MONEY MATTERS by Rob Terry

Welcome to High Edge Financial Planning, your local independent financial planning and advisory professionals and our column on issues relevant to financial planning and advice.

Investment and Risk

We’ve gone through some testing times in the last few years: banks collapsing, credit crunch, stock markets falling and then bouncing back. What is one to do when it comes to investing money? If you ask anyone what they would like from an investment the typical response is ‘no risk and a big return’! Utopia! 

However, all investments and savings are exposed to one or more forms of risk and it is true to say that by taking increasingly more risk you can achieve a better return over the longer term.

Term: why is that important? Well, depending on your investment horizon (the period over which you are prepared to invest), it will dictate the type of asset you may consider for the investment. As a rule of thumb, if your investment horizon is under 5 years, you would generally be better off investing in deposits with a bank or building society. This is because if you need the money in the short term you would not want to expose yourself to the risk of not being able to access it, or getting back less than you have invested due to asset price movements.

When investing for 5 years and beyond you open up other investment possibilities. The traditional asset classes are: cash, bonds, property and equities. Each carries a different level of risk and within each asset class you can access different levels of risk. A key consideration for the investor is that of risk and return, and capacity for loss. For instance, you could build a portfolio of shares yourself, but that can carry a high degree of risk, as you are relying on your own experience and research capabilities to select the right stocks.

There are also different types of risk. Inflation risk is a particular issue right now as cash deposits are paying low rates, whilst inflation is higher. Your money is therefore losing value in real terms.

There is market risk. This is where your investment is subject to the ups and downs of the markets. This could be the stock market.

Concentration risk is where you may have all your cash in only one or two asset classes or investment funds. A way to tackle this issue is to diversify your investment. This means to invest varying percentages in different funds and asset classes to spread the risk and also the return (the not having all your eggs in one basket principle).

Counterparty risk is typically found in what are called ‘structured products’. These are products which aim to provide a return of capital after a fixed term if the stock market index they are linked to falls. The provider enters into financial arrangements with other counterparties to provide the capital protection. 

However, as found when Lehman Brothers collapsed, the counterparty may not be able to uphold their obligations to the product and consequently the return of capital could be affected adversely.

Consideration also should be given to the Financial Services Compensation Scheme limits for deposits and investments. This could affect how much you invest with one institution.

So, I am barely scratching the surface here on this A5 page. A lot of thought needs to be given to how you invest and this depends on a number of factors personal to you. I would suggest that when in the position of considering investments, speak with someone who has access to the whole of the market and can therefore offer independent, impartial advice.

High Edge Financial Planning is an appointed representative of Unleash Advice Partnership Ltd which is authorised and regulated by the Financial Services Authority. Information presented here is generic, does not constitute specific financial advice and are personal opinions of the author. For advice tailored to match your personal circumstances, please feel free to contact us on 07773 426498.

Rob Terry

Independent Financial Advisor

“On Two Wheels” By Ian Bax of Roy Jervis, Ripley

Motorcycling – The Benefits

I make no secret of the fact - I love motorbikes! I have loved them since I saw my first one as a toddler and, as soon as me and a couple of mates could raise the required £5 (a lot to a 12-year-old in 1972), we bought a very used Raleigh Runabout, painted it white and proceeded to thrash it round the woods!

Various bikes followed, ex GPO Bantams, stripped down Vespas and such like until the magic day arrived; my sixteenth birthday. My parents had relented and bought me my first road bike, a PUCH M50 Sport, the first in a long line of bikes that I have owned and ridden on and off road, in fact I still have four motorbikes and my son’s scooter in my garage at present.

To me, riding a motorbike is pure joy and I have never really given any conscious thought to the real benefits of owning and riding one, even though I travelled to work for years on bikes - mainly because I enjoyed it but also because I knew I would get to work in less time than in a car and parking was a doddle.

Congestion is a major problem in many of the UK’s towns and cities with the number of cars increasing annually. London’s Congestion Charge has, depending on where you are sitting, proved a success and now the charge looks set to be rolled out to other major cities. Motorcycles and scooters are exempt from congestion charges and often parking for bikes is free so straight away the cost savings are quite substantial.

Not only will you save money but, because bikes can filter through traffic queues, you will get to work a lot quicker and probably be able to park a lot closer to work as well.

With fuel costs at well over £5 per gallon never has motoring been so expensive and many people are swapping to motorcycles and scooters purely for the savings to be made in fuel costs. Modern 125cc motorcycles and scooters cost a lot less than 10 pence per mile to run and some can achieve 100 mpg!

In addition, a 125cc powered two wheeler (PTW) costs just £16 per year in Road Tax, even the largest bikes only attract a tax duty of £74 per annum. Savings will also be made on insurance, running and servicing costs over cars. Also, don’t forget that bikes are substantially cheaper to buy than cars.

Despite manufacturers’ claims, electric cars have a long way to go before they are a viable alternative to the internal combustion engine, whereas electric two wheelers are lighter and therefore don’t need the plethora of batteries and large motors to keep them going. OK the range is still not fantastic - up to 50 miles - but to get into work they are ideal and again parking is a doddle and it’s a lot easier to get close to a plug socket to recharge.

Not only will you enjoy the cost saving benefits of owning a bike you will also be benefitting the environment by reducing your carbon footprint and on a nice sunny weekend, you will have a vehicle that you can go for a ride on purely for the fun of it and hopefully you will come to love bikes as much as I do.

Interested? Then come and see me for a chat and we’ll see just how much you can save by joining the biking community, I’ll look forward to meeting you.

Jessica’s Column by Jessica Davies

Jessica Davies from Duffield has been a regular columnist for All Things Local for the past 3 years. Jessica is now at Cambridge University studying French and Spanish. With such an intense workload, Jessica has decided to step down from her role as regular columnist for All Things Local and this is her final contribution:

Welcome Winter

This is the time of year that Dad likes to play his thrifty heating game. It’s a game of endurance and pushing the boundaries. And shivering. He likes to sneakily knock the thermostat down one degree at a time and reduce the hours that the radiators thaw; with an adamance that 18^oC is a healthy room temperature. How cold can a house get before the family turns into icicles? 

There’s probably some secret league table for fathers everywhere. “I got it down to 15.5^o today,” They boast, “Only had it on for two hours!” Cue impressed hand-shaking and blokey congratulations. We just huddle together resignedly.

I can forgive winter for making me sleep in a cocoon of dressing gown, fleecy blankets and duvet, surrounded by hot water bottles. I can even put up with the depressingly grey mornings when it’s terrifying to set a toe out of bed, because the sub-zero temperatures make way for exciting novelties that have been forgotten about amid the tedium of t-shirts and boring in-between weather.

I want drama from my sky. I want heat wave or snowfall, fierce wind or mysterious fog. Much of the time, England’s weather is indecisive – autumn is all showers and breeze and short spells and frosty edges, whereas winter here is executed thoroughly. An everyday family walk could be dull - plodding along, drearily uphill and aimlessly downhill. Winter throws a bit of spice into the mix. She strips the trees to leave hauntingly beautiful skeleton silhouettes and stiffens the grass to give a satisfying creak when we tread. A brisk winter hike gives you a fairytale rosy flush and gets the circulation going. Plus I can gleefully dust off my pea green coat and retrieve my beautiful rainbow scarf and gloves, glad for zero threat of a bizarre socks-and-shorts tan.

When my legs have entirely forgotten the golden brown sunshine feeling of summer, a hot drink is medicine, an antidote to the frost that presses threateningly against the windows. The steam floods my glasses, rendering them opaque, and I sigh with happy anticipation. I am permanently in the mood for a cup of tea and often scarcely have I drained the dregs before the kettle is put on afresh. Winter is a time of banding together, of laughing and of passing around scorching mugs. Hot chocolate anyone?

As the world outside grows darker and colder, the lights inside glow brighter. Ice tightens around the visitors’ cars on the drive whilst indoors songs are sung, food is gobbled and spirits remain high. Everyone’s clothes become more colourful and jolly despite the plummeting temperatures on the streets. We have the ideal excuse to wear ridiculous woolly socks and gorge on casserole and crumble.

When the flurry of red and green festive sparkle dies down, the Christmas presents are thoroughly investigated and the doors are locked – an established custom at home known as the hibernation period. It’s the rest between the relatives, and a brief respite from celebrating the cheer when we can sleep until late and generally indulge.

Winter is my favourite time of year. Last year the snow was so special – and so unusual. Because, lovely as it would be, the weather isn’t always that spectacular. It’s sometimes just an inundation of chilly muddy rain. Hopefully this winter the delicate drifting flakes will be a frequent sight and we’ll get towering mounds of snow again. Then I can wear my wellies and scruffy navy jumper and enjoy snowball fights and snowy sculptures, as well as the other joys that winter brings – glistening turkey, early nights and friends home for the holidays. Oh, and did I mention my birthday is in January?

Jessica

Note from Editor: Congratulations on securing your place at Cambridge University Jessica, thank you for providing an excellent and well-articulated range of articles over the past 3 years. Good luck with your course and I wish you every success for the future. Karyn x

Views from a Grumpy Old Man

Doesn't it seem like only yesterday that it was dear old Delia filling our screens with 30 minutes of 'How to cook an egg' or 'How to grate cheese' or my favourite, 'How to make ice'?

Or to acknowledge a true TV institution; the Antiques Roadshow would present us with a treat of little old ladies with pillowcases full of priceless works of art to which we sat on the edge of our settees feeling a strange, mixed emotion between jealousy and euphoria when the said little old lady finds out that the vase she has kept old screws, drawing pins and empty cotton reels in, turns out to be the missing centrepiece of Emperor Wah Wah III from 987 AD's wedding gift to his son and future icon – Ming, and is worth just over £40 million quid.
 
Fast forward 20 years and for reasons that any intelligent person cannot fathom, our screens are overrun with both cookery and antique sales shows.
 
Let’s tackle food first. I am all for education through entertainment and learning how to make a really decent hotpot/Bolognese sauce or indeed how an omelette is both useful and long-lasting. So why do we accept and apparently continue to demand food cooking shows that are so impossibly far from our day to day lives that that the TV companies would be better presenting shows about how to live on Mars (Oops, I think that has been done) or how to make an Ocean Liner from a sherbet dib-dab.

So as always, this is best by way of example. Firstly - I assume that our readers either go to work (I include parenting housewives and househusbands in this as there is no harder job!), are retired, studying, looking to work, or somewhere in between these - i.e. normal life.

One show in particular, asks members of the audience to spend £5 in a supermarket on random products and then the 'experts' will make a meal in less than 20 minutes - using only these products and a selection of standard store cupboard ingredients. On the episode I watched, the mystery bag contained some sausages, some potatoes, an onion and some gravy powder. Our audience guest confesses: “I keep seeing these ingredients and would love to know what to do with them.” Our 'expert' looks perplexed, confused and claims: “You do know how to challenge a man don't you Barbara.” He is given time to think his dish through and the presenter returns 2-3 minutes later and asks: “So then Tarquin, what are you going to do for us today?” Tense moments ensue to be followed by a positive explosion of enthusiasm: “I'm gonna do Sausage and Mash!” The crowd erupts into a near riot as if each of them has just had all 6 numbers come up on a Saturday night rollover. Meanwhile at the other end of the studio, Claudia  - our other 'expert' receives an equally gratuitous reception for announcing that with the eggs, sugar, flour, butter, milk, cream and jam delivered to her, she is going to attempt the Holy Grail of haute cuisine; the Victoria Sponge. The fact that neither of these dishes can be prepared in 20 minutes is a mere oversight, so clearly we have to assume that the studio staff ply the audience, contestants, chefs, presenters and indeed themselves with large quantities of cooking sherry so that the actual 60 minutes feels like 20 and they cut the program accordingly to fit their primetime slot. The end scene is our audience now beyond containment, sampling the extraordinary fayre on offer......Blimey. 
 
At the other end of the scale, we have the show where a Michelin starred chef brings his/her cooking into our homes and shows us that the dishes he/she charges £120.00 each for can be made by anyone at home. Again in a particular show I have seen, our host informs us that tonight he will show us how to make his signature dish: 'Filete asado con especias de la nutria erizo relleno con un jus flamenco rosado y caramelizada párpados bate.' In English: 'Roast fillet of otter with spiced hedgehog stuffing with a pink flamingo jus and caramelised bat eyelids' (note to Editor - no actual harm came to any creature in the writing of this piece!) We are informed that most supermarkets now stock these items ....well not in Ripley they don't! So, we sit in front of our TV with a long, exhausting day behind us munching on our exquisite sausage and mash watching in a sense of disbelief or wondering if they served this on Mars. Our host then begins to assemble this dish using kitchen equipment only reserved for those that have had all 6 numbers come up, in a kitchen the size of Swindon.
 
 
Now off to antique world.

TV Land has created a series of shows that have devalued our beloved Antiques Roadshow and tried to be humorous in their titling. So, we now have shows like: 'Shekels from the Shed' or 'Cash from the Cupboard' or 'Wonga from the Window Sill' - the format is the same. Some low-on-work antique traders visit some UK outpost and visit a family who need to raise some money for a holiday/wedding/car etc - all good so far. They then scour their house looking for stuff they think will fetch a premium in an auction. The program generally falls down as most people (myself included) have very few items in their house of antique value. So, our 'hunters' normally dispossess our victims of things they really need.

“Brian, how do you think today went?”

“Well I got 35 quid for my sofa, have nothing to sit on now and still owe 300 quid on it, so not a great day.” Our presenter looks slightly pained but not enough to really care too much.

In another format 'antique' show, we have two teams who, for their sins get to wear bright blue or red jackets to highlight them as being absolutely clueless to the antique traders. They then walk around an antique fair and try and buy a bargain that will earn them a profit at an auction. Our stall holders at the fair are not that daft, so when presented with two family members in bright jackets surrounded by a film crew and sound engineers they unsurprisingly are reluctant to give their livelihoods up, so they do not sell a Royal Crown Derby commemorative teapot with gold inlay for £20.00 instead of £1200.00, so our witless contestants come away with a bag of utter tat for which they have parted with £100.00 and make their way to the auction rooms. They are accompanied by 'experts' who have tried to help with the negotiations but typically fail miserably. The viewers’ joy (if it can be called that) is the ignominy faced by our contestants when their item; a chipped,
one-eared clay cat inscribed with 'Souvenirous de Torremelinos' on its base for which they paid £40.00, is snapped up for 60 pence by a 9-year-old boy who thinks his Gran would like it. After auctions fees, our contestant receives 15 pence and then is informed that they have lost £39.85. “How do you feel about that?” our presenter asks. “Gutted” says the contestant. “Wrong audience” says the expert. “Give me strength” says the viewer...
 
GOM

Diary of a local Mum by Helen Young

As I write this, it’s half term. The time when teachers get a well-deserved rest, and parents are suddenly thrown headfirst into a whirlwind of complex childcare arrangements and endless attempts to entertain their children (and often one or two belonging to other people as well).

I was lucky enough to have some time off work to spend with the kids this half term, and was hell-bent on making sure we enjoyed our time together. However, after a day or two (possibly more like an hour or two, but it felt like a while…) of giving in to the can we do’s and the can we have’s I noticed that my purse felt decidedly light, and recoiled in shock at the sight of my bank balance. It was then that I cast my mind back to my own childhood, and began to get a bit more imaginative with the entertainment…

I reinvented myself as a Blue Peter presenter and we spent a happy afternoon baking and making models from cardboard boxes, toilet roll inners, much glue, and some paint. The next day was spent at the park kicking piles of leaves and rolling down hills (resulting in lots of giggling, some filthy clothes, and only a very minor head injury). I even introduced them to the wonders of communication via two yoghurt pots and a piece of string, which caused more astonishment and intrigue than my iPhone ever has.

Our enjoyable budget days started me thinking about how childhood has changed over the years, and how the current economic climate, although difficult in so many ways, may have some hidden positives (albeit deeply hidden). I look back on my childhood with fond memories, and it wasn’t full of gadgets, holidays and expensive days out. My brother and I would spend hours building dens from blankets and boxes, creating our own musical instruments, or concocting delicious mud pies in the garden.

This article appeared in the Dec 2011 / Jan 2012 edition of All Things Local.

The thing with kids is, they have no preconceived ideas about how life should be, but they expect what they get used to – and the more they’re given the more they come to expect. And as parents it’s easy to fall into this trap of feeling guilty if we don’t give them what they want. It’s a vicious circle. Don’t get me wrong, I know that as a parent (especially when you work as well) it’s very hard to find the time and energy to get creative or leap around the park like an excited six year old, but when you do manage it, it’s surprisingly liberating!

The other great thing about spending some time getting back to basics is that the special outings become so much more special. We did treat the kids to a day at a theme park, and there was a noticeable absence of ‘can we have’s, ‘pleeease Mum’s, and tears at home time. There was a real sense of enjoyment and, dare I say it, gratitude.

With Christmas fast approaching I have no doubt that there’s much spoiling to come (I’m already clearing out the toy boxes in preparation), but after my half-term reality check I’m going to really make an effort to embrace the simple (and cheaper) pleasures in life over the festive season. I’m not planning on depriving my children of what’s on their Christmas lists (that wouldn’t be fair, especially considering what’s on mine…), but I will make sure they understand how lucky they are, and that their gifts are appreciated.

And I’ll show them how much fun you can have making your own decorations and baking mince pies, even if nine times out of ten they’re totally inedible.