Nursing Europe out of intensive care

Events in the middle east and Ukraine have  absorbed traders in the city over the past couple of weeks with swings in the fortune of both European & US stocks been influenced by political and military actions.So far despite all the activity the FTSE 100 index is little changed for August but it is still down by around 1% since the beginning of the year and whilst this is extremely disappointing when we consider the international turmoil in and around the oil states the position could be considerably worse.

Europe`s economic growth has finally stagnated with even the mighty Germany posting negative economic growth in the last quarter and the rest of the member nations struggling to reduce unemployment and trim their debt levels. There is clearly no magic solution but the European Central Bank  says it stands to do more and is committed to using “unconventional instruments” whatever they are to maintain confidence. The announcement caused stock markets on the other side of the Channel to rise today with a hope of more stimulus measures.

Still a lot more TLC needed here then.

Soothing brows

The big day for UK economic news was Wednesday when the governor of The Bank of England Mark Carney let loose with a barrage of financial data that was aimed at preparing us for future rate rises but at the same time convincing the markets that any changes would be sympathetic to the needs of consumers and small businesses. There appears to be little pressure on inflation and the big focus was on spare capacity which means there are still plenty of premises,raw materials,manufacturing tools and people around that can be procured at reasonable cost.

Foreign currency dealers seemed to believe Mr Carney as the pound fell to a two month low against the US dollar and all the odds now seem in favour of the policy of ”slow and small” increases getting being delayed until the new year.

But don`t bet your shirt on it as a lot can happen in the month between meetings!

Not penny shares!

 Some people have a bit of fun buying penny shares and enjoy the prospect of wide diversification for not a relatively small investment. So shares in US company Berkshire Hathaway are certainly not for them as the price hit the $200,000 each this week.

The investment giant ,owned by one of the richest men in the world Warren Buffett,has grown since the 1960s into a business valued at over $300 billion that holds 70 stocks ranging from small jewellery businesses to Coca Cola and Wells Fargo Bank. Mr Buffett is number three in Forbes magazine survey of the world`s wealthiest individuals and he maintains that his secret is based on a number of very simple rules that he sticks to religiously.

There is absolutely nothing here that we probably don’t know but if Mr Buffett can build a personal fortune of $66 billion on these foundations perhaps they are worth another look?

On investment-           “Never put all your eggs in one basket”

On taking risk-            “Risk comes from not knowing what you are doing”

On price-                     “ Price is what you pay. Value is what you get.”

On trust-                      “ Investing in yourself is the best thing you can do”

Wise words indeed.

 

Tax office loves London property boom

So perhaps I am being unfair but without a doubt the huge rise in residential property prices in the capital,or indeed elsewhere, will have accelerated the amount of money paid in Inheritance Tax with potentially 40% of any increases eventually going to HMRC. If £3.4 billion was paid by UK estates last year and a high percentage was due to bricks and mortar that figure is bound to rise.

This week the thorny issue of tax avoidance once again raised it`s head as the chatter in the press suggested that the government were looking at retrospectively challenging legitimate tax planning done years ago to reduce Inheritance Tax. They suggested that trusts used by families to put money in the right hands in the future could potentially be challenged and although they were very quick to say that they were only “consulting” it could well be more than that.

There are lots of very legitimate ways of helping to reduce or remove this tax so a balanced approach is always best and your financial adviser should be able to discuss a suitable strategy.

If all else fails there is of course one very simple way of reducing your future Inheritance Tax liability.

Spend your money and have a great time doing it!  (Please don`t take this as comprehensive advice but it does make you think )

If you would like some outlandish ideas the the FT can give you a few at http://howtospendit.ft.com/

And finally…

So when is a pound not a pound? When you spend it at a discount retailer in Scotland.

Two discount shops have engaged in a price war, dropping their prices in a battle for savvy consumers.

The 99p Store in the Kingsgate Shopping Centre, Dunfermline, has steadily dropped its prices from 97p to 95p – in what bosses call ‘tactical marketing’.

Ever on the offensive the mangers of the Poundland shop a few doors away , whose slogan is “Yes, Everything`s £1” has undercut its competitors as it sells products for 93p.

If this continues there will have to be major rebranding with the launch of the 75p shop and then the question is. Just how low can you go?