Armageddon is Just Around the Corner

Who says so?  The magazine "Money Week" says so.  In a massively overlong and melodramatic article  "The End of Britain" the magazine explains that Britain's debt is too big, we can never repay it, change and decay in all around they see, and say goodbye to your money, your house, your pension, your investments.  But YOU can avoid personal financial devastation.  How?  Go on, guess.  You can't?  Then I'll tell you. All you need do is take out a subscription to "Money Week" and they'll tell you all you need to know.  Schimples!  On you go, sucker! It's only £175 p.a.  If their dire warnings are right we'll all go down together including the editors and column writers at MW. If wrong, well, you're £175 worse off and they're £175 better off.  If only telephone scams were that simple . . .

And a word to the MW editors and copywriters.  The article is so wearyingly and boringly long and repetitive that very, very few readers are going to get anywhere near the "Send us your money" bits at the end.  I mean, the kick-off's at 3.30 . . .

Invest For Yourself!

First, the downside.

If/when you join a workplace pension scheme your employer top-slices you salary and hands it over to the Pensions Fund whose job it is to impoverish you when you reach retirement age. Your employer adds a contribution and H.M. Government adds a bit more in the shape of tax relief on these contributions.  Short of opting out of the scheme, there's nothing you can do except pay up.

If/when you start a pension plan, money is taken from your bank by direct debit, monthly or annually.

In either case, you are contributing willy-nilly to the scheme or plan. You don't have to exert any self-discipline about actually making the payments.  You can happily forget about them, which is exactly what the pension fund managers want.  They want your money.  They don't want you to ask questions about what they're doing with it.

If you invest for yourself, YOU must make a personal commitment to put money into your investments on a regular basis. This is not easy because most people - and that includes you - can't resist looting their investments/savings for a new car, jet-skis. daughter's wedding, holiday in Marbella etc. etc. whenever the fund reaches a miserable few hundred quid.  Fatal. If you recognise yourself in the above, better after all to hand your cash to a penison fund, unit trust etc and let the manager spend it for you.  At least you'll get something back when you retire.

More tomorrow.

The Great Rip Off

Your workplace pension scheme and/or your private pension probably requires you to convert your pension-pot into an annuity (i.e. annual income paid monthly). Journalist Paul Collinson in the "Guardian" 24th. August 2013 has interesting things to say about this system for rewarding/defrauding you at the end of your working life.

You can opt out of workplace pension schemes, although not until after your employer has opted you in.  So if you're in one, get out of it - now.  The scheme might insist on keeping contributions you have already made until you retire, in which case you've just learned your first lesson about how pension schemes extract money from you.

Nor do you need a private pension. These schemes are headed up by overpaid men in red braces who probably skim 2% minimum off every one of your contributions. Pension Funds exist to make money for the Fund, not for you.  The annuity you get at retirement probably won't repay you as much as you've paid in unless you live to a very, very ripe old age.  If you die earlier than actuarial forecasts say you should, the balance of your pension pot goes to an insurance company, probably with a "thank you" payment to the pension fund that you fell for in the first place.  You should be more scared of pension funds than of internet fraud or identity theft - a lifetime spent piggybanking a proportion of your pay cheque will probably turn out to be about as rewarding as buying lottery tickets - if you're an average earner, that is. All the cards are stacked against you. If you're already massively overpaid your pension is probably gold-plated by the taxpayer or your company's shareholders. 

We don't teach folk anything useful about money and finance and how to avoid being ripped off either at school or after.  We leave them to find out for themselves at 65 what they should have found out for themselves at 25  - invest for yourself.  Do I hear cries of "Ooerr!  I can't do that!  I don't know anything about investing!"?  So already you're level with a lot of pension fund managers and Independent Financial Advisers.  

I give financial advice for nothing - and I bet that in the most cases it will be the same as an IFA gives you for about £125 and hour.

Third in shares.  Third in UK short/medium term Gilts(*). Third in Premium Bonds - which with only average luck pay more than the banks. Forget ISAs. They're another scheme for extracting commissions and management charges from you. Do everything for yourself. Don't leave it to the wide-boys.

(*) NEVER corporate bonds.  I know IFA's who were busy flogging Lehman bonds 24 hours before the firm went belly up.  

Watch this space.

Do You Ever Feel Close to Despair?/Club News

Here's another example of the sh**e that the BBC offers us as "news." Oh my friends, this one really will change your life, even if you don't know where to put your apostrophes!  (Anagram of "Stop Her Soap" - which doesn't matter one way or the other)  

I interrupt another of my lunchtime rants to remind you there are plenty of vacancies in the phenomenally successful "White Knuckle Riders Investment Club" which modestly tries to make you 1% per month (that's per month).  Details from wkr.inv.club@gmail.com. Preference will be given to punters who can express 1% per month as an annualised rate . . .