Money To The Masses http://moneytothemasses.com Putting you in control Tue, 30 Jun 2015 21:32:48 +0000 en-GB hourly 1 Where should you invest if Greece exit the Euro?http://moneytothemasses.com/saving-for-your-future/investing/where-should-you-invest-if-greece-exit-the-euro http://moneytothemasses.com/saving-for-your-future/investing/where-should-you-invest-if-greece-exit-the-euro#comments Tue, 30 Jun 2015 21:32:48 +0000 http://moneytothemasses.com/?p=19570 Where should you invest if Greece exit the Euro? The IMF, the ECB and the EU first bailed out Greece in 2010 and Greece has been having to repay the debt ever since. It is an incredibly complex situation that few people truly understand. To use an analogy, imagine if Greece was a person who couldn't get finance...

The post Where should you invest if Greece exit the Euro? appeared first on Money To The Masses.

]]>
Where should you invest if Greece exit the Euro?

greece cliffThe IMF, the ECB and the EU first bailed out Greece in 2010 and Greece has been having to repay the debt ever since. It is an incredibly complex situation that few people truly understand.

To use an analogy, imagine if Greece was a person who couldn't get finance or loans from the mainstream creditors. It was therefore forced to go to payday lenders and loan sharks as a last resort. In the case of Greece these were the aforementioned institutions. These three institutions are collectively referred to as the Troika (which is derived from the Russian word for a group of three which strangely adds to the gangster feel of the whole thing).

Unsurprisingly the Troika periodically send the heavies (inspectors) in to Greece to make sure that they are keeping up their end of the bargain (financial reforms etc) to make sure they will get their money. All the while the Troika also release new funds (in tranches) as part of the original loan agreement.

How much does Greece owe?

Something like €245 billion and the repayments are now crippling the country. If you look at 2015 alone Greece has repaid around €17 billion but still has to repay more than €20 billion before the end of the year.

Like anyone in debt Greece is having to 'rob Peter to pay Paul'. Some of the money received in each tranche of the loan goes on interest payments on the loans that are already owed to the Troika. Bonkers I know!

Each tranche of money delays the day of Greek bankruptcy and means that public sector workers might get paid. The government is raiding every stash of cash to keep it's head above water. It is even demanding that hospitals hand over cash on account while there are reports of the Greek fire service having to go door-to-door with cap in hand.

When each new tranche of bailout money is due to be paid to Greece, the heavies put the frighteners on them and Greece tries to squirm out of its commitments. Usually at the 11th hour both sides reach a compromise and the tranche is paid and Greece avoids bankruptcy for a while longer.

Crunch time - this time is different, or is it?

In January 2015 a new Government was elected in Greece with an anti-austerity mandate. Since then the new Greek Government has been pushing back against any reforms agreed by the previous Government as part of the original bailout.

So we now find ourselves at a point where Greece has taken it upon itself to delay the four regular payments, totalling €1.5 billion, owed to the IMF that were due at the end of June. Technically it has now defaulted on this payment. Greece also needs to find €2.2 billion to pay pensions, social security benefits, public sector salaries as well as keep public services going.

The problem is that Greece needs a final €7.2 billion payment from the previously agreed bailout package which is also now due. But obviously tell a loan shark you are not going to pay him but that you need to borrow even more money and you can imagine what happened. Rather than kneecaps being broken, in the world of politics the Troika walked away from the negotiating table and both sides are further apart than ever before. The situation has become even more strained because the Greek Government has decided to call a referendum for the 5th July to allow the people to decide on the implementation of more austerity measures.

So metaphorically Greece is threatening to jump off the precipice (default on its debts) and the Troika are nervously watching on while the rest of the world (even Obama) are shouting from the sidelines 'come on Greece stop being so stupid and get down form there!'

So is Greece about to exit the Euro?

If I was a betting man and wanted to put money on the possibility of Greece exiting the Euro then I couldn't, as William Hill actually stopped taking bets on that outcome a while ago. Of course a bookmaker's odds only reflect punters' opinions of what is likely to happen rather than reality itself. Yet it gives a good sense of that things are looking ominous.

So, everyone is now holding their breath waiting for the outcome of the referendum to see what is the next episode in this Greek tragedy. If some sort of an agreement isn't reached soon in theory Greece would have to default on its repayments (and not just miss them). There are also other repayments that will come thick and fast. On 20th July it has to pay €2 billion to the ECB and if it ends up defaulting on that as well then the problems could get worse. The ECB had been propping up Greek banks but has now limited its assistance.

The inevitable result has been that Greek citizens have rushed to withdraw their money from Greeks banks in panic and capital controls had to be enforced (i.e stopping people withdrawing their money freely) which never ends well. Greece may well end up being forced to leave the Euro and ultimately the eurozone.

Is a Greek exit likely?

Never underestimate the capacity for politicians to fudge something together but time is almost up. Interestingly just last week the Financial Times recently reported that a third of institutional investors (investment banks and the like) think a Greek exit will happen..... but by the end of May 2016. If you asked them the question this week the answer would undoubtedly be different.

What should investors do?

You'd think that the market would have already priced in the possibility of a Greek exit, after all the Greece saga has been like a slow-motion car crash. Yet equity markets have taken a hit this week. The FTSE 100 is down almost 5% in the last 7 days as the Greek crisis worsened and that is before Greece has even exited the Euro..

However, research by Bank of America Merrill Lynch recently found that fund managers are unprepared for a Greek exit from the euro. In fact 43% still expect a deal to be done at the 11th hour while 42% think that Greece will default on its debts but won't exit the eurozone.

Or in other words don't expect a fund manager to protect your money in the event of Greek exit. If you are worried about the impact of a potential Greek exit on your portfolio then the only safe place to be is in cash (but clearly not in a Greek bank).

Funds for a Greek exit

While the safest thing to do is to hold cash, are there any funds that seem particularly prepared for a Greek exit or at least better placed than their peers to navigate one? How might you even find them given that we've never experienced a Greek exit before?

One of the benefits of being an 80-20 Investor member is that I teach you the process to go about answering these sorts of questions. My analysis was carried out on over 3,000 and published in full for 80-20 members benefit two weeks ago, long before the crisis took a turn for a worse and markets tumbled. I even taught them how to do it for themselves.

Below is a brief summary of the types of funds which were picked after my analysis. There were in fact 20 funds which you can see if you become an 80-20 Investor member. You can take advantage of a Free 30 Day Trial. Below I reveal one of these funds.

So if there is a Greek exit then those things most likely to weather the storm are:

  • short dated bonds (i.e those which are just about to mature)
  • the best quality bonds (from companies and countries unlikely to bust - i.e UK)
  • bricks and mortar property funds
  • funds that use hedging strategies to avoid such events
  • and certainly not equities

However, one fund which should weather the storm better than its peers is Insight Absolute Insight.

To see the other 19 funds simply take advantage of a Free 30 Day Trial of 80-20 Investor.

 

The post Where should you invest if Greece exit the Euro? appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/saving-for-your-future/investing/where-should-you-invest-if-greece-exit-the-euro/feed 0
How many life insurance policies can you have?http://moneytothemasses.com/quick-savings/insurance-2/life-insurance/how-many-life-insurance-policies-can-you-have http://moneytothemasses.com/quick-savings/insurance-2/life-insurance/how-many-life-insurance-policies-can-you-have#comments Tue, 30 Jun 2015 14:25:38 +0000 http://moneytothemasses.com/?p=19531 How many life insurance policies can you have? In theory there is no limit on the number of life insurance policies that you can have. Although, there are other restrictions to be aware of which I explain in this article. In reality there are numerous reasons why you might have more than one life insurance policy...

The post How many life insurance policies can you have? appeared first on Money To The Masses.

]]>
How many life insurance policies can you have?

Child maintenceIn theory there is no limit on the number of life insurance policies that you can have. Although, there are other restrictions to be aware of which I explain in this article.

In reality there are numerous reasons why you might have more than one life insurance policy including:

  • to protect your family in the event of your death
  • to cover a loan, such as a mortgage, that will be paid off in the event of your death
  • to protect a business partner so that in the event of your death the business can still continue
  • to cover any potential inheritance tax liability against your estate in the event of death

However, you can't simply insure yourself for million and millions of pounds without good reason. When you take out a life insurance policy the life insurance company will in turn use a reinsurer to manage the risk. The reinsurers don't deal directly with consumers but instead deal with the insurance companies. A life insurance company won't want to over-expose themselves to any one individual and neither does a reinsurer. It's not how many life insurance policies that is of particular concern but the total amount of life insurance they are liable to pay out if you die. So when you apply for life insurance the insurance company will likely ask about your existing life insurance policies. Even if you do not disclose your other policies, when the insurance company approaches a reinsurer the reinsurer will check its own records. Don't forget they will be reinsuring for lots of different insurance companies so they will likely find your existing policies. If you didn't disclose the fact that you already have insurance policies which you intend to keep they'd question why and what your motives are which could ultimately mean you will be rejected for the new policy. So be honest.

Why you may have need to purchase more than one life insurance policy

As you go through life you will often need to review your life insurance cover. Most people will buy their first life insurance policy when they get married or take out their first mortgage. A policy to cover a mortgage can be reasonably cheap and can be limited to the term of the mortgage. Covering both parties to the mortgage means that the surviving partner's standard of living can be maintained in the event of the premature death of either partner.

The arrival of children, for example, is a point at which you should review your life insurance again to ensure that you are covered for the extra costs involved in raising your children, such as childcare, if one partner was to die prematurely.

Maybe you start up a business with a partner, again you will need to review your life insurance arrangements. The death of a business partner can have a catastrophic impact on a business as not only have you lost a key worker but their part of the business will form part of their estate, causing financial stress on the business. A life insurance policy can offset the financial impact by providing cash to allow the business to continue operating while adjustments are made.

In later life, as you build up assets, you will need to reflect on your potential inheritance tax liability (IHT) that will fall on your estate in the event of your death. If your total assets are over the inheritance tax threshold (£325,000 for 2015/16 tax year) then your estate will pay IHT of 40% on the amount over the threshold. A life insurance policy for the estimated amount of IHT payable can ensure that your beneficiaries receive your total assets free of IHT.

Can I just increase my existing life insurance policy instead of taking out new ones?

In theory you could increase an existing life insurance policy as long as your life insurance company will allow this. In practice, however, it may be advisable to take out more than one policy so that you or your executor are aware of what purpose these policies were originally intended. Also, you may want to put a policy into trust or assign it for some other reason and this would be easier with more than one policy.

In addition you should not just assume that your existing policy still constitutes value for money. It may be worth checking whether you can replace your existing life insurance policy with a new one with a cheaper monthly premium. This is called rebroking. If you do decide to rebroke then check the new policy is a like-for-like replacement in terms of level of cover and the circumstances in which it will pay out. Also, make sure when you apply for the new replacement life insurance policy you inform the new insurance company that you intend to cancel your existing policy when your are accepted. That way the insurer will take this into account when calculating how much life insurance you will have which in turn dictates the level of medical evidence they will need from you in order to make a decision.

The best way to find the best & cheapest life insurance policies

I recommend using this life insurance quote tool* to give you an idea of the monthly premiums you are likely to pay. You can even use it to see whether you can get a better deal on your existing life insurance policies.

I would then strongly suggest that you have a quick chat (it's FREE) with the company behind the quote aforementioned quote tool to get their opinion on what is the best course of action. I have personally vetted their service which is why I recommend it.

 

 

The post How many life insurance policies can you have? appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/quick-savings/insurance-2/life-insurance/how-many-life-insurance-policies-can-you-have/feed 0
Do I need mortgage life insurance?http://moneytothemasses.com/quick-savings/insurance-2/life-insurance/do-i-need-mortgage-life-insurance http://moneytothemasses.com/quick-savings/insurance-2/life-insurance/do-i-need-mortgage-life-insurance#comments Mon, 29 Jun 2015 04:20:12 +0000 http://moneytothemasses.com/?p=17275 Do I need mortgage life insurance? If you own a house, or an apartment, the payment on your mortgage is probably your largest monthly outgoing. Imagine what would happen if you or your partner died. The mortgage would still have to be paid so that you and your family could keep a roof over your...

The post Do I need mortgage life insurance? appeared first on Money To The Masses.

]]>
Do I need mortgage life insurance?Do I need mortgage life insurance?

If you own a house, or an apartment, the payment on your mortgage is probably your largest monthly outgoing. Imagine what would happen if you or your partner died. The mortgage would still have to be paid so that you and your family could keep a roof over your heads. Continuing to pay the mortgage on just one (or no) income would be a struggle so it would make sense to take out mortgage life insurance for the amount of your mortgage so that your mortgage is cleared in the event of death.

How does mortgage life insurance work?

Mortgage life insurance is a decreasing term insurance policy where the sum assured decreases in line with the outstanding repayment mortgage debt. Although the level of cover reduces, the premiums remain level throughout the term. By having a reducing sum assured it allows the insurer to reduce the premiums making a mortgage life insurance policy very cost effective.

When taking out a mortgage life insurance it important that the term of the policy is the same as the term of your repayment mortgage. This will ensure that the cover would always be enough to cover the outstanding mortgage.

Are there any other life insurance policies that can be used to cover a mortgage?

An alternative to mortgage life insurance is a level term assurance policy. The sum assured on a level term insurance policy remains the same throughout the term of the policy instead of reducing over time. The premiums for this type of policy are more expensive than for a mortgage life insurance policy and are more suited to covering an interest only mortgage.

Can I use a mortgage life insurance policy to cover an interest only mortgage?

An interest only mortgage is a mortgage where the monthly mortgage payments only cover the interest on the loan. With this type of mortgage the outstanding loan remains the same throughout the term. With mortgage life insurance cover reducing over the term it would not be a suitable policy for an interest only mortgage. You would be better off taking out a level life insurance policy where the sum assured matched the level of your mortgage debt.

Can I take out a joint mortgage life insurance policy?

If you have a partner then it would make sense to insure both lives on a joint mortgage life insurance policy. This type of policy would pay out in the event of the first death during the term of the policy. Before taking out a joint mortgage life insurance policy check out the premiums for two single policies as this might be a more economical option and provide double the life cover.

What will happen to my mortgage life insurance policy if I move house?

If you move house then your mortgage life insurance policy can cover your new mortgage. However, if you increase the mortgage amount or extend the term of the mortgage then your policy will have to be reviewed to fully cover the new mortgage and remaining term. Any increase in the sum assured or the term of the policy will have to be underwritten by the insurance company and the cost of cover may increase due to age or current health.

Does the cost of mortgage life insurance differ from company to company?

Every insurance company will assess the risk of insuring someones life according their own statistics on life expectancy, so premiums for mortgage life insurance may differ across various insurance companies. Also, insurance companies may offer different features on their policies resulting in different premiums to their competitors.

How can I find the best mortgage life insurance policy for my circumstances?

I recommend that in the first instance you get a mortgage life insurance quote. The process is very simple and you will be dealing with a company we have personally vetted to provide you with the best quote for your circumstances.

(image by Filomena Scalise / FreeDigitalPhotos.net)

The post Do I need mortgage life insurance? appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/quick-savings/insurance-2/life-insurance/do-i-need-mortgage-life-insurance/feed 0
The best stocks and shares investment ISA (& the cheapest fund platform)http://moneytothemasses.com/saving-for-your-future/investing/the-best-stocks-and-shares-investment-isa-the-cheapest-fund-platform http://moneytothemasses.com/saving-for-your-future/investing/the-best-stocks-and-shares-investment-isa-the-cheapest-fund-platform#comments Mon, 29 Jun 2015 04:11:46 +0000 http://moneytothemasses.com/?p=18619 Stocks and shares ISA best buy Readers and journalists often ask me which is the stocks and shares ISA best buy. The answer depends on your circumstances and whether you want to buy shares, buy investment trusts, buy exchange traded funds or simply buy unit trusts. This guide will show you how to find the...

The post The best stocks and shares investment ISA (& the cheapest fund platform) appeared first on Money To The Masses.

]]>
cheapest stocks and shares isa and best stocks and shares isaStocks and shares ISA best buy

Readers and journalists often ask me which is the stocks and shares ISA best buy. The answer depends on your circumstances and whether you want to buy shares, buy investment trusts, buy exchange traded funds or simply buy unit trusts. This guide will show you how to find the stocks and shares ISA best buy as well as those providers that can offer advice on where to invest your ISA allowance. I will also highlight the stock and shares ISA best buy for tools and functionality as well as the managed stocks and shares ISA best buy for beginners. The full amount you can invest in a stocks and shares ISA is now £15,240 and that can be split between shares, ISA funds and cash.

Cash ISA best buy

If you do not have an investment timeframe of at least 5 years (i.e. you will need access to your cash within 5 years) then you would be better off placing your money in a cash ISA rather than in an investment ISA. That is because when you take out a stocks and shares ISA you will be Investing in shares, funds, bonds, investment trust or exchange traded funds (ETFs) all of which carry investment risk and the potential to lose money as well as make it. Below are links to our latest cash ISA best buy tables:

Comparing stocks & shares ISAs

Under the current ISA rules you can choose to invest some of your ISA allowance in a cash ISA and the balance of your ISA allowance in a stocks and shares ISA. However, for the remainder of this article I will assume you are going to invest the full ISA allowance of £15,240 into a stocks and shares ISA (also called a NISA)

Step 1- Decide how you want to invest your stocks and shares ISA

When you compare stocks and shares ISAs the cheapest ISA provider or platform for you will depend on what you want to invest in. When you invest in a stocks and shares ISA there are a range of charges. Firstly there is the charge of the underlying fund or asset you are investing in. Then there are the charges levied by the broker or fund platform (often called a fund supermarket). Every stocks and shares ISA provider levies different charges based on what you invest in and how much you have invested with them. For example there may be additional charges levied for investing in shares or investment trusts. So what might you invest in?

Funds

Most DIY investors will invest in funds which in turn buy shares and other assets, such as corporate bonds. Funds (a term which includes investment trust. unit trusts and ETFs) are called collective investments. They pool investors money together to benefit from economies of scale and then invest that money in assets such as shares or bonds. Actively managed investment funds have a fund manager who chooses the underlying investments. Meanwhile passive investments simply track an index such as the FTSE 100 index using computers. If you are considering investing in funds then I recommend downloading this FREE guide to investing in funds*. It's the best guide I've come across on the topic and tells you all you need to know including how to get started with buying funds.

Shares

If you want to buy shares within your Stocks and Shares ISA this limits your choices in terms of which would be the best Stocks and Shares ISA provider for you. Some stocks and shares ISA providers do not offer the stockbroking facility required to buy shares directly. Investing directly in shares is a riskier investment strategy as while it can be profitable it increases the chances of a potential loss.

Step 2 - More things to check when choosing the stocks and shares ISA best buy

Once you know what type of investments you wish to buy that makes life a lot easier. If you want to buy shares and investment trusts your options are much more limited. If, like most investors, you want to just invest in funds then you need to consider other factors to screen down your choices. For now we will set cost to one side and come back to it later. Competition among funds supermarkets and online brokers is growing increasingly fierce so costs are falling all the time.

Customer service

There has been a mini-explosion in new stocks and shares ISA providers, after all it can be a lucrative market if providers get the proposition right. To many of the new online providers that means keeping their own costs low, by that I don't mean the costs you pay but how much time and money they have to spend administering your investments.

As such the level of service some provide is pretty minimal. You need to decide if being able to speak to someone on the phone if things go wrong is important to you. You need to decide whether you want a slick user experience with the ability to buy and sell investments quickly and easily. Would you like to be able to check your investments via your smartphone, if so do they have a smartphone app?

Does the Stocks and Shares ISA accept transfers in

If you already have an existing stock and shares ISA portfolio you might want to consolidate them all with one provider. If so check what their rules and charges for doing so are.

Tools and research

Some stocks and shares ISA providers offer tools and some research (albeit limited). However most don't. Would you like a tool that can help you to pick the best ISA funds for your objectives? If so check they offer these. I highlight some of the best stocks and shares ISA providers in the next section and detail what they offer.

Charges

As mentioned there are a host of charges that stocks and shares ISA providers can levy. They include:

  • transfer charges
  • dividend reinvestment fees
  • buying charges
  • selling charges
  • fund switch charges
  • bid/offer spread
  • fund manager charges
  • platform charges
  • transfer out fees

We include a full comparison of the costs of each stocks and shares ISA provider at the end of this article so that you can find the cheapest for you. However, you shouldn't just focus on cost but instead consider value for money as well as the level of service provided.

A roundup of the Stocks and Shares ISAs best buys

Managed stocks and shares ISA best buy for beginners

Nutmeg - click here for more info*

  • Great for those who want the low costs associated with DIY investing but don't want to select investments themselves
  • Provide a full discretionary investment service, usually reserved for wealthier individuals elsewhere, for sums as low as £1,000
  • Annual fee ranges from 0.3% to 1%
  • They manage this by buying low cost exchange traded funds
  • They help you choose the right portfolio for you with simple online tools

Stocks and shares ISA best buy for tools & functionality

Hargreaves Lansdown Vantage ISA - click here for more info*

  • Not the cheapest available but provides excellent investor information and tools
  • Winner of numerous 'Best Stocks & Shares ISA provider' awards
  • Information rich website packed with information from their advisers and analysts
  • Comprehensive shares and fund data
  • Useful smartphone app
  • Investors pay 0.45% annual fee on total fund investment up to £250,000, 0.25% up to £1m, 0.1% up to £2m and nothing above that
  • Allows you to invest in shares and investment trust although they incur a 0.45% annual charge on the entire holding, capped at £45
  • Non-Isa Vantage account carries same charges but with no fee for holding shares and investment trusts

Cheapest stocks and shares ISA best buy (no frills)

Cavendish Direct - click here for more info

  • Funds only platform and should be considered for its very low charges
  • Investors pay 0.25% annual fee and no dealing charges, initial charges, or exit fees
  • Does not offer the comprehensive information of some of its rivals
  • Offers three model portfolios graded by risk
  • Good option for investors interested only in funds and keeping costs low

Alternatives...

Rplan

  • Funds only platform with a website full of investor tools
  • Compare funds on performance, risk and charges available prior to signing up
  • Can create different investment pots and goals
  • Quality fund research
  • Investors pay 0.35% annual fee on total investments with no further charges
  • SIPP investment not available

Interactive Investor

  • Offers a range of investments backed by solid research and is good for regular investors
  • Charges a quarterly admin fee of £20 but you can get that back in free trades spread evenly over four quarters
  • Standard charge of £10 to buy or sell funds, shares, investment trusts and ETF’s or £1.50 for regular monthly investing. Make ten standard trades in the previous month and a frequent trader rate of £5 kicks in
  • Dividend reinvested charge of 1% of the sum reinvested up to a maximum of £10

 Alliance Trust Savings

  • Offers full range of investment trusts, shares, ETFs and direct bonds
  • Investment tools and research provided by Morningstar
  • Charges a flat fee of £12.50 per trade but this is reduced to £1.50 per trade for regular monthly investments via direct debit
  • Dividend reinvested costs a flat £5 fee
  • Good for ‘buy and hold’ investors due to the flat fee structure

Frequent Trader (Club Finance)

  • Administered by stockbroker James Brearley & Sons
  • Basic looking service compared with some of the larger platforms but dealing is cheap
  • Annual administration fee of 0.24% with a minimum annual fee of £120
  • £2.50 flat fee for buying or selling shares, investment trusts and funds, reduced to £1 for portfolios above £250,000 and 50p for portfolios over £500,000
  • Good for active investors looking to build a portfolio as this could be a cheaper option than the larger platforms

The Share Centre – Self-Select ISA

  • Offers a full DIY choice in its Self-Select Stocks and Shares Isa
  • Charges a monthly fee of £4.80
  • Fund, share, ETF, investment trust and corporate dealing costs 1% (£7.50 min.) or a flat fee of £7.50 and a quarterly charge of £24
  • Regular monthly investment costs 0.5% (£1 min.)
  • Dividend reinvestment costs 0.5% of sum reinvested (£1 min.)
  • Non-ISA dealing carries a £1.80 monthly admin fee
  • Some good analysis tips and advice

BestInvest – Select ISA

  • Annual charge on portfolios of 0.4% up to £250,000 and 0.2 % up to £1m with no extra charge over £1m
  • No dealing charges for funds
  • No reduced charges for regular monthly investments in shares and trusts and no cheap dividend reinvesting
  • Good for investors making regular trades due to the low dealing costs

AJ Bell Youinvest

  • Annual charge of 0.2% on fund holdings capped at £200 per year
  • Fund dealing charge of £4.95 and share investment trust dealing at £9.95 (reduced to £4.95 if you have traded ten times in the previous month
  • Regular monthly investment in funds costs £1.50
  • Investing available FTSE 350 shares and a limited range of investment trusts
  • Cost effective for monthly investments

Charles Stanley Direct

  • Low annual charge of just 0.25% on fund holdings, 0.15% above £500,000
  • No charge on investment trust or share holdings if you trade at least six times in the current six-month period
  • Free fund dealing but investment trust and share dealing will cost £10
  • Investors holding individual bonds and overseas shares must pay £30 per year holding
  • Good for active investors due to low annual fee and no buying or selling charges

The cheapest Stocks and Shares ISA provider

If you are only focused on getting the cheapest stocks and shares ISA below is a comparison of stocks and shares ISA charges from all the major providers. Simply look at the column that most closely matches the size of your stocks and shares ISA portfolio for an estimate of the annual cost if your investments were held with each fund platform. The table assumes that you only invest in funds and make 5 switches a year.

 

Portfolio sizeFund Switching Costs£5,000£15,000£25,000£50,000£100,000£250,000£500,000£1,000,000
Aegon Retiready£0.00£25£75£125£250£450£900£1,650£3,150
AJ Bell Youinvest£49.50£60£80£100£150£250£250£250£250
Alliance Trust Savings£125.00£200£200£200£200£200£200£200£200
AXA Self Investor£0.00£18£53£88£175£350£500£1,000£2,000
Barclays Stockbrokers£0.00£35£53£88£175£350£875£1,750£1,750
Bestinvest£0.00£20£60£100£200£400£1,000£1,500£2,500
Cavendish Online£0.00£13£38£63£125£250£625£1,250£2,500
Charles Stanley Direct£0.00£13£38£63£125£250£625£1,250£2,000
Chelsea Financial Services£0.00£30£90£150£300£600£1,500£2,875£5,375
Close Brothers A.M. Self Directed Service£0.00£18£53£88£175£350£875£1,750£3,500
Close Brothers A.M. Self Directed Service2£0.00£14£43£71£142£283£708£1,417£2,833
Clubfinance£0.00£120£120£120£120£240£600£1,200£2,400
Fidelity Personal Investing£0.00£18£53£88£175£350£500£1,000£2,000
Halifax Share Dealing£125.00£138£138£138£138£138£138£138£138
Hargreaves Lansdown£0.00£23£68£113£225£450£1,125£1,750£3,000
Interactive Investor£20.00£100£100£100£100£100£100£100£100
iWeb£50.00£50£50£50£50£50£50£50£50
iWeb year 13£50.00£250£250£250£250£250£250£250£250
James Hay Modular iPlan4£0.00£9£27£45£90£180£450£900£1,650
Nutmeg£0.00£50£150£225£375£600£1,250£1,500£3,000
rplan£0.00£18£53£88£175£350£875£1,750£3,500
Strawberry£0.00£40£63£98£185£310£685£1,310£2,560
Telegraph Investor£0.00£20£45£75£150£300£300£300£300
TD Direct£0.00£51£45£75£150£300£750£1,250£1,500
The Share Centre£12.50 to £755£108£95£120£229£229£229£229£229
Trustnet Direct£100.00£120£138£163£225£300£300£300£300
Willis Owen£0.00£20£60£100£200£350£875£1,250£2,000

 

The data was compiled by langcatfinancial

 

2. Special offer of platform charge of 0.25% for rest of 2015, reverting to 0.35%. 3. Account opening fee of £200 applies here 4. James Hay Modular iPlan - Customers need to open a SIPP before access to an ISA is allowed 5. Assume frequent trader option for £50k and above. Assume standard option and 25% portfolio turnover for below.

(image by Photo by worradmu. freedigitalphotos.net)

The post The best stocks and shares investment ISA (& the cheapest fund platform) appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/saving-for-your-future/investing/the-best-stocks-and-shares-investment-isa-the-cheapest-fund-platform/feed 0
Best of the Sunday papers’ MONEY sectionshttp://moneytothemasses.com/news/best-sunday-papers-money-sections http://moneytothemasses.com/news/best-sunday-papers-money-sections#comments Sun, 28 Jun 2015 04:00:48 +0000 http://moneytothemasses.com/?p=16650 28th June 2015 The Independent Is peer-to-peer lending a risk worth taking? Weekly Money: The personal finance stories you might have missed Debt managers are misleading vulnerable people, warns watchdog The Telegraph Jim Slater: my seven rules for a successful share portfolio The 'official' method to make your pension cash last a lifetime Right to...

The post Best of the Sunday papers’ MONEY sections appeared first on Money To The Masses.

]]>
28th June 2015

The Independent

Is peer-to-peer lending a risk worth taking?

Weekly Money: The personal finance stories you might have missed

Debt managers are misleading vulnerable people, warns watchdog

The Telegraph

Jim Slater: my seven rules for a successful share portfolio

The 'official' method to make your pension cash last a lifetime

Right to rent: all landlords must check immigration status or face £3,000 fine

 

The post Best of the Sunday papers’ MONEY sections appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/news/best-sunday-papers-money-sections/feed 0
Best of the Sunday papers’ PROPERTY sectionshttp://moneytothemasses.com/news/best-of-the-sunday-papers-property-sections http://moneytothemasses.com/news/best-of-the-sunday-papers-property-sections#comments Sun, 28 Jun 2015 04:00:36 +0000 http://moneytothemasses.com/?p=16656 28th June 2015 The Independent Homes gossip: celebrity moves and A-list homes UK house prices: Britain's fastest-growing regions Seeking planning consent? You may have to budget for eco-friendly additions The Telegraph Inside millionaire lairs: The £12m pad with Harrods staff on speed-dial 24/7 'Colossal' fall in demand for luxury homes in parts of London, data...

The post Best of the Sunday papers’ PROPERTY sections appeared first on Money To The Masses.

]]>
28th June 2015

The Independent

Homes gossip: celebrity moves and A-list homes

UK house prices: Britain's fastest-growing regions

Seeking planning consent? You may have to budget for eco-friendly additions

The Telegraph

Inside millionaire lairs: The £12m pad with Harrods staff on speed-dial 24/7

'Colossal' fall in demand for luxury homes in parts of London, data reveals

Glastonbury tent for the price of a one-bed flat

 

The post Best of the Sunday papers’ PROPERTY sections appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/news/best-of-the-sunday-papers-property-sections/feed 0
Are premium bonds worth it?http://moneytothemasses.com/saving-for-your-future/investing/are-premium-bonds-worth-it http://moneytothemasses.com/saving-for-your-future/investing/are-premium-bonds-worth-it#comments Wed, 24 Jun 2015 15:30:09 +0000 http://moneytothemasses.com/?p=19527 National Savings and Investments has announced that the amount that savers can invest in premium bonds has increased from £40,000 to £50,000. With more than £61million in prizes paid out each month are premium bonds good value for money? Are premium bonds worth it? Premium bonds are an example of great marketing. They appear very...

The post Are premium bonds worth it? appeared first on Money To The Masses.

]]>
are premium bonds worth itNational Savings and Investments has announced that the amount that savers can invest in premium bonds has increased from £40,000 to £50,000. With more than £61million in prizes paid out each month are premium bonds good value for money?

Are premium bonds worth it?

Premium bonds are an example of great marketing. They appear very simple to understand and most people just see them as a perpetual lottery with a chance of winning £1million.

The problem is that it’s a lottery you are never likely to win. Winners are picked at random from the 50 billion bonds in existence. That means that you have a 26billion to one chance on winning the top prize each month (of which there are 2)

To put that into context you are 1,900 times more likely to scoop the lottery jackpot (which will also likely be higher than £1million) than winning the top prize in the premium bonds draw.

Or in other words you’d need to put £1,900 into premium bonds to get the same chance of winning the top prize as you have of winning the lottery jackpot. But even if you take account of all the prizes that premium bond holders can win (and the the odds of doing so) the average annual return is just 1.35% tax free.

But that’s the average figure, and what you’d get if you held all 50 billion premium bonds in existence and won every prize. The reality is that no one will achieve that consistently. Of course some lucky people might but the odds are stacked against you.

The attraction of premium bonds is that they are backed by Government and the returns are tax-free. Yet you can get a better rate on cash ISA’s at the moment (which are tax-free) and that are also backed by the Financial Services Compensation Scheme (FSCS). Here is a roundup of the current best cash ISA rates at the moment.

Of course if you are using the maximum £50,000 premium bonds allowance your odds of winning are greatly increased. If they are also held for a number of years you are more likely to win a number of prizes and match the returns achievable from a savings account.

So are premium bonds a good investment?

From experience the people most interested in premium bonds are wealthy top rate tax payers. I’m talking about those who’ve maxed out pension contributions, ISA allowances and for whom the tax they pay on savings accounts is punitive. The very people who are trying to minimize their tax bill and don’t need an income (remember premium bonds don’t pay income). For these people 1.35% seems a good deal as they’d need to get over 2.45% from an ordinary savings account before tax to beat it.

For everyone else premium bonds offer pretty poor value, unless of course you simply like a flutter or buy them as a gift for grandchildren.

A better alternative to premium bonds?

But here’s an idea if you are simply fixated on winning a jackpot...

Remember that £1,900 mentioned earlier? If you put it in a savings account you can comfortably earn enough monthly interest to buy monthly lottery tickets and have some money left over.  To achieve this a basic rate tax payer would only need to find a savings account offering around 1.6% per annum gross, of which there are plenty!

The post Are premium bonds worth it? appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/saving-for-your-future/investing/are-premium-bonds-worth-it/feed 0
Here’s what you should be doing NOW about inheritance taxhttp://moneytothemasses.com/tax-advice/heres-what-you-should-be-doing-now-about-inheritance-tax http://moneytothemasses.com/tax-advice/heres-what-you-should-be-doing-now-about-inheritance-tax#comments Wed, 24 Jun 2015 12:02:46 +0000 http://moneytothemasses.com/?p=19508 Throughout my career in financial planning I've always been struck by the lack of planning when it comes to passing money on to children and the next generation. There is a false assumption that it is something to worry about when you are 'old'. But what does 'old' mean? We are quick to complain about a...

The post Here’s what you should be doing NOW about inheritance tax appeared first on Money To The Masses.

]]>
inheritance tax adviceThroughout my career in financial planning I've always been struck by the lack of planning when it comes to passing money on to children and the next generation.

There is a false assumption that it is something to worry about when you are 'old'. But what does 'old' mean? We are quick to complain about a 1% increase on income tax but surprisingly don't seem bothered about the fact that the tax man could take up to 40% of our estate when we die. That is money that could be passed on to your family or organisations you would like to support.

HMRC collect over £3billion in inheritance tax a year yet it is largely avoidable with some very simple bits of planning that anyone can do. Everyone should be aware of their potential inheritance liability, in the event of their death, but especially those aged over 55 because they have more flexibility when it comes to avoiding inheritance tax.

So how do you calculate how much inheritance tax you could end up paying? How could you personally reduce your potential IHT bill? Or what are the best ways to avoid paying inheritance tax? Below I show you how to work out the answers to these questions in minutes and what you need to be doing today about inheritance tax.

Step 1 - Answer these quick questions

Get a pen and paper and jot down the answers to these questions (or make a mental note):

  • Are you married?
  • Everyone is entitled to a nil rate band (currently £325,000) which is the value of the assets that can be passed on without inheritance tax being applied. Have you inherited someone else's nil rate band as well (i.e this will occur if you have a deceased spouse)?
  • How much is your house worth?
  • How much are your other assets worth, including investments?
  • Do you own any agricultural property or own a business? If so how much is each roughly worth?
  • Do you plan to give a significant sum of money away to charity when you die? If so how much?
  • What would be the total outstanding value of your mortgage and debts if you were to die today (once you've taken off any associated life insurance that would pay out)? If you have life insurance in place to clear your mortgage when you die then ignore this question
  • Details of gifts (cash and assets) that you've made within in the last 7 years.

Step 2 - The quick way to work out your inheritance tax (IHT) bill

Here is a brilliant FREE inheritance tax calculator which can be quickly used to work out what your potential inheritance tax bill will by using the information from step 1 above.

Open the calculator and then follow the simple instructions below which will take just minutes. You can do it for yourself or for you and your spouse:

1st section (Assets)

  1. tick the box at the top if you are married
  2. Leave the 'current nil-rate band' as £325,000 each unless you have inherited a deceased spouse's band
  3. skip to the second section

2nd section (Assets continued)

  1. enter the value of your house
  2. enter the value of your investments
  3. Jump to section 3

3rd section (Agricultural and business property)

  • only complete if you own any agricultural property or own a business (otherwise skip this section)

4th section (Charitable gifts)

  • only complete this if you plan on giving money to charity upon your death

5th Section (liabilities)

  • here you enter your outstanding mortgage that isn't covered by any life insurance policy

6th & 7th section (Potentially Exempt Transfers or Gifts)

  • only complete if you or your spouse has given any money away in the last 7 years

Then simply click calculate to find out your potential inheritance tax liability! But Step 3 is the most important step of all....

Step 3 - Now cut your inheritance tax bill

This is the most important part of the entire exercise. By completing steps 1 and 2 you now have a handle on your potential tax liability. Now it is all about maximising the amount of money you can pass on. Or in other words how to avoid paying inheritance tax legally and fairly.

So I suggest that you download this excellent FREE guide to IHT including 10 steps to cut your IHT bill*. This is by far the best guide I've seen on inheritance tax advice and downloaded.

Once you've downloaded it skip to page 12 where you will find a roundup of 10 simple steps you can take now to cut your inheritance tax bill. When you've read through them go back to page 8 to 11 where there are real life examples showing you how people have actually reduced their IHT bills with a bit of planning.

In one example a widow was able to avoid over £371,000 in inheritance tax which she was then able to pass on to her family. In a second example a lady was able to pass on an additional £240,000 to her son (taking the total to £976,000) by a simple restructuring of her assets.

This entire exercise should have taken you no more than a few minutes to complete and should put the wheels in motion to saving thousands of pounds in inheritance tax and passing on more of your estate to your next of kin.

 

(Photo by Stuart Miles -freedigitalphotos.net)

The post Here’s what you should be doing NOW about inheritance tax appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/tax-advice/heres-what-you-should-be-doing-now-about-inheritance-tax/feed 0
Should you fix your energy bills now?http://moneytothemasses.com/quick-savings/utilities/should-you-fix-your-energy-bills-now http://moneytothemasses.com/quick-savings/utilities/should-you-fix-your-energy-bills-now#comments Tue, 23 Jun 2015 11:07:17 +0000 http://moneytothemasses.com/?p=11857 Should you fix your energy bills now? Normally the decision whether to fix your energy bills is a tough one. On the one hand is the attraction of fixing your energy bills so protecting your finances from any prices rises, for a fixed period of time. Usually one winter. But on the other hand fix...

The post Should you fix your energy bills now? appeared first on Money To The Masses.

]]>
should you fix your energy pricesShould you fix your energy bills now?

Normally the decision whether to fix your energy bills is a tough one. On the one hand is the attraction of fixing your energy bills so protecting your finances from any prices rises, for a fixed period of time. Usually one winter. But on the other hand fix deals have often been more expensive than the cheapest non-fixed deals available. Plus you run the risk of missing out on falls in the price of gas and electricity as fixed deals usually have a lock-in period. To break a lock-in usually requires you to pay a penalty, often negating any potential savings made from switching your energy deals.

What's currently happening with energy prices?

Following a mild winter and stiff competition between energy suppliers the price of energy is falling. Gas prices for 2015 are more than 25% less than last year with wholesale electricity prices now at a two year low.

So is now a good time to fix your energy bills?

Now is a good time to fix your energy bills as some of the best deals on the market are fixed deals. Make sure you check all the details of the fixed deal offers carefully as some deals have high exit fees.

What if I am already in a fixed energy deal?

Go to your suppliers website and check if they have a cheaper fixed deal on offer. If they have then contact them and ask if you can be moved over to this new deal. Many suppliers will negotiate with you as they are all keen to retain their customers. If, however, you are looking to move away from your current supplier then they are likely to charge you an exit fee.

What is the best way to compare energy prices?

If you follow my guide "How to find the best energy deal, switch & cashback in 17mins 39secs – a walkthrough" it will take you through the whole process and find you the best gas and electricity deal. So what are you waiting for? If you are interested in fixing, be warned these deals will likely disappear due to demand.

 

The post Should you fix your energy bills now? appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/quick-savings/utilities/should-you-fix-your-energy-bills-now/feed 0
Inheritance tax explainedhttp://moneytothemasses.com/tax-advice/inheritance-tax-explained http://moneytothemasses.com/tax-advice/inheritance-tax-explained#comments Mon, 22 Jun 2015 15:10:54 +0000 http://moneytothemasses.com/?p=19500 Inheritance tax explained Inheritance tax is paid if a deceased person's total estate and certain gifts are worth more than £325,000 when they die. This level of £325,000 is known as the 'inheritance tax threshold and is liable to change over time. Who pays inheritance tax? Usually paid by the 'executor' of the will or...

The post Inheritance tax explained appeared first on Money To The Masses.

]]>
Inheritance tax explained
inheritance tax explained

Inheritance tax explained

Inheritance tax is paid if a deceased person's total estate and certain gifts are worth more than £325,000 when they die. This level of £325,000 is known as the 'inheritance tax threshold and is liable to change over time.

Who pays inheritance tax?

Usually paid by the 'executor' of the will or the 'administrator' of the estate using funds from the realisation of the estate. An executor is the person, or persons named, in the deceased person's will whereas an administrator is the person who deals with the estate if their is no will. If you are in receipt of an inheritance then this will normally be paid after any inheritance tax liability has been dealt with. You may, however, be liable to tax on income received from assets passed to you as part of an inheritance such as share dividends or rental income. You may also be required to pay inheritance tax on gifts received from the deceased whilst they were alive. This is explained in more detail below.

At what rate is inheritance tax paid?

The current rate of inheritance tax is 40% on all assets above the inheritance tax threshold. This rate may be reduced to 36% if 10% or more of the estate is left to charity.

What are the timescales for paying any inheritance tax due?

In normal circumstances inheritance tax is payable within six months from the date of death. Inheritance tax can be paid in instalments over ten years for assets that are difficult to sell.

Are there any exemptions or reliefs from paying inheritance tax?

There a number of exemptions and reliefs from paying inheritance tax which I have detailed below.

  • assets below the current IHT threshold of £325,000
  • assets left to spouse or civil partner on death
  • if an estate is below £325,000 any unused threshold can be passed on to a spouse or civil partner when they die - even if they remarry
  • certain business, agricultural, and national heritage reliefs are available
  • there are certain rules and reliefs in regard to passing on a home
  • certain gifts as explained below

How is inheritance tax payable on gifts?

There are a number of rules regarding gifts made by the deceased during their lifetime, a summary of which is provided below. A gift can be anything of value such as money,property or other possessions or the sale of an asset at less then the market price.

7 year IHT taper relief rule

Under this rule the original owner of the asset gifted must live 7 years before the gift becomes free of inheritance tax. The amount of inheritance tax due reduces on a sliding scale over the 7 year period (known as taper relief).

0-3 years - 100% of IHT due

3-4 years - 80% of IHT due

5-6 years - 40% of IHT due

6-7 years - 20% of IHT due

For a more detailed explanation of how inheritance tax taper relief works and how you can use it to your advantage read my article Inheritance tax taper relief on gifts explained.

Are there any gifts that are exempt from inheritance tax?

There are gifts that are exempt from inheritance tax which are:

  • gifts of up to a value of £3,000 in each tax year, any unused amount can be carried over to the next tax year
  • wedding or civil partnership gifts worth up to £5,000 to a child, £2,500 to a grandchild or great grandchild and £1,000 to any individual
  • individual gifts up to £250 not included in the above
  • gifts from income providing the giver can maintain there normal standard of living
  • gifts to help with other dependent person's living costs
  • gifts to charities, museums, universities or community amateur sports clubs
  • gifts to qualifying political parties

How to avoid paying inheritance tax (IHT)

There are numerous simple and legal ways to arrange your affairs to avoid paying inheritance tax, I cover this in detail in my article How to avoid inheritance tax

Further reading:

 

 

Image: Arvind Balaraman

The post Inheritance tax explained appeared first on Money To The Masses.

]]>
http://moneytothemasses.com/tax-advice/inheritance-tax-explained/feed 0