Daily Archives: October 1, 2009

Banks, Checking & Savings, Financial, Financial Information, Financial Services, Investment, ISAs, Money, Personal Finance, Retirement

Ruling Out Stock Market Investment Hits Long-Term Returns

Prudential has recently released new research that shows that one in four investors have ruled out a return to stock market investment in fear of losing money.

Around one in four potential investors – equivalent to 11.9 million people – are ruling out equity investments because of a lack of confidence in the stock market or because they don’t want to lose more money.

The FTSE-100’s 43 per cent surge from its low-point of 3,512.1 on March 3rd 2009 to more than 5,000 now has yet to convince millions of investors to return to stock market investing, Prudential believes.

But the retirement and savings giant warns that by ruling out stock market investments now, those people who can afford to save are potentially missing out on long-term gains delivered by the historically strong performance of shares.

The research shows 1.9 million – around 4 per cent of the population – have been put off investing more because of recent losses while approximately 12 per cent say they have no confidence in the stock market over the next 12 months and around another eight per cent say they have no confidence at all in the stock market.

Trevor Cheal, Retirement Savings Business Director for Prudential said: “The saying that it is not timing the markets but time in the markets that matters could never be more apt. Investors often act irrationally and driven by fear they sit out the markets as they begin to recover, missing out on some potentially spectacular gains.”

Prudential research shows that 32 per cent of those who do not intend investing in the stock market would be convinced to do so if they could be guaranteed they would not lose money, while 13 per cent say they will invest if the market shows strong signs of recovery. Another 6 per cent would do so if they had access to expert advice on where to invest.

However 25 per cent of those who reject stock market investments say there is nothing that could convince them to return to the stock market.

There are investors willing to buy however, with 9 per cent of the population – 4.3 million people – planning to invest directly in shares with another 11 per cent – 5.2 million people – planning to buy unit trusts or an ISA.

But direct equity investment is not the only option as Prudential’s Trevor Cheal, points out: “It is understandable that in volatile markets, investors may not want all their eggs in one basket and multi-asset funds which provide diversification can give them some degree of comfort while still giving the investor exposure to the stock market. Those who feel they lack the knowledge to manage a diversified portfolio should consider getting professional financial advice from a stockbroker or an IFA.”

Via EPR Network
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Checking & Savings, Financial, Financial Information, Financial Services, Investment, IRA, Money, Personal Finance, Retirement

Prudential Reports Strife Begins At 40 For Pensions Late Starters

Prudential has revealed that workers who don’t pay a penny into a pension until they reach the age of 40 may need to set aside upwards of 33 per cent of their salary until age 65 if they want to retire on the holy grail pension of two-thirds annual salary.

But for someone starting their pension at 30 the amount drops to 20.5 per cent of salary and at age 18 it falls to 12.9 per cent – just over a third of the amount a 40-year-old would be required to pay into a pension for the first time.

Based on the current average salary of £26,020 a 40-year-old worker starting their pension plan today and aiming to retire at 65 would need to put aside the equivalent of £728.06 a month, or £23.94 a day, from combined employee and employer contributions.

A 30-year-old worker’s pension savings would need to total £443.59 a month or£14.58 a day, while an 18-year-old starting work today would need to save an amount equivalent to £9.19 into a pension every day of their life until the age of 65 in order to achieve the optimum pension of two-thirds the current average annual salary of £26,020.

Martyn Bogira, Prudential’s Director of Defined Contribution Solutions, said: “The findings show very clearly that anyone earning an income should try to begin putting money into a pension fund as soon as possible as the cost of delay is considerable; for someone aged 40 who’s contributing to a pension for the first time, the optimum pension contributions are three times higher than for someone aged 18.

“Understandably, making payments into a pension at age 18 may be a struggle and seem insignificant but even the smallest of contributions has the potential to make a massive difference. Arguably, the simplest and most beneficial way to do this is to pay into an employer’s defined contribution scheme and take advantage of any contributions an employer will also make to help make up the optimum amount needed to retire on two-thirds salary.”

Via EPR Network
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Financial, Financial Information, Financial Services, Insurance, Insurance Services

LV= Is Inviting Its Members, Customers And Website Visitors To Share Photos Of What They Love In Life

LV=, insurance, pensions and investment group is inviting its members, customers and website visitors to share photos of what they love in life, and be in with the chance of winning £1,500.

The competition’s theme ties in with LV=’s overall aim as a financial solutions and insurance provider, to help people look after the things that they love in life.

The photo could be of a family member or friend, a pet, or a treasured possession like a car or house, even a place they love to go on holiday.

The online photo competition judges aren’t looking for an ‘expert’ photo, but a picture that captures something that the entrant really cares for, in the most original, visually appealing and self-explanatory way.

Details of the competition have already been emailed to a large number of LV=’s customers and to competition websites, and already some excellent entries have been received and loaded up to view. And even if entrants don’t win the first prize of£1,500, there are three runners-up prizes of £250 to be had.

To take part in the competition entrants will need to register themselves as a member of the LV= online community, and then it’s simply a case of loading up their photos. The closing date is 31 October 2009.

Alan Lay, LV=’s Web Content Manager, said: “The LV= community has been very popular with our members since its launch, and this new competition is an ideal way for existing and new members to share what they really love in life with the wider community. Judging by the high quality of photos that we’ve already received, it’s going to be tough to choose the winners, though we’re sure that there are even better examples out there just waiting to come in.”

Via EPR Network
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Banks, CDs, Checking & Savings, Financial, Financial Information, ISAs, Money

Over 800,000 Knee Jerk Fixers Need Instant Access

This year really has been a savings rate massacre for consumers, with rates falling to historic lows in line with the plummeting base rate. New research from uSwitch.com reveals that in response to this rate land slide, 9 million savers have locked away a total of £131 billion in fixed rate savings accounts in a desperate bid to bag a decent rate. Unfortunately, a turbulent financial climate has led to almost one in ten of these consumers being forced to access their savings early due to job losses (6%) and mounting housing bills (32%). As a result, these savers have incurred penalty fees averaging £132 each.

In total, over 800,000 consumers have made an average withdrawal of £3,738 each from their fixed rate account in the last year, with over a third of these incurring penalty charges. As a result, these cash hungry savers have racked up a total bill of £40 million in withdrawal penalties which are predominantly made up of interest charges. Going forward this issue is only going to get worse as a further 1.7 million (19%) people with fixed rates claiming that they might have to access their money early.

With each of these savers locking away a total of £14,237 each, this has clearly made a positive boost to the UK’s £1.1 trillion savings pot which is held by 35 million consumers. This may sound like a lot of money in the current climate but it’s hardly surprising as further reports have shown that the amount of money consumers are stashing away has actually gone up by 26% since January this year.

However, with 47% of fixed rate savings accounts offering consumers absolutely no access to their money before the end of the term, it’s hardly surprising that 6% of these knee jerk fixers already regret locking their money away. 87% of fixed rate savers only chose this type of account because it was the only decent rate available at the time and 17% admit to making a rash decision.

Rumina Hassam, savings expert at uSwitch.com, comments: “Fixed rate savings accounts can offer consumers some really competitive returns, but the reality of this extra interest can be harsh. Almost half of the accounts available do not allow consumers to access their cash under any circumstances which, in a climate of recession and redundancy, is a dangerous situation for some people. The devil really is in the detail as far as fixed rate savings are concerned. Even if consumers are allowed to make withdrawals, the extra interest earned could be completely wiped out by the penalties incurred.

Variable rate savings deals are on the up and there are currently deals paying as much as 3.3% with no restrictions on access with Citibank. This explains why 37% of people don’t feel their rate is quite as competitive as it seemed when they first took it on. The average one year fixed rate bond now pays an average of 3.11% but Chelsea Building Society is offering as much as 3.8%. Five year bonds have gone up from an average of 3.33% to 4.61% since January however, one year fixed options have actually dropped down from 3.62% to 3.11% in the last nine months. For details of the best savings accounts available consumers can log onto www.uswitch.com.

Via EPR Network
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Banks, Bonds, Currency, Debts, Financial, Financial Information, Forex, Investment, Money, Stocks, Trading

The Japanization of Financial Markets

Saxo Bank predicts that monetary stimuli and government deficits are likely to continue, fostering a “Japanization” of financial markets, whereby the market will see higher price-to-earnings ratios and lower yields on both corporate bonds and treasuries.

Chief Economist at SaxoBank, David Karsbøl, commented: “Because Western economies are more flexible and able to embrace the necessary changes, we do not think that things will get as bad as was the case in Japan. However, it is increasingly evident that the current scenario in the West bears a close resemblance to post-1990 Japan, and it looks progressively like we have entered a new regime in which everyone assumes that large companies will be bailed out. This means that default risk is ‘priced out’, and we see higher price-to-earnings ratios and lower yields on fixed income.”

In its fourth quarter outlook, the Copenhagen-based investment specialist predicts that the American economy will return to positive GDP growth in the second half of the year, but warns that the sustainability of this growth is questionable and will be largely due to government spending and inventory restocking. US unemployment will continue to rise over the coming months, and that this will further hinder debt repayments and consumption.

David Karsbol believes a USD short seems to be a vote for the global recovery and has become the, newer and better carry trade. “The very low US’s yields and need for external financing and increasing reluctance from China to buy greenbacks is a toxic cocktail that could drive the currency even weaker in the near term,” Karsbol said.

Looking towards the end of the year, market dynamics indicate a shift from this year’s equity market rally. Global equity markets rallied 59% from the March lows through to August, and looking ahead, dynamics indicate a shift in performance towards micro trends and sector-specific growth and valuation stories.

Karsbol added: “Most indicators of economic activity are stabilising, but at very depressed levels. We believe investors should continue to take cyclical risk through regional allocations, with particular emphasis on emerging markets over Europe and the US, where it will be difficult to maintain and improve growth.”

Via EPR Network
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Financial, Financial Information, Financial Services, Insurance, Insurance Services, Money

By Lowering The Risk You Can Save on Home Insurance

There are many factors that affect home insurance quotes. Things such as the neighborhood the house is located in, the neighborhood’s crime statistics and the amount of security the home contains are all major components. A recently published article on InsuranceAgents.com reveals that the more secure a house is, the cheaper home insurance rates it will produce.

Fill out a form to get free home insurance quotes.

For homeowners interested in preventing break-ins—not just to reduce insurance rates but also to ensure the safety of your family and belongings—they may want to consider taking certain steps to increase home security. The first step they can take is to install deadbolt locks on their doors.

“Statistics show that thieves tend to stay away from houses with deadbolt locks on ground level doors,” the article, Low Risk Behavior: Prevent Break-Ins And Reduce Home Insurance, states. “They take substantially longer to break into thus increasing their risk of getting caught. Simply put, deadbolt locks deter robberies and reduce home insurance.”

Via EPR Network
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