Not that I want to crow about it you understand, but back on March 8th I brought to your attention a way of making a 27% return. Scroll down on the blog page and you'll see the item headed "How Can I Get More Interest?". In fact it's still featured on the Home page of the Retirement Revenue website.
It's gratifying to note that Yahoo Finance have published a very similar article - on 23rd March. They have obviously done their sums as well (one supposes) because they came up with exactly the same number (27%) that was published here more than two weeks earlier. I wonder where they got the idea from? Probably nothing to do with me, but it's an interesting idea to think that Yahoo might be reading this blog as well as you!
Original thinking from the Retired Old Blogger!
You read it here first.
Friday, March 26, 2010
How can I get more interest?
Interest rates on my meagre savings are damn near zero. In fact, when you take inflation into account, I'm actually losing money. My savings are depreciating at a faster rate than my interest is adding to the original amount.
This is crazy. The frightening thing is that it's not going to improve anytime soon. I used to rely on my bank interest to supplement my miserably small pension. Not any more. So I started wondering what I could do about it. Somehow I have to earn more than the 1 - 2% that I'm getting in bank interest, but I am scared silly about putting my few savings at risk.
I've thought about putting a bit on one side and maybe taking a punt on the currency markets, because I can't help feeling that sterling is down the tubes and that I should be hedging my bets by investing in some other currency. But then I think that I'm just gambling and most people lose money gambling. Instead of currencies I thought about buying gold, but it can be a bit of a hassle unless you buy an Exchange Traded Fund (ETF) that's physically backed by the commodity. Anyway, I've probably missed that particular boat by now.
The final thought was buying shares in foreign companies. Some research will produce a few jems that could make a capital gain and, at the same time, generate a much higher income (by way of dividends) than I'me getting in bank interest. They might also make a gain in currency terms. One such company would be France Telecom. This is the third largest telecoms company in Europe. Right now it's returning 7.9% on a price/earnings ratio of just about 10.
Worth a thought - but please make your own decisions, I'm no investment guru that's for sure.
This is crazy. The frightening thing is that it's not going to improve anytime soon. I used to rely on my bank interest to supplement my miserably small pension. Not any more. So I started wondering what I could do about it. Somehow I have to earn more than the 1 - 2% that I'm getting in bank interest, but I am scared silly about putting my few savings at risk.
I've thought about putting a bit on one side and maybe taking a punt on the currency markets, because I can't help feeling that sterling is down the tubes and that I should be hedging my bets by investing in some other currency. But then I think that I'm just gambling and most people lose money gambling. Instead of currencies I thought about buying gold, but it can be a bit of a hassle unless you buy an Exchange Traded Fund (ETF) that's physically backed by the commodity. Anyway, I've probably missed that particular boat by now.
The final thought was buying shares in foreign companies. Some research will produce a few jems that could make a capital gain and, at the same time, generate a much higher income (by way of dividends) than I'me getting in bank interest. They might also make a gain in currency terms. One such company would be France Telecom. This is the third largest telecoms company in Europe. Right now it's returning 7.9% on a price/earnings ratio of just about 10.
Worth a thought - but please make your own decisions, I'm no investment guru that's for sure.
Monday, March 15, 2010
Nine Million People Can't be Wrong
When you learn that the government has spent 60% more on the National Health Service over the last 10 years you think, "OK, credit where it's due. That sounds pretty good." Then you learn that productivity in the NHS has actually fallen by 4% over the same period.
Hang on. How can that be? How can expenditure go up by 60% and productivity fall by 4%. If you were in business you'd go broke in no time. If you were a manager with that kind of record you'd probably get sacked for incompetence. And yet the NHS, that you and I pay for, gets away with it.
It transpires that 2/3 (yes, that 66%) of all the new money has gone on pay deals and additional managers. Suddenly the government doesn't look too good any more.
According to a statistic I read in Money Week, nine million people of my generation - the over 55's - are thinking about leaving the country to go and live somewhere else. I never quite understood how they work out these statistics, nobody asked me, but if that's correct, it's a sad reflection on the mood of the older generation and nine million people can't be wrong, can they?
Actually, they might be thinking about it, but not many will go through with it. For a start the pound has fallen to such low levels against just about every other currency (it even fell against the Zimbabwian dollar) that moving abroad is an expensive business. Living costs will therefore be that much higher because we are going to be taking our pension in sterling and buying our food in Euros or whatever. So we might want to move out, but just at the moment it doesn't make economic sense, so we're stuck.
May as well stay put and try and make some extra money. Perhaps start a business in our spare time working from home, or maybe get a part-time job. There's a web site that will give you some ideas about how to get started: http://retirementrevenue.co.uk
Hang on. How can that be? How can expenditure go up by 60% and productivity fall by 4%. If you were in business you'd go broke in no time. If you were a manager with that kind of record you'd probably get sacked for incompetence. And yet the NHS, that you and I pay for, gets away with it.
It transpires that 2/3 (yes, that 66%) of all the new money has gone on pay deals and additional managers. Suddenly the government doesn't look too good any more.
According to a statistic I read in Money Week, nine million people of my generation - the over 55's - are thinking about leaving the country to go and live somewhere else. I never quite understood how they work out these statistics, nobody asked me, but if that's correct, it's a sad reflection on the mood of the older generation and nine million people can't be wrong, can they?
Actually, they might be thinking about it, but not many will go through with it. For a start the pound has fallen to such low levels against just about every other currency (it even fell against the Zimbabwian dollar) that moving abroad is an expensive business. Living costs will therefore be that much higher because we are going to be taking our pension in sterling and buying our food in Euros or whatever. So we might want to move out, but just at the moment it doesn't make economic sense, so we're stuck.
May as well stay put and try and make some extra money. Perhaps start a business in our spare time working from home, or maybe get a part-time job. There's a web site that will give you some ideas about how to get started: http://retirementrevenue.co.uk
Monday, March 8, 2010
Make a 27% Return!
I've had a letter from those very nice people at HMRC.
It seems that I'm entitled to something called Graduated Retirement Benefit. I haven't actually worked for the past 6 years and so haven't paid any National Insurance, but it seems that I can voluntarily make Class 3 payments of £626.60 a year to effectively 'buy back' these missing years.
Now I'm no mathemetician, but I got out my pencil and did some sums.
In April the basic states pension goes up to £5,077.80 a year. According to the rules, each year I pay for entitles me to 1/30th of the full pension. So, for £626.60 I get back £169.26 a year. I work that out to be a return of 27%.
This is what my grandchildren call a 'no brainer'.
Be well.
It seems that I'm entitled to something called Graduated Retirement Benefit. I haven't actually worked for the past 6 years and so haven't paid any National Insurance, but it seems that I can voluntarily make Class 3 payments of £626.60 a year to effectively 'buy back' these missing years.
Now I'm no mathemetician, but I got out my pencil and did some sums.
In April the basic states pension goes up to £5,077.80 a year. According to the rules, each year I pay for entitles me to 1/30th of the full pension. So, for £626.60 I get back £169.26 a year. I work that out to be a return of 27%.
This is what my grandchildren call a 'no brainer'.
Be well.
Thursday, March 4, 2010
How to Benefit from FX Without Trading Currencies
Foreign Exchange (FX) trading is not everyone's cup of tea. I have been known to dabble in it, but I'm not hugely enthusiastic and I'll tell you why. Time. FX traders don't buy-and-hold currency as you might do with shares. You take a punt. It's a gamble, a bet. The market is massive and it's massively volatile and so you need to keep a very watchful eye on the charts and be prepared to move quickly. Moving quickly is not something I do well, not at my age.
I can hear the howls of protest from swing traders and trend followers around the world, but currencies bounce around all over the place and stop-losses get hit with alarming regularity, even when a currency is trending strongly.
So, if you think that sterling is in long-term decline (and I wouldn't disagree), how do you benefit from that trend without shorting the pound? Well, you could buy gold or, better still, buy a fund that follows gold mining companies. The other alternative is to buy companies that trade on the London Stock Exchange, but that make most of their money elewhere in the world. Don't just buy any old company - you still need to do some research and remember one of Warren Buffett's great sayings: “It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
By the way, please don't take this as advice - what do I know? I'm just passing on the benefit of my experience.
Trade well and take your time.
I can hear the howls of protest from swing traders and trend followers around the world, but currencies bounce around all over the place and stop-losses get hit with alarming regularity, even when a currency is trending strongly.
So, if you think that sterling is in long-term decline (and I wouldn't disagree), how do you benefit from that trend without shorting the pound? Well, you could buy gold or, better still, buy a fund that follows gold mining companies. The other alternative is to buy companies that trade on the London Stock Exchange, but that make most of their money elewhere in the world. Don't just buy any old company - you still need to do some research and remember one of Warren Buffett's great sayings: “It's far better to buy a wonderful company at a fair price, than a fair company at a wonderful price.”
By the way, please don't take this as advice - what do I know? I'm just passing on the benefit of my experience.
Trade well and take your time.
Tuesday, March 2, 2010
How Much to Retire?
It has to be said that I’m not a great fan of Twitter (or Facebook and the others), but I’m told it’s because I’m a Grumpy Old Man who doesn’t understand social networking. I don’t think that’s strictly true. I think it’s more that I have no interest in knowing that Alice has a hangover or that John’s cat just caught a mouse.
However, there are occasional snippets of valuable information and Retirementdosh recently posted a good example. They said that in order to have £1 million pounds in 20 years time you would need to save £3,962 per month. That struck me as being a huge amount that is well beyond the scope of most people. There can’t be many 40 year olds planning on retiring at 60 that can afford to put away the best part of £4,000 per month – I dare say most people of that age don’t earn four grand a month. So I thought I’d look into it in a bit more detail.
It turns out that this is all to do with real bottom line return on investments and the unreal expectations that we tend to have. Most of us think that we should be getting a 5% or 6% return on our investments. Except, that is, for a professor at the London Business School by the name of Elroy Dimson (honest). He, according to Money Week, is an expert on market returns and reckons that the net-net-net return is only a half of one percent. He’s obviously allowed for all the costs involved in investing; bid-offer spreads, income tax, capital gains tax, stamp duty, inflation and the fact that we don’t put all our savings into stocks and shares anyway.
If he’s right, and logic suggests that he is, the vast majority of people are going to have a fairly bleak retirement. Especially so when you consider that today’s 40 year old is going to live a lot longer than today’s Grumpy Old Men.
You’re going to need more income when you officially retire and you need to start thinking about it now. Check out the web site for some ideas: http://bit.ly/apWC4h.
However, there are occasional snippets of valuable information and Retirementdosh recently posted a good example. They said that in order to have £1 million pounds in 20 years time you would need to save £3,962 per month. That struck me as being a huge amount that is well beyond the scope of most people. There can’t be many 40 year olds planning on retiring at 60 that can afford to put away the best part of £4,000 per month – I dare say most people of that age don’t earn four grand a month. So I thought I’d look into it in a bit more detail.
It turns out that this is all to do with real bottom line return on investments and the unreal expectations that we tend to have. Most of us think that we should be getting a 5% or 6% return on our investments. Except, that is, for a professor at the London Business School by the name of Elroy Dimson (honest). He, according to Money Week, is an expert on market returns and reckons that the net-net-net return is only a half of one percent. He’s obviously allowed for all the costs involved in investing; bid-offer spreads, income tax, capital gains tax, stamp duty, inflation and the fact that we don’t put all our savings into stocks and shares anyway.
If he’s right, and logic suggests that he is, the vast majority of people are going to have a fairly bleak retirement. Especially so when you consider that today’s 40 year old is going to live a lot longer than today’s Grumpy Old Men.
You’re going to need more income when you officially retire and you need to start thinking about it now. Check out the web site for some ideas: http://bit.ly/apWC4h.
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