot typically buys a pension of just £5,500 a year for a couple. But different insurance companies vary wildly - by as much as 20% - in the sort of income they'll pay in exchange for your pension pot.
This is particularly important if your health is poor as you may qualify for an enhanced rate - sometimes a huge 30% - 40% more. This applies to smokers, too, as their life expectancy is shorter.
Peter McGahan points out that some pension plans provide 'guaranteed' annuity rates that comprehensively beat the open market options. But he warns that even then, these they aren't always the best option.
He says: 'Check whether your pension offers a guaranteed annuity. As you retire you might see this is around 8% or 9% and that looks very attractive. But when you dig deeper, you'll find that these often have serious downsides. Firstly, most don't include spouses in the terms. That means that if you die, your partner won't benefit – the payments will stop. (source www.thisismoney.co.u )
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Sunday, July 31, 2011
UK pension schemes shy away from private equity
UK pension schemes shy away from private equity : It has been revealed that UK pension schemes are shying away from private equity due to the fact they need firm income and more reliable investment returns for the future. As a consequence, a report by the National Association of Pension Funds has confirmed that the allocation of funds to private equity fell from 2.5% to just 1% as of the end of June 2009. While this does not seem like a massive adjustment in the allocation of funds to private equity investment, it will have an impact in the longer term.
As we have seen, the pension fund deficits of so many well-known companies in the UK have grown substantially over the last decade and pension trustees feel that they now need to maintain a high level of fixed interest assets, predominantly UK gilts which are backed by the UK government. While this will allow pension fund trustees to accurately predict their income into the future, and a return on their investments when the gilts are redeemed, it will reduce actual "investment returns".
It is worth remembering that pension funds are not only reducing their potential investment returns on an annual basis, but there is also the impact of an investment return on an original investment return, i.e. the reinvestment of profits.
As we have seen, the pension fund deficits of so many well-known companies in the UK have grown substantially over the last decade and pension trustees feel that they now need to maintain a high level of fixed interest assets, predominantly UK gilts which are backed by the UK government. While this will allow pension fund trustees to accurately predict their income into the future, and a return on their investments when the gilts are redeemed, it will reduce actual "investment returns".
It is worth remembering that pension funds are not only reducing their potential investment returns on an annual basis, but there is also the impact of an investment return on an original investment return, i.e. the reinvestment of profits.
Saturday, July 16, 2011
best performing asset class 2011
best performing asset class 2011, Precious metals (gold, silver and platinum) were the best performing asset class over the first half of 2011, providing investors with a return of 4.9pc, according to new research from Lloyds TSB. The return over the past year was 36pc. 'Precious metals continue to shine brightest among investors amid renewed uncertainty over the outlook for the global economy
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Wednesday, July 13, 2011
best investment 2011, Gold vs shares vs property
best investment 2011, Gold vs shares vs property : As gold hits a new record high, precious metals are still shining brightly among investors, according to research by Lloyds TSB.
According to the bank, precious metals - gold, platinum and silver - were the best performing asset class over the first half of 2011, providing a return of 4.9 per cent.
Silver was the precious metal that fared the best, significantly outperforming the other precious metals over the first half of 2011 with prices rising by 14 per cent – this is more than double the increase in gold prices (6.6 per cent).
In addition to its position as a safe haven investment, high demand for industrial uses has contributed to the strong rise in the price of silver.
In contrast, the price of platinum dropped 1.9 per cent in the last six months – but despite this, precious metals still beat other assets.
Despite the impressive rise in the price of silver, it has dipped drastically since its peak performance in April 2011, where it reached $49 per troy ounce – a rise of 59 per cent since the start of the year.
At the end of June, it was 28 per cent lower at $35 per troy ounce, amid a period of increased market volatility. But silver prices at the end of June are still 87 per cent higher than at the same point in 2010.
Looking over a ten year period, the price of silver has gone up a whopping 708%, gold 457% and platinum 209%.
In April 2011, gold prices smashed through to record highs of $1,532.91 an ounce and since then, gold prices have continued to climb and are now reaching even higher heights – it hit a new record high of $1,591 on Wednesday.
Gold vs shares vs property
The report also found that precious metals delivered the highest returns over the past ten years (36 per cent), closely followed by commodities (34 per cent) and UK shares (26 per cent).
Looking at the past ten years, precious metals have also provided the highest returns over a ten year period (416 per cent) with the fall in interest rates increasingly the opportunity cost of holding this asset.
Commodities (208 per cent) recorded the second biggest increase over the ten years to 2011, followed by residential property.
Suren Thiru, economist at Lloyds TSB, said: ‘Precious metals continue to provide the best returns for investors against a backdrop of continued anxiety over the prospects for global economic growth and convers over Eurozone sovereign debt risk and high inflation.
‘Precious metals have benefited from lower interest rates over recent years as well as their position as a hedge against inflation and financial market uncertainty.’
With bank rates still at record lows, holding cash delivered the lowest returns (0.3 per cent) over the first six months of the year.
Looking at commodities, coffee was the top performer over the first half of the year, with a price rise of 15 per cent. In contrast, hard wheat was the worst performing commodity, recording a price decline of - 18 per cent.
According to the bank, precious metals - gold, platinum and silver - were the best performing asset class over the first half of 2011, providing a return of 4.9 per cent.
Silver was the precious metal that fared the best, significantly outperforming the other precious metals over the first half of 2011 with prices rising by 14 per cent – this is more than double the increase in gold prices (6.6 per cent).
In addition to its position as a safe haven investment, high demand for industrial uses has contributed to the strong rise in the price of silver.
In contrast, the price of platinum dropped 1.9 per cent in the last six months – but despite this, precious metals still beat other assets.
Despite the impressive rise in the price of silver, it has dipped drastically since its peak performance in April 2011, where it reached $49 per troy ounce – a rise of 59 per cent since the start of the year.
At the end of June, it was 28 per cent lower at $35 per troy ounce, amid a period of increased market volatility. But silver prices at the end of June are still 87 per cent higher than at the same point in 2010.
Looking over a ten year period, the price of silver has gone up a whopping 708%, gold 457% and platinum 209%.
In April 2011, gold prices smashed through to record highs of $1,532.91 an ounce and since then, gold prices have continued to climb and are now reaching even higher heights – it hit a new record high of $1,591 on Wednesday.
Gold vs shares vs property
The report also found that precious metals delivered the highest returns over the past ten years (36 per cent), closely followed by commodities (34 per cent) and UK shares (26 per cent).
Looking at the past ten years, precious metals have also provided the highest returns over a ten year period (416 per cent) with the fall in interest rates increasingly the opportunity cost of holding this asset.
Commodities (208 per cent) recorded the second biggest increase over the ten years to 2011, followed by residential property.
Suren Thiru, economist at Lloyds TSB, said: ‘Precious metals continue to provide the best returns for investors against a backdrop of continued anxiety over the prospects for global economic growth and convers over Eurozone sovereign debt risk and high inflation.
‘Precious metals have benefited from lower interest rates over recent years as well as their position as a hedge against inflation and financial market uncertainty.’
With bank rates still at record lows, holding cash delivered the lowest returns (0.3 per cent) over the first six months of the year.
Looking at commodities, coffee was the top performer over the first half of the year, with a price rise of 15 per cent. In contrast, hard wheat was the worst performing commodity, recording a price decline of - 18 per cent.
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