Monthly archive for October, 2014
The recent falls to the FTSE 100 Index are a useful reminder that none of us are able to predict the stock market with any real certainty and that trying to time the market with our investments is far from an exact science. But whether you are of the opinion that the FTSE may rise significantly in the medium term, continue to meander above 6,000 points in the coming years or indeed fall slightly below this level, we take a look at one particular investment that offers the potential for attractive returns in all three of these scenarios.
Defensive plans proving popular
Whatever the future may hold, the FTSE has been consistently above 6,000 points since the start of 2013 and because the Index has never broken through the 7,000 point barrier in its 30 year history, what this does tell investors it that it continues to remain at historically high levels. When faced with this investment landscape, it is perhaps understandable why investment plans that aim to offer competitive returns even if the market falls are being considered. Indeed, these ‘defensive’ plans are proving to be an increasingly popular alternative to the more traditional growth investments which rely on the markets rising in order to produce a capital gain.
With the headline rate of inflation at its lowest level for five years, this should translate to happier times for both savers and investors. Unfortunately, whether you are taking a short term view, or perhaps looking to the longer term in the hunt for higher returns, trying to factor in the relationship between inflation and interest rates continues to create a real headache for all concerned – we therefore take a look at the latest developments to see if any lessons can be learnt. We also review the current range of savings rates on offer as well as reveal some of the more recent trends we are seeing.
Earlier this month the headline rate of UK inflation, as measured by the Consumer Price Index (CPI), fell to 1.2% for the year to September 2014, according to the latest figures from the Office of National Statistics (ONS). The fall was larger than expected and came as a surprise to many economists who were expecting a smaller reduction.
This sizeable fall of 0.3% on the previous month also means that CPI inflation is now at a five year low and well below the Bank of England target of 2%. In fact, with the exception of September 2009 at the height of the financial crisis when it stood at 1.1%, the current rate is the lowest we have seen for a decade.
What might happen to inflation?
The ONS figures show the weaker inflation recorded in September was a continuation of the trend over the last few months where we have seen falling food and energy prices. Despite a reduction in commodity prices and a strong pound also pushing the headline rate of inflation down, the consensus views seems to be that a period of deflation is not imminent and that inflation should close around 1.4% at the end of 2015 and possibly up to 2% by the end of 2016.
And yet with every inflation report and latest economic data, there are always warnings over potential inflation risk but perhaps a view which should be heard is that of former Bank of England Monetary Policy Committee (MPC) member Andrew Sentance who has said there are parallels between the prevailing economic conditions and those which led to a period in the 1980’s when inflation rose to 10% and interest hit 15%. These ‘conditions’ include low headline inflation, a strong pound, a benign oil price environment, structural change in the financial sector and spare capacity in the economy – perhaps we should at least take note of the possibility of inflation rising quicker than expected.
Fair Investment Company is proud to announce the launch of a new mortgage advice service aimed at those looking for expert independent advice from a team of highly qualified and experienced mortgage and protection specialists. The service, provided by Fair Mortgages, is based at our Clifton offices in Bristol and has been built with the simple aim of helping you make the right decision, whether you are a first time buyer, a busy professional looking to remortgage or an experienced property investor.
Challenges in the mortgage market
Most of us at some point in our lives require mortgage advice, and yet the recent changes to mortgage regulations have had a significant impact on how people find and apply for the right mortgage – you may have already seen coverage of this in the press. Perhaps the change which has had the greatest impact is the need to ensure that when selecting your mortgage lender, your situation sits well within their criteria and that you provide all of the necessary supporting information about your circumstances right from the start. Otherwise, your application might be delayed, or worst of all even rejected out of hand.
A simple vision
This means that getting good advice from the outset is more important than ever before – not just to make sure that you make it through the first application stage, but at every stage thereafter to ensure you have a smooth and timely path to completion. In launching our independent mortgage advice service our vision is a simple one – to be the best independent mortgage broker in the UK, and that’s regardless of your situation and what you are looking to achieve.
This may be new territory for you, perhaps you are seeking a mortgage for your first home or your first remortgage, or perhaps you may be more experienced, raising capital to pay a deposit for your child’s first mortgage or managing an extensive Buy-to-Let portfolio. Whatever your experience, we’re confident that after speaking to one of our specialist team of independent mortgage advisers and using our service, you will know you’ve made the right choice.
A big decision, so get it right…
Your mortgage is probably the largest financial transaction that you will ever undertake, and you should feel 100% comfortable with your decision at every stage of the process. Getting professional, affordable and reliable advice to help you make the right choice can ensure this, and perhaps now more than ever before you should be wary of trying to navigate the mortgage market on your own.
We know there is a vast amount of information and choice available to you, and that the search for the right mortgage can often be very confusing. Being stuck with a mortgage that is not a good fit for you can have serious financial repercussions that you could be tied to for a number of years, and so our goal, as with our vision is a simple one – to help you make the right decision.
A history built on customer service
Since 2000, Fair Investment Company has strived to be a pioneer in financial services, using a combination of the latest technology and the values based traditions of quality customer service. With our depth of experience across financial services, customer service, attention to detail and seeking a fair deal for customers, Fair Investment was well placed to launch a mortgage advice service that aims to be the best in the market. So before rolling out our mortgage service, we needed to make sure every aspect was covered – and here are just some of the reasons which make Fair Mortgages stand out.
With the summer well and truly behind us, we take a look back at what has been a very busy month with our round up of our September Plans of the Month. With five categories including traditional fixed rates bonds, FSCS protected savings alternatives, as well as income and growth investments, this monthly review is designed to give you a quick snapshot of what is proving popular with both new and existing Fair Investment customers.
Busy, busy, busy
It seems that the impact of the increased New ISA allowance continues to build momentum, offering a strong mid-tax year reason for reviewing any existing ISAs, as well as the wide range of options for ISA transfers and new ISA investment opportunities. But it’s not just with those looking to benefit from tax-efficient returns where we have seen increased activity, as non-ISA savers also continue to be frustrated with low savings rates and increasingly begin to look wider afield.
Plans of the month categories
And it is here that our range of structured plans has been popular with our customers, whether it is the potential for higher returns combined with FSCS deposit scheme protection on offer from structured deposit plans, or the conditional capital protection combined with the potential for higher returns from our selection of income and growth investments.
In either case, the defined return and defined risk on offer from these fixed term plans has had an obvious appeal with both savers and investors, which is why four of our five Plans of the Month categories are structured plans. As a reminder, the categories are:
- Fixed rate bond
- Savings alternative
- Income investment
- Growth investment
- Kick Out investment
We also give you an in-house view of each plan, brought to you by our Head of Savings and Investments, Oliver Roylance-Smith, who gives his own thoughts as to what might be making each plan so popular.
While top fixed rate deals might be thin on the ground at the moment, there are alternatives to traditional fixed rate bonds, such as structured deposit plans, which could be an option for those who would normally have chosen to lock their cash away in a fixed rate bond. See below for our selection of some of the best fixed rate bonds and alternative savings plans on the market in October 2014.*
Short term fixed rate bonds
For those looking for a short term fixed rate with a low deposit requirement, Aldermore currently offers a one year fixed rate bond offering 1.50% gross/AER requiring a minimum deposit of £1,000. No withdrawals are permitted during the term of the bond.
For a shorter fixed rate deal, Principality offers the option of a 9 month fixed rate bond or an 18 month fixed rate bond, with the former paying 0.75% AER/gross and the latter paying 1% AER/gross. Both of these fixed rate bonds require a minimum deposit of £5,000, and no additional deposits or withdrawals are permitted during the term of the plans.
Axis Bank offers a tiered interest rate on its one year fixed rate bond – earn 1.55% AER for deposits between £10,000 and £30,000, 1.60% AER for deposits between £30,000 and £50,000, or 1.70% AER for deposits between £50,000 and £200,000. Interest on this account can be paid monthly, quarterly or at maturity, and no withdrawals are allowed during the one year term of the bond.
Medium term fixed rate bonds
For those looking for a longer fix, Bank of Cyprus offers 2.10% AER/gross on its 18 month fixed term deposit, requiring a minimum balance of £1,000, up to a maximum of £1m. Interest is paid annually and the account is available on a single or joint basis.
Axis Bank also offers a 2 year fixed rate bond paying up to 2.20% AER, along the lines of the one year bond described above. The Axis Bank 2 year fixed rate bond pays 2.05% AER for deposits between £10,000 and £30,000, 2.10% AER for deposits between £30,000 and £50,000, or 2.20% AER for deposits between £50,000 and £200,000. Again, interest options are monthly, quarterly or at maturity, and no withdrawals are allowed.
If you currently hold most of a your business cash in a current account, it’s worth noting that cash that is not currently required as capital for the day-to-day running of your business will usually generate more interest if you move it into a specialist business savings account. To help you choose the right option for your business, we’ve put together a selection of some of the latest business savings accounts in October 2014.
Latest easy access account deals
If you’re likely to need access to your capital at short notice, Cater Allen’s Asset 30 account offers a rate of 0.65% AER/gross and pays monthly interest, with a minimum opening balance of £5,000. Withdrawals are permitted at any time, as long as you give 30 days’ notice.
Latest short term fixed rate deals
Aldermore currently offers a 6 month fixed rate account for businesses, which offers a rate of 1.50% AER on deposits between £1,000 and £1million. Balances under £1,000 earn a rate of 0.05% AER.
Fair Investment Company is committed to helping charities get the best interest rates on their savings. See below for our selection of some of the best charity saving accounts available in October 2014.*
Latest notice account deals
If you want to be able to access your charity savings at fairly short notice, the Manchester Building Society offers a 60 day notice Business Tracker account which promises an interest rate that will remain 0.65% above the bank of England Base Rate until 30th September 2015. The current rate on offer is 1.15% AER/gross and the account is open for deposits between £10,000 and £75,000.