Thinking About Investing in the Stock Market

Is it a good time to invest? The global economy is shaky, businesses are struggling and marketing budgets are tight.

How can businesses increase their value and their profit if they can’t afford to expand..?

When will be a good time to think about investing in the stock market?

Well, I don’t know a great deal about it but I read and digest information and I dabble with a virtual portfolio (an excellent way to get started without spending a penny).

In my opinion, the best time to get into investing in the Stock Market was 2008!

To justify claiming that the eruption of the financial crisis led to an ideal time to invest, when rock-steady businesses were popping all over the place, I call on my virtual portfolio from the past.

I have an account with Interactive Investor (www.iii.co.uk) which I opened back in 2008.

When the banks started to falter and companies started to lose value everyone seemed to rush to gold as a safe haven. This led to a surge in gold prices and an abundance of ‘Cash for Gold’ adverts on TV.

My thinking (as a total novice) was, if gold is going up in value, then any companies that can find more of it will reap the rewards and so I started to look at the performance of gold mining companies.

In any industry sector there will be winners and losers. Strong companies with good management and a little good fortune will do better than badly managed and strategically ill-placed ones so it always pays to do some digging.

I only did a small amount of research owing to time but I selected a number of gold mining companies and added them to my virtual portfolio.

Just a few weeks ago I reactivated my Interactive Investor account and had a nose at the old portfolio to see what had happened.

The overall profit on all of the virtual investments in companies across the gold mining sector was 722.95%

The best performing company rose by a staggering 8733%

The difference between the best performing and the overall portfolio indicates that some of the virtual shares should have been discarded and reinvested in some of the better performers but I still think growth of over 700% in 4 years isn’t bad!

Someone once told me there’s never a bad time to buy property.

I think this is true but it’s important to also remember that although there’s never a bad time to invest in property, there are some properties that will always be a bad investment.

The same applies to investing in companies. Some will do better than others but if you do your research you can avoid potential bad investments.

It’s easy to say all this when it comes to small scale investing but given the task of managing millions or billions of pounds or dollars, of other people’s money and being targeted, it becomes harder to find a safe place to put it all!

So anyway, I reopened my virtual account, had a look at a few companies and last week I bought a few shares in Carphone Warehouse. Their share value recently dropped when they shed ‘Best Buys’ and now they’re bouncing along a bit of a trough but all being well, the only way is up!

My 2011 – A Thoroughly Belated Review & Here’s to 2012

The financial future still looks pretty bleak.

‘The World Economic Forum Annual Meeting in Davos has wrapped up….. and in short, the outlook, after a week of intense discussion, is of a troubled world pressed for solutions across a number of fronts, but with optimism provided by human ingenuity and progress.’

I too am optimistic about 2012 thus far and good fortune throughout 2011 has most certainly helped.

The PPI Mis-selling bonanza lured me onto the bandwagon and I pursued a claim without employing the services of a third party. The claim was referred to the Ombudsman and upheld. I received over £13k back from MBNA and I was very pleased!

Most of it was used to wipe out a large portion of outstanding MBNA debt on which the Shylocks are charging a grotesque rate of interest.

Barclays changed the name of my ‘Overdraft Protection’ to simply ‘Payment Protection’ which led me to question the selling of what was actually another PPI policy. They sent me a letter saying they’d calculated an ‘estimated’ repayment of about £700 and then they paid me just £20. I questioned the discrepancy and mentioned I’d had success with the Ombudsman and wasn’t afraid to use them again and lo, a few weeks later, £700 arrived! Every little helps!

If the PPI successes weren’t enough I had a letter from Halifax to say they hadn’t notified customers of interest rate rises as well as they should have and they’d be calculating the financial impact of that and a few weeks later they knocked £1700 off the balance of my mortgage!

Thanks to good fortune and circumstances my monthly outgoings have been dramatically reduced. It would have otherwise taken many more years of grafting to get to this stage and I am extremely relieved.

There’s nothing more annoying than working just to pay off debts so with my burden reduced I now feel I can work towards a brighter financial future.

And that’s where 2012 comes in.

I build websites and I have a couple that generate enquiries for me. I have about 11 years of experience marketing websites and in a niche market I can easily get top 10 rankings without needing a massive marketing budget.

Marketing by itself does not make money, one still needs to work the enquiries and sell. 

As a one man band who also looks after a small firm with a few staff the marketing I need to do to perpetuate my own business can sometimes be sporadic.

But when I find the time, it pays.

So far this January I have generated 76 new finance related enquiries which is why I have only just found the time to write an article about 2011!

I don’t like to count chickens but I don’t plan to get pessimistic about the Mayan calendar this side of December.

Happy New Year everybody and I hope 2012 provides fruit for you too.

UK First Time Buyers Given a Boost with a 95% LTV Product Launch

This isn’t one of my own but a useful tidbit nonetheless. I have some thoughts and ideas floating around for some original articles but January has started with a boom and free time is hard to find!

So here’s something someone else wrote!

Newcastle Building Society has launched two competitive mortgage schemes to help first time buyers (FTB) with a low deposit take their first steps to owning their own home. 

With recent research highlighting that affordability for first time buyers is at the best level since before the credit crunch the Newcastle’s new products may be a timely introduction.

Newcastle Building Society’s two mortgage deals require a minimum 5% deposit. One product is a two-year fixed rate at 5.95% (APR 6.3%) with a £800 Completion Fee and £195 Reservation Fee.

Or, as an alternative, a fees-free option is available to suit those who want to use their available funds to maximise their deposit. This product is a two-year fixed rate at 6.25% (APR 6.2%) and comes with no completion or reservation fees.

Both products have a minimum loan amount of £10,000 and a maximum of £250,000 and are available in both NBS’ branch network and through the telephone-based direct mortgage team to make it as accessible as possible.

These products are also available for re-mortgages, as well as first time buyers and other home movers.

Steve Urwin, Sales and Marketing Executive at NBS: “When it comes to the housing market, it is a well known fact that first time buyers are key to keeping it mobile.

“Additionally, there is no doubt an appetite and ambition to own a home amongst this market still exists. However, the big hurdle for them is to obtain a mortgage deal that suits their specific needs with a smaller deposit requirement.

“Our two new mortgage products ultimately aim to give those new borrowers the chance to get onto the property ladder sooner rather than later.”

PRODUCT INFO:

The product features are outlined below:

5.95% (APR 6.3%) Fixed Rate until 31st March 2014

£800 Completion Fee (can be added to loan up to max LTV)

£195 Reservation Fee (payable upfront and non refundable)

Minimum Loan £10,000

Maximum Loan £250,000

Max LTV 95%

Early repayment charge of 3% if repaid before 31st March 2014

6.25% (APR 6.2%) Fixed Rate until 31st March 2014

No Completion Fee

No Reservation Fee

Free Standard Valuation (on properties up to £500k)

£300 Cashback (payable 14 days upon completion) or Free Legal Fees (for re-mortgages only in England and Wales)

Minimum Loan £10,000

Maximum Loan £250,000

Max LTV 95%

Early repayment charge of 3% if repaid before 31st March 2014

100% Mortgages are Back! – Or are they..?

A new product that has appeared on the mortgage scene is being called a 100% LTV Family Guarantee Mortgage.

This has been designed for families who wish to help their children get on the property ladder.

As the name suggests, a family member must provide a guarantee and that guarantee must come in the form of security on their property and must cover at least 25% of the child’s new mortgage.

What’s more, the security on the family member’s property must not take the total combined liability of all the secured debt (mortgages, loans etc.) above 75% across both properties.

eg: Parents have house worth £250,000 with a £100,000 mortgage.

75% LTV on parents home would be £187,500

Child wants to buy £120,000 flat.

25%  of flat value = £30,000

A £30,000 charge is placed on the parents property and the child gets a mortgage of £120,000 (provided the child can afford it).

In this example, if the parents mortgage was over £157,500  (75% less £30k security) it would not be possible.

For a small percentage of the population this represents an opportunity for parents without liquid funds available, to help their children onto the property ladder.

The risk is there for the parents because they could be forced to sell their home if the child defaults.

The risk is there for the child because their parents would disown them if they didn’t keep up the payments and as a consequence put the family home at risk.

The risk to the lender is minimal because they could repossess the £120k flat to cover all of the mortgage and they would also be able to go after the security in the parents home.

So although the borrower has a 100% mortgage, 25% of it is covered by security in the guarantor’s property.

The offer is a 3 year fixed at 6.48% (repayment only).

For the few who qualify for this product, it might actually work out cheaper for the parents to dip into their equity at a lower rate and gift the deposit to their child. The only drawback then is the parents would have to make the repayments on the money they raised – or try to get money out of their offspring!

Guarantees can come from parents, step parents or grandparents.

Independent advice could help determine the most appropriate solution!

The Greek Referendum

How many European leaders slapped their brows when they heard the news about the proposed referendum in Greece? I’d hazard a guess at ‘quite a few’.

Having spent ‘hours’ in meetings discussing the way forward for further bail-outs for Greece the Greek Prime Minister decided his public should vote on the matter.

Why? Can you imagine what would have happened here in the UK if the ConDems had allowed us to vote on the austerity measures?

More people would have voted than they did in the elections and there would probably have been a unanimous result of a resounding ‘no’ to cuts. After all, we are all so well informed we know what’s best for the country far better than any highly qualified economists, surely?

So when a country that is going to have to put in place some much tougher measures to avoid bankruptcy suggests the people should vote it’s hardly surprising the rest of the world puts its head in its hands and sighs.

A quote from an article on Interactive Investor puts it quite nicely: 

‘There is no pleasing some people. Not content with borrowing and spending his own country into economic oblivion, Greek Prime Minister George Papandreou single-handedly capsized global stockmarkets on Tuesday.

By giving the Greek people a referendum on the second tranche of bail-out funds from the eurozone, Papandreou has destabilised fragile investor optimism and placed a banana skin under the increasingly shaky domino his country has become’

The whole global debt crisis is no longer being understated as it was in 2009 when everyone was trying to pretend certain problems didn’t exist and global economies would return to prosperity in Q1 of, er, no wait, Q2..? Ah, Next year then…?

I recently received a hand-out at a meeting that showed Barclays Corporate base rate predictions sticking at 0.5% for at least another year.

I’ve also noticed forecasters downgrading their predictions for UK growth to a more pessimistic figure of about 0.3% so that when the news came out that growth was actually a staggering 0.5% the press could put a positive spin on the result – ‘UK Growth Higher then Predicted’!

Previously they’d have released optimistic figures only to be disappointed.

The threat of a ‘double dip’ recession is real but with growth so stagnant will it have much of an impact on consumer confidence that is already low (unless you sell iPads)?

Of course it could be avoided by swift action which is why Mr Papandreou’s decision is seen as a veritable spanner in the works.

What’s this? My Overdraft Protection isn’t Compulsory?

For as long as I can remember I’ve had a monthly entry on my bank statement that was called ‘O/D Protection’.

I thought this was a compulsory part of having an overdraft and for a time I was occasionally dipping into the overdraft so protection seemed like a good idea.

It wasn’t until my bank changed the title of this to ‘Payment Protection’ that it caught my attention.

What with all the automated sales call about PPI I keep receiving I thought my bank had taken it upon themselves to mis-sell me some without me even knowing about it.

I spoke to my bank and they explained that, (a) The ‘Payment Protection’ is what used to be referred to as ‘O/D Protection (b) It wasn’t compulsory and (c) It was effectively a PPI policy.

It was at this point that I remembered my recent credit card PPI claim that the Ombudsman has upheld.

If my credit card PPI claim had been upheld on the grounds that it was mis-sold then quite clearly I have a case against my bank for a PPI policy I didn’t realise was optional AND I wouldn’t have been able to claim on due to my self employment status.

The original O/D Protection was applied to my account in 1998 and has cost me approximately £4 per month and is still running (they’ve said they can’t cancel it until a dispute is settled… which seems odd if they’re probably going to have to give me all my money back anyway – with interest).

So that’s 13 years at £4 per month = £624

I think I have a pretty strong case but I now have to go through the standard procedure for making a PPI claim which means form filling and joining the back of the queue of the thousands of other people currently claiming!

I doubt I’ll see a refund this side of Christmas but it just goes to show that mis-selling has indeed been a scandal and it wasn’t always called PPI (Payment Protection Insurance).

Check your bank statements, check your other financial commitments such as credit cards and loans and then visit the very helpful Financial Ombudsman Service  website to find out if you’d qualify for a refund and a simple DIY guide to making a claim.

If you have the time, it’s not too difficult to do yourself.

An ‘Online Only’ Car Insurance Experience

The theory goes that if a business doesn’t need to pay as many salaries, it can offer its products at more competitive prices.

The internet is therefore an ideal medium for transacting low cost automated business.

If a company can use its website to take a customer from enquiry through to sale without the need for human intervention it should be able to save money and either increase profit margin or pass the savings on to customers.

Having tried a selection of car insurance comparison sites I recently settled for an ‘online only’ car insurance policy.

It was the cheapest policy I could find that also included things like protected NCD (No Claims Discount) and legal cover.

The welcome pack and certificate arrived and all was well.

But then 1 month later I moved house and I had to make some changes…

It soon became apparent there was no customer services phone number at all and all enquiries (apart from claims) had to be sent by email.

This wasn’t an immediate problem as my enquiry wasn’t urgent and all I needed to do was ‘login’ to my ‘customer area’ and make the changes to get a new quote.

I’ve been using the internet for a few years now so I can’t say how a ‘newbie’ would find things but I found changing my details and getting a fresh quote to be quite straightforward albeit a bit ‘clunky’.

Having changed the addresses and obtained a new quote I fell off my chair.

The insurer wanted an additional 75% of the original premium for the remaining 11 months of the policy.

It was at this point my need to contact customer services became a bit more important and so duly I compiled an email to to find out if I had correctly altered the policy information.

48hrs later and no reply…

So I sent the same email again.

Another 48hrs later and still no reply…

I then forwarded the email to the ‘compalints@’ email address and lo, a reply!

The alterations and new premium were confirmed as correct.

Yes, it would mean my premium would nearly double just for moving house.

Strangely though, when I went back to the comparison sites I was able to find a different insurer who could offer me a policy at the new address for less than the original premium at the old address!

If only I’d checked the cost of cover at the new address before I bought the policy!

Now there’s usually an ‘admin fee’ to pay when you cancel a car insurance policy (even if you cancel within the ‘cooling off period’) so before I rushed into cancelling I did some digging and found out I would be charged the princely sum of £75.

The only comparison I can offer is Swiftcover who transact most of their business online but would have only charged me £50 and who also have a call centre with customer service operatives and Iggy Pop.

An admin fee of £75 is therefore, in my opinion, a bit steep for an ‘online only’ insurer but it was still more cost effective to suck it up, pay the fee and go elsewhere than it would have been to pay the additional premium.

Having cancelled, I was notified that any refund of premium would be processed within 30 days and not one day sooner than that, I received my refund.

Oddly, it took only minutes for them to take my money in the first place and just a few days to receive the policy documents so why it took them 30 days to give me my money back can only be their way of squeezing every last drop of interest out of the funds in their account before releasing them back to me. Or am I being cynical?

Anyway, it turns out that a customer services phone number is quite improtant to me afterall and I doubt I’ll compromise again in the future.

So all in all, not the best car insurance experience I’ve had but I suppose that’s what you get for buying car insurance from a supermarket!

The only clues I’m giving to who the insurer was are:

Their name has 4 letters and starts and ends with A.

Their slogan is ‘that’s A _ _  A price’.

What to do About Energy Price Rises

Shop around!

I did and I found gas for about half the price of British Gas – with no standing charges!

What’s more, I know what the price will be after a forthcoming rise and it’s still nearly half the price of BG who haven’t even put their prices up yet!

So the story goes; I’ve recently rented a place closer to my office so I can spend a little more time at work (madness, I know).

The letting agent told me they would contact the utility providers on my behalf and then sent me a letter saying that although they would try, I was ultimately responsible for doing it myself. That, to me, was as good as them saying that I should just get on and do it.

First of all I had to find out who my current provider was so after a little search I found the M Number Enquiry Helpline (0870 608 1524)  – this is an automated service for finding out your Gas provider and I found it really easy to use.

To find out your electricity supplier there is a list of regional numbers to call with friendly operators waiting to take your call!

I found the list of numbers here: ukpower.co.uk/who-supplies-my-gas-and-electricity

Having found out my supplier for both gas and electricity was British Gas I set sbout calling them to find out the best tariff they could offer me.

This turned out to be their imaginatively titled ‘Websaver 12’ tariff.

Browsing their website while talking to an operator I found the actual monetary values of the tariff before the operator was able to tell me (and the website was running slowly).

For gas in my region the Tier 1 tariff is 8.849p per kwh and the Tier 2 tariff is 3.638p.

For electricity the Tier 1 tariff is 25.101p per kwh and the Tier 2 is 10.894p.

These are the current prices with a rise due at the end of summer/beginning of autumn.

The Tier 1 price is how much a customer pays for using up-to a set amount of kwhs (kilowatt hours) and any kwhs used above this amount are then charged at the Tier 2 rate. This is usually within a set amount of time and then the price resets back to the Tier 1 tariff.

I’m not going to spend a great deal of time at home so I doubt I’ll ever make it into the Tier 2 band but armed with the facts and figures I began searching comparison sites to see what I could find.

It was energyhelpline.com that helped me arrive at my final choice and it was the fact that they don’t just display the companies they partner with but also those they don’t which, means more choice for the customer.

I noticed that if I searched without knowing my current usage and just selected a box that said ‘low use/small flat’ I didn’t see as many results as I did when I entered my actual monthly usage.

This was a little confusing at first because my gas meter doesn’t show kwhs but another quick Google and I found this link: energylinx.co.uk/gas_meter_conversion.html which, converts gas meter readings into kwhs.

By entering usage figures I became enlightened.

EBICO – the UK’s only not-for-profit energy supplier has one tariff and no standing charges.

Compared to British Gas:

Gas:

BG – 8.849p (yet to increase)

EBICO – 4.02p (will increase to 4.788p mid Sept)

Electricity:

BG – 25.101p (yet to increase)

EBICO – 13.44p (will increase to 14.69p mid Sept)

Based on my usage for the 3 weeks I’ve been in the new place I expect to lower my forthcoming bills by approximately 45% compared to British Gas and probably over 50% after British Gas put their prices up. 

Switching was one of the easiest decisions I’ve made and all it took was one quick phone call (they haven’t paid to me to say this!).

ebico.org.uk

If you’ve been looking into prices lately, EDF have a pretty good offer on at the moment that fixes prices until December 2012 and the rates per kwh are cheaper than EBICO but they apply a Standing Charge which, adds about £10 per month to the bill (when taking both gas and electricity).

Higher usage could represent a saving and houesholds using a combination of more than 500 kwhs of gas (approx) and more than 215 kwhs of electricity (approx) per month could be better off with EDF.

Blink and Miss History – It’s Eye Opening!

In times of economic uncertainty, people striving to make a living can so easily bury themselves in work and while getting engrossed by work is a sure-fire way of getting things done, in this fast paced world in which we live it also means we may not be paying attention to everything else that’s going on around us.

Pause for one minute, stick your head up and look around and it’s amazing to see what’s gone by in just a few days.

Admittedly, some weeks are less impressive than others but with so much news available at all times from all over the world there is always something amazing happening. Be it good or bad news, the world is definitely spinning very fast.

And what a week it’s been!

This whole business of America’s long-term federal debt being downgraded by Standard & Poor’s for the first time is all still part of the fallout of the ‘credit crunch’. Remember that term?

The world is still trying to sort out the mess of debt that has been floating around for the last few years. Governments need to reduce their levels of debt but with slow economies the revenue isn’t sufficient to keep pace the with former rates of spending. Hence austerity measures such as tax rises and lay-offs which curb spending and attempt to increase revenue but also cause public spending to falter.

Governments have tough choices to make because no government wants their country or citizens to struggle financially.

Should S&P have downgraded the US long term debt? None of the other credit agencies did.

They apparently overstated the US debt by $2 trillion and in addition they claimed the downgrade was also due to the inability of the current administration to make decisions ‘at a time of ongoing fiscal and economic challenge’.

It’s true, the decision to raise the debt ceiling was made at the last minute but with so many decisions to make and so many factors to consider I would have used all of the available time to really thrash out the alternatives before making a decision too.

There was panic selling as confidence wained and investors fled to safer havens. Stock markets around the globe crashed and suffered huge losses only for many of them to bounce back days later but with warnings of more volatility to come.

Some fear another global recession which is more likely only going to be even slower growth than expected although it seems every growth prediction result these days is just short of the mark.

It seems the world is desperate to return to heady days of boom, boom, boom instead of sucking up and accepting slow, steady sustained growth and so the madness continues.

Technology, internet, gadgets and social media has altered perceptions and people still want the latest and greatest things now and they are not prepared to wait until tomorrow. As a result, Apple has more money in the bank than the US government! (I wonder, how many iPad purchases were made using a credit card!)

Lloyds is still suffering with PPI claims which pushed it to a £3.3 billion loss for the 6 months up to June and amidst all the news about London riots they slipped in another announcement of further job cuts.

Yahoo, once the US’s favourite search engine and a piece of internet history is now apparently worth less than it’s holdings in other companies so anyone able to buy Yahoo may be able to sell off these holdings and potentially make a profit!

I think the phrase is ‘it’s all going off’ but if you follow the news from around the world, it’s always ‘all going off’.

On a final note for today, London and other UK cities are a mess from the recent violence which has resulted in loss of property and loss of life and nothing good will come as a consequence of the rioting. My sympathies to all who have lost property and my sincerest condolences to anyone who has lost a friend or family member.

Why it’s Important to Get Life Insurance Advice

I am personally involved in helping people find life insurance. Mostly for people with a medical condition or high risk occupation.

Regardless of the different circumstances of the individual, the things that people protect are always the same and the top two priorities are family & mortgage.

Mortgages are quite simple to protect. If the mortgage is ‘Interest Only’ (the debt stays the same) then the most suitable cover is likely to be ‘level’ term insurance which also stays the same.

If a mortgage is ‘repayment’ which means it goes down over time then the FSA favours ‘decreasing’ cover which also goes down. It is cheaper than ‘level’ cover and serves the purpose, although quite a few people tend to favour ‘level’ cover even though the mortgage is going down.

Why? Well, as the mortgage goes down, the amount of cover stays the same so a surplus of cover builds up which could provide extra benefit for the family.

Plus, the policy holder always knows how much cover they have.

The FSA aren’t so keen on this though and there’s a good reason.

A house was worth a lot less 25 years ago which means the mortgage would have been a lot less so the amount of cover would not seem like quite as much in today’s terms thanks to inflation.

The best way to provide protection against inflation is with ‘Index Linked’ cover that goes up and so provides a comparable amount of cover, over time, throughout the term.

Usually the cover goes up and so do the payments.

So it might make sense to have one policy for the mortgage and another one for the family.

But then there’s Family Income Benefit, Waiver of Premium, Critical Illness.

Or how about Own Occupation or Work Tasks Disability Cover which could be the difference between a claim being successful or rejected….

This is just the tip of the protection iceberg and hopefully highlights the importance of really doing your research or getting advice from a specialist.

Another good reason for getting advice is based on a true story.

I recently spoke to someone who had applied for life insurance through a well known supermarket chain.

They have a mortgage of £120,000 with 18 years remaining.

An application was submitted over the phone for £115,000 of cover for 17 years.

Now I can only speculate as to how this happened and people do sometimes make mistakes but when I spoke to the applicant they couldn’t think of any reason why the ‘adviser’ had got it so wrong and they certainly seemed to know their mortgage balance and term.

Could it be the ‘adviser’ was really more of an ‘order processor’ and didn’t double check or even ask the right questions?

What’s hard to understand is an application had already been submitted with the wrong cover but there is a regulated process and the applicant should have seen or at least discussed a quote before it went that far which, would have brought the mistake to their attention.

This could be an isolated incident and I’d like to hope it is but I wouldn’t be surprised if lurking around the corner there’s an advertising slogan or an automated sales call that asks, ‘have you been mis-sold life insurance?’ or ‘Are you entitled to a refund?’